Necessity is the mother of invention, never more so than when the government of the day presents you with budget cuts of 25 per cent or more. Accustomed to regarding their ICT systems as tiresome obligations that soak up money, housing providers need to start thinking of these systems as weapons in their survival armoury for the next few years.
With the right thinking, housing providers could use technology differently – to streamline their business processes, drive efficiencies with business process re-engineering, and share risk and return with their ICT suppliers – to transform performance outcomes from fewer resources, and some providers are rethinking the way they use ICT to do just that.
Inescapable trends are seeing ALMOs either being pushed back into the fold of their original authority or alternatively being forced towards shared service models to change the economics of delivering services. As the coalition’s cutbacks bite – the removal of Supporting People ring-fenced funding, a review of housing benefits, and budget cuts of nearly 40 per cent are just the latest signs – only a very small number of housing providers are actually assuming more responsibilities from their local authority.
There is wide agreement that the Housing Revenue Account (HRA) will one day be reformed, given added momentum by the Government’s recent consultation paper on housing finance. In essence, ring-fencing will end and providers will gain much greater scope to reinvest proceeds in their stock. However, this vital reform will not be soon enough to rescue authorities and ALMOs who were faced with spending cuts in October, as well as housing benefit caps beyond that. But it does raise important questions around how housing management systems will be run in the future.
The HRA consultation is a reminder of the growing expectations from social housing. It highlights that approximately 40 per cent of all housing management costs account for what have been historically ‘non-core’ services, such as tackling anti-social behaviour or helping tenants back into work. All these activities are central to today’s housing providers’ support to their tenant communities but they can represent a huge administrative and reporting burden if they are not continually reviewed and improved.
Whatever form the HRA reform takes, and some form of long-term self-financing scheme seems likely, ALMOs will need to organise operations to independently make their case to government bodies (or whichever executive agency is appointed to the supervisory role). Housing providers will need to develop much greater long-term insight into their projected proceeds. In addition, they will need to assess planned and responsive repairs. They will need accurate reporting of crime related to voids. And of course, they will need to liaise effectively with the government.
This is in the future, but what about the present? Faced with a spending squeeze and longer-term finance reforms, what are the choices for housing providers? How can they urgently reduce current management costs so they are better placed to address the challenges of new financing models?
Two trends are emerging as the social housing sector tries to tackle these issues. First, some housing departments are gradually re-engineering business systems, speeding up the process by outsourcing some of their services to specialists. Second, others are removing entire administrative processes through business process outsourcing to reduce service costs and free up staff resources for tenant support. Whichever route is taken, senior management teams are acutely aware that they need to act by March 2011 in order to deliver outcomes as the next year’s budgets are set. They will also know they are starting a process that will leave them better able to cope with a reform, and reporting on the sector’s post-HRA financing landscape too.
Neither of these options is simple. Providers need to audit their processes and identify their assets before outsourcing. Suppliers too need to properly understand the client’s required outcomes and the ICT systems that support core processes. Technology suppliers have been accused of supplying systems not fit for purpose in the past and pocketing the fees as problems continued. The sector’s best suppliers will take the time to sit down and understand their clients’ long-term needs. More than that, they will accept the programme risk needed to drive a long-term change in service developments and operate complex administrative needs through their own data centres.
Intriguingly, necessity is being turned into invention in other ways. Some housing providers, having re-engineered their business systems over time, are planning a third option, acting as shared service hubs for other ALMOs and housing departments. They have the capacity and system resilience to host services for others. They could be the answer for small departments that lack the funding or ICT infrastructures to kick start rapid cost efficiencies that the current public finances demand.
ALMOs and housing providers are certainly starting to innovate. What providers cannot do… is do nothing at all.
John Hood is managing director for housing at Civica.
