Following the 2008 financial crash, Bank of England chief economist Andy Haldane looked into what factors caused the crisis. He discovered that breaching the regulations set out in Basel II – a complex 347-page document that attempted to ensure banks remained safe – proved a less effective predictor of failure than a crude rule of thumb: highly leveraged firms were more likely to fail.

In other words, Haldane concluded, “less is more”.

We could learn from this approach in social housing. Like Haldane, we at IWP  have a few rules of thumb based on 8 years’ worth of statistical analysis that we use with boardrooms and executive teams:

  • If you are looking to improve your VFM performance, you should examine the performance of associations that are 10k-3k in size and are LSVT>12yrs in type, as they have consistently delivered VFM based on the new metrics.
  • Our analysis shows that high performing VFM associations have primarily improved on three metrics, SHL Operating margin,  Cost Per Unit and EBITDA.  
  • Our research identifies that an LSVT typically outperforms a Traditional in the new VFM metrics and costs by some margin.
  • If you are looking to improve your CPU then you should examine associations that are 10k-3k in size and LSVT 7-12yrs as they have consistently reduced their CPU.
  • As a rule of thumb if you have the following CPU then you should at least be achieving the following Operating margin.

CPU vs Ops Margin

  • If you want to model yourself on high performing associations then you would not go wrong to look at 10k-3k in size and LSVT>12yrs. RP’s who tend to be representative of our consistent elite performers in our database.

These rules of thumb create a starting point for decisions that require us to compute a lot of information. While recognising that smart housing associations have reliable and often complex processes that enable better decision-making, sometimes a simple rule of thumb can set us off on the right path.


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