Preparing for self financingPreparing for self financing

Steve Partridge

Director

CIH and ConsultCIH

Not long left…Not long left…

A major transaction involving many thousands of stakeholders – Officers from housing, housing finance and corporate finance– Members, ALMO board members– Tenants and residents

Progress since February: what’s hot and what’s not

Key areas for a few thoughts

The next big task: bringing the business plan and funding plans together

On the ground… the positivesOn the ground… the positives

Majority of LAs and ALMOs now have a model in place For the majority, a positive business plan with revenue headroom For the majority, some capital/borrowing headroom

– £3 billion + in 149 authorities

– £2 billion focused into 24 authorities

Moving from modelling to business planning– Thinking through resource prioritisation

– Understanding the key decisions

– Establishing new governance structures

– Talking to tenants – building capacity for empowerment

– Extending analysis of their asset base -> Asset Management Strategy

Thinking through resource prioritisationThinking through resource prioritisation

For all, an increased revenue headroom from two sources– Increased allowances, in particular increased major repairs finance– Growing headroom as rents are retained locally not nationalised

Key in thinking through how you set up the plan – balance priorities– Investment in service delivery– Increased capital programme driven by increased MRA – at the very least– Headroom for investment in higher standards, regeneration– New build

The extra £ could go a long way but can only be spent once Short, term and medium term – timetable to the autumn

Understanding key decisionsUnderstanding key decisions

Resource prioritisation … yes But key decisions of corporate financial policy

Policy towards… use of borrowing headroom – does that have an impact on the type of borrowing and debt that is taken out?

Policy towards… the use of RTB receipts – how much goes to the HRA? Policy towards… rent convergence – do you quicken to 2016? Policy towards… the building of reserves… or the repayment of debt? Policy towards… efficiency and value for money – and how do the

proceeds get recycled to HRA priorities?

On the ground… challengesOn the ground… challenges

RTB receipts pooling continues to run against localism ethos– With risks for the future plan if not controlled effectively through policies from the

outset

For a significant number, not the majority, a tight plan with continued shortfalls of investment against backlogs– Decent homes funding pegged back– Borrowing cap too tightly drawn– Difficult and challenging stock

If it doesn’t stack up, that’s not because of self financing…– But it is a real and practical issue for some

Options for private finance and other means being explored

Building a business planBuilding a business plan

Wherever you are and however your plans looks, a model and a summary narrative by the autumn…

Much of this is already in place – what new needs creating? New build?

Climate change

Treasury ManagementService

standards

VISION &MISSION

Repairs policies

FINANCIAL PLAN

Debt and financing

ASSET MANAGE-

MENTRegeneration redevelopment

Rents policy: > flexibility?

Governance & Risk Strategy

Tenant Empowerment

Value for Money strategy

Refurb -standard

Four key areas for developmentFour key areas for development

Governance and empowerment– How will tenants be involved?– What structures are needed to oversee the plan?– Empowering (building capacity for) tenants and members– Who needs a seat at the table?

Service delivery– Much already in place – linking to local offers– Value for money and efficiency becomes real cash for reinvestment– Summary of plans – ensuring the plan has the right numbers in it

Four key areas for developmentFour key areas for development

Asset Management– Probably the subject of a completely new and long term strategy in time– What assets will you refurbish? To what standard?– What assets will you regenerate and redevelop? And how?– How will you read in the green agenda?– Do you / can you build – with or without HCA grant?

Financial planning - the ‘really new’ bit– A Treasury Management strategy for the HRA loans pool – long not short term– The potential for more rent flexibility – within the framework of convergence?– Debt and reserves management – the FINANCIAL PLAN

Bringing it all togetherBringing it all together

There will be a time when the Business Plan and the Treasury Management/Debt Structure come together…– Borrowing for the settlement– Borrowing in the first few years – and the nature of that borrowing

What will your strategy be?– To repay debt – no need, in fact leaves future capacity under-utilised– To fix debt for 25 years – does this leave enough opportunities to reinvest?

Or combinations – the key watch word might be… FLEXIBILITY

From managed decline to dynamic future…From managed decline to dynamic future…

Even if there were no additional resources and no growing headroom, self financing would offer major opportunities for efficiency and progress

How would you characterise your council housing over the last 25 years?

What story can we start to tell for the future… Dynamic growth An increasing contribution to meeting the housing needs of residents A diversifying product and service in partnership with other providers

And finally…And finally…

For those quiet times surfing the net… a joint CIPFA and CIH initiative

www.hraselffinancing.org.uk