Three into one creates ‘super consortium’

A partnership forged between three housing consortia has given rise to a ‘super consortium’ that creates the country’s largest strategic buying alliance for social landlords.

Fusion21, the Northern Housing Consortium (NHC) and Procurement for Housing (PfH) decided to team up after research was said to show that some housing providers find the UK’s range of buying groups confusing, making the marketplace difficult to navigate and “disaggregating” demand.

The new alliance has a combined membership of 1,170 housing providers and represents the largest groups of social landlords in the UK, covering over 70 per cent of the sector’s stock. By coming together, the three partner organisations claim they will be able to generate social outcomes for members, as well as generate substantial cost savings.

Housing organisations will ultimately have a single point of access to agreements, it is said, which it is claimed will simplify the market without removing choice. The scale of the initiative will allow the group to achieve significant efficiencies through aggregated purchasing power, supporting housing providers to tackle key social agendas such as fuel poverty by achieving lower costs.

Among the benefits, the new alliance says it aims to overcome the “duplication and complexity created by the range of consortia options” available to the housing sector. It will also link procurement spend to wider community benefits such as job creation, training for disadvantaged groups and supporting local SME suppliers. The alliance’s total of 65 frameworks is currently worth £400 million per year.

“We wanted to replace the traditional focus on lowest price with a ‘triple bottom line’, ensuring the procurement muscle of the social housing sector is used to meet social, economic and environmental outcomes,” said Dave Neilson, chief executive of Fusion21.

Jo Boaden, chief executive of the NHC said: “Given the crucial nature of the efficiency agenda, it was apparent to us that any initiative that could increase our capacity to help members make savings had to be worthwhile. I think it’s the savings already achieved by the three partners, combined with the unique mix of skills and experience that the alliance creates, which will really transform procurement in the housing sector.”

Steve Malone, managing director of PfH said: “Over the last 10 years many housing buying consortia have been created to generate efficiencies by combining sector demand. Whilst the drivers behind this have been positive, the marketplace has become convoluted. Our alliance aims to cut through this, offering providers a co-ordinated resource through which they can generate the biggest savings and influence policy and the market as a whole.”

Initially, the alliance will provide one central procurement point for two frameworks – Retrofit and Gas Servicing. Social landlords buying through these agreements will help to secure employment and training opportunities within framework suppliers for local people. The alliance will also support a range of small local suppliers to offer their services on each framework rather than appointing one large company as the main contractor.

As it develops, the alliance will aim to offer further joint frameworks and a range of additional services for its members. The first alliance framework, Retrofit, is now live. Gas Servicing is expected to be available to all 1,170 members in April 2012.