A Year In Housing

As I drift towards retirement, but still with a desire for fresh experiences,  I took a part time job working for a housing association (no Kilimanjaro for me).  This is not any old housing association though, but one that (somewhat ironically) specialises in providing homes for the getting on a bit.

I was recently invited to a team building day! Nothing too stressful. Turn up at 10 for 'coffee and pastries' for a 10.30 start. The conference room filled with circular tables where the individual teams sought comfort and safety with familiar faces. 'Welcome' said the junior director before handing over to a more senior director who placed everyone's fears at rest by stating that there would be no 'brown envelopes', at least not today.

For some reason somebody thought it would be a marvellous idea to get everybody dancing, that it would be a positive and energising thing to do. We were, somewhat reluctantly, made to stand and learn some Bollywood steps from Jaz!  As Jaz ever so enthusiastically took us through her moves, she attempted to interweave the organisation's value statements into the proceedings. With a slight, not unattractive, Yorkshire rasp to her voice, she wanted to know if we were feeling 'inclusive', ‘courageous', 'positive' and 'honest' and 'respectful' and 'connected'.  The coffee and pastries almost made a reappearance. Having been warmed up by Jaz an even more senior director made an appearance and told us all that in his short time with the organisation he had come to realise just what a great organisation it truly was, not least because of its people, but that it would need to change. It was OK for today, but not fit for purpose for the coming years. We need to offer the best possible service to our customers and protect the future of the organisation.  The sub text being that we are going to sack a whole load of people - but for genuinely positive reasons. There was no mention of the shape the new organisation would take, without a chunk of the 'connected, honest, respectful...' people in the room. Apparently, according to the most senior director, nobody knew at this point what was going to happen.  Not sure how 'honest' that statement was or how 'connected' the senior director was with his audience. He was certainly being courageous, just not sure how inclusive! Probably what is true is that they haven't agreed how to implement the changes that need to be made against the 'transformation' strategy, whilst keeping all services running smoothly. In some respects it is better to assume that the senior directors were lying. If they really do not have a firm strategy to manage change, sorry, to lead the 'transformation process' then the organisation really is up '…t creek' without a paddle.

To show openness, there was a Q & A session where anybody could ask a question of the senior man. The responses were good for the questions relating to services, and the answer, 'we just don't know yet' was the standard answer to the trickier questions.  Having finished the coffee and sticky buns by 10.30, lunch was served at 12.00.  Even with Jaz's high calorie and value burning workout the 90 min gap in eating might be considered a bit on the short side.  It would have been difficult to make the process any faster. 'Get em in, feed me, talk to them, feed em, play games with them (team building), send em home'. Lunch was followed by the highlight of the day - the team building exercise, masquerading as dressing up in saris and making chapatis.  Instructed by the still highly energised Jaz we each had to both wear a sari and learn how to assemble one. I wore a particularly lovely one in cobalt blue. Split in to two teams we set about competitive chapati making.This was quite good fun and a life skill that will undoubtedly prove useful when making curry in the future. I left the venue shortly before 3pm, feeling a little numb.  What was the purpose of this very short Jaz packed away day and what were we supposed to take away from it, other than inedible chapatis. Beneath the thin veneer of positive words and dancing from the sub-continent there was within the room an almost audible muffled yell of discontentment. Uncertainty, fear, anger and cynicism were all detectable, but carefully disguised with forced smiles.

Perhaps all housing associations are faced with the same issues, in that social housing has its roots in a culture that was first planted in council housing and built on socialist ideals.  The idea of profit, balancing books etc. never seems to have been a priority.  As a result, by commercial standards there is an extreme level of wastefulness.  It is not wanton waste, it is probably not even recognised as wasteful.  The apparent internal conflict that torments the people that manage some housing associations is where should their priorities sit? Is it in providing the best possible housing in a manner that exemplifies all of its core values and saccharine mission statement or is it in providing housing that is fit for purpose for a price that makes a profit, or a re-investable surplus as the sector would call it.  Attempting to square these two objectives helps create a loss of focus, resulting in decisions taken for what appear to be political reasons, or are fudged by creating a committee to do the work.  Compromise is easier than managing difficult decisions, and design by committee where everyone has a say, is quite likely to deliver a two legged stool. The politics of housing can appear to have the effect of removing common sense business options from the table.  In some organisation's completely unintegrated self-serving departments have been allowed to develop and seem to exist merely to duplicate and confuse. With poor cross company communication this multitude of administrative departments has the effect of slowing decision taking to a crawl, costing immeasurable sums of money, damaging efficiencies and creating poor morale – or so it appears to me.

Older people have so far been protected from the cost cutting initiatives of our government, but in reality how long can that be sustained.  The properties we offer are excellent. On the estate I look after there are twenty six 1 & 2 bedroom properties with an average rental income of £450 per month. I estimate that around 75% of those properties are paid for out of housing benefit. The organisation's own statistics would, not inconveniently, show this figure to be much lower. This is because our central systems can only measure who has HB if it is paid directly to the company.  The majority have it paid in to their own accounts.  If a resident receives HB they do not need to pay council tax, and this opens up a whole range of other government funded benefits.  Clearly, with an ageing population this cannot be sustained at the current level, into the long term. The accommodation we provide is completely independent, with lounge, kitchen, bathroom, bedroom/s. There is certainly no discernible poverty amongst the residents on my scheme, neither is there any obvious difference in the quality of life between the self- funders (those who have sold their home in order to pay to come to our scheme) and those on benefits. On the contrary there is to all intents and purposes a high quality of life for all. Arguably, this is how it should be, but it does not take a financial genius to see that this level of support for our ageing population is not sustainable in the long term. 

What I find hard to fathom is that lower cost options are not being designed and built. Accommodation that will preserve dignity, provide a level of privacy and independence, whilst at the same time being more cost effective - would sharing a bathroom or a kitchen be so terrible?  In fact quite the opposite is happening. The key focus at the moment within our organisation is to develop 'downsizer' properties. The idea being that the profit (surplus) from these properties will support the 'rented' estate. With the exception of those that will be held for affordable rent, the bulk of these properties are for sale.  These highly desirable leasehold properties in sought after locations, usually within the Home Counties and the south coast, are purchased by older people for perhaps half the proceeds of the sale of their £500k suburban family home. These 'executive' retirement properties are sold as high quality secure retirement homes.  Perhaps one word of concern though - because of the need to release some of the properties for affordable rent, the effect could be to have 'Terry & June' securely living next to 'Wayne & Waynetta'.  This supposedly squares the old social housing values with commercialism - the profit made from properties sold to people with accrued wealth supporting the social rental sector which is heavily funded by benefits.  Profit from one will support the need of the other.  This does seem like a poor strategy - having the success of one support the shortfall of the other. It reminds me of a holiday in Cuba where from the bus, on the journey from airport to the resort, could be seen the signs of communism rationing both opportunity and food. Meanwhile at the 5 star 'all inclusive' luxury resort capitalism held sway.  Without the slightest blush of hypocrisy capitalism was openly supporting a failing communist system.

'Not for profit' organisations with charitable status seem to have an almost schizophrenic existence. Increasingly the larger housing associations are becoming involved in commercial enterprise due to the fact that funding is being cut (and with it any surplus).  Revenue and profit are a necessary evil that sit uneasily with the not for profit charitable ways of the past.  One of the problems, it seems to me, is that the housing sector operates within a completely separate and distinct cultural bubble, where people move from one association to another, or perhaps move to housing from another charitable organisation.  Highly political – ‘boat rocking’ or any form of risk seems to be minimised by recruiting senior people that are known and from the same relatively small 'not for profit' gene pool.  Perhaps this is the reason such organisations appear unable to evolve quickly enough to react and flourish in the cash strapped world around them.  It is interesting that this apparant lack of continual evolution has now led to the need to 'transform', rather than change.  Things have got so bad that change is just not radical enough to address the size of the problem. To meet the challenge change managers have now grown into 'transformation leaders'. That's progress!

It seems strange to me that organisation's that clearly need to make a profit, in order to invest in the future, would call themselves 'not for profit'.  Possibly a tax status, but surely not a part of an organisation's ethos. By saying that we are not for profit we make it appear that profit is unimportant.  Profit is as much made by what something costs to produce or provide as it is the price that is charged for it, so not for profit almost encourages a lack of interest in minimising cost. The term Social Profit puts a whole new spin on the enterprise - we must make profit in order to invest in the social good of our endeavour - it makes us accountable. Rather than happily achieving a somewhat passive surplus through budget manipulation, we are actively driving a socially enhancing profit.  I know which is most likely to make me jump out of bed in the morning.

The nasty Tory government is now forcing housing associations to reduce rents by 1% annually for the next 4 years.  This has forced organisations to consider all options in terms of taking out cost.  This is has of course been the cause of much angst, but perhaps it is a good thing in terms of reducing wastefulness and improving value for customers. It will undoubtedly force housing associations to reconsider what their 'mission' truly is.  Restructures and mergers will take place but unlike a commercial enterprise where the expectation is that shareholders will benefit, with housing associations it will be the funders - you and me, the tax payer.

IFA's - Should we trust them?

Recently, I have been working in the company of Financial Advisers.  I can guess what you are thinking!  First off, I need to confess that I had mixed feelings about the industry too. Financial Advisers do have a reputation to contend with don't they, justified or not. You know the sort of thing - crooks in suits, in league with self-serving banks and insurance companies. Commission is their only real interest. Nothing too flattering and nothing too exciting.

Produce some brochures and a website that projects a more professional, more upfront and trustworthy image for our business. That was the brief.  Not wishing to sound cynical but this was probably, in part at least, prompted by FCA changes designed to ensure adviser charges become more transparent.  In the past the adviser made his money through commission from the mortgage, pension or insurance provider. This fee was supplemented by an annual percentage payment to the adviser - for the life of the product/service. But now, the client must be told the cost of the advice s/he is getting - up front and clear, before dotted lines are signed upon.  Certainly, a bright and positive image was required - to take advantage of a financial sector reborn.

A need for such crystal clarity has, not surprisingly, seen the banks disappear from this branch of financial services, which of course has proved to be a great boost to the Independent Financial Adviser. If we don't trust the banks anymore, and the banks can't trust themselves to provide a good service for a fair price, where can we go for expert advice?  Can we really trust the advice of a financial adviser? I suppose the first question is - 'just how expert is s/he'?

One of the major changes in recent financial legislation has been to ensure IFA's are well qualified. This has created something of an Exodus as 'old school' advisers unwilling to put in the, not insignificant, study time exit stage left.  Those remaining are generally younger, more professional and better qualified.  For the career minded higher qualifications are essential - qualification translates into credibility and, with that, higher earnings. 'Chartered' is the gold standard.

So let us accept that nowadays IFA's are expert in their field. Clearly some will be more expert than others and some will have particular areas of expertise.  That sounds like an improvement - or are we just facing smarter, better qualified, more determined 'crooks in suits', better able to relieve us of our hard earned?

Whether we have pots of it or very little of the stuff, there will probably come a time when we will have concerns over money. This could surround the house we buy or the investments we make.  It may well surround the way we plan for retirement.  We might just need to seek out an expert for some well measured guidance - just to put our concerns to one side. 

So you bite the bullet and start to discuss some of these issues with a chap in a suit who, initially at least, you really are not too sure about - he seems very young.  Cheeky little sod will probably ask you to reveal financial details that you haven't even told your other half about.  He will then tell you that his service will cost say £500. I know it sounds a lot, but you can't have it both ways can you. If he's not going to get a bung from a favoured service provider then it's got to come from you.  Of course it always came from the client in the past - it just wasn't talked about and was quietly taken in the cost of the financial product - a secret!

You can expect to be confronted by some straight talking as well. He will probably challenge your ideas on financial planning. Initially, you might not like this, but that is exactly what a financial adviser is qualified and legally obligated to do.  The regulatory body, the FCA, says he has got to find out your financial position and your objectives before he can offer advice. Obvious really.  They could scrutinise the advice he gives, and he must be able to defend that advice. Compliance is a watchword in this industry.

As with our physical health, most of us would want our financial well-being to be handled with great skill and meticulous consideration.  There are not many budding stand-up comedians among the IFA's I have met.  They are a serious lot, mostly about what they do - helping you get the most from your money. What I feared might turn out to be a dry and boring subject turns out to be the complete opposite. What can be more exciting, poignant and liberating than knowing your financial house is in order. But back to the question, can you trust IFA's?  The answer is - a great deal more than you thought you could!