Small still beautiful when it comes to efficiency, finds GWSF report
The notion that smaller housing associations are less efficient than larger ones doesn’t stand up to scrutiny, according to a new report from the Glasgow and the West of Scotland Forum of Housing Associations (GWSF).
The report, prepared for the Forum by the Scottish Housing Best Value Network, looks at a range of financial measures and shows that management costs among GWSF member associations are slightly higher than the average for all Scottish associations, but with lower rents.
Management costs – taken as management and maintenance administrative costs for this report – were £1,194 per house for GWSF members, compared with £1,160 per house for Scottish associations overall. Average rents were £70.15 and £72.33 respectively.
The report, which is based on 2013/14 data, does highlight some interesting variations in the management costs of different sizes of association. Management costs fall as stock size rises from under 500 to the 1,000-2,000 mark, but after that they start going up again.
Despite the higher management costs, rents for the smallest associations (under 500 units) were markedly lower - £66.44 as against £69.24 for associations with 500-1,000 units, £70.12 for 1,000-2,000 units and £70.93 for 2,000+.
GWSF director David Bookbinder said: “We’ve learned from this work that with finance data, making comparisons is much more hazardous than, say, with Charter data. On the face of it, the higher management costs of our smallest member associations may be as expected, but this obviously doesn’t tell the whole story given how comparatively low their rents are. Debt and other factors obviously have an impact.
“However you look at the figures, it would be hard to find anything to suggest smaller associations were somehow less efficient overall, not least when you factor in quality of service as measured by the Charter. If anything, some of the data points to the opposite being the case.
“I guess the preoccupation with size rather than quality of service will still continue in some places. It was interesting to note the recent news about two very large English associations having merger talks to create an association well in excess of 100,000 units. The news story noted that one of the associations had long-running problems with its repairs service – to GWSF that says it all, really.”
The report did not specifically look at capacity to make new build provision, though it did look at debt, finding that the average debt per unit was £325 for GWSF member associations as against £434 for all Scottish associations. SHBVN’s conclusion asks whether more could be done, given the overall financial strength of GWSF member associations, but adds that ‘this also raises the question of the extent to which current tenants should bear the cost of investment in future tenants’.
The report can be seen here.