Friday, February 08, 2008

Its official: efficiency gains claimed by housing associations "do not reflect the whole picture"

Readers of this blog will know that I am a long time skeptic about the huge efficiency gains being claimed by housing associations through the annual efficiency statements to the Housing Corporation. All sorts were being claimed without much concern for definitions or common sense. (The efficiency gains reported reminded me of reading Soviet Weekly on grain targets.) I was heartened to read that the Audit Commission has one or two doubts too.

In the Commission’s new report on procurement (Better Buys - pdf available) they note that reported efficiency gains represent 3.5 per cent of aggregate turnover and 4 per cent of total expenditure of the sector in 2005/06. Yet they observe that “these global cost savings do not reflect the whole picture” and remark on the reliability of these figures.

It is particularly interesting that in an attempt at verifying of a sample of annual efficiency statements, but it was not possible to track the efficiency savings reported in the statements into associations’ management accounts.

Thank goodness the Housing Corporation has abolished this requirement. It is a lesson in how efficiency gains cannot be brought forward at regulatory behest.

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