20 August 2004
Inefficient housing associations face the wrath of their regulator as the government's drive to cut costs gathers pace.
Landlords have been told to make efficiency savings of £355m by 2007/08 following the Spending Review.
From October, registered social landlords will be assessed against a new efficiency index. This has been developed by the Housing Corporation in response to ministers' calls for a greater emphasis on operational efficiency.
Bob Dinwiddy, the corporation's assistant chief executive for regulation, said RSLs near the bottom of the index would be 'taken in for questioning' and told to come up with ways to cut costs, or else risk losing lucrative development grants.
'There are bound to be those in the lower category with high costs that don't have a good explanation,' he said. 'We would expect them to look into it and start taking action, or else there is the question of coming in with regulatory backup.'
The corporation operates a 'traffic light' system to show RSLs causing concern. Those with red lights do not normally receive grants. 'An organisation with high operating costs is not the sort we would want to partner with in terms of investment,' added Dinwiddy.
An analysis of RSL costs, carried out for the corporation by consultancy Indepen, shows that the most efficient association last year was Bristol Churches, while the least efficient was Bournville Village Trust.
The study of 192 RSLs, based on 2002/03 figures, was published on August 12 to coincide with a corporation consultation document on the proposed index. More extensive tables using 2003/04 figures will be compiled after consultations close next month.
But the National Housing Federation warned that quality was also important. 'The challenge for the government and the sector is to achieve a balance between reducing costs and maintaining service quality,' said NHF chief executive Jim Coulter.