Housing Corporation News Release 

Associations have secured significant efficiency gains says the Housing Corporation as it launches Operating Cost Index Results for 2007

Tuesday 24 June 2008     45/08

Housing associations have delivered around £360m in operating efficiency gains during 2005-07 says the Housing Corporation as it publishes the 2007 Operating Cost Index (OCI) results for the largest housing associations in England.  Published for the fourth year, the OCI allows the comparison of costs between associations. 

The calculation of the index has been revised from that of previous years as the movement in costs over time is factored into the approach. Previous years results have been restated and associations are able to track their own trend in results and compare that to others’ over time. Whilst associations have delivered around £360 million in operating efficiency gains during 2005-2007, the OCI demonstrates that total costs are, on average, increasing well ahead of inflation over the same period. There also remain significant differentials in costs between associations delivering similar services.

The sophistication of the OCI, over a simpler cost comparison, is in its identification of the drivers of costs and their financial impact across the sector. The OCI allows users to compare their costs with those of other associations with similar drivers.  

Clare Miller, Director of Regulation at the Housing Corporation said, "We have revisited the methodology to make better use of the historic data, with some interesting results. We now see some evidence of scale economies, which has not been evident before. And although we know the sector has secured significant efficiency gains during the period covered by this analysis, the wide range in results between similar associations suggests the scope for further gains in operating cost efficiency are deliverable and indeed should form a critical part of associations’ business strategies.

A copy of the results can be obtained via the Housing Corporation’s performance indicator (PI) website – www.housingpis.co.uk.  The results come complete with the full report from the consultants commissioned to produce the OCI, a briefing note, containing the main findings, a ready reckoner which shows how the index is calculated and provides the data sources for all years, with graphs tracking results over time for each association.

Ends. 

Notes to Editors

1) For further information, please contact Sandra White on 0207 393 2094

2) The operating cost index provides a means of comparing costs between associations.  It provides a useful tool for associations to benchmark against peers and a starting point in examining and comparing their own cost base in order to improve performance in cost effectiveness and efficiency. 

3) The results of the analysis show the following factors to be statistically significant in determining the operating costs of an association:

• Volume of housing
• Type of housing
• Location of stock
• Asset condition measured through the Decent Home Standard.
   

4) Results have not been published for specialist associations – associations who have greater than 50% of rental stock as support, housing for older people, or non social specialist units of accommodation.  However, these associations have been included in the analysis and can use the ready reckoner tool to calculate their own result and that of their peers.