1. Preparing for self financing Steve Partridge Director CIH and ConsultCIH

2. Not long left…  A major transaction involving many thousands of stakeholders –Officers from housing, housing finance and corporate finance –Members, ALMO board members –Tenants and residents  Progress since February: what’s hot and what’s not  Key areas for a few thoughts  The next big task: bringing the business plan and funding plans together

3. On the ground… the positives  Majority of LAs and ALMOs now have a model in place  For the majority, a positive business plan with revenue headroom  For the majority, some capital/borrowing headroom –£3 billion + in 149 authorities –£2 billion focused into 24 authorities  Moving from modelling to business planning –Thinking through resource prioritisation –Understanding the key decisions –Establishing new governance structures –Talking to tenants – building capacity for empowerment –Extending analysis of their asset base -> Asset Management Strategy

4. Thinking through resource prioritisation  For all, an increased revenue headroom from two sources –Increased allowances, in particular increased major repairs finance –Growing headroom as rents are retained locally not nationalised  Key in thinking through how you set up the plan – balance priorities –Investment in service delivery –Increased capital programme driven by increased MRA – at the very least –Headroom for investment in higher standards, regeneration –New build  The extra £ could go a long way but can only be spent once  Short, term and medium term – timetable to the autumn

5. Understanding key decisions  Resource prioritisation … yes  But key decisions of corporate financial policy  Policy towards… use of borrowing headroom – does that have an impact on the type of borrowing and debt that is taken out?  Policy towards… the use of RTB receipts – how much goes to the HRA?  Policy towards… rent convergence – do you quicken to 2016?  Policy towards… the building of reserves… or the repayment of debt?  Policy towards… efficiency and value for money – and how do the proceeds get recycled to HRA priorities?

6. On the ground… challenges  RTB receipts pooling continues to run against localism ethos –With risks for the future plan if not controlled effectively through policies from the outset  For a significant number, not the majority, a tight plan with continued shortfalls of investment against backlogs –Decent homes funding pegged back –Borrowing cap too tightly drawn –Difficult and challenging stock  If it doesn’t stack up, that’s not because of self financing… –But it is a real and practical issue for some  Options for private finance and other means being explored

7. Building a business plan  Wherever you are and however your plans looks, a model and a summary narrative by the autumn…  Much of this is already in place – what new needs creating? New build? Climate change Treasury Management Service standards VISION & MISSION Repairs policies FINANCIAL PLAN Debt and financing ASSET MANAGE- MENT Regeneration redevelopment Rents policy: > flexibility? Governance & Risk Strategy Tenant Empowerment Value for Money strategy Refurb - standard

8. Four key areas for development  Governance and empowerment –How will tenants be involved? –What structures are needed to oversee the plan? –Empowering (building capacity for) tenants and members –Who needs a seat at the table?  Service delivery –Much already in place – linking to local offers –Value for money and efficiency becomes real cash for reinvestment –Summary of plans – ensuring the plan has the right numbers in it

9. Four key areas for development  Asset Management –Probably the subject of a completely new and long term strategy in time –What assets will you refurbish? To what standard? –What assets will you regenerate and redevelop? And how? –How will you read in the green agenda? –Do you / can you build – with or without HCA grant?  Financial planning - the ‘really new’ bit –A Treasury Management strategy for the HRA loans pool – long not short term –The potential for more rent flexibility – within the framework of convergence? –Debt and reserves management – the FINANCIAL PLAN

10. Bringing it all together  There will be a time when the Business Plan and the Treasury Management/Debt Structure come together… –Borrowing for the settlement –Borrowing in the first few years – and the nature of that borrowing  What will your strategy be? –To repay debt – no need, in fact leaves future capacity under-utilised –To fix debt for 25 years – does this leave enough opportunities to reinvest?  Or combinations – the key watch word might be… FLEXIBILITY

11. From managed decline to dynamic future…  Even if there were no additional resources and no growing headroom, self financing would offer major opportunities for efficiency and progress  How would you characterise your council housing over the last 25 years?  What story can we start to tell for the future…  Dynamic growth  An increasing contribution to meeting the housing needs of residents  A diversifying product and service in partnership with other providers

12. And finally…  For those quiet times surfing the net… a joint CIPFA and CIH initiative www.hraselffinancing.org.uk