Richard Bayley | Performance Management in Social Housing & Public Sector @ Performant Public Services Event

1. Public Sector Seminar
Richard Bayley
Research & Planning Director

2. Planning & Performance
- post CSR & Localism
• Economy & Politics
• Market dynamics
• Opportunities & Risks
• Implications for Planning & Performance
• Planning has real significance
• Performance requires more focus
• Summary

3. UK real GDP
annual percentage change
5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
-4%
-5%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Cebr OBR Budget 2011
OBR November 2011 Darling Budget 2010

4. Public borrowing target
revised upward
180
160
140
120
100
80
60
40
20
0
2009
2010
2011
2012
2013
2014
2015
Cebr forecast Emergency Budget 2010
March 2011 Budget OBR November 2010

5. Economy
• Government deficit not reducing quickly
• Big threats are inflation and energy
• Real and sustained implications for RPs
–Interest Rates
–Maintenance (& other external) Costs
–Income levels & Benefit rates
• What will Gvt response to not meeting its
deficit target just before the next election?

6. Politics
• Medium and Long term scenarios
–More tax and public expenditure cuts?
–It does not matter as aim was to cut Gvt?
–Would or Can Labour do anything different?
• Reality is that RPs are now in a new world
–Gvt funding: little or no public funding
–Finance: corporate/mortgage lending tight
–Customers: not able to respond to demand

7. RSL finances
140
130
120
EBITDA interest cover
110 EBITDA MRI
EBITDA MRI & Sales
100
90
80
2007 2008 2009 2010

9. Real disposable incomes
6
5
4
3
2
1
0
-1
-2
2009
2010
2011
2012
2013
2014
Real disposable income Cebr
Real disposable income OBR
RPI

11. Opportunities & Risks
Opportunities Risks
• New tenures • Worsening arrears
• New strategic • > inflation increases
alliances in external costs
• New funding streams • Less grants & local
for energy authority services
• New investment into • Tighter & more costly
the sector debt lending

12. Implications for
Planning & Performance
• Business Basics
–Cash management (reduce need for lending)
–Asset management (maintain profit margins)
–Customer service (co-regulatory focus)
• Silo systems
–Planning has focused on stakeholders
–Performance has been driven by regulation
–Finance has tended to have historic focus
–Risk has tended to be a text book exercise

13. Planning now has
real significance
• Vision/Mission
–Balance on organic v acquisition growth
• Goals/Objectives
–Emphasis on customer service & efficiency
• Project approach
–Organised around external & internal delivery
• Deliverables (incl. regulation)
–Greater linkages with plans & performance

14. Performance now
requires more focus
• Cash Management
–Arrears focus due to benefit changes
• Asset Management
–Profit per property focus to protect margins
• Customer Service
–Customers & Investors need to know it is good
• Performance framework
–Process, Satisfaction, Standards, VfM

15. Summary
• Economic & Political realities mean that the
housing world has & will continue to change
• Opportunities with housing demand still
strong & potential for new investment funds
• Implications of this new world are:
– Longer term planning and scenario analysis
– Shorter term predictions of performance
– Asset management of whole portfolio
– Customer profiling to improve performance and
asset management

16. Questions?

17. Plenary 2: Richard Neale
SAP