3) Newsletters

DECEMBER 2015

`May you live in Interesting times`:

The Comprehensive Spending Review Outcomes (CSRO ) Nov 2015 will dramatically impact upon the voluntary sector over the next few years . Both Boards of Trustees and Senior Mangement Teams will be wondering `which way forward now` for their individual organisations be they large or small. The content of the CSRO are consistent with the Conservative Manifesto and `direction of travel ` to `shrink the state` and can be basically summarized as:

 Welfare
£4.4 Billion cut to Working Tax Credits dropped; £12 Billion of Welfare cuts to be delivered via `roll –out` of `Universal Credit `; Housing Benefit capped in the social housing sector to the level of Local Housing Allowance.

Care
An extra £1.5bn for the Better Care Fund by 2019/20; An optional 2% council tax increase to fund social care; For youth a new Apprenticeship Levy to be introduced in 2017;Protection of the DCLG funding for targeted homelessness prevention ; £600m for mental health services ;£500 million by 2019-20 for the Disabled Facilities Grant for 85,000 home adaptations that year.

Housing & New Development
A pilot of the voluntary Right to Buy scheme for housing association tenants ; £4bn funding for 135,000 shared ownership homes ; £2.3bn for 200,000 Starter Homes ; Funding for 100,000 affordable rented homes; 8,000 specialist homes for older people and people with disabilities. Public land to be released for more than 160,000 homes ; Planning reforms, including a continuation of developers’ right to negotiate Section 106 affordable housing requirements if they affect viability; New `Help to Buy ` scheme for London with 40 % interest free loans on new build

Implications
There are concern around future funding for social care and the reduction in Housing Benefit to Local Housing Allowance level. It is not still clear if this would apply to supported housing, which would undermine the sustainability of the sector.

The extra cash will not make up for the hit to housing associations’ development plans caused by the social housing rent cut. Read here. Previous announcement that social housing rents would be capped at minus 1% per year as opposed to the anticipated 1% plus annual Consumer Price Index annual increase. Groups continuing to campaign to amend the Welfare Reform Work Bill to exclude supported housing .

The £1.5 bullion support through the Better Care Fund in 2020 and new 2% council tax levy to fund social care will not go far enough to plug the gap in adult social care funding.

Councils will now be able to spend 100% of receipts of asset sales on services separate from the proposals on right to buy receipts. More devolution of budgets is expected to local authorities in the Housing and Planning Bill currently in parliamentary stages. The same legislation has recently been amended to remove `lifetime` tenancies for social housing.

The Institute for Fiscal studies suggest the finance pain has just been deferred to 2020 with the public and voluntary sectors to deal with the consequences.   The implications are:

Who will adapt in order to survive? Charles Darwin summed it up nicely when he said “It is not the strongest species that survive nor the most intelligent, but the ones who are most responsive to change”. For numerous charities or social enterprises providing a wide range of services including housing, support, care and health services to needy clients the question is can you remain viable in future. Organisations will need to address the viability and resilience questions. Your analysis should include testing the current impacts and risks ahead.

What does the future look like is a key question with the current government`s emphasis on shared and owner occupation which challenges the reason many housing based charities exist. Many providers are preparing strategies on mergers or acquisations without waiting for the NHF merger code on guidance due in 2016.

One answer is organisational transformation  to become more efficient to create a  sustainable large operating margins and survive. Transformation involves a different way of thinking and delivering services. You may have to make hard decisions to achieve high margin business plans. The regulators will be very busy with a range of low margin providers over the next few years.

The burdens will become heavier upon housing, care, support and health providers as the implications of reductions in incomes across all sectors start to filter through. The £12 billion of welfare cuts will in due course have a direct impact on providers’ income alongside rising profile of clients needs as other support services disappear of diminish.

So we all need answers to ensure we adapt .That means fundamentally transforming the way that you do business, thinking to 2020 and beyond. How the sector can transform. Salami slice cost cutting and tinkering will not deliver that adequate strategic response. In many cases only wholesale transformation is needed to drive change.

So how do you embark on a transformation project that makes you fit for purpose in a new operating environment? Organisations have been revisiting their strategies and determining whether they are achievable in the future. These should include identifying who your current and future customers are; what your customer value proposition is; and taking an honest look at what services you can and cannot now afford to deliver.

Once that’s in place, you need a fundamental review of your Operating Model to determine whether it is fit for purpose, before identifying what your future Target Operating Model (TOM) should be.

A key success factor is leadership. Change will be difficult with barriers to overcome and tough decisions to be made around culture. The speed of change in other areas such as technology, customer demands and employee expectations are drivers in their own right for transformation and are happening now.

The Chancellor has kicked the ball into touch. We now have to ensure that we play and win the game. If you require any assistance on your Transformation please contact: john@caracommunity.co.uk .  01803852270 for a free discussion.