David Montague's December 2011 Round-up

January was the ninth month since the Coalition Government was formed and the third since the Comprehensive Spending Review. The Coalition set out its new ‘localist’ vision, and as the Bill started to take shape we all went in search of localism - what does it mean for our relationship with residents and local authority partners, our service delivery mechanisms and our governance and accountability structures? More importantly, in an age of austerity, how could we become more local as well as more efficient?

I joined the Mayors Housing Investment Task Force and L&Q's research led us to new insights about housing needs. As we were debating the future of home ownership and affordable housing, people with no other choice were moving into the private rented sector. The number of private rented homes was set to overtake affordable housing in 2010. If this was the future shape of housing, what did it mean for affordability, quality, security and the home ownership dream? In February L&Q's Board approved the principles of our internal change programme - to get closer to residents and local authorities; to deliver a better service at a lower cost; to manage risk more effectively; and to create opportunities for succession and diversity.

In March L&Q launched its new five year plan which, in the face of unprecedented change, committed us to three things which would remain the same - our social mission to create places where people want to live, our aim to deliver World class resident satisfaction, and a determination to meet housing need through responsible growth.

In April the global economy took a turn for the worse with the US being down rated by Standard and Poors, with Greece’s debt being downgraded to junk status, with the stock markets tumbling, and with UK social housing starts falling by fifty percent.

In response, L&Q and PWC reassembled the Hard Times Group for the third time to consider 'Where Next' for social housing? Government had set out its plans until 2015, but then what, and what do we need to do now to ensure that social housing production doesn’t come to a complete standstill in four years time?

In May we witnessed a six hour housing debate in the House of Commons; a stark reminder that the battle for the hearts and minds of politicians was far from won. Housing associations are uniquely placed to respond to the housing crisis, but are too often regarded as inefficient, unaccountable and resistant to change. I invited every MP who took part in the debate for a tour of L&Q, to speak with our residents and staff and discuss the future of housing. And we made a commitment to do our very best to change these negative perceptions by staying in touch and delivering the basics well.

In the same month we saw L&Q resident satisfaction break the psychological 80% barrier as we delivered our highest ever rate of 80.2%; World class performance according to the UK Customer Satisfaction Index.

In June L&Q held its annual staff conference where I talked about our social mission, a golden thread which is held at one end by Reverend Nicholas Stacey, L&Q's founder and the founders of all associations which became part of L&Q; which has passed through the hands of every L&Q employee since that time; which we now hold; and which we must pass on intact to our successors. For us, we will not choose between a social or commercial future, it has to be both.

In July we launched the L&Q Foundation setting aside £100 million to invest in our social mission with a focus on the four things which matter most to our residents - young people, employment and training, community involvement and financial inclusion.

August saw unprecedented violence across London and other major cities and the continuation of the debt crisis in Europe with share prices falling even further. With international investors seeking a safe haven for their money, UK borrowing rates fell to an historic low – a window of opportunity for housing associations?

In September L&Q launched ‘Where Next?’(Pdf 260KB) our third report with PWC described a dual housing crisis, with the poor and vulnerable competing with the young professional for a home in the private rented sector; a sector which on average costs 17% more than buying outright, where 40% of homes were non decent, and where security of tenure was just six months. If this was tomorrow’s housing offer, it wasn’t good enough. ‘Where Next?’ proposed a new form of rented housing, available to everyone, offering quality, security, affordability and a pathway to ownership for those who wanted it. And it issued a call to arms for housing associations; attractive to international investors and sharing a social mission with local authorities and government; associations should play a vital role in the development of this new tenure.

L&Q attended the Party conferences and learned that housing was back at the top of the political agenda. But the glory days of high grant rates were over, at least for now, and so we would need to rely more than ever on the resources we generate ourselves.

In October we saw resident satisfaction rise to another all time high of 81.7%, a tremendous result given the amount of change we were experiencing internally and externally. We were awarded funding for 1,800 new Affordable Rent homes, bringing our total development pipeline to 9,000 homes.

Along with four other Chief Executives I attended an all-party briefing at Lewisham Council where we set out our plans for Affordable Rent. Five housing associations, five different offers, in just one Borough. The future looked complex, harder to navigate, model and predict; a ‘luck of the draw’ system for people on the waiting list. But it also offered greater diversity, greater competition and greater choice - possibly the emergence of a new affordable housing market?

November was a bleak month with the Chancellors Autumn Statement setting the path for more public sector job losses, longer public sector pay freezes, longer working lives, higher borrowing and more years of austerity. But looking over the Channel to the rest of Europe which staggered from one calamity to another, what was the alternative?

At L&Q we considered the impact of European meltdown on our ability to invest. We concluded that we could afford to set aside a housing investment pot of £1.25 billion on one condition - that we generate an annual surplus of at least £60 million. And so long as we were confident that the risk in our existing development pipeline was covered, now may be a good time to borrow.

Which brings me to December, the month when I reported to our Group Board on the outcome of our internal change programme. We created seven new neighbourhoods to ensure that we can become even more responsive at a local level; bringing together our sales and development teams to manage risk more effectively; creating two new internal boards to delegate more responsibility, and making a significant contribution to our £22 million efficiency target. Along the way we improved operating performance, increased resident satisfaction, improved staff engagement, boosted our investment capability and set out a new Pledge between L&Q and its people.

I made two New Year's resolutions - to play my part in increasing resident satisfaction and financial strength, the two crucial ingredients to our continued success, and to take the L&Q Workplace Pledge, providing a great place to work in return for great customer service, and investment in return for a stronger bottom line.

2012 is going to be tough, but I can’t think of a better job, a better place, or a better time to be in housing.

Happy New Year

David