United front on social housing

How's business?

Our predictions at the moment are that for 2007, we'll have a turnover of £147m, with a profit of probably £4m. Next year, the turnover grows again to £233m, with an anticipated profit of £15m.

A lot of this growth is because we have made an enormous investment in PFI - it took about five years for our first project to close. So we have suffered profit loss for the past three or four years, but we're now coming out of all that and we're going back very much into a positive market.

The process of setting up the first housing PFIs has been quite slow. United House has so far worked as the lead sponsor on three housing PFIs. How did you find the experience?

The first round pathfinders took on average about four and a half years to get to financial close and the reason, quite simply, was that it was a brand new market and there were a lot of lessons to be learned.

The public housing sector had to learn how to cope with these sorts of long-term contracts, and of course these were based on a number of assumptions and some of these were found not to be the best way of doing things.

I'm on the record as saying things about stock condition surveys - someone driving up in a car and looking out the window to do a stock condition survey wasn't the best way to build up a price for a 30-year contract. Those issues have been well publicised and well documented, and I think that the government's response in the latest round was to tighten up the whole process and put the emphasis on the local authority to have a much tighter business case before it goes to the market.

What do you think of the bidding process and the costs involved?

Under the new 'open dialogue' approach, where a local authority selects three expressions of interest, it takes about 10 months to get to preferred bidder status.

We are currently bidding on an HRA (Housing Revenue Accounts) project in Myatts Field in Lambeth, which is one of the first PFIs to bring a big element of new build into it. It's very impressive to see that so far the local authority has stuck to the whole timetable. I guess if we could keep to the timetable and with our efficiencies, the bidding process will still cost about £600,000.

What do you think of the moratorium the government placed on non-HRA housing PFI projects?

The government called them back to ensure that it is actually getting true value from them, because they're relatively small. True value is looking at whether there is another way to finance it, rather than to go through the PFI route. There may well be.

As the conversation develops, I think a big change will come. My feeling is that the public sector will get a bit of release to sell off some of its assets, like land, so that it can provide a cross subsidy - that's what I think they're being asked to look at.

So what's the future for housing PFI?

I think it's going to become much bigger and more collaborative and that you are going to see local authorities opening up to longer-term consortium players, following on from the education LIFT system.

I think what you'll see is 30-year exclusivity given to a consortium that would undertake all of a local authority's housing needs. This has political advantages, because you have some authorities that don't want to do a stock transfer they don't want an ALMO. They can keep the management and they have a partner that delivers the goods. The goods might be refurbished council housing, new housing for rent, it might be some element of healthcare within communities, or care for elderly schemes.

I would envisage these consortia involving someone like ourselves, perhaps a major housebuilder, a commercial developer, a bank and perhaps a healthcare provider.

What this consortium will do is raise some capital to pump prime the project and recirculate the profit. The consortium can take its normal profit out and the additional profit goes back into the scheme. I think that's a way forward.

How do you think the creation of Communities England is going to affect the way in which you do business?

If it's not just two government departments bolted together and it becomes a unified body, it could only help to improve things dramatically.

What are the biggest challenges for United House when it comes to meeting the Code of Sustainable Homes?

The biggest thing is trying to work out what sustainability is. I think the issue is making sure we can get the local authorities to specify what they want in the planning brief.

We've got instances at the moment where we're building things and we haven't got the sustainability issue solved. So we're having to take a view because some local authorities, not all of them, just haven't got the resources to question or challenge what you are doing.

We've been talking about sustainability and renewable energy for donkey's years. But now the pendulum has swung and it has become a political hot potato. I think the government has quite rightly said, let's give the industry 10 or 15 years to react - that's why we've got these stages and I think it's going to be difficult to get to those stages in an economical way. Somebody's got to pay for it.

The Decent Homes programme will finish in a few years. What sort of impact will that have on your business?

I don't think it will be a significant impact, because what is a decent home? Is a decent home a kitchen and a bathroom, or does it have something to do with the environment that a house is in?

Quite a lot of the time we're putting a kitchen and a bathroom in, but the street lamps don't work and the hoodies are out in the playground. There's a bigger picture.

We've worked in some of the same properties under Decent Homes in the past five or six years that we worked in thirty years ago for the Greater London Council (GLC) under their modernisation programme, so we're taking out what we put in back then. At the time it was state of the art - 30 years on it's not. There's a lot more work to be done on bringing the existing stock and environment up to a high standard.

You've been a director of United House since 1985. What keeps you interested?

For a start, I own 50% of the business. And second, there's a pride in trying to make the business better and trying to get acknowledgment for what you are trying to achieve.

I say to my guys, you've got to come out every morning like a boxer and be prepared to fight 10 rounds. And every now and again you win a round and go forward, every now and again you get knocked out and take three steps back. That's what it's about. It takes motivation, it takes pride, and enjoying it, getting a buzz out of it.

CV

Jeffrey Adams

Age 56

Positions in United House

1982 - group marketing manager

1985 - marketing director

1990 - managing director

1995 - group chief executive

2007 onward - Chair, Housing Forum

Member of the SkillCity Advisory Board

4 things you didn't know about Jeffrey Adams

He is involved in amateur and professional theatre and would have liked to try making a living out of it if he hadn't gone into construction.

He's a big rugby supporter and organised a charity rugby dinner that members of the England squad attended after winning the 2003 World Cup.

He's a fan of horse racing - the gambler in him thinks he could make a quick buck, but experience has taught him there's no such thing.

He wishes he understood horticulture better - but has never had the time to learn!