Why we haven’t bid for the HCA programme
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Housing associations and other developers have now submitted their bids for the next round of grant funding from the HCA, but at Bromford, we've decided not to bid for anything.
Here, our chief executive, Philippa Jones explains why for us, it’s not just about building more homes.
Does the UK need more affordable homes? Emphatically Yes. The case has been well proven that a decent home for everyone is fundamental to delivering better outcomes in education, health and the economy.
Will maximising the number of affordable homes solve the problem? No, not alone. Not if that is seen by landlords and tenants alike as the endgame. Providing an affordable home is a huge investment in both capital costs and housing benefit subsidy so we must maximise the benefits of that investment. A great affordable home has to be the start, not the end. The rationing of scarce social housing based on greatest need and vulnerability, has led to a 'race to the bottom' and a focus on what customers can’t do rather than what they can do - a negative dependency spiral that causes deep damage to society and that UK PLC cannot afford in the long term.
That’s why we introduced the Bromford Deal – an approach that requires and helps our customers to use their new tenancy as a springboard, to take personal responsibility, to build their own local networks and if they are not working or training, to take steps, with our support, on that personal journey. Some professionals argue this is unfair interference in people’s lives - but that’s not how our customers have reacted. They have jumped at the opportunities we have offered them and welcomed the conversations we have opened up with them and their families about what they really want to achieve and how they can make a start on this. This emphasis on what people can do, rather than on what they can’t, has helped uncover hidden abilities that can be channeled into strengthening local communities as people gain the confidence to help themselves and each other.
It’s also why we were keen to participate in the housing benefit direct payments pilots – and why, now that the pilots are ending, we are one of the very few landlords keeping those customers paying their own rent and now extending that approach to most new customers.
We have redefined Bromford’s purpose as inspiring people to be the best they can be. Moving away from defining our success by how many homes we manage is proving exciting and liberating.
This doesn’t mean we won’t be building lots of new homes - in fact we plan to invest £335 million in total over the next five years, delivering about 600 homes per year. The difference is we’ll be doing it on our own terms, choosing what we build where, what we should charge, who we house and how we best support them along their journey. We will target some specific pressing needs, including for example specialist supported housing which has long been a vital part of what Bromford’s all about.
It came as no great surprise that Mr Osborne’s budget back in March did not address the affordable housing issues. We all need to face the fact that the days of massive public investment in housing are long gone. So we want to take charge of our own future, generating profit and using strong cash-flows to reinvest into new homes and services. In 2013/14 we completed 624 new affordable homes, investing £46m of which only £4.7m came from grant – and all the rest, for the first time, was funded entirely from our in-year cash-flow, with no additional loan drawn down. That’s a great step towards our grant-free future.
When generous grant regimes still existed, relying on that made sense but now that any grant available is likely to be a minimal proportion of the total costs, the benefits may no longer outweigh the constraints and risks of tying ourselves into an HCA programme contract and relinquishing control over many of our investment and management decisions. So while we would not completely turn our backs on any future grant funding, for us it will now be small bids for specific schemes where the benefits outweigh the constraints.
We’ll also continue to buy homes from developers under S106 affordable housing agreements where we can get them at a sensible price and where the local authority supports our approach, including the need for lettings plans to create sustainable, mixed neighbourhoods of people who actively want to be a part of these new communities. We urge councils to think differently about their S106 agreements to avoid crazy bidding wars where housing associations bid against each other to pay the developer the highest price for the “affordable” homes.
Our annual accounts and Value for Money statement on our website show how our focus on efficiency and making the right investment decisions over our 50 year history has put us in a very strong financial position. Embedding a culture of thinking in a more commercial way has delivered us some fantastic results, both financially and in customer service and enabled us to achieve our exceptional Aa3 Moody’s credit rating which can now underpin our drive for self-sufficiency. Now we want to re-invest that legacy as a selective and astute investor to enable our customers and the communities where they live to be their very best.
And that’s also why, while we support the good intentions of the “3% pledge”, we won’t be signing up to that either. Because although we agree the U.K. needs to build more affordable homes, we are concerned that focussing solely on the number of properties overlooks what happens once people move in. The Bromford Deal is a radical approach that aims to ensure our customers get more than just a great home – they also get support and encouragement to use that valuable asset as a means to help themselves and their families to be the very best that they can be. We believe that will help ensure that both our individual customers and wider society get maximum value from every pound we invest in new homes.