31ten gave Norwich City Council an independent, in-depth review of its housing company, Lion Homes, giving the council the evidence it needed to make a confident decision about how best to deliver its future housing pipeline.
Supporting Norwich City Council to make an evidence-based decision on its housing company
Background
Norwich City Council set up its housing company in 2015. Since that time the company has been through significant changes, including a rebrand to Lion Homes. After the company faced performance challenges in its early programme, the council wanted a thorough review of its financial performance, whether it offered value for money, and how well it was delivering the council’s strategic objectives.
With key regeneration projects progressing across the city, it was critical for the council to understand how best to use the company and to make sure its financial risk exposure was understood and well managed.
Our project brief
Our initial research and analysis identified four key areas to explore in depth:
- Strategic rationale – Is there a clear reason for the company to exist, with a golden thread linking it to the council’s overarching strategic objectives?
- Business plan – Is the company’s business plan robust and viable, and does it provide value for money for the council?
- Governance – Are the governance arrangements effective, and are roles properly resourced and well understood in both the company and the council?
- Expectations – Is there a fair expectation of what the company can achieve, and are new opportunities properly assessed and their implications understood?
Our approach
Our work included:
- Stakeholder interviews across the council and the company
- A review of the company’s business plan, financial model and governance model
- Stress-testing the business plan, drawing on our expertise in housing development, company finances and council funding models
- An options appraisal covering everything from complete closure, to reducing the scope and scale of the business plan, to expanding the company’s role in delivering the council’s future pipeline
- A recommendations report setting out our findings on financial performance, governance and funding structure
The challenges
Our interviews highlighted differences of opinion about the company’s role and objectives, especially between council and company staff. They also showed that expectations of what the company could achieve were too high, given the competing objectives it was being asked to balance.
We used these insights alongside our financial analysis to build a clear, evidence-based picture of where the company stood and how well it fitted within the council’s wider range of delivery routes.
Key Outcomes
Our review gave Norwich City Council a clear understanding of the company’s performance and the risks it posed:
- A detailed set of recommendations to reduce risk and improve performance across financial performance, governance and funding structure.
- A full assessment of the council’s options for continuing or closing the company, including the financial impact on loans, grant and the delivery of housing.
Based on our report and the concerns it raised, the council followed our recommendation to close the company and bring delivery of its housing pipeline back in house.
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