The new normal

• new relationship between individual and state • unemployment, welfare, exit other services – risk to

revenue• cutting deficit, cutting grant, HAs carry more debt, more risk

• lender behaviour, covenants, no cheap finance• global finance, Eurozone stabilising? • regulation reduced, refocused, follows the money• rents still pegged to RPI phew• trimming costs, cutting cloth, surpluses up • demand for social housing high & rising• tenure flexibility offers opportunity • competition from new entrants too early to tell

…..end of the world as we know it but the sector’s getting on with it and managing the risks

VFM: business imperative• regulation takes its cue from new normal:

• ‘lever’ to improve taxpayer’s return on embedded public £s

• promotes active asset management, backed by tenure reform

• but VFM standard has broader perspective• tension between existing & potential tenant?

• social business imperative: VFM generates margin to keep delivering objectives

• smaller HAs need a compelling value proposition and evidence to back it……

• ….customer focus, responsiveness, specialism, localism, health & well-being?

What are they looking for?: economic regulation in practice

integrated assessment based on 8 questions• understand operating environment?• appropriate strategic business plan?• financial plan?• risk management? • robust approach to VFM?• track record of achieving objectives?• transparent & accountable – challenge

drives improvement?

• effectively led and controlled?

VFM standard: requirements

• boards understand and deliver VFM across operations (people) and assets (property)• in the context of the provider’s purpose• mindful of stakeholder interests & 3 Es (includes

benchmarking)• involves understanding the ‘return’ on all resources

available, expressed in financial, social, environmental & (service quality) terms

• annually self-assess VFM & make it publicly available

• VFM was about the cost & performance of services but this is wider – the whole business

• reality check – are we really talking about business effectiveness here?

VFM standard: implications

• as a basis for active regulation – intrusive? • as a set of (voluntary) principles to ensure (social) business

effectiveness - good practice?• should herald genuine board engagement in strategic business

planning: • boards define VFM (business effectiveness) in their own image

• essential to assert a clear vision of what they value (are in business for)• taking account of the value perspective of different stakeholders

• more strategic debate about running the business• total VFM = bigger picture - forces challenge of previous ‘givens’ • the right activity or product mix to meet business objectives, eg social rents,

care, affordable homes, services, regeneration…….tenure fits here• the right resource allocation between activities

VFM standard: implications• appetite for risk – a clear position

• understand which opportunities you go for• understand the business case

• the right housing assets (in the right places) • the right service delivery system• efficient & effective service delivery• the right information to make business decisions –

includes systems for capturing investment & operational costs & measuring the success of that investment

• board competence - skills to provide strategic leadership, challenge & ask the right questions

• requires investment of time – on strategic business issues and in skills development

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