26 January 2017

The questions for boards are many – and challenging. Where do we position ourselves? Do we ‘play’? Or risk being left behind? Are we acting in the very best interests of people in housing need?

The housing association sector is not truly commercial. Commercial businesses do not have long lines of customers queuing to pay a price set by government. Leaders of commercial businesses do not spend lots of time in talking shops with competitors. They are too busy competing.

Housing associations have however become quasi-commercial. Some more quickly than others. The sector is probably polarising between ‘players’ with whom future governments will work to increase supply and specialists who will continue to do good in the community, but probably build fewer homes. Players will make profits from genuinely commercial activities and thus subsidise new homes. Some will lose money. Inevitably. Careful regulation may reduce this reality, but cannot eliminate it.

What happened when our core-product price was reduced by the Government? We made efficiencies we previously thought impossible. The Government feels we need to do more. I find it hard to disagree. As the world becomes more digital, as home construction shifts to modular, scope for efficiencies will increase.

Never has the strategic role of boards been more important. The questions are many. And challenging. Where do we position ourselves? Do we ‘play’? Or risk being left behind? Are we acting in the very best interests of people in housing need? Really? Or being influenced by self-interest? Are we providing taxpayers with value for money for their historical investment?

I’ve been asked to speak at the 2017 board members conference on board and executive working to a common goal… how to deliver better results…

I’m no guru. The best I can do will be to offer a few personal opinions based on Flagship’s journey.

In 2010, the Flagship Group included four separate housing associations, each with their own board:

  • 40+ non-executive directors, including local authority nominees and customers - paid a token sum (overpayment in some cases)
  • wide shareholding
  • countless committees and working groups
  • complex customer representation
  • a stack of a year’s board papers standing as tall as the company secretary.

Hopelessly inefficient.

Now we are one housing association:

  • a board of four or five non-executive directors and three executive directors
  • just five shareholders
  • just two permanent committees.

We now have a Customer Operations Group that mirrors the board by including senior managers (in a minority) and its customer members, like our non-executive directors, are chosen on skills, serve a fixed term and earn their pay by making a real and committed contribution. As a result, the board is getting better customer insight and customers have more influence on the strategy.

We have started our own large maintenance company and recently acquired a gas services company. We have exited care – because we feel it’s too important to be handled by non-specialists.

£10m per annum efficiencies made; more to come.

I’m in my last year as chair – the only survivor of the turkeys who voted for Christmas. But we did the right thing. Flagship is now far better positioned to build more new homes. And that is surely what it’s all about. Isn’t it? And Flagship’s journey has only just begun.

Peter Lakey

Peter Lakey is Chair of Flagship Group.

Never has the strategic role of housing association boards been more important