Latest Government proposals require housing associations to demonstrate their delivery of value for money for the benefit of all their stakeholders, an expert has warned.
Deborah Good, head of housing in the public sector consultancy arm of international accountants and business advisers Mazars, said it went “to the heart” of how they ought to operate.
Speaking at housing sector seminar at Mazars’ Birmingham office, she stressed: “Providers should have a strategy for optimising value for money and systems to ensure that this strategy is delivered.”
Regulators viewed it as a key indicator of the quality of governance.
Among the competencies housing organisations needed to demonstrate were an understanding of operating costs and how they compared with sector peers; efficiency gains and how these could be realised over time; clear evidence of best practice delivery; a strategy for maximising future returns on assets; effective performance management and scrutiny; and a rigorous approach to assessing whether partnerships and mergers could offer improved value for money.
Cost control, getting better value from the asset base and the approach to procurement were all vital.
Ms Good said: “Housing associations are under pressure to come up with plans that will dramatically transform transparency – throwing open their books and publishing details of what they spend.”
Housing advisor Mark Sawyer said weaknesses on the maintenance side included established work “habits”, inefficient job diagnosis and scheduling, limited multi-skilled competencies of the workforce, poor van stock management, a multiplicity of suppliers and no reconciliation between materials supplied and used.
“Often there is no sustained focus on driving down costs and improving efficiencies, quality control needs to be better, managers and staff have to be made more accountable, and better services delivered to customers.”
Mazars partner Glen Jones said that in the absence of public subsidy and recognising the difficult lending environment housing bodies need to maximise their financial headroom by using their purchasing power, carefully managing the volatility in income streams and controlling their expenditure across each department.
“Also many are exploring new forms of finance such as issuing bonds on the capital markets, private placements, accessing funds through pension companies, and sales and lease back arrangements.
And the ultimate nightmare is fraud.
Stephen Lewis, partner in Mazars Forensic and Investigation Services, cautioned that fraud is a problem that undermines the stability and financial health of organisations across the whole economy. It is not a victimless crime and the housing sector is not immune from fraud. Indeed, a recent study concluded that fraud in the sector could be as high as £2 billion annually.
Areas of particular risk to the social housing sector include repairs and maintenance programmes, procurement and the actions of rogue employees.
Organisations needed to put in place controls and procedures to prevent fraud. However, in the event that a fraud is discovered then they need to put in place a process to investigate the fraud. The objectives of the investigation are to stop the fraud, identify the parties responsible and to seek recovery of any losses that may have been incurred.
