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Housing finance reform - the here and now Lorraine O'Brien - 17/05/2012

perf_data_300March 2012 ended with a virtual heat wave and was one of the driest on record… But I can only guess that many Finance teams in local councils may have missed much of the glorious weather, as they worked tirelessly to ensure that the necessary transfer of funds to achieve transition to 'Self Financing' happened without drama.  Year end and 'Self Financing' is no small achievement, so to them I send my warmest congratulations for a job well done.

So 'Self Financing' is here, but what now? For many local authorities the change is welcome and long overdue; allowing them to retain and use much needed surpluses, planning for the long term, and even offering them the prospect of building new homes. However to achieve success in managing large scale debt, a change in approach to managing performance is also required.

No longer will retrospective analysis of performance suffice. In future more effort will be needed to provide the decision makers with data that helps inform business planning, especially when it relates to income. Business plans will be much more susceptible to under-performance than in previous times; especially now that the subsidy system is no longer there to mask such matters.

It is time to get busy assessing what data is helpful and what is not; however I would suggest the need for caution. Trying to review organisational data requirements is always fraught with difficulty, and if approached from the perspective of spring cleaning your data is also highly likely to fail. It is time to get together key players to determine what information is needed, and by when.

Think about the decision making process and consider the range of information which will help project performance, bear in mind that decisions made in the early years of self-financing are likely to have long term consequences, and make sure that you get buy-in from the senior team.

Consider how your data can be manipulated, and how easily it can be validated. Does the finance system 'talk' to the housing system? If it doesn't can that be sorted without the need for expensive fixes?

Each organisation will be different, every Business Plan is unique and so information needs will be individual. Most of you will have a considerable amount of good quality data, so don't be tempted to throw it out and start again, but do make sure that when required it will do the job.

Early testing to see if it helps inform decision making is the order of the day, so get planning and make sure you share good ideas and practice. Happy Planning.

 

Download HouseMark's briefing on The future of performance management post HRA reform, written by Lorraine and published in January 2012.

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