You are viewing 1 of your 1 free articles
New value for money metrics – how did housing associations do in the first year?
2018 saw a new approach to value for money (VfM) for English housing associations. Out went the self-assessment and in came reporting the regulator’s new VfM metrics in accounts. Steve Smedley examines how they got on
In December, the Regulator of Social Housing (RSH) published the 2017/18 global accounts for the sector’s larger providers. The Value for Money annex is a must-read for all associations wanting to ensure compliance with the VfM Standard in 2019.
Broadly, the RSH was happy with how the sector responded but the bar was set low. Consequently, there have been no VfM downgrades as in previous years. That will change.
As is often the case with new regulatory standards, the regulator treats the first year as a dummy run and then steadily raises the bar.
So, for last year only, all associations needed to do was submit their results for the new regulatory VfM metrics. Other key requirements like providing comparisons and strategic VfM targets were waived.
Easy enough? Apparently not.
Some associations just didn’t follow the regulator’s metrics definitions, undermining the entire point of the exercise: consistency, which is essential to enable comparisons of associations’ VfM performance.
Some regulatory definitions were ignored more than others, eg debt-based metrics and headline social housing costs.
“Some associations just didn’t follow the regulator’s metrics definitions, undermining the entire point of the exercise: consistency”
In some cases, associations simply went with their own established definitions, eg gearing.
Here associations have their own pre-existing measures based on bespoke covenant requirements with their lenders.
Clearly ‘bespoke’ and ‘consistent’ are not great bedfellows. Don’t assume that because you already have a measure that looks like what the RSH wants it’s going to be OK.
This doesn’t explain what seems to have happened with headline social housing costs – the metric claiming the greatest number of disparities and possibly the most sectoral angst given that its misuse may lead to unfounded accusations of inefficiency.
READ MORE
It wasn’t so long ago that similar data was weaponised against the sector for political and sensationalist purposes.
Approaches varied with headline social housing costs but commonly associations simply excluded particular types of social housing, eg supported housing, presumably because it distorts (inflates) costs.
Such a plucky disregard for regulatory requirements is almost as admirable as it is wrong.
It might also suggest that the offending associations misunderstand the purpose of the metric – it really is supposed to reflect the cost of all types of social housing in all its wonderful diversity.
It’s then over to the association to contextualise the result by explaining how costs that might superficially look high compared with sector-wide averages are simply due to the RSH’s known justifiable cost drivers, eg material numbers of supported or housing for older people, region and large-scale voluntary transfer maturity.
“Such a plucky disregard for regulatory requirements is almost as admirable as it is wrong”
A credible, evidence-based way of doing this is by making intelligent comparisons, eg benchmarking yourself against similar organisations as well as the wider sector.
This has the added benefit of educating the reader about what ‘normal’ looks like for different types of providers.
For example, as a group, supported or housing for older people providers will have higher average costs than the sector as a whole because less intensive general needs services bring the cost down. Similarly, regional wage differences mean London-based associations will generally exceed sector-wide averages while the North East will come in under. This has nothing to do with performance, everything to do with context. Don’t let others tell your story for you – pre-empt the obvious questions.
A small minority of associations even failed to report all seven metrics. Thank goodness for low bars. The RSH is having a word with those who didn’t get it quite right. Do yourself a favour: read the manual.
Steve Smedley, associate director, Acuity
