After five years as CEO of Shelton Development Services, Housing Technology interviewed Phil Shelton about IT, funding and political changes in social housing.
How has IT affected the housing sector since 2009 when you took over at Shelton Development Services?
The technology has advanced considerably since 2009, when the iPhone 3 had only been out for six months. Inevitably, consumer hardware and software will tend to outstrip that used in the corporate world, which can lead to friction in managing users’ expectations.
We’ve seen a massive increase in the use of virtualisation, which is not surprising given the ease with which IT departments can manage hundreds of desktops with minimal staff. My concern is that there has also been an increase in the amount of IT outsourcing. IT may not be ‘core business’ for housing providers but they are critically dependent on their IT systems. While it may be prudent to outsource the procurement of hardware, housing providers need to ensure they have on-site staff who can administer their systems.
What will be the main IT advances in the next five years?
The shift to the online delivery of software will continue. Web development in the last two years has come on leaps and bounds in terms of what’s possible and what’s available to deliver that. Google and Amazon are dominating this web services space at the moment, and the Safe Harbour agreement means it’s practical to use these global platforms, with their scalability and low-cost, without infringing any data protection laws. Google is now facing the same anti-trust scrutiny in Europe as Microsoft does, but that’s hardly surprising given its 95 per cent market share in online search in Europe. The legacy Windows systems will still be used, but there are now alternatives, which are cheaper and easier to deploy. New software is likely to be fully cloud-based to take advantage of the different devices available and, in commercial environments, to remove the dependency on corporate hardware.
What are the main changes in social housing since 2009?
The demand for new housing has continued to significantly outstrip supply, yet government funding has obviously been much reduced. A large withdrawal from the market by the banks has made getting funding difficult and expensive. At the same time, regulations and standards have both increased, putting additional strain on housing providers. In 2008, prices were rising and people were optimistic, but by 2009 this was over and confidence in development didn’t really pick up again until 2013. In 2014, social housing development seems to be characterised by a more commercial focus, an increased need to closely monitor programmes, and a recognition that new ways of delivering housing are needed, whether through new funding mechanisms or new types of tenure.
What have been the most positive developments in government policy?
I can’t think of many! Ironically, the cost-saving measures of disbanding the TSA in 2012, and moving its regulatory powers to the HCA, meant that the amount of bureaucracy decreased, which was an unintended improvement; however, the resources of the HCA are severely limited, meaning it has a lot of bark and not much bite.
Do you welcome the return of local authorities to social building programmes after so long?
Yes, this is one of the most active areas at the moment and while many developments are necessarily small, due to the local authorities needing to replace lost skills in development, it will help deliver many new homes driven by local needs.
What are the biggest barriers to meeting the current target of 58,000 new affordable homes by March 2015?
Funding and certainty. It’s simply not possible to develop affordable homes without subsidy. This subsidy can’t always come from housing providers’ own reserves, with a little top-up from government. Cross-subsidy via speculative/market housing is slowly becoming normal, but this significantly increases the risk for the housing provider, and they don’t always have the commercial skills or experience in this area.
Revenue funding through affordable rent conversion subsidies is not a good solution; it simply shifts the cost from a capital budget to the housing benefit bill. So they’re capping that! Revenue funding also relies on the future conversion of the units, and it’s easy to be overly-optimistic about the returns from this. The uncertainty over the housing market, the risks for housing providers in developing housing for sale, increased funding costs from lenders and more regulation from the HCA are all making it more difficult to deliver affordable housing.
How can landlords and developers be encouraged to invest in new build?
Developers don’t want to manage property, and landlords do. The government needs to help to make it as painless as possible for developers to build properties and then hand them over to landlords or managing agents. Tax incentives or other cost benefits that other sectors enjoy, such as the film industry, would help mitigate the tortuous process of getting planning on sites.
What’s the worst HCA red tape you would throw out?
I’d love to throw out the IMS system and start again. We constantly hear about the volume of information required to submit schemes, and it’s not clear what the HCA is actually doing with all this information. The HCA obviously wants to ensure grants are being properly used and it’s getting value for money, but its approach often puts housing providers off bidding for grants, so that the HCA is left at the end of year frantically trying to find recipients to take the grants. I would prefer to see a move towards only continuous market engagement (CME), removing the long programmes we have now, which invariably start slow and then end in a frantic rush to deliver.
What would you like to see in the party manifestos next year to accelerate the building of social housing?
A firm commitment to increase infrastructure spending and an increase in capital grants for housing. Clear timelines and light-touch regulation to make it easy for housing providers to bid, and target the number of homes delivered, not how much grant per unit. I’d like to see better social policies, including removing the bedroom tax, and a focus on identifying the types of homes actually required in an area.
Has project management changed much since you created your Sequel software for project management 10 years ago?
The reduction in grants and increase in open market engagement has meant that housing providers need to monitor their development programmes much more closely than before. We’re seeing many more organisations realise they need to do this better than they are at the moment, particularly around cash flows and the handover of properties. Regulatory compliance is onerous and the project management elements of SDS Sequel are being used to help manage that. 10 years ago, I’m not sure I would have called it project management!
