Published here on August 31st 2005

The Efficiency Targets

When embarking on Decent Homes projects, landlords must now be aware of the environmental forces which will impact their delivery. In 2003-04, social housing expenditure on capital works programmes totalled £3.4bn. This will rise further as funding is expanded on ALMO, stock transfer, and PFI programmes in order to allow social housing landlords to meet the Decent Homes Standard. Within this climate, the Government has challenged social housing providers to improve efficiency while maintaining or even improving performance.

The Government is committed to delivering efficiency gains of greater than £20 billion over the next three years to feed into front-line delivery of public services. More specifically, in response to the recommendations of the Gershon Review (July 2004), the ODPM set the target of achieving total annual efficiency gains of £835m for social housing by 2007-08. This covers four areas of work:

• new supply
• capital works
• housing management and maintenance services
• RSL procurement of commodity goods
  

The gains are not expected to be detrimental to the delivery and quality of services. Rather, improving efficiency is concerned with developing more efficient ways of operating, while sustaining tenant satisfaction. It is therefore about doing more for the same - raising productivity, increasing effectiveness and enhancing value for money. The table below ("Expected efficiency gains for social housing in aggregate") indicates the expected gains and timings for the aforementioned four areas of work. It should be noted that the targets are sector-wide and therefore are no individual targets for social landlords.

Expected efficiency gains for social housing in aggregate

view table in full 

Measuring Progress

In measuring progress against the targets set out above, efficiency gains will be scored where projects achieve one or more of the following:

• (E1) reducing inputs for the same outputs
  = fewer staff needed to provide the same quality housing services
• (E2) reducing prices for the same outputs
  = less public subsidy needed for a new social home of the same size, quality and location
• (E3) getting greater outputs or improved quality for the same inputs
  = carrying out capital works to a higher standard with the same budget
• (E4) getting more outputs or improved quality in return for an increase in resources that is proportionately less than the increase in outputs
  = if increased spend on partnership working leads to better outcomes than would have been achieved through increased spend on existing approach

Within the £835m efficiency gains for social housing, the Gershon Review identified scope for £340m worth of gains could come from the procurement of capital works by social housing landlords. This could be achieved through the application of procurement best practice, focused on partnering and will be epitomised by the formation procurement consortia. To facilitate the aforementioned, a National Change Agent (NCA) has been appointed.

The NCA will provide specialist support and know-how in establishing and supporting a network of at least 30 local housing procurement consortia by March 2008, with at least two consortia fully operational and generating efficiency gains during financial year 2005-06. Their expertise will be employed to consider governance structures, models of procurement, standard contracts and documentation, and supply-chain options.