By David Cowans, Chief Executive of Places for
Housing Association boards are going through a time of
considerable change and challenge. While there are enormous
opportunities to demonstrate new approaches to increasing house
building and promote choice in the housing market, there are
significant challenges at the same time.
Not only are they dealing with the impact of the -1% rent
settlement for 4 years to 2020/21, they are also working through
the economic and policy challenges that their housing organisations
face and how these challenges could affect their ability to make a
difference in the future.
How to square the circle of dealing with the challenges while at
the same time expanding our offer to society is the key strategic
focus. In this context it is unsurprising that mergers are high on
the agenda for many boards. The motivations to merge are
varied but it often comes down to scale, both to achieve
efficiencies and to boost the capability of
Joining forces with another organisation can and often does
unlock funding opportunities, create back office efficiencies and
generate economies of scale in procurement and operations as
individual companies tap into the buying power and borrowing
capacity of a larger group. For those who can successfully create
the right motivation and negotiate their way through the process of
coming together, these alliances can have the potential to be
transformative. Equally, they can be unsuccessful.
For smaller organisations trying to survive and compete in an
increasingly difficult operating environment, there are clearly
advantages of becoming part of a larger group. However, often these
opportunities are portrayed as a binary choice between the big and
small, the national or the regional, becoming part of a corporate
centre or retaining local control. But why does it have to be a
choice? Is it possible to gain the benefits of becoming larger
without losing your local identity?
There is a powerful argument to say that merger doesn't have to
be a choice between the big and the small; it needn't be a zero sum
game, there is a middle way. This middle way is about creating
mechanisms which allow organisations to merge with one another
whilst retaining what makes them effective in their communities.
Organisations of scale will certainly have the capacity to build
greater volumes of new homes, can access capital more efficiently
and generate savings through centralised services and greater
buying power. They can take on larger scale projects in
regeneration, estate renewal and development. However, effective
delivery of management in any size of business requires local
knowledge, insight at the neighbourhood level and a detailed
understanding of the customers you serve. Any smart merger
relationship is built on preserving the qualities of merging
organisations and ensuring that local identity and expertise is
At Places for People, we have experience in creating successful
relationships through mergers that have brought huge benefits to
both parties. Castle Rock Edinvar and Cotman Housing Association
joined the Places for People Group in 2005 and 2009 respectively.
They have retained their board, their brand, their business plan
and their commitment to the communities in the geography where they
operate. They can now access the Group's treasury facilities and
make use of Group back office infrastructure and central expertise
where it improves their business delivery. Their customers have
benefitted from Group products like low-cost loans through our
Financial Services company or discounted access to Places for
People Leisure facilities. They have both strengthened the Group
and its presence in a new geography, bringing their local expertise
and taking over the management of Places for People stock in the
area creating efficiencies for the Group.
I am convinced that where Boards have the vision to imagine a
partnership between two organisations where values are shared and
the customer comes first, size doesn't matter. Mergers take effort,
vision and attention to detail but the benefits of partnership to
both sides make a compelling case for action.
This blog was first published in
Social Housing on 30 November 2016.
01 December 2016