The weight of the impossible asks

We welcomed recent announcements on the Affordable Homes Programme and New Towns, but these are set against a stark truth: the weight of the asks of our sector outweigh the art of the possible. We, as the social housing sector, are left with ever-growing, impossible, asks as a result, to do more and more with less and less.

Our landscape is a ‘multiverse’ of purpose, one that has to be delivered on a not-for-profit foundation. We are expected to look after our customers, invest in our homes, build new homes, deliver on net zero, meet regulatory standards and fill agency gaps on anti-social behaviour, domestic abuse and mental health.

And all this while protecting our regulatory financial viability and, as a not-for-profit, our reserves. That’s all set against a hard backdrop of external factors and conditions, the impact of inflationary pressures, higher borrowing costs and a volatile labour market.

“We, as the social housing sector, are left with ever-growing, impossible, asks as a result, to do more and more with less and less”

As a V1 registered provider since 2015, Livv Housing Group is living the reality of some of these impossible asks of our sector. We are currently navigating industrial action relating to colleague remuneration. We continue to counter misperceptions about the role of reserves in not-for-profit operations, highlighting again that they’re essential for maintaining financial stability and supporting future growth, not excesses to be paid out as dividends to shareholders. Reserves are there to uphold the spirit of what the social housing sector stands for: to make a difference, not profit for payout.

In early 2024, we proposed a 5% annual pay award for 2024-25, the maximum we could offer as a G1/V1 registered provider and one of the highest in the UK housing sector. This was rejected by the unions, which were seeking 10%.

Our most recent and final offer proposed several benefits: reduced working hours, higher pension contributions, a two-year pay award (7.7% over two years), more holiday entitlement and a salary review process. Altogether, the package could increase pay and benefits by 17.88%.

While we deeply respect the rights of our colleagues to strike, our offer reflects our responsibility. It is to ensure that the long-term financial viability of Livv is protected, not put it on a path to financial failure, regulatory downgrade and a worst-case scenario of, ultimately, insolvency.

Although it has been mercifully rare to date for housing associations to become insolvent, the challenges we face in the current landscape are myriad. And as the weight of the asks upon our sector continue to grow, we may have to get ready to face the reality of V1 registered providers becoming the exception, sadly not the robust norm, that customers deserve.

The regulator acknowledges the sector’s financial challenges, including the need to invest in existing stock to meet safety, quality and energy-efficiency standards, as well as rising capital costs due to higher interest rates. These pressures have steadily reduced financial performance since 2018, but has intensified recently, leading to debt servicing costs surpassing net earnings in 2023-24 for the first time since 2009.

Our financial decisions at Livv have been set against all these macro environmental factors and must strike a fine balance between sustaining our charitable purpose, maintaining excellent customer service, supporting communities and fairly compensating colleagues.

“While we deeply respect the rights of our colleagues to strike, our offer reflects our responsibility. It is to ensure that the long-term financial viability of Livv is protected”

This all speaks to why we believe our initial one-year, and most recent two-year, pay award is a fair deal, especially when compared with the wider employment market. In the past five years, we have offered a cumulative 25.2% pay award to all colleagues and distributed a universal £1,400 cost of living payment. We’ve also been a real living wage employer for over a decade.

We have repeatedly highlighted throughout the industrial action that our reserves are continuously reinvested to improve services and support our communities – and that it is a requirement of our regulator to have a 30-year business plan to support long-term investment. This means reserves are both restricted and regulated.

This is the reality of our landscape, and it’s a very difficult time, understandably, for colleagues in all corners of our business. We are undoubtedly in the most challenging times for social housing anyone in the sector has ever seen.

However, we must remain positive if we are going to make a difference and we must remain anchored to the spirit of the art of the possible, despite the weight of the asks.

Working in partnership with Homes England, we’ve demonstrated how new communities can be created in our largest development to date. Built on derelict land, our Watchfactory phase 2 development has delivered 191 new affordable homes and created a thriving intergenerational community.

While it does not have quite the scale to qualify as a New Town, it is a brand-new, mixed-tenure neighbourhood with a beating heart, where people can really thrive. This is a blueprint of what making a difference really means, because having a safe, warm home matters above all and is where opportunity in life truly stems from.