The Importance of Planning for the Unprecedented
Financial planning and auditing are tasks that are critical to any business, especially housing providers, but they’re not particularly exhilarating tasks. Undertaking audits and creating plans are a crucial part of forecasting and regulation adherence, but they don’t necessarily provide the same feeling as when our Place team moves a previously homeless family into their new home.
However, in 2017, our financial planning suddenly became even more important than it had been before.
Putting things into practice
In London, tragedy struck those living in the Grenfell Tower block. Just days after the terrible events, local authorities across the UK were reviewing their current fire safety measures, with a large focus on whether the current cladding was suitable.
It was no different for us here at One Manchester. We worked quickly and understood that 16 out of 17 of our tower blocks were affected by unfit cladding. This is where our robust financial plans came into play.
We regularly stress test our finances, even going as far as to create individual scenarios through our business continuity planning, to ensure our financial planning can hold up to the worst possible situations. We also work to a 30-year business plan, and in 2017, this meant we had two years of cash available to use.
Residents were understandably shaken and worried, wanting a solution to the problems that had seemingly been sprung upon them, and so time was of the essence. While our finance team was working hard to pull together plans and next steps, our communications and Place teams immediately reached out to all our residents.
Every person living in one of our tower blocks was contacted and updated on the early situation affecting their specific block and all of our residents were aware of the project progression through updates we created for our website and social media channels.
Consultation events were held in partnership with the Greater Manchester Fire and Rescue Service, and we appointed a dedicated high-rise customer liaison officer to ensure our tenants had a representative working on behalf of them.
We also provided a lot of educational material for our residents, advising them of the steps they can take to ensure their home is a safe environment.
Ensuring that we had adequately planned our finances allowed us to make decisions very quickly, which meant that residents didn’t feel uninformed or in the dark, and once all cladding had gone through the required checks, we were confident we could move fast.
Although we had planned our finances well, we still needed to ensure that the large cost we were facing wouldn’t impact us or our customers negatively further down the line. We had previously raised funding to build new properties across our areas as part of the New Homes Programme, so we did have available cash, however taking money from our development programme would result in fewer new homes.
Luckily, we have strong relationships with our lenders. As soon as the cladding was tested, we spoke to the banks, updating them on the situation and how it might affect both us as a business, and them as a lender. This relationship allowed us to gain further funding, ensuring we had all the resources we needed to carry out the cladding replacement programme, and put any and all safety measures in place.
Alongside updating the banks, we also spoke to our insurers. We couldn’t receive any finance from our insurers, as we couldn’t claim on cladding as it hadn’t had a detrimental impact on us directly, even though it failed the fire safety tests. However, something potentially could have happened in the time before we removed it and replaced it with cladding which complied with the updated regulations.
For this reason, and due to our partnership approach to working, we wanted to be completely transparent with our insurance providers, providing updates on how the situation could potentially affect them.
As we’re regulated by the Regulator of Social Housing (RSH), we regularly go through In-Depth Assessments. We’ve worked hard to ensure we’re meeting regulations, and we’re currently achieving the highest possible rating in Governance and Viability – G1 and V1 – from the RSH.
However, we go further than the standard requirements through internal audits, working with specialist auditors and control monitoring from our board.
We have residents on our board, and this allowed us to ensure we were communicating effectively with our tenants, making all the technical regulatory information accessible to everyone we spoke to.
It also made sure we were taking the views of all residents into consideration throughout the process and doing everything we could for the people living in our properties.
Resident voice and safety are paramount
As previously mentioned, the cladding on our blocks was deemed as unfit, and so moving quickly with the replacement programme was vital. But removing and reinstalling cladding across 16 tower blocks couldn’t be done overnight, and so we faced yet another difficult decision – how could we make our residents feel safe and secure?
We weren’t about to just ask people to leave the tower blocks while we undertook work. They would be leaving their homes, their communities and their social circles, and so moving people to temporary accommodation wasn’t really an option. Our residents felt the same and told us they would prefer to stay in their own homes, and work with us to feel safe.
Fortunately, our additional funding from the banks, our 30-year business plan and the two years of cash available enabled us to put certain safety measures in place straight away.
We immediately began installing new fire alarm systems throughout all of our high-rise blocks and put a 24/7 wakeful watch in place until the cladding was removed, helping residents to feel safe and confident staying in their homes while we carried out the works.
Another safety measure which was immediately implemented was an evaluation of our tower block emergency policies. For example, at the time of the cladding works, we had a ‘stay put policy’. This is standard policy for high-rise buildings in the UK, as fire safety measures implemented in tower blocks (known as compartmentation) should ensure that any fire is contained within the property where the fire started.
Although our cavity barriers, fire resistant doors and windows, and other fire safety measures were correctly installed, we spoke to residents in our tower blocks and after hearing their concerns, quickly introduced an evacuation policy to be driven by the fire alarms, so residents can immediately act when they hear it.
The tragedy at Grenfell triggered investigations into the regulation and best practice around fire safety and building materials across the world. Local authorities and housing providers across the country had met the standards expected by central government at the time, and when those standards changed, it was the individual organisation’s responsibility to ensure their residents and constituents felt safe and secure as quickly as possible.
But the sudden financial impact cannot be understated. We made an early commitment to tenants and leaseholders that we weren’t going to debate who was responsible for the costs of these remedial works, we were just going to rectify the issues. Unfortunately, for those in the private sector, even over two years on there are still debates over the financial support for making homes safe.
At One Manchester, we always plan for the unpredictable and the unimaginable as we are acutely aware of our responsibility to our residents. Organisations that own properties must plan not just from a financial point of view, but from a logistical capacity angle, to ensure that the most important people – those that live in our homes – are protected as much as possible.