For the social housing sector, November's spending review placed the focus squarely on the sector’s housing supply figures, with growing pressure to play a substantial role in the UK’s biggest house-building programme since the 1970s.
In the wake of the 1% rent cut, loss of grant funding and the extension of right to buy, housing associations are once more being asked to do more with dwindling resources – meaning fresh-thinking is needed for buying goods and services.
With budgets set to decline for at least the next four years, how can housing associations adapt to the new and developing challenges and requirements of a rapidly evolving market?
Failure to successfully adapt and develop may influence the very existence of some registered providers over a period which may prove to be the most dynamic and challenging few years the social housing sector has ever seen.
But after five years of austerity and organisational tweaks, what’s left to improve?
For many housing associations the answer is better procurement - not only the commercial terms that can be negotiated, but perhaps more importantly the application of intelligent solutions.
Everything about the sector seems to be in a state of flux at the same time – the budgetary pressures faced, the demand for changing deliverables and outcomes (new housing), the procurement legislation, and the political environment itself.
How can organisations cope effectively with such a changing environment? The application of intelligent procurement solutions must be an underpinning factor. The effective use of innovative, flexible solutions for real-world problems is imperative.
No longer is it good enough to simply rely upon framework after framework as a panacea. There is currently a school of thought that the ‘framework’ solution used so widely within social housing is past its sell-by date. There are other solutions out there, and it is critical that the right tool is used for the right job. Social housing providers need to become more flexible and dynamic to meet the changing requirements of the sector.
One of the primary outcomes of the spending review is a case in point. The increased pressure on social housing providers to develop new homes has never been higher. The Procurement Hub was one of very few organisations in the sector to have anticipated this, putting in place procurement solutions for the sector which meet not only the functional requirements of development, but in an innovative and flexible manner using a mix of dynamic purchasing solutions and traditional frameworks, giving the scope and flexibility required to meet the changing environment we will all face over the next few years.
It is vitally important that dynamic, intelligent procurement solutions like this are the cornerstones of organisations’ reaction to the evolving landscape. Social housing providers need to enable their own flexibility and development by embracing innovative solutions such as these.
In our experience, many housing associations will not have a centralised procurement department. Responsibility for procurement is devolved to each estate, each with their own buying procedures. That’s not the best route to efficiency.
Even central procurement departments in larger RSLs are often under-staffed, under-valued and under increased threat of job cuts.
For housing associations with limited resources for procurement, collaboration - whether it’s through a joint venture, forming ‘buying clubs’ or using a comprehensive procurement solution for new build homes such as ours, makes a lot of sense.
The social housing landscape is undergoing a series of fundamental changes, and the message to providers is clear - understand the budgetary constraints your business is facing, quickly identify organisations that can help you to address these challenges … or face the inevitable consequences.
This article first appeared as a comment piece on Social Housing Magazine website.