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Public Sector Seminar
Richard Bayley
Research & Planning Director
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Planning & Performance
- post CSR & Localism
• Economy & Politics
• Market dynamics
• Opportunities & Risks
• Implications for Planning & Performance
• Planning has real significance
• Performance requires more focus
• Summary
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UK real GDP
annual percentage change
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Cebr OBR Budget 2011
OBR November 2011 Darling Budget 2010
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Public borrowing target
revised upward
0
20
40
60
80
100
120
140
160
18020
09
2010
2011
2012
2013
2014
2015
Cebr forecast Emergency Budget 2010
March 2011 Budget OBR November 2010
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Economy
• Government deficit not reducing quickly
• Big threats are inflation and energy
• Real and sustained implications for RPs
–Interest Rates
–Maintenance (& other external) Costs
–Income levels & Benefit rates
• What will Gvt response to not meeting its deficit target just before the next election?
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Politics
• Medium and Long term scenarios
–More tax and public expenditure cuts?
–It does not matter as aim was to cut Gvt?
–Would or Can Labour do anything different?
• Reality is that RPs are now in a new world
–Gvt funding: little or no public funding
–Finance: corporate/mortgage lending tight
–Customers: not able to respond to demand
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RSL finances
80
90
100
110
120
130
140
2007 2008 2009 2010
EBITDA interest cover
EBITDA MRI
EBITDA MRI & Sales
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Real disposable incomes
-2
-1
0
1
2
3
4
5
6
2009
2010
2011
2012
2013
2014
Real disposable income Cebr
Real disposable income OBR
RPI
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Opportunities & Risks
Opportunities
• New tenures
• New strategic
alliances
• New funding streams
for energy
• New investment into
the sector
Risks
• Worsening arrears
• > inflation increases
in external costs
• Less grants & local
authority services
• Tighter & more costly
debt lending
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Implications for
Planning & Performance• Business Basics
–Cash management (reduce need for lending)
–Asset management (maintain profit margins)
–Customer service (co-regulatory focus)
• Silo systems
–Planning has focused on stakeholders
–Performance has been driven by regulation
–Finance has tended to have historic focus
–Risk has tended to be a text book exercise
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Planning now has
real significance
• Vision/Mission
–Balance on organic v acquisition growth
• Goals/Objectives
–Emphasis on customer service & efficiency
• Project approach
–Organised around external & internal delivery
• Deliverables (incl. regulation)
–Greater linkages with plans & performance
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Performance now
requires more focus
• Cash Management
–Arrears focus due to benefit changes
• Asset Management
–Profit per property focus to protect margins
• Customer Service
–Customers & Investors need to know it is good
• Performance framework
–Process, Satisfaction, Standards, VfM
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Summary
• Economic & Political realities mean that the housing world has & will continue to change
• Opportunities with housing demand still strong & potential for new investment funds
• Implications of this new world are:– Longer term planning and scenario analysis
– Shorter term predictions of performance
– Asset management of whole portfolio
– Customer profiling to improve performance and asset management
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Questions?
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Plenary 2: Richard Neale
SAP