No. 40/04

Press Release: Thursday 12 August 2004

CORPORATION CONSULTS ON NEW EFFICIENCY INDEX

A discussion document on a proposed efficiency index for housing associations is published on the Housing Corporation's website today, as part of a consultation process with key stakeholders.

'An Approach to Improving Efficiency in the Housing Association Sector' is published alongside the feasibility study upon which it is based, and is part of the Corporation's programme to promote self-improvement of housing associations. It is intended to support associations' efforts to improve their efficiency and respond to expectations set out in the Government's recent Spending Review.

To illustrate the approach, the report analyses performance data based on operating costs for the year 2002/03, from a sample of nearly 200 of the largest housing associations. The Corporation aims to produce its first index, based on 2003/04 data, by the Autumn.

The measure of operating efficiency will be used alongside all other information collated on HAs to inform the Corporation's regulatory judgments.

Housing Corporation chief executive, Jon Rouse, said: "This methodology offers the prospect of a much more sophisticated analysis of operating efficiencies than we have been able to undertake previously.

"As we develop this apporach, we expect it will help to inform our regulatory engagement with associations. However the most significant impact will be in helping associations to ask themselves the right questions, particularly as most are seeking improvements in their performance via bench-marking and peer review, amongst other methods.

"This index should help the Corporation and individual associations to make better sense of their performance relative to that of their peers."

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For more information please contact Gillian Watson, Head of Communications 020 7393 2095; email gillian.watson@housingcorp.gsx.gov.uk or Robert Davies on 020 7393 2227; email robert.davies@housingcorp.gsx.gov.uk.

Notes to Editors

1. The Housing Corporation is the Government agency responsible for regulating and investing in over 2,000 housing associations in England. Its biggest ever investment programme of £3.3 billion for 2004-06 will fund over 67,000 affordable homes. 16,000 of these will go to key workers and 25% will use some form of modern methods of construction.

2. The importance of assessing and improving efficiency has been widely recognised by the HA sector and given additional emphasis by the 2004 Spending Review which sets efficiency targets to be achieved by 2007/08, namely £160m efficiency gains in the procurement of new social housing and £195m in the procurement of capital works management, maintenance and commodities.

3. The project has been undertaken on a pilot basis using data the Corporation already collects, from a sample of around 200 of the larger (by unit numbers) associations. These associations own or manage close to 70% of the sector's entire stock.

4. As part of the consultation, the Corporation is seeking particular comments with regard to:

• The statistical model proposed.
• Further possible cost drivers to be considered, as well as those specifically for LSVT associations.
• Financial efficiency ratios to sit alongside operating efficiency measures to provide a rounded picture of HA efficiency.
• The proposed regulatory approach and how the Corporation may further assess and assist associations' responses to the need for increasing efficiency.