SignPost Services

Source: Construction Digital

Date :20/03/2007 00:00:00

SignPost Services: Merger of Signpost and Spinnaker allows for greater savings

As two of the biggest social housing companies in the south west merge along the consortia in which both are lead members, the idea of efficiency and economies of scale can be found throughout the company

Written by David Hughes & Produced by Dave Alexander

One of the first major reforms of the Thatcher government came in the 1980 Housing Act, which allowed council tenants to buy their homes. Allowing Britain to become a nation of homeowners was a vote-winning move that had a profound effect on politics and the economy and helped to ensure a further three general election victories for the Tories.

A quite foreseeable side effect of the legislation, however, was an ever-diminishing stock of affordable and decent housing. Councils found themselves in a difficult position; they could go to the expense of building more houses to meet local needs but they would also be susceptible to losing them almost as fast as they were completed. Social housing was becoming a poundingly uneconomic headache.

The solution for many was to get out of housing completely and sell all their properties to newly set-up housing associations, often not-for-profit organisations, which fell outside the terms of the Act. The Signpost Housing Group is just such an organisation, formed in 1989 from the former North Dorset Housing Association buying more than 2,800 homes from the local district council in 1994 under a Large Scale Voluntary Transfer. It acquired its group structure in 1999 and now encompasses four subsidiary companies and owns nearly 5,000 homes with developments in 32 local authority areas across the south west of England.

Four divisions

Signpost is a commercial company with a social brief: two of its divisions have this as their explicit remit – Signpost Housing Association offers social housing and key worker accommodation and Signpost Care Partnerships is a charitable association that provides supported housing. The work of these divisions is made possible through the far more commercial activities of the other two. Signpost Homes Ltd develops and manages student accommodation and homes in the private rental sector and Signpost Services Ltd (SSL) provides maintenance and construction services not only to the other members of the group but also to outside customers such as Poole Housing and Bournemouth Council.

Maintenance of thousands of properties is a huge task and turnover has risen in the last four years from £8 million to more than £17 million. Signpost Services alone employs 200 people including electricians and carpet fitters plus an enormous number of sub-contractors.

Technological efficiency

The company took on board cool feedback from the Audit Commission in 2003 about the level and quality of maintenance provided by SSL and has used new technology and management techniques to bring it up to the level where it is now garnering constant praise from its customers. At the heart of the project is a bespoke computer system Opti-Time, essentially an automated scheduler that reduces the amount of time workers need to move from one job to the next. It is combined with a vehicle tracking system that allows administrators to know exactly where workers are and help them to cover the inevitably emergency call-outs.

SSL is also involved in construction for the Group. It will have built some 800 new homes in the two years to 2008 and is using economies of scales and modern building techniques to keep costs down. It is already a partner of the building supplies firm Jewson’s, buying 80 percent of what it needs from the company. In addition, SSL’s aim is for 25 percent of its new projects to be built with new methods such as closed and open panel timber frame systems, which are not only more cost effective than traditional techniques but also better in environmental terms.

Care for the environment also features in other areas of SSL’s work, such as the drive to improve their eco-ratings by piloting ground source heating for blocks of flats and recycling as much as possible from void homes.

Economies of scale

Even greater economies of scale are likely to be available from summer 2007, when an expected merger between the Signpost Housing Group and Spinnaker Housing Group, a similar organisation based in Christchurch. The combined group will have about 16,000 homes under management across south west and central southern England and also has plans to develop another 700 homes per year, in conjunction with a range of partners, including local authorities, health trust, care agencies and universities. It will be a time of great change for all elements of the new business, not least Services, which will have its responsibilities trebled.

The group as a whole is keen to capitalise on the savings the merger is expected to bring in order to meet the competition from traditional private sector developers, the demands placed on it by government and regulators and the obligations it has towards the environment, all while keeping rents at a level that people can afford. Signpost Housing Group is also the lead member of the Peninsula Development Partnership, a consortium of nine similar organisations in the south west that uses their combined business strength to get the best deals and to bid for contracts. Spinnaker is the lead member of the Wessex Development Partnership and in keeping with the business merger, the consortia have also joined forces in order to save as much money as possible.

Quick profits

Work carries on apace for SSL with the group having secured more than 500 new housing development units through the National Affordable Housing Programme. Signpost has also won a contract for the 1,000 new student lettings at Bournemouth University and is in continuing discussions with Exeter University for the provision of new accommodation through long-term student leases. This year also sees the completion of Point 500, a 59-unit scheme for outright sale in the Castle Point area of Bournemouth, which includes a 30 per cent affordable element. The project has already proven extremely popular in the highly priced local property market: all units were bought off-plan before construction was complete, netting the company more than £1 million in profits.

Affordable housing, particularly in the rental sector, is still essential even in the mortgage and interest rate obsessed UK. Its social function means that it is always going to be a more expensive business to run than other property development and management businesses but clear thinking has allowed commercial principles to be applied and, wherever possible, costs to be driven down.