Ian Wilson
Centre for Regional Economic and Social Research
Sheffield Hallam University
The Economic Impact of Housing Organisations on the NorthHSA Value of Housing conference: Wednesday 16th April 2014
• introduce the study
• activities of social housing organisations
• the economic impact of social housing organisations on the North
• factors influencing size of economic impact
• consider Welfare Reforms and their affect on economic impact
In this presentation...
Introducing the Study
• economic impact of social housing organisations on the North in 2011/12:− encompass 'day to day' activities− key metrics: expenditure, GVA & employment− direct and 'in-direct' impacts
• why important…− responds to requests to demonstrate impact− underpin case for housing− add to evidence base− baseline against which to assess change
• funded by NHC plus 7 case study organisations
The Study
• to provide a comprehensive evidence base
• sent to 121 organisations each managing c1,000+ properties
• includes Housing Associations (HAs), Arms Length Management Organisations ( ALMOs) and councils
• 58 responses: c54% of total turnover
• questions covered: stock, building, employment, income, expenditure and neighbourhood investment
Evidence base: Survey of Northern Housing Organisations
A (very quick) overview of social housing organisations activities
• Managing properties:
− just under 1,198,000 dwellings managed
• Building:
− 8,400 new build completions
− 58 responding had 3,100 dwellings in development
• Community investment:
− remit covers more than just housing: 'want to do it & business case'
− links with key Government policy agendas
Core functions which provide economic impact
The Economic Impact of Housing Organisation on the North
Output expenditure
• £5,005 million output expenditure into local economies
• in addition every £1 spent generates a further £1.05 in the supply chain...
• ...therefore social housing organisations support £10,269 million total output expenditure
Gross Value Added
• produce an estimated £1,699 million in Gross Value Added (GVA)
• this is approximately 0.6 per cent of total Northern GVA
• including indirect GVA social housing organisations support £4,646 million: 1.4 per cent of total.
Employment
• employ 46,200 employees at workplaces within 3 Northern regions
• that working in 'manufacture of motor vehicles' and 'call centres' combined
• 41,600 FTE employees work within 3 Northern regions
• plus for every FTE directly employed a further 1.8 FTE are indirectly supported: 116,900 FTEs in total
Direct Impact
'Indirect' Impact
Total Impact
Output:£millions
5,005 5,264 10,269
Gross Value Added:£millions
1,699 2,948 4,646
Employment:(FTEs)
41,600 75,200 116,900
Economic Impact on the North: summary
Factors influencing size of economic impact
• Income: gross expenditures
• Procurement: regional sourcing
• Composition of expenditure: multiplier effect
Total 'income' was £6,499 million, of which:
Net rental income
67%
Management fee7%
Loans6%
Affordable Homes
Programme5%
Sale of other fixed assets
3%
Supporting People
2%
Other10%
Income
Procurement
• Gross expenditure was £6,940 million of which £5,005 million - 72 per cent - was sourced locally
• recognise responsibility to local communities and potential opportunities afforded to deliver economic, social and environmental objectives
• e.g's of procurement policies and practices:
− panels which include many local suppliers
− assist local SMEs to meet criteria to get onto panels
− social contracts: e.g. take on apprentices
− buying power to influence suppliers
Composition of expenditure (1)
• how organisations spend their money affects the size of the multiplier effect (indirect impact)
• construction, major repairs, refurbishment = larger effect
• financial and business services, transport/post/ telecommunications and labour costs = lower effect
Composition of expenditure (2)
Other
Hotels/distributions
Rents and rates
Community/N'hood Investment
Transport/post/telecoms etc.
Energy/water for offices/HQ etc.
Purchase of other fixed assets
Finance and business services
Construction of housing
Direct labour costs
Major repairs and maintenance
Refurb. & purchase of housing
0 5 10 15 20 25 30
11
1
1
1
1
1
2
2
12
17
25
27
Percentage of net expenditure
Welfare Reforms: potential affects on economic impact
Welfare Reforms: potential affects on economic impact• Removal of Spare Room Subsidy/Bedroom Tax
– HB paid based on 'need' = reduced entitlement for c240k, who collectively faced £168 million shortfall
– impact unclear: evidence increased arrears & collection costs, but not as bad as first thought...
• Direct Payments
– housing benefit paid directly to tenant within Universal Credit
– impact unclear: increase in arrears for previously low risk tenants; DPDP DWP figures show 94 per cent rent collected (14 payments)
• Benefit Cap
– cap on total benefits
– impact unclear: 'fewer' tenants affected, but those who are arguably least able to deal with a shortfall
Welfare Reforms: potential affects on economic impact
• Income: increased arrears = reduced income
• Composition of expenditure:
− increased rental collection, management, financial awareness ... associated with a smaller multiplier effect
− how is this achieved?... less work on high multiplier activities such as construction and major repair works?
• Procurement: likely impact limited; plus e.g. Public Services (Social Value) Act & Localism Act give more weight to local purchasing = less leakage
Summary
Summary
• housing organisations are an important component of local economies
• total impact (direct and indirect) on the North:
− output: £10,269 million
− GVA: £4,646 million
− 116,900 FTE employees
• housing organisations are faced with considerable 'challenges' which could diminish impact
• important to consider how decisions affect: income, procurement and composition of expenditure
Thank you
Reports and video available at:
http://www.northern-consortium.org.uk/economy
Ian Wilson:
• 0114 225 3539