The Impact of National Insurance Rises on Housing Associations - Change is Required!

The UK's housing association sector is facing a significant financial challenge as the Labour government's policy changes, particularly the increase in National Insurance Contributions (NICs), come into effect in 2025. With employer contributions set to rise from 13.8% to 15% and the payment threshold reduced from ￡9,100 to ￡5,000 annually, housing associations are bracing for a substantial increase in labour costs. This additional burden threatens the viability of many supported housing schemes and services, which are already under pressure due to funding constraints. This requires action!

Driving Efficiencies and Savings

Faced with this challenge, housing associations must urgently seek ways to mitigate the impact of the NIC changes. One key area of focus is driving efficiencies and finding alternative income streams to absorb the NIC hit as much as possible.

Cost Analysis & Modelling: Housing associations should undertake detailed cost analysis and modelling to identify potential savings through different staffing models. This might involve comparing current specifications with alternative models that could deliver substantial savings, while considering factors such as the impact on service quality. Outsourcing might be considered, but it may not always be the most effective solution due to sector-specific challenges. We provide this service to our social housing clients listed here.

Operational Efficiencies: There are several operational efficiencies that housing associations can explore to reduce costs and improve productivity. These might include:

• Restructuring management teams to reduce inefficiencies and improve oversight.
• Introducing job management systems to track performance and improve scheduling.
• Consolidating depots to improve productivity and reduce downtime from travel.
• Improving equipment maintenance to avoid costly breakdowns and delays.
• Introducing digital tools to enhance communication and scheduling.

Waste & Fly-tipping Management: Consider:

• Consolidating fly-tipping operations into dedicated teams.
• Investing in equipment to lower disposal costs.
• Introducing reuse initiatives to reduce waste.

Staffing Adjustments: Staffing is one of the largest costs for housing associations. Potential adjustments could include:

• Reducing top-heavy structures to improve cost efficiency.
• Creating specialist teams to handle specific tasks more efficiently.

Contracts: It is also important to review outsourced services and bring key tasks in-house where viable. They might also consider temporarily suspending non-essential external contracts to prioritise internal services. Our benchmarking includes commercial comparison available from contractors to allow for effective decision making. We can also ensure procurement compliance including managing the tendering process and making use of frameworks/ dynamic markets where possible

Biodiversity: Introducing low-maintenance landscaping, such as urban meadows, could reduce the need for frequent upkeep. The impact of this can be significant - including financially!

Fleet & Equipment Optimisation: Phasing in electric vehicles and battery-operated equipment could help reduce fuel costs. Purchasing instead of leasing equipment is often more cost-effective in the long term - sustainability is the ultimate focus. Training operatives in basic equipment maintenance could reduce reliance on external repairs.

Expanding Income Streams

In addition to driving efficiencies, housing associations should also explore opportunities to expand income streams, such as:

• Ensuring recovery of chargeable costs for services like grounds maintenance.
• Expanding services to generate revenue such as from bulk waste removal. This can change a significant cost into income for many!
• Housing associations should explore grant opportunities for environmental initiatives and investigate funding for carbon reduction and sustainability projects, as well as commercial contracts. At Thornton & Lowe we have trained and supported numerous social housing providers on bid writing and income generation.

Estate Services Commercial Consultancy for Social Housing

The impact of the NIC changes will require a genuine drive for efficiencies and value for money. Housing associations must leave no stone unturned!

With over 30 years of commercial experience, we offer a range of commercially focused services to optimise your estate services operations, whether outsourced or in-house. We work with Housing Associations only via our Social Housing Consultancy division.

Our solution includes reviews, benchmarking, audits with specific and costed action plan to achieve savings (which we can implement) - as well as contract management and procurement advice to options appraisals and operational reviews. We work closely with you to understand your unique challenges and develop bespoke strategies that deliver sustainable results - saving money!

We are committed to helping you find the efficiencies and savings needed to weather the current financial storm and set you up for long-term success. Our sector knowledge and relentless focus on results ensure that you receive the highest quality advice and support.

If you're ready to take control of your estate services costs our Estate Services Commercial Consultancy is ready to help. Let's work together to find the solutions that will make a real difference to your organisation and the communities you serve.

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