Constitutional change is never easy, and this is particularly true in the current economic climate. But this climate requires us to be lean and nimble, able to take advantage of opportunities, and be as efficient as possible.
Sovereign Housing Group is a complex organisation which included, at its peak, 19 separate legal entities. In October it consolidated to form one main landlord. A small number of subsidiaries were retained for commercial investment.
Sovereign was created by Sovereign and Twynham Housing Associations in 2005. By 2009, those had been joined by The Vale and Kingfisher to create a housing group close to three times the size of the original Sovereign. This growth allowed to combine the expertise and increase financial muscle and influence.
But such rapid growth hasn't been without its problems. Like any growing organisation, there were issues of cultural change and management of the transition from a respected regional organisation to one of the England's largest social landlords.
Rebranding and a new strategy helped, but the real key to culture change has been staff commitment. For six years, people have worked patiently together across Sovereign, rationalising service delivery and aligning policies to offer a good service for residents, despite sometimes unwieldy structure.
Although hard work and goodwill have helped to cope day-to-day, the governance structure was a real downside of growth. Four separate management boards resulted in duplication and a complex decision-making process; too much energy was going into operating the machinery of governance. What's more, the different subsidiaries meant a complex web of individual relationships with funders and different pension arrangements across the group.
Simplification
It was clear that to continue to grow and thrive in the new reality of today's social housing world, we would have to simplify the structure. After carefully assessing different options, it was decided that the best course of action would be to consolidate the group. By introducing streamlined governance we could become stronger than our constituent parts, as well as being better equipped to respond to the changes in the housing sector.
A transfer of undertakings from each of the main housing association members was chosen as the most cost-effective option, with Sovereign Housing Association as the receiving entity due to its relatively complex borrowing.
A major challenge of growth was to find a balance between achieving efficiency and influence while continuing to deliver services to residents that reflect local needs. In parallel with governance changes, we have created seven resident-led regional panels. The panels feed into a Residents' Council, which works alongside our single board, providing challenge and scrutiny.
Funding
Creating a new single organisation meant untangling a web of funding to create a streamlined portfolio, with consistent covenants and clear relationship management. Thanks to good relations with our lenders, existing syndicate loans worth £425m were arranged and transferred over to Sovereign Housing Association from the other group partners on favourable terms.
The new loan arrangements are far more efficient to manage, creating savings that can be invested in services or new homes. The transition to a single landlord also creates access to a single large pool of unsecured properties, available to back up funding wherever development opportunities arise. This combination of strength and flexibility is critical to our future success.
Development
Between 2011 and 2015, we plan to deliver around 4,700 new homes, including almost 1,900 under the Homes and Communities Agency's Affordable Homes programme. But we also need to start planning now how we will be able to carry on developing when the programme ends. Last year, we started to invest in property-related projects for a commercial return; an approach that may be part of our solution to complementing public funding in the future.
Although the process has been lengthy (over a period of two years) and complex (requiring more than 20 board meetings, eight shareholder meetings, and a myriad of approvals), it nows feels as if we can face the future with confidence.
Our employee engagement scores have actually increased during the process. Staff now recognise the importance of shaping our organisation around our mission: creating homes; shaping communities; changing lives.
But the final word should go to our residents. "Sovereign did not implement this new structure because it was easy. On the contrary, the organisation has done this because it is the right thing to do and for all the right reasons and the residents are at the heart of those reasons," our Residents Council told us.
Clare Powell is director of strategy at Sovereign Housing Association
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