As news of more mergers hit the headlines, Fiona Fletcher-Smith considers the driving forces behind these decisions.
It is a time of unprecedented change for housing associations. From ‘mega mergers’ to new group structures, the sector is changing rapidly in a bid to become more efficient and build thousands of extra new homes.
Within industry discussions, there has been a tendency to dwell on the negative, particularly when it comes to the perceived impact on residents.
Opaque housing management structures are said to move staff away from the front-line and slow response times. Complex governance arrangements are claimed to reduce agility and damage local ties.
Yet in reality, this is rarely the case. When values align and visions are clear, mergers can provide scope to invest and innovate. Whether this is in services and technology, communities or people – merging can and should put residents front and centre of progress.
The case for mergers has often revolved around achieving economies of scale and organisational efficiencies to build more affordable homes.
This is largely to be expected. After all, synergies in supply chains lead to significant savings, and greater purchasing power is needed in the wake of rising construction costs.
L&Q’s merger with East Thames in 2016 accelerated development throughout London and the South East, including along the Thames Gateway corridor – an area which was identified as a long-term national priority for growth. Currently in the pipeline, Plumstead College will offer 295 homes in Greenwich, whilst our partnership with Anderson will see us deliver 145 homes at the Quarry, in Erith, south east London, 80% of which will be affordable.
We are reaping the rewards of our merger with THT and building more homes than ever before. With an ambition to deliver 20,000 new homes in the North in the coming years, we have invested £165m in development, with 3,313 new homes approved and over 1,500 starting on site. The partnership has also been integral to our successful agreement with the Far East Consortium (FEC) and Manchester City Council to deliver 127 new high-quality homes as part of the Victoria Riverside development - THT and L&Q’s first major project in Manchester.
But expansion should not be the sole driver of a merger. In a sector where residents are our top priority, the positive impact that a provider makes is another measure of success.
A merger is not just a route to growth: it’s a path to increased impact – offering organisations the chance to learn from their partners.
Inspired by THT and guided by Sharon Burns, THT’s former Executive Director of Customer Services and now L&Q’s Director of Housing Management, we are replicating many elements of our North West local housing model on a larger scale.
Moving to a localised approach will not only create an important link between people and place, it will also mean more frontline officers out and about in our communities, as the visible face of L&Q. Spending more time on the ground will enable them to link up more with other agencies, from mental health practitioners to ASB specialists.
Beyond repairing bricks and mortar, the local intelligence gained from this approach will help us to develop stronger relationships with our residents and build a greater understanding of their needs.
Merging can also present an opportunity to find a partner that offers specialist skills that might be beyond an organisation’s capabilities. Whether that be in rough sleepers’ initiatives and homelessness support, or the provision of older people’s services.
A case in point was our merger with East Thames, which paved the way for a 6,500 home specialist care and support subsidiary for older and vulnerable adults.
Or the creation of THT’s North West Foundation, which offers a range of services and activities that enhance social impact. The L&Q Foundation and the North West Foundation collaborated on our first joint sustainability report, aligning impact monitoring methods where possible, with respect for local geographies and customer need. Through sharing expertise, together we are learning best practice from each other’s strengths. For example, THT’s School Partnership programme has benefitted from session plans shared by its southern counterpart, L&Q’s Learning to Succeed.
This exchange of knowledge continues to flow both ways as the merger progresses. Widely considered as industry best practice, THT was the first organisation in the UK to achieve the new British Standard BS9997 in fire risk management in 2020, and the knowledge and skills acquired proved instrumental in helping L&Q go on to receive this sector-leading risk management accreditation last month.
The days of consolidating to convert cost reductions into development capacity have evolved. In today’s landscape, the most compelling reason to merge is a drive for improvement and the added value this will bring to residents.