Mar 10th 2013, 10:56
Impact Housing Association’s Board met in Carlisle last Wednesday. Our agenda included reports on finance, welfare reform, our offer to our tenants and the Board’s own Performance Management.
While I have been Chair we have systematically reviewed every aspect of Impact’s work and have established a clear mission, objectives and performance measures for each team in the organisation. This has included the Board itself and has involved Board members in some work at our board conference last November, at a workshop in February and in Board itself in defining what the Board is about and how our success should be measured.
In my experience many housing associations do not have a clear view of what the Board should be achieving or how this should be measured. Furthermore, if board performance is measured it tends to focus on simple quantitative measures such as the number of meetings that members attend rather than any qualitative measures of what boards are succeeding in doing. We wanted something more comprehensive and meaningful but we did not want a long checklist.
Our definition of the Board’s role is that we are:
“Responsible for setting and ensuring delivery of Impact’s direction.”We have decided that our critical success factors are:
And for each of these critical success factors we have identified a small number of critical success measures and performance measures that will be reported to the Annual General Meeting and monitored by the Board.
We consider that the Board already works well but we are ambitious. We expect that this approach to performance management will enable us to improve our performance further.
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Last Wednesday saw George Osborne’s fourth budget and the AWICS briefing paper on the budget and its implications went online last Thursday. A copy can be freely downloaded from here.
The budget’s rather modest attempts to encourage home ownership and the construction of affordable housing prompted me to think about the way that the government does its accounts and the effect that this has on its expenditure plans and economic policies.
Accountants usually draw an important distinction between revenue expenditure (or day to day spending) and capital expenditure (or investment). Revenue expenditure is charged to the annual income and expenditure account that calculates whether the organisation has a surplus or a deficit; while capital expenditure is included as an asset on the balance sheet and only the depreciation of the asset is charged to the income and expenditure account.
However, the UK government (regardless of which political party is in power), while it distinguishes between revenue and capital expenditure, lumps all expenditure together when calculating whether the government is running at a surplus or a deficit. In my view, this not only represents bad accounting, showing the deficit to be larger than it actually is, but also places an artificial constraint on public investment.
This artificial constraint led to significant reductions in public investment as part of the 2010 comprehensive spending review, including a 62% reduction in investment in housing. It is now being increasingly recognised that this reduction in public investment has prevented the economy from recovering from the recession.
I believe that it would be beneficial if the government changed its approach to the control of public investment to that which is followed in the private sector and by housing associations. This would involve investing in public services where the financial and social benefits clearly exceed the costs and being prepared to borrow the necessary resources as long as the cost of the borrowing was affordable and the value of the assets was greater than the borrowing involved.
This approach would allow much needed public investment in areas including affordable housing, transport infrastructure and environmental sustainability without increasing the deficit on the government’s income and expenditure account. It would also allow the government to concentrate on the important matter of eliminating the deficit on its income and expenditure account.
Our 2013 seminar on ‘All You Want to know about Housing Association Finance’ was held in London last Tuesday. It was attended by representatives from housing associations, local authorities and other bodies and representatives included board members, housing managers, accountants and solicitors. I thoroughly enjoyed spending the day with the delegates and discussing various aspects of housing association finance with them. Clearly, the government’s welfare reforms are a major concern, along with the long-term availability of social housing grant and loan finance.
The feedback that we received included:
Many thanks to all those who attended and contributed towards it being such a good day.
The government will announce their 2013 budget this week amongst calls for more investment in public infrastructure including housing. Local authorities will be looking in particular for the lifting of the ‘borrowing cap’ that was imposed on them as part of the ‘self-financing' arrangements. However, in view of the continuing recession, reduced tax yields, increased public borrowing and the government’s commitment to reducing the deficit through austerity it seems unlikely to me that much progress will be made. As usual, we intend to publish a briefing paper on the implications for local government and housing.
I am writing this blog while travelling by train from Cumbria to London. I have seldom seen such diverse weather! Small amounts of snow in Cumbria; a lot in the Midlands causing the train to slow down; then bright sunshine and now fog!
Last week we published our 2013 edition of ‘All You Want to Know about Housing Association Finance’. This is one of our ‘All You Want to Know about’ series that provide a useful introduction and overview of the finance of various public services. I originally wrote these books to accompany our regional seminars but they have also proved popular as stand-alone books that represent excellent value for money. To find out more click here.
The Chartered Institute of Public Finance & Accountancy (CIPFA) has appointed me as an examiner for their International Public Financial Management professional examinations so I have spent some time recently drafting exam questions. This course is currently offered in countries where CIPFA has partnerships with local tuition providers, professional accountancy organisations,governments or others with a desire to improve public financial management at a local or country level. The programme is currently available in South East Europe and in Nigeria and Lesotho. To find out more see http://www.cipfa.org/Training-and-Qualifications/Qualifications/International-Public-Financial-Management-Qualifications
We like to think that Housing Associations are caring and efficient landlords but occasionally I find an instance where they are not. I recently met an 89 year old widow who had asked her landlord – a housing association in Yorkshire – to replace her broken bath panel. They said that they could do this but would charge her over £100. She therefore got a private contractor to do the work for £20. Two questions: Why did she have to pay? And why are the housing association’s costs five times those in the private sector?
I have been busy this week making the final preparations for our seminar ‘All You Want to Know about Housing Association Finance’ that will be held in London on 12th March 2013. The delegate packs are now all prepared and printed, and the accompanying book is at the printers. I am looking forward to meeting our delegates next Tuesday and to spending the day with them. There are still a few places available and further details can be downloaded from here.
The government’s welfare reforms will start to be introduced in April and concern is clearly growing among social landlords and their tenants regarding their effects. I chaired a meeting of Impact Housing Association’s board last Wednesday where welfare reform was one of the main items for discussion along with resident involvement and our community investment projects.
Last Friday’s Cumberland News had a major article on welfare reform that featured the effect that it will have on a tenant who I happen to know. He is in his fifties and is divorced with two children who do not live with him but who do visit. He is disabled and does voluntary work and lives in a two bedroom flat. He lives on benefits of £96 a week but from April these are being reduced by £14 a week because he is deemed to be under-occupying. His comment on the situation is:
“I think it’s totally unfair… I could put in for a one bedroom flat but there’s none available. The government wants people to take in a lodger but you need your privacy and where would my children stay (when they visit)… When you’re on £96 a week, £14 is a big drop. There’s nothing I can do about it. I don’t think the government realises how much it’s going to affect people like myself.”
We have just updated our website to include:
The website still contains all the information about AWICS and the services that we offer in management consultancy, training and independent residents' advice. It also contains our newsletters and briefing papers.
February has been a busy month in other ways. Our seminar 'All You Want to Know about Local Authority Housing Finance' in London was well attended and well received and we are now looking forward to the next session in Huddersfield in June. I have been pleased to provide in-house training for staff of the Homes & Communities Agency in 'All You Want to Know about Housing Association Finance' and to Weslo Housing Management's board and staff on 'All You Want to Know about Scottish Social Housing Finance'.
You may have read in the press that Irwin Mitchell are involved in a number of judicial reviews of Councils' policies for localised council tax reduction schemes. I have been pleased to support them in this with advice on the finance of local government and on the financial aspects of the schemes.
We have published the 2013 edition of 'All You Want to Know about Local Authority Housing Finance' - our authoritative, up to date and popular guide to this important subject.
Impact Housing Association, of which I am Chair, has been re-awarded the investors in people gold standard with an even higher score than previously. As Chair, I have been busy this month in developing performance measures for the board.
Our seminar 'All You Want to Know about Housing Association Finance' will be held in London on 12th March 2013. This event has proved popular but we still have a few places available.
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