6 | Accord Housing Association
Operating Environment
During the financial year two key events , Brexit and coronavirus , impacted on the UK economy , Government priorities and the Bank of England ’ s monetary policy . The organisation managed the financial risks of both of these events by bolstering liquidity , stress-testing the financial plan for specific Brexit and coronavirus scenarios , including mitigations , and reviewed and updated our Treasury Strategy .
In June 2016 , a referendum took place which resulted in a majority verdict for the UK to leave the European Union ( EU ). Article 50 was invoked in March 2017 marking the start of the withdrawal process and , following months of negotiations and several deadline postponements , on 31st January 2020 the UK left the EU . We have now entered a transition period that is set to end on 31st December 2020 during which time we need to finalise the details of our future relationship with the EU .
In late 2019 a new virus emerged in Asia and quickly spread to Europe and other continents . The fast spreading respiratory virus is potentially fatal and those with underlying health conditions and the elderly are most vulnerable . Due to the rate of infection and the number of fatalities worldwide , the World Health Organization declared coronavirus , also known as Covid-19 , a pandemic on 11th March 2020 . The UK Government quickly followed up with a series of closures , restrictions , and support packages for individuals and businesses .
UK Gross Domestic Product ( GDP ), a key indicator for the performance of the economy , slowed materially in 2019 and fell by 1.6 % in the year to March 2020 as a result of Brexit-related uncertainty , weak global growth and the outbreak of the coronavirus . The Bank of England reduced the base rate twice in March , by 0.5 % on 11th March and a further 0.15 % on 19th March , and it is now at a record low at just 0.1 %. The pandemic had a material adverse effect on the global economy and long-term impacts are still unclear ; however both inflation and interest rates are likely to remain low .
2019-20 was the final year of the four year rent reduction policy introduced by the Government in 2016 . Over that period our social and affordable rents were reduced annually by 1 % and this curtailment of income is equivalent to circa £ 19m lost income compared to the previous regime which allowed rents to be increased by CPI plus 1 % annually . Accord absorbed this financial pressure through efficiency savings and remodelling our service delivery methods , protecting our front-line services , investing in our existing properties and maintaining our commitment to the development of new homes .
The effects of the continued roll-out of Universal Credit are felt by both Accord and our customers and we proactively manage this , balancing the need to collect rental income whilst supporting those customers who find themselves in difficult financial circumstances and have a dedicated Financial Skills Team . We achieved our target for rent collection for the year and have stresstested our financial plan with various scenarios relating to Welfare Benefit Reform which demonstrates our ability to continue to manage these pressures .
The social care market remains complex and challenging with a changing demographic , increased customer and regulatory expectations and funding pressures from cuts to public service budgets . Despite the financial challenge of this activity , the delivery of care and support remains an important part of our wider service delivery and contributes greatly to our social purpose . We delivered over two million hours of care last year and work closely with commissioners and local authorities to shape the services that we deliver , adapting our service offer and meeting the needs of our customers .
The UK housing crisis , driven by a widening gap between demand and supply of suitable housing accommodation , remains a key focus for the Government . Research by the National Housing Federation suggests that the Government needs to spend almost £ 13bn annually for the next 10 years to end the chronic shortage . Accord recognises the important role that Housing Associations have to play in this and as a Strategic Partner with Homes England is committed to the supply of new affordable rent and low cost home ownership properties , securing £ 77m in wave one development grant for the Matrix Partnership for the provision of 2,257 new homes by 2022 of which Accord will deliver 900 .
Despite the challenging landscape and economic outlook , Accord remains resilient , agile and innovative . During the year we were subject to an In-depth Assessment ( IDA ) by the Regulator of Social Housing and our ratings of G1 : V1 were retained . During the IDA process the Regulator took a close look at how we run our business and confirmed that we meet the highest standards for governance , managing risk , delivering value for money and financial viability .