Branch Secretary :

Housing Associations: surpluses up, staff costs down

Sector has largely strengthened its financial position


Housing associations have booked record surpluses year after year, along with positive indicators in all the main areas of finance while squeezing their employees.  This picture is confirmed by an authoritative new report from Vantage Business Solutions which concludes that despite social rent cuts and pressure from the role out of Universal Credit, “the social housing sector has largely strengthened its financial position”.  It states; “In summary, financial viability remains strong in the sector.  Real cost savings have been achieved, sale of assets have boosted margins and organisations are not dependant on asset sales to keep them viable.” Of course the government has recently announced social rent increases will be higher than inflation in future. 


5% pay claims


The public sector pay cap has held down pay in recent years but the government has been forced to retreat on that and unions have agreed to push for 5% increases next year.  In local government Unite has agreed to ballot members for 5% and the civil service union PCS has won a consultative ballot for 5%.  Workers in Britain have faced real terms pay cuts for years and RPI inflation is now nearing 4%.  A recent meeting of Unite reps in housing associations discussed claims of 5%, and all the available evidence makes it quite clear that Housing Associations could quite easily afford such increases.


Surplus up 15.6% Staff costs down 6.6%


The Vantage Business Solutions report shows that the operating surplus across the sector is up 15.6% in 2016/17 to an impressive £5.55 billion overall and overall management costs fell by 7.3%.   


Employment costs were down by 6.6%, falling to £3.37 billion and this was despite special pension costs in the sector not expected to repeat in the short run.  Numbers employed in the sector fell by 3,397 to 99,417.  No doubt this reduction will have had an adverse impact on services to tenants and residents and we know that surveys suggest staff are being faced with unrealistic workloads.


Average operating margin is over 30%


The recently released ‘Sector Scorecard’ pilot also gives revealing figures, showing that the average operating margin for housing associations is over 30%.  Three quarters of social landlords covered by the Sector Scorecard study had operating margins above 22.5%.  To get an idea of how big these figures are consider that private housebuilding giant Bovis Homes made an operating margin below 20% in each of the past five years.  Bellway recently boasted that their operating margin had risen to a record high of 22.3%


Members know the impact of rising prices


The Vantage report also looks at a range of measure of financial vibility.  For example all the main EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) measures have improved significantly over the last year.


Our members know the impact of rising prices and the squeeze on pay conditions - we need to ensure they know the strong and growing financial health of their employers.


Paul Kershaw (Chair LE1111)


8 November 2017


Note on Vantage report: "The Top 132 RPs contained within this report accounts
for 84% of the total turnover of the sector, equating
to just under £17 billion. Similarly, stock represents
84.9% as a proportion of the HCA social units owned
and managed"





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