We know that our affordable homes help our residents towards achieving their aspirations. Housing associations have a real impact in the communities where they work. And on an individual basis, our homes change lives.
But where does our work have the most impact? Effectively measuring our social value is complex and multi-faceted. The competing approaches can be dauntingly complex. And while the measurements may be valid they often take a lot of explaining, and some stakeholders can be pretty sceptical.
Understanding your social value achievements is important. But before you invest your time, energy and valuable brainpower, it’s vital to consider how you want to use the results.
Is a social home priceless?
Commercial businesses are often at pains to point to the value of their Corporate Social Responsibility. For housing associations though, social value isn’t an extra – it’s central to who we are.
Clearly, a social business also needs to understand where our investment adds the most financial value. But to get the balance right between commercial viability and social purpose, we need to understand where our core product – sub-market rented housing – does the most good.
My team has been working on a simple(ish), repeatable approach that uses readily available data to put a number against the difference that our homes make It’s helping us understand how this changes over time and between areas.
Our starting point was to understand how much people save by being our tenants, rather than paying a market rent.
People on low pay – like our tenants – spend a larger proportion of their income locally and on necessities. So it’s reasonable to think of this saving as money that’s released into local economies.
However, some of our tenants – both in and out of work – need to claim housing benefit. For this group, a lower rent doesn’t change the cash in their pocket. It’s the public purse that benefits by way of a lower housing benefit (or Universal Credit) bill.
Our social value calculation compares each of our social and affordable rents to the local market rents. We used the rents we reported to the Homes and Communities Agency on 31 March, and compared them to Valuation Office median weekly rents. But for properties where housing benefit had been claimed during the year we substituted the relevant Local Housing Allowance (LHA) figure, to get a truer picture of the saving to the public purse.
Sovereign’s social value
The headline numbers are pretty impressive. In 2017, we delivered £140m in social value.
Because of rising prices, and our new homes, this was up £11m since 2016. On average, each of our homes achieved £3,154 in social value, an increase of £204 since 2015.
When we look underneath the headline figures, we can see the impact of some of our strategic choices. For example, Sovereign decided some years ago that we would charge affordable rents only on new homes – we don’t convert existing properties. This new analysis supports that approach – affordable rents are closer to market levels, so they ‘do less good’ according to this measure. By this measure, new developments definitely add to our total social value, but they reduce the average social value achieved in areas where we provide lots of new homes. Of course, our work to achieve social value through the supply chain means that rent levels aren’t the only way we add value with new homes. There are apprenticeships, training and education, and community arts projects as well, not to mention the transformation that a stable, secure home makes for each new occupant.
Looking at our geography, the measures of ‘sub-marketness as social value’ varied quite a bit. In areas where market rents are high, our homes deliver greater social value.
And this is important, because when it comes to geography, incomes vary far less than housing costs.
So does all of this help us understand the difference we make?
Well, clearly it’s not perfect. One measure never shows you the full story. But I think this model of social value gives us a quantifiable, repeatable way of understanding how much good we do, and how that’s changed by decisions we make, and the markets where we work.
Like all housing associations, we’re constantly trying to balance commercial and social considerations. Luckily, as Strategy and Research Director, it’s not my job to decide where the balance should lie. That’s one for the Board. But I hope this approach will help us to inform their decisions, so Sovereign can carry on getting the balance right.