Social landlords are in a bind. The government wants more efficiency from them, but it鈥檚 shedding precious little light on how they are supposed to measure it. Ben Cook gets the tape out.

Everyone in social housing knows they鈥檙e supposed to be working more efficiently. The murky part is what this actually means, how you know when you鈥檙e doing it and, crucially, how these supposed savings are meant to be measured.

Last July鈥檚 announcement by the Treasury and the ODPM that social housing providers must make savings of about 拢1.5bn by 2007/8 was fairly unambiguous. But for months there was a lack of detail about how the ODPM plans to measure councils鈥� and housing associations鈥� performance on efficiency.

Now, however, the situation is becoming clearer 鈥� to an extent. On 21 February, the ODPM report Social Housing Efficiency:

A discussion paper revealed that councils and housing associations would have to measure their own efficiency and submit the results to the regulators.

The Housing Corporation responded to this on 24 March, issuing a guidance note on the process and framework for the production of efficiency statements. It added that the corporation would be issuing a circular, on an unspecified date, detailing its requirements for production and submission of associations鈥� statements.

Formal responses to the ODPM discussion paper are still being collected but, informally, many housing providers say they remain unsure of how to measure the more complicated gains and are worried the existing guidance is not enough.

Why self-assessment?

The ODPM鈥檚 discussion paper acknowledges that working out how much housing providers have saved will be a tricky task.

So much so, in fact, that it is leaving it to housing providers to do the calculations themselves. 鈥淲e decided to pursue the self-assessment option as it provides local ownership of the measures of efficiency gain and supports local innovation,鈥� says an ODPM spokeswoman.

The ODPM also argued more prescriptive methods of measuring savings, or setting a framework of nationwide indicators, would increase bureaucracy. 鈥淎 framework opens up the dangers of a 鈥榦ne-size鈥� solution, and the associated burdens and distortions that could arise 鈥� it could be over-simplistic or create a complex bureaucracy which measured things that were not important and prevented real gains being created and used,鈥� the spokeswoman adds.

How it works

Each local authority and housing association must complete these annual efficiency statements 鈥� and the first are due in from local authorities on 15 April. The statement will consist of two one-page documents, the 鈥渂ackward look鈥� and the 鈥渇orward look鈥�. The backward look will set out the amount of savings made in the past financial year 鈥� in areas covered by the ODPM鈥檚 targets for 鈥渆fficiency gains鈥� 鈥� whereas the forward look will briefly outline the strategy for making savings in the following year.

The ODPM has set targets for efficiency gains for 2005/6, 2006/7 and 2007/8 in the following areas: procurement of new homes; procurement of goods; repairs; and management and maintenance.

Local authorities鈥� statements will be judged by the Audit Commission, while those of housing associations will go to the corporation. The ODPM wants to see savings of 拢274m in 2005/6, 拢550m in 2006/7 and 拢835m in 2007/8.

The baseline against which savings will be measured is costs incurred in 2004/5.

The ODPM says efficiency is about improving quality,
but with no methodology for measuring efficiency, organisations feel they have to focus on cost-cutting

A cold reception

But those who鈥檒l be making the savings, or helping authorities and associations do this, still feel left in the dark. Ross Fraser, chief executive of benchmarking organisation Housemark, has provided some guidance on how to calculate statements, but says that unless the government provides more advice on meeting efficiency targets, housing services could suffer.

鈥淪elf-assessment is definitely the way forward but it would be helpful for organisations to have more of a framework in which to exercise this,鈥� he says. 鈥淭he ODPM says efficiency is about improving quality and not making cuts, but in the absence of any real methodology for measuring efficiency and quality, organisations may feel they have to focus on cost-cutting.鈥�

One director of housing at a city council, who did not want to be named, agrees the advice the ODPM has provided so far is too vague. 鈥淭he ODPM is struggling with these more general measures of efficiency,鈥�

he says. 鈥淭here has to be more recognition of the need for mechanisms for identifying good practice. One method could be the cost of management per property, but if you鈥檙e already providing an efficient service it will be difficult to demonstrate savings.鈥�

Money isn鈥檛 everything

Much of the confusion centres on the issue of 鈥渘on-cashable gains鈥�, savings made through improvements in quality or increases in output, but with the same level of expenditure. This is as opposed to cashable gains, where savings can be made available for reinvestment elsewhere. 鈥淲e can show [cashable] savings in pounds and pence 鈥� but when it comes to other savings, how do we identify them and how do we account for them?鈥� asks Keynote Group chief executive Tom Murtha.

Reassuringly for the sector, the ODPM does appear to be taking quality of services into account. 鈥淲e accept that improvements in quality will be the most difficult gain to measure, but the sector already focuses on a number of customer-oriented outputs,鈥� the spokeswoman says. 鈥淚t鈥檚 important to stress that any reductions in quality negate any proposed efficiency gain.鈥�

Roy Irwin, chief inspector for housing at the Audit Commission, acknowledges that there will be calls for more guidance on how to make efficiency savings, but says the commission鈥檚 role won鈥檛 just focus on cash savings. 鈥淲e will be looking at how they use the resources they鈥檝e got and what they are getting for their money.鈥� But not all housing associations feel they need more guidance.

The William Sutton Group has calculated that, in order to meet the ODPM鈥檚 target, it needs to save 拢437,500 on management and maintenance, 拢125,000 on commodities and 拢25,000 on capital works in 2005/6.

鈥淚鈥檇 prefer the ODPM to just give us the broad figures and let us get on with it,鈥� says Mike Morris, the group鈥檚 chief executive.

鈥淚 recognise we haven鈥檛 got firmer detail, but we shouldn鈥檛 need it 鈥� we should make the running.鈥�

With many issues left unresolved, initial assessments of efficiency statements will inevitably involve an element of trial and error. 鈥淩egulators must respect the difficulties that housing providers are going to experience,鈥� says Fraser. 鈥淭he first year will be a learning curve for everyone.鈥�

Can tenants tell if a service is efficient?

Leicester council, Southern Housing Group and Home Housing all think they have an efficient repairs service. So do tenants agree? Eleanor Snow finds out

Leicester council

In 2003 Leicester council spent 拢27.6m on repairs to its 24,500 homes, with an average cost of 拢21.13 for each job and 拢22.30 per property per week.

According to Audit Commission performance data, the council also makes and keeps appointments for nine out of 10 of its non-emergency repairs. That鈥檚 an outstanding record.

Norman Pilgrim has been a Leicester council tenant since August 1953. 鈥淚鈥檝e seen a lot of changes to my housing service. When I first moved in, you would get a housing repairs man turning up in tatty clothes, fag in mouth, pushing a bicycle with tools dangling off the handlebars. But these days the workmen and women look very smart. They drive vans kitted out with the latest equipment and they are always polite and clean up after themselves.鈥�
It鈥檚 not just appearances that have improved. Pilgrim says the council is now 鈥渆xcellent鈥� at responding to emergency repairs. When he had a leaking pipe last year, the council fixed the problem the morning he reported it.

But he thinks waiting times are too long for minor repairs.
He had double-glazing installed incorrectly at the end of February. He rang the council when he noticed a draught blowing into his living room.

The council sent someone round a few days later but it took three more weeks before they were fixed. 鈥淚t鈥檚 not acceptable to leave an elderly tenant waiting so long in winter,鈥� says Pilgrim.

In spite of this, he says that Leicester is 鈥渧ery good鈥� at keeping appointments and letting tenants know how long different types of repairs will take. 鈥淭he worst thing is not knowing what鈥檚 happening. It鈥檚 a mark of a good service when you鈥檙e told what鈥檚 going on and when they turn up when they say they will,鈥� he says.

Southern Housing Group

In 2003 Southern Housing Group became concerned that its tenant surveys showed declining satisfaction with repairs. So in 2004 the association streamlined the system.

Contractors now carry out all repairs up to 拢250 without having to check back with the association and can arrange times for repairs directly with tenants. Times for all repairs have halved to 11 days and tenant satisfaction has improved.

Lyn Lockley, 51, from Folkestone, has been a tenant with Southern for three years and has always been pleased with the service. She has never needed any emergency repairs but has had several minor ones. The most recent was four weeks ago when her sink started dripping.

Within two days of reporting it, someone came to fix it.
鈥淚t鈥檚 always been easy to get things fixed within a reasonable time. Repairs to communal things take longer to fix, but that鈥檚 fair enough,鈥� she says.

But Lockley does feel the landlord could be more efficient, in terms of financial savings and customer care. She thinks a Southern representative should visit its properties every six months to check their condition.

鈥淚 take a lot of pride in my flat and I find it frustrating when fellow tenants don鈥檛. It鈥檚 in our tenancy agreements to look after the property so Southern should make sure that people abide by the rules. It would also show tenants that Southern cares about the properties,鈥� she says.

Home Housing

Home Housing has made big changes to its repairs service in the North-east in the past two years in pursuit of efficiency.

It has abolished its coding system for repairs and
pre-inspections of repairs as the codes often turned out to be incorrect and contractors would bring the wrong tools. Now repairs are often done there and then. The central depot has been axed and contractors procure their own supplies. Repair times have dropped from 17 to fewer than 10 days in the past year.

Victoria Stabler, from Durham, has been a tenant with Home for seven and a half years and moved into a new property a year ago. Although her housing repairs service has been good for most of her time with Home, she has had problems in the past year.

鈥淲hen I moved into my current house, I was told the property had passed all the necessary checks. But when I opened one of the rear windows it fell off in my hand. I called the repairs service and it took nearly 28 days before someone came and temporarily secured it. It was then another six months before I finally got a new one,鈥� she says.

The pump in Stabler鈥檚 heating system also broke. Despite having a small child and being left without heating and hot water, it was two days before someone fixed it. Stabler says that when Home repairs staff did visit, they were very apologetic. But she adds: 鈥淚f my house had been thoroughly inspected before I moved in, there wouldn鈥檛 have been any problems.鈥�

Source

Housing Today

Postscript

Housing Today is hosting The 2005 Housing Efficiency Conference, sponsored by Genesis Housing Group and Hometrack, on 14 April in Marble Arch, central London. For more information, contact Catherine Moore at Moore Style on 01452 611003, or email catherine@moorestyle.co.uk