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There is no ‘I’ in Team

30 November 2016

Formula 1 is a sport divided by the desires of a team to win a Constructors Championship and their two drivers, who each want to be the Drivers World Champion.

The 2016 season came down to the wire with Nico Rosberg emerging victorious, but not after some gamesmanship by the reigning champion Lewis Hamilton. Everyone will have an opinion as to whether it was the right or fair thing to do. However what is not is question was the ‘Instruction’ Lewis was given by his team to speed up, to ensure they win the race.

The instruction was met with a swift response from Lewis that he needed to do something (in this case back his rival into the pack behind) in order to win the championship. If that resulted in the team losing the race, he was willing to sacrifice that for the ultimate goal.

If you don’t know by now, I am incredibly passionate about F1 and as passionate again about the Housing Sector, which has been the building block of my life. Growing up in that world, it then pleases me immensely when I am able to support and help teams move forward in this difficult and sometimes unpredictable sector and supplying the very best people to help shape and lead us through the changes ahead.

So - what has an F1 team order got to do with housing? Stay with me on this one!

Attending the Social Housing Annual Conference in London a few weeks ago there was an interesting talk from Julian Ashby regarding the state of regulation across the sector and his thoughts on how and what organisations should and should not be doing to minimise risk moving forward.

There was a moment were I heard the same example of the desire for differing objectives.

On one hand we were told that there needed to be a serious check on doing anything that is out of the norm. Organisations that were stretching the limit of commercially acceptable practice and would incur risk and therefore further scrutiny by the regulator. This may have been a veiled comment to those in attendance who were starting down a path on certain ventures which put the affordable / social element of their organisation at a more exposed risk to losses.

However, shortly after we were then told that diversifying risk was a good thing and that has led many teams to ride the wave of instability recently. That they should continue to look outside of the mainstream funding and build programmes to deliver our ultimate goal, more houses.

So what is it to be? I have theory…

Could it be that we are being told to diversify and deliver large scale housing expansion, but on the basis that we don’t do so with commercially and financially complex arrangements as the regulator can’t quite keep up? That they understand and realise that the sector needs to expand into unchartered territory, but how do they then keep a lid on the risks associated with it.

With the potential that we will be charged for a new regulatory service of approximately £5 per unit, will we be able to scrutinise their skills as much as they look into ours?

Would it be fair to say that we should be getting a regulator that can and should be able to supply the necessary skills and knowledge to regulate whatever the complexity and diversified portfolio we entertain? The housing world has been changing for some time and this has only accelerated in the past eighteen months. So one would assume that the scope, skills and experiences of those that govern us, have also diversified and expanded to keep track.

 It’s just a thought and no doubt many will come back and explain why I am completely wrong (which I’d welcome - discussion breeds knowledge) but one thing I will definitely be sure of; that Lewis was right to back up Nico. Mercedes had won the constructors championship and they could just have let them get on with it.

Maybe we should try that with our sector too...

Suresh Lal, Consultant

Suresh Lal is a Consultant within the Social Housing Practice at Odgers Interim


Categories: Social Housing

Comments

Suresh Lal at 01/12/2016 17:20 said:

Thanks for the comment Jon.
In context, I was being a bit controversial here, but not without reason.

You are absolutely right that with the fact that regulation should (for now) be part of what we do. It is also fair to say that investors and lenders look favorably at us because we have this scrutiny to reduce the risk to the public purse.

I would then ask what level of interest or perceived benefit is derived and will that be shown in the new 'paid for regulator' as the level of public input reduces?

After all - I have to justify my costs to clients on a daily basis, surely now they should too.

Also the regulatory aspects are levied against the parent social housing company and not the commercial subsidiaries. Where I assume all the risks are actually going to come from?

It all adds up to interesting times for us all and if anything leads to debate. Which means I get to learn something, with my limited knowledge, from the likes of yourself.

Jon Southall at 30/11/2016 23:10 said:

The subsidy income stream is not what it was and so greater diversification into more profitable activities is more important, so that the sector can expand development of new homes.

It is prudent not to take on too much risk considering what the purpose of social housing is and what is at stake. I think the sector is at risk of losing sight of its purpose, given the latest trends.

I am a fan of private enterprise and of minimal or no regulation, however the fact remains the sector receives significant public funding, so of course the regulator will want oversight to make sure this money is being used appropriately; to protect the ultimate beneficiaries - residents, tenants, low cost home owners. It is only appropriate that scrutiny is directed at activities which pose the greatest potential risk to them.

A model with primarily profitable private ventures, redirecting profits to fund secondary social activities is what I would prefer to see, without dependence on public funding. There are some examples out there which approximate closer to this (Grainger?) In these cases there is less of a case for scrutiny and regulation. The social housing sector is the reverse of this currently, though the poles are reversing...

For now I think the regulator needs to scrutinise and keep some of the more egotistical, status driven leaders in check.

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