Last year, Kalvin Neal said in his Message from the Chair that “the country seems to be bouncing from one economic disaster to another, with us now being gripped by a cost-of-living crisis”. Twelve months on there seems to be little improvement with the cost of living and inflation still dominating the national debate. KWL is weathering the economic storm, maintaining a healthy balance sheet thanks in no small measure to the continuing hard work of KWL employees.
Recruitment and retention of employees remains challenging with the skills gap in the construction industry getting worse not better. Against that difficult backdrop, KWL has created 25 new posts in the last 3 years, with the focus being on the construction trades. Investment in apprenticeships continues to be a key component in the long-term sustainability of the business – some 37 new apprenticeships being created in the last 3 years.
Several new directors were appointed in 2023 and training has been provided focusing on directors’ roles and responsibilities, health and safety and pensions. Further training is scheduled covering the core business areas of social housing and more generally around financial management. Stability in the business has been maintained with the senior management team unchanged and the business continues to engage with a range of external professional support providers.
The company remains focused on its core business, with the shareholders contracts being at the forefront of any planning and services provided – 80% of our turnover is generated by the HCC housing repairs, maintenance and improvements contract.
Due to the effect of COVID-19, lockdowns, working from home and the disruption caused worldwide to the supply chain, the normal work rhythm was disrupted. This resulted in reduced activity in 2020/21 and 2021/22 but 2022/23 saw a return to almost “normal” trading conditions, albeit it against a backdrop of a very tight labour market and longer lead times for product. At the time of writing, the average number of void properties held by KWL in the quarter ended September 2023 has been at pre-covid levels, and the backlog in responsive repairs all but eliminated. The volume of planned and capital works being delivered in 2023/24 is at record levels. There has been a steady increase in outputs from the low of 2020/21 and this is reflected in the forecast outturn for 2023/24 and the two years thereafter. This is only possible due to the focus on recruitment and training.
The new Fleet and Street Lighting contracts will be in place by the end of 2023/24 and will run through to March 2030. In the meantime KWL continues to invest in new vehicles to maintain the correct age profile and provide HCC with vehicles that are maintained to a high standard. The investment includes the continuing move to electric vehicles – there are now 49 electric vehicles being operated by HCC.
KWL has started work building 27 new homes on the former Gleneagles Centre. The enabling work has been completed and the main works are due to start Spring 2024.
The business has recovered well from COVID-19, but there are significant challenges that KWL and our main client currently face.
The social housing sector is at the start of the biggest shake-up in a generation, with the Regulator of Social Housing heading up a new regime that will drive up standards where service delivery for tenants is the priority. Landlords will be required to make sure that services are open and accessible to tenants to report issues. The Regulator expects tenants to feel happy and safe. Combined with an upcoming revision to the Decent Homes standard, the sector will see a period of sustained investment with properties requiring systematic stock condition surveys and annual tenancy visits to inform decision making.
KWL has a key role to play in delivering the improvements that the Regulator will expect from the sector and I know the senior management team are relishing the challenge that the new regime will bring. The medium term will see more investment in properties and this will be reflected in an increase in business activity for the next 5 to 10 years. Affordability for the sector will be a key issue, so the increase in activity will have to go hand in hand with efficiency gains some of which will crystalise from the Regulators focus on improving communication with tenants.
KWL has an excellent history of meeting challenges head on and I know the organisation will deliver on the challenges I and the directors set down.
I would like to take this opportunity to thank all the management and staff at KWL for their hard work and resilience during the continuing economic challenges faced by business and the country. My thanks also go to the past Chair, Kalvin Neal for his support this year and to the directors that left the company this last year.
Jan Loft, Chair