Value for Money. Self-Assessment 2017

Transcription

1 Value for Money Self-Assessment 2017

2 VfM Highlights We re one team with one purpose: creating better futures together We completed 221 affordable homes 23 homes for & outright sale We invested We supported over 21m 791 in repairing & maintaining our homes We started a further 149 affordable homes & 21 for outright sale people through our Tenancy Sustainment service Our business plan targets a 5m improvement on our annual operating costs 3.5m of this was achieved in 2016/17 We redefined our repairs service which resulted in 14% fewer jobs being carried out compared to budget. 750k This generated savings of around with no impact on resident satisfaction with the service We renegotiated our Supported Housing contracts and restructured our management team saving 470k We reshaped the structure of the business so we can best deliver our business plan & purpose saving a further 700k in 2017/18 We ve enhanced our self-service digital platform with a prominent resident toolkit We redesigned the homepage of our website after carrying out user reviews We ve seen a 32% increase in the number of residents signing up to an online account We ve started developing a strategy to gain deeper insight into how customers are interacting with their account services 2

3 Our comprehensive approach to driving Value for Money Our purpose is to create better futures together and our vision is to be the leading investor in homes, people and their communities in the West of England and Somerset, delivering great customer service. We can only do this by working efficiently, making the most of our available resources and driving out waste. Our ambition is to deliver, embed and demonstrate Value for Money (VfM) in everything we do, whilst maintaining our high quality of service. The Board takes strategic responsibility for VfM, ensuring that our priorities and objectives are focused on minimising our operating costs without compromising important services. Our Board leads on this while our Executive Team has collective responsibility for embedding VfM within the organisation s culture. They support and challenge our Service Leaders in delivery of their service area objectives, working with them to identify opportunities or threats to delivery, and their plans to develop or resolve. Our approach to VfM recognises that in delivering the required outcomes we need to work collaboratively across services and teams and this starts with the Board and Executive Team. 1. Group Board 2. Executive Team Accountable for ensuring that Knightstone s priorities and objectives deliver VfM 1 2 Responsible for embedding VfM within the organisation 4. Service Teams Responsible for delivering excellent services and VfM Service Leaders Continually monitor performance and review services and processes for efficiency and effectiveness 3

4 VfM and the golden thread As we continue to support the delivery of VfM throughout the Business Plan, we ll track our VfM gains and report progress to the Board against our three strategic priorities Committed, Agile and Digital. With VfM fully integrated into the business planning cycle, we ensure a direct link (golden thread) from the business and financial plans, to the budget and through to performance monitoring. VfM is also a key performance measure for business transformation and improvement initiatives. Business Plan priorities Long-term Financial Plan Improvements measured Transformation projects Business improvement interventions Annual budgets 4

5 2016/ / / /14 Financial performance & benchmarking Actual Actual HCA Global Accounts Actual HCA Global Accounts Actual HCA Global Accounts Operating Cost Per Unit 3,887 4,020 3,970 3,687 4,077 4,285 4,020 Operating margin (exc. sales) 27% 20% 28% 25% 28% 21% 27% Operating surplus per unit 1,959 1,330 1,858 1,470 1,736 1,132 1,569 EBITDA MRI 216% 149% 147% 191% 144% 126% 145% Net surplus per unit 1,508 1,356 1,189 1,355 1,137 1, Debt per unit 22,996 23,742 24,155 22,340 23,931 19,970 22,598 Operating Cost Per Unit (CPU) Our % of supported housing compared to the sector VfM for us is about fully understanding the relationship between our performance and costs, ensuring we reduce our Cost Per Unit without compromising important services. One way we can measure our VfM is by comparing our financial performance against other providers. The table opposite compares our performance in six areas against all housing providers listed within the Homes & Communities Agency s (HCA) Global accounts from 2013/14 onwards. Across all six measures, we have improved our performance on last year. This year our CPU decreased by 3% ( 133) compared to 2015/16, and is just below the 2015/16 sector average of 3,970. Our calculation is based on the HCA Global Accounts method which includes capital major repair spend. We work hard to maintain our CPU at an acceptable level and the main drivers for this year s decrease are the reduction in capital spend and higher unit numbers. There are two other key drivers of our operating costs, both related to the choices we make about delivering our purpose. Firstly, we re a significant provider of supported housing services. At 1 April 2017 supported housing units made up 9.3% of our total social housing portfolio. This is more than double the sector average of 4.6%. % supported housing 40% 35% 30% 25% 20% 15% 10% 5% Average Key: Knightstone Other providers When comparing headline Cost Per Unit against the percentage of supported housing by provider, we can see our CPU is lower than the sector average. 0% -5% 2013/ / /16 5

6 Secondly, we ve made a strategic choice to invest in value-added services to support residents and communities during challenging times. In 2016/17 we invested 1.3m in our Tenancy Sustainment service. We produce an annual Social Impact report to assure our Board of the social and financial value that results from our investment. Total Operating Margin This year our operating margin, excluding sales, stood at 27%. This is a 35% increase on 2015/16 and is in line with the benchmark average. Total Operating Surplus Our turnover increased by 8%, which, along with a reduction in operating costs and pension re-measurements, contributed to a 50% increase in operating surplus, and our operating surplus per unit increased by 629. Net surplus was also a healthy 16.7m, 21% of our turnover. Surplus on property disposals has reduced by 11.8m year-on-year following last year s completion of our programme to rationalise our non-heartland stock. Surplus on property disposal in the year of 4.2m is made up of staircasing on our shared ownership portfolio, along with surplus from our stock rationalisation strategy. We also made a surplus on the sale of our office in Taunton to complete our office rationalisation. Our % of supported housing by headline Cost Per Unit Headline cost per unit ( 000) % 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% % Supported housing Key: Knightstone Other providers Line of best fit EBITDA MRI Our Internal Financial Framework sets the lower limit for EBITDA MRI interest cover at 120%. At 216%, we re well above this limit. Reducing our interest costs during the four years of rent reduction will help us to continue to exceed our minimum EBITDA MRI interest cover limit, maximise our financial capacity for ongoing investment in developing new homes, and in maintaining and improving our existing homes and communities. HAILO In addition to using the HCA Global Accounts for benchmarking, we also work closely with the South West Housing Associations Influence and Leadership Organisation (HAILO), a group of the largest South Westfocused housing associations. These organisations are a useful peer group for us to benchmark our performance against. 6

7 Headline CPU CPU ( 000) / / / /17 Key: Knightstone Other providers Maximum Greatest value, excluding outliers Upper Quartile 25% of data greater than this value Median 50% of data greater than this value; middle of dataset Lower Quartile 25% of data less than this value Minimum Least value, excluding outliers For 2015/16 our headline CPU was the third highest of the HAILO group. Our analysis shows that, to a large extent, this can be explained by our higher proportion of supported housing compared to all but one member, as well as our commitment to community investment. In 2016/17 our headline CPU reduced by 133 (3%). 7

8 Maintenance and major repairs CPU Both maintenance CPU & major repairs CPU fall within the interquartile (normal) range for 2015 and 2016 At 904 per unit maintenance costs are in line with the HAILO median of 912 per unit Our major repairs CPU was 1,009 in 2016 and, despite being slightly above the median of 921, it is still well within the interquartile range Maintenance CPU Major repairs CPU Key: Knightstone Other Providers CPU ( 000) CPU ( 000) / / / / / / /17 8

9 Return on Assets (ROA) We define ROA as: Operating surplus from social housing lettings (inclusive of overheads) Housing assets (NBV) Operating surplus from social housing lettings increased by 13%, as a result of controlling overheads and increasing turnover. The improved operating surplus strengthened our ROA from 5.0% to 5.3% in the year. Asset NBV increased by 7.2% mainly as a result of the 24.6m of capital expenditure invested in developing new properties and improving existing homes. 2016/17 Central Staff Operating Turnover Direct costs Contribution overheads overheads surplus Asset NBV ROA m s m s m s m s m s m s m s % General Housing % Supported Housing % Shared Ownership % Immediate Rent % Care Homes & Keyworker % Totals % 2015/ % Figures for this year are up as a result of controlling overheads and increasing turnover. 9

10 VfM achievements 2016/17 We re now in the second year of our 2016/21 Business Plan, Our Journey to 2021, which responds to the challenges the sector is now faced with and outlines our plans to transform our business, taking advantage of the opportunity to seek innovative ways to drive our business forward. It focuses on three key priorities, being: A committed business An agile business A digital business Our operating environment is increasingly characterised by Volatility, Uncertainty, Complexity and Ambiguity (VUCA). To ensure we thrive and prosper in this challenging environment, we have responded in a number of ways. Firstly, we have retained a clear focus on delivering our purpose of creating better futures together the touchstone against which our decisions can be assessed. Secondly, by delivering our Change Challenge Opportunity programme, we now have the right people, in the right place, doing the right things, in the right way, across all of our governance, leadership and staffing structures. Thirdly, we provide our colleagues with clear direction and consistent messaging against a backdrop of our necessarily evolving priorities. These three priorities are an important focus for promoting VfM throughout the business and align closely to our VfM objectives: To allocate resources to business plan priorities by: Maximising the size and impact of our development programme Making the most of our assets Maximising the social impacts of our activities Improving our productivity. We aim to achieve our VfM objectives through our business plan priorities by being committed, agile and, where appropriate, using digital solutions. Allocating resources to business plan priorities This year we ve seen the continued realisation of our three-year income improvement and cost saving programme. Action to improve VfM and financial capacity has been a big theme this year. Whilst this includes responding to government changes to welfare policy and the four-year 1% annual rent reduction, it also includes proactive measures: In 2016/17 we budgeted and delivered 3.5m of operating cost savings, 70% of the three-year target In addition, we outperformed the budget by 4.5m, including 1m of treasury cost savings, as a result of the swap breaks we completed in March 2016 We ve made 700k of additional savings for 2017/18, delivered from the management and organisational review We have 1.0m allocated for 2018/19 from business improvement reviews and further business transformation. 10

11 Maximising the size and impact of our development programme The government s rent reduction policy and the uncertainty around the LHA rent cap continues to place significant pressure on the development of new homes. Through a combination of careful re-modelling, attracting additional grant funding and changing the tenure profile of some schemes, we ve made significant gains towards the successful achievement of our development programme. The overall result is that we re well on track to deliver our business plan target of 1,500 new homes by 2021, while using less financial resource to achieve this. This year we: Delivered the majority of our 2016/17 programme including the development of 221 new affordable homes and 23 homes for outright sale Identified and secured new development projects to ensure we are well on track to deliver the affordable homes programme as set out in Our Journey to 2021 Generated a total additional surplus of 1.1m through shared ownership staircasing (where shared owners incrementally buy a greater share in their home) Focused on operational efficiency. We ve carried out a number of key process reviews so we can deliver an improved service for customers, as well as save time and money Completed a detailed review of our commercial development subsidiary, Arc Homes, and have begun developing a new, more efficient business model to deliver stronger results. This work is on track to be completed in 2017/18 Reviewed our build specification for new homes to reduce development costs without reducing the quality of new homes. By using the revised specification for most of our 2016/17 development programme, we ve been able to counter the financial pressures of reduced rent and build cost inflation. Making the most of our assets We own housing assets with a Net Book Value (NBV) of 646m (March 2017). Overall, the NBV of our housing assets increased by 8.6m in the year, reflecting 24.5m of investment in new homes, 9.8m of disposals under our stock rationalisation strategy and 6.1m of net depreciation. Our asset management strategy ensures that we can invest in our homes and communities so that they meet our property standard and are places people want to live, and also improve the overall performance of our homes. We assess any underperforming properties that we identify through NPV modelling and create an action plan. We aim to retain our assets however in some cases it s better value to sell the property and reinvest into additional new homes. This year we sold 36 underperforming properties for this reason, which delivered 3.4m in sales proceeds. Target units Actual units Asset performance Target proceeds Actual proceeds Target surplus Actual surplus 2015/ ,995, , , , / ,029,600 3,446,500 2,307,600 1,668,199 Total ,025,250 4,331,000 3,148,744 2,223,317 The year Net Present Value (NPV) profile demonstrates an improvement in our financial position, with the overall NPV rising from 249m in 2016 to 280m in At unit level, this has increased the average NPV by 12%, from 26.5k per unit to 29.7k. 2016/ / /15 NPV overall 280m 249m 217m NPV per property 29,656 26,544 24,779 Number of properties with negative NPV

12 Asset performance continued The improvement in overall NPV can be attributed to two main factors: A reduction in the NPV of maintenance costs using the assumptions around current repair costs and trends relating to reduced demand. More detailed analysis of repair costs also indicates that repair Costs Per Unit have reduced by 10% since the new contracts were tendered in 2014 A reduction in the NPV of major repairs as a result of the implementation of an in-house property data survey team, to produce more accurate and consistent data. In addition, there has been a positive effect from the sustained planned component replacement investments programmes and this has been factored in to the results. Significantly, the number of poor performing (negative NPV) properties has reduced from 753 in 2016 to 411 in The reduction is due to the positive influence of the factors detailed above. Repairs and maintenance In 2016/17, we carried out an in-depth review of our repairs service to realign our service offer with our legal and contractual obligations to residents, as well as providing efficiency savings and value for money, for example our residents carrying out simple repairs themselves. In the six months following the review, we ve seen a clear reduction in demand, 10% fewer jobs than budgeted, which has generated a saving of around 750k. Even though we ve seen a big saving, we re pleased to say that it has had little effect on resident satisfaction with the service. The trend has given us confidence to reduce the repairs budget by 300k (8%) in 2017/18. Customer satisfaction 2016/ /16 Satisfaction with the quality of repair 93% 95% Satisfaction with the quality of planned maintenance 89% 87% Stock Condition Surveys As outlined in our Business Plan, we re committed to delivering 60m investment in our current homes and communities between 2016 and As part of this, we have brought stock condition surveys in house and plan to increase the number of properties surveyed from 85% in 2014 to 100% in Bringing surveys in house has brought real financial and efficiency benefits. The in-house team is approximately 75K less expensive per year than external consultants, and enables us to do other tasks in homes at no additional cost, such as checking smoke detectors and repair completions. The team has already carried out surveys on 3,800 properties, increasing the percentage of our stock with valid surveys to 98%, meaning we re well on the way to achieving our target of 100% by We ve also been able to reduce the time between surveys on each home from five to three years, providing more timely, accurate and relevant data to inform future investment planning. Changes to the service This year we merged our Repairs, Compliance, Estate Management and Asset Management Teams into one. This restructure helped us realise financial and practical efficiencies including: A smaller yet more streamlined and efficient team providing an annual saving to the business of 85k The restructured service means that residents have one route for all maintenance queries resulting in better customer service Decision making on complex work is quicker and collaboration across the various property teams is more efficient It has also enabled us to make better use of key frontline staff. For example, empowering estate supervisors to carry out simple repairs in communal areas is already resulting in annual savings of approximately 10k. 12

13 Maximising the social impacts of our activities We re committed to investing in our communities for the long term and we re proud of the social impact we ve made by working in partnership with our residents and our wider networks through our Tenancy Sustainment and Supported Housing offers. Through a commitment to social impact evaluation, alongside business benefit, we use evidence to learn from and improve services across our operating area, increasing VfM and achieving the best possible outcomes in the process. By measuring our social impact, we aim to capture the effect that our services have on our residents and our communities. By measuring our performance through impact and outcomes, not simply outputs, we aim to address the so what? question. In other words, how does our work make a difference to our customers, the communities they live in, and to our business? Supported Housing Uncertainty around the future funding of supported housing has unsettled the sector. While we share others concerns, we ve reacted with agility to changes and, with considered planning, continued to make long-term investments in care and support for vulnerable people in our communities where it remains viable. Operating in a competitive environment, we also need to ensure that our support helps people reach their goals at the same time as being financially viable and sustainable. In 2016/17 we chose not to retender for our young people s service in Somerset, instead working collaboratively with the new provider to ensure minimal impact as the service transitioned. This year our Boards approved an ambitious investment strategy for our learning disabilities support services, that will see us invest 28m over the next five years, benefitting more than 500 people. We also secured a further 1.5m to enable 10 adults with learning disabilities to leave long-stay hospital care and live independently, with support, close to family and friends. SIDAS Additional external funding in 2015/16 allowed the Somerset Integrated Domestic Abuse Service (SIDAS) to continue its important work in 2016/17. Last year SIDAS: Actively supported 1,371 clients Offered 81 clients refuge or safe house provision, the remaining 1,290 we worked with in the community, many receiving support to obtain legal orders to provide additional protection Adopted a multi-agency approach, working with Children s social care, health visitors, schools and the police to support Team Around the Child and Team Around the Family arrangements, as part of Early Help. There were 1,619 children linked to cases during the year Worked with 607 high risk clients referred to our Independent Domestic Abuse Advisors Domestic Abuse Coordinators worked with 547 clients to help them come to terms with abusive events and supported them with how to avoid unhealthy relationships in the future. 13

14 Tenancy Sustainment Our tenancy sustainment and empowerment services work with customers to build skills, confidence and self-reliance. This helps them take control of their situations and take ownership of their communities. In the community We continue to work in 63 neighbourhoods through our Achieving What Matters programme, delivering 33 sustainable community solutions. Where we ve committed to working in communities for three years, we ve seen an increase in neighbourhood satisfaction from 68% to 77% and a decrease in anti-social behaviour incidents of 38% We completed the first Connected Communities course, giving residents the opportunity to gain an NVQ Level 2 qualification and the skills to embed sustained community development where they live. We saw twelve learners graduate and eighteen more are signed up to our next course We were awarded 56k of Sport England funding to extend our Creating Active Communities programme, delivering sports and activities to people and families in Somerset We were also commissioned to deliver Bristol Ageing Better, a community development and gentrification support programme worth 160k for older people in Bristol. Working with individuals In 2016/17 our Into Work Team helped 32 unemployed residents find jobs and supported a further 15 into volunteering roles We supported over 400 residents with financial skills, helping reduce their rental arrears by 35% With our support, 648,520 was awarded to residents through government payments that they were entitled to but not receiving. These payments help residents to stop falling into debt and ensure they have enough money to survive We supported 187 residents through our digital inclusion service, helping them get online, reduce isolation and save them time and money. Improving our productivity In 2016/17, we completed a significant organisational change programme called Change Challenge Opportunity. The key deliverables were identifying a target business culture, a supporting set of behaviours that we look for in our colleagues and leaders, and designing and implementing a flatter, lower cost organisation and management structure. Working with the Board, managers, and colleagues from across the business, we agreed to shift our culture towards being more innovative, results-focused, empowering, experimental and risk-tolerant. This target culture was underpinned by a new organisation and management structure and a revised set of leadership behaviours that informed the selection of people into the new structure. Three immediate outcomes from this change programme have been a 700k reduction (5%) in staff costs, significant and positive changes in the shape, skills and composition of our Executive Leadership Team, and a renewed focus on improving operational performance and VfM. Improving customer outcomes and landlord services In November 2016, we brought together our Rented Housing Teams, Leaseholder and Homeownership Management, Customer Contact and our Resident Engagement Teams to reshape and realign them to create a new Landlord Services division. Through this, we ve been able to streamline our services and cut out duplicate work in key areas such as income and estate inspections, as well as promoting: Effective inter-team working Greater ownership and accountability for customer-facing staff who are empowered to make decisions closer to the customer Stronger focus on performance and outcomes. We ve also looked in depth at a number of our business areas this year, mapping demand, reviewing our processes and redesigning our systems to ensure we re achieving Value for Money. These business areas include: Tenancy and Estate Services Former Tenant Arrears Income Management Review Voids and Lettings Mutual Exchanges For example, following our income management review, we shifted our focus from managing arrears to managing income. Through customer profiling, we identified residents who were at financial risk from welfare reform and contacted them to help them prepare. Over 618 of our residents have now created nest eggs through advance payment of rent to assist them in preparing for a move to Universal Credit, and will in turn help to protect our income stream. 14

15 Culture and business transformation The housing sector and the world around us is evolving at an incredible pace, and it s vital that we keep up, or stay one step ahead, to be a business fit for the future. We re moving away from our traditional ways of doing things, becoming more innovative, more agile, more efficient, and more commercially minded. This year has been a pivotal year for our culture and business transformation programme. In summer 2016, we held workshops and engagement sessions with employees from across the organisation to help us evaluate our culture as it was, and define what we wanted it to be for the future. Following this, we launched our new values and behaviours, which are embedded across our organisation. Our values Empathy Professionalism Integrity Commitment Our behaviours Aspirational Enabling and empowering Inquisitive Risk tolerant Adaptable Focused on delivery and outcomes We re driving a digital first approach across the organisation and for our residents, to make employee and customer lives easier, relationships stronger and services more accessible. By 31 March 2017, 15% of our residents had set up an online account allowing them to pay their rent, report repairs and update their personal details. We continue to sign all new residents up to an online account on day one of their tenancy. This year we redesigned our website homepage after user and navigational reviews, and it now features a self-service resident toolkit where customers can directly access their My Account and resident information. We achieve around 17,000 hits on our website each month, with about 61% from a mobile device. 15

16 Looking forward The opportunity to do more During 2016/17, we developed our partnerships and alliance strategy that sets a clear framework within which we will explore potential alliances. This strategy provides the context for exploring with DCH the potential merger of the two organisations and the benefits that amalgamation would deliver. The key outcomes we have identified would include: Our Journey to 2021 While merger discussions are ongoing, we remain focused on delivering our objectives set out in our 2016/21 Business Plan. We are now in the second year of Our Journey to 2021 which not only responds to the challenges the sector is now faced with, but also outlines our plans to transform our business. We re taking advantage of the opportunity to seek innovative ways to drive our business forward by focusing on our three key priorities of being a committed, agile and digital business. These priorities will be a key driver in improving VfM gains across each of our VfM objectives. Creating the financial capacity to deliver a minimum of 500 new homes each year in the West of England and Somerset as part of a package to deliver up to 15,000 new homes over the next 10 years Creating the capacity for additional investment in business and service transformation over and above existing organisational resources. Underpinning our discussions is our complementary geography, our shared South West heritage, and our ambition to assess how we can do more together than we can independently. Whilst the outcome of our work together is not a done deal, we are nevertheless optimistic about the potential benefits to both organisations and our colleagues, residents and stakeholders. Both Boards anticipate taking decisions as to whether or not to proceed in the autumn of 2017 and, if we do go ahead, we ll aim to complete the amalgamation in Improving our productivity Maximising the social impacts of our activities Allocating resources to business plan priorities Maximising the size & impact of our development programme Making the most of our assets 16

17 Maximising the size and impact of our development programme by: Developing over 1,500 new homes 176 in 2017/18 Replacing homes sold under Right to Buy. Making the most of our assets by: Investing 60 million in our existing homes through the delivery of our asset management and planned maintenance programmes 20.9m in 2017/18 Actively managing our property assets, reviewing their social and economic performance with a view to selling 20 underperforming properties per year. This will generate an estimated 10m over the next four years that we ll invest in new homes and regeneration. Our investment in our properties is for the long term, so we will continue to make sure that the homes we build and the communities we create are places people want to live and remain. By 2021 we re committed to: Maximising the social impacts of our activities by: Delivering a targeted programme of tenancy sustainment activities to support at least 40 communities through our Achieving What Matters plans, enabling an estimated 3,750 self-reliant and connected people to take action together Evaluating our social impact, alongside business benefit, using evidence to learn from and improve services across our operating area, increasing VfM and achieving the best possible outcomes in the process. Improving our productivity by: Delivering our new repairs service purpose: Right repair, reliably fixed. We ll do this by redefining and clarifying the scope of the repairs service we provide and reducing the 50,000 repairs we carry out each year. In 2017/18, we ll: Evaluate the Landlord Services structure following reviews of tenancy management, and voids and letting processes to deliver streamlined processes, reduced costs and improved customer service Carry out a full review of our Customer Contact Centre to understand customer demand, improve the customer experience and ensure we maximise the use of our resources to provide a more proactive focus for periods of low demand Improve April 2017 NPV position by 4% through reduced maintenance and void costs Increase financial capacity for investment in new and improved supported housing stock by disposing of poorly performing properties Increase social value offers delivered from our contractors by implementing a more strategic/ planned approach to ensure we get maximum social impact Reframe the Tenancy Sustainment service, taking a critical look at what they do and refocusing on what works and what delivers business impact. 17

18 In 2017/18, we ll: The world in which we operate is constantly changing and our business must be agile. We will adapt to remain relevant and contemporary and to thrive in this challenging environment. The need to cut our costs gives us the opportunity to seek better, more efficient ways of doing things and to deliver better value to our customers. Continue to explore merger opportunities, supported by a robust Strategic Partnerships Strategy. By the end of 2017, we ll know whether our planned amalgamation with DCH will progress or not Maximise the size and impact of our development programme by: Developing our approach to partnershipworking, exploring opportunities to expand our services and introduce new products to help us deliver our purpose efficiently and effectively. Make the most of our assets by: Driving cost reductions as part of a Board set cost saving and income improvement programme to alleviate a significant impact of the rent reductions. By 2021 we ll: Improve our productivity by: Using a rolling programme of Systems Interventions to drive out waste, reduce cost and improve service quality, all of which create genuine efficiency gains Sustain business efficiency by aligning the development of new homes with a stock rationalisation programme of nonheartland homes. Achieve our target of 100% of properties having in-house stock condition surveys, refreshed every three years. In-house surveys provide more accurate intelligence on our stock, that enables us to reprogramme long-term planned component replacements. This will enable us to release capacity of around 200k per annum to the business or to direct resources to new business plan priorities Bring our kitchen and bathroom programme in house via the in-house maintenance service. This will allow the delivery of 150 kitchens and 150 bathrooms in 2017/18 saving 50k against external contractors in first year We will bring asbestos surveys and reviews in house by the end of 2017/18, reducing operating costs by around 50k per annum in subsequent years compared to current costs Join the pilot group for the new Sector Scorecard. We hope that this will provide greater insight into our performance when compared to others across the sector for the 15 indicators identified. We will also continue to support the delivery of VfM throughout the business plan Refresh our Into Work offer to increase performance and improve business impact Carry out a strategic review of Supported Housing, taking a critical look at what we do and the value it adds in relation to its cost. 18

19 We have ambitious plans to modernise our service. This transformational programme has twin aims of improving our customers experience as well as reducing the costs of delivering our core services. Becoming a digital business will support us and help us achieve success across all of the VfM and business plan objectives. What we re working on from 2017: By 2021 we ll: What we ve achieved this year: Enablers of Customer Centric Digital Transformation Smart Data Transform our culture and services for digital delivery, enabling residents, customers and staff to be better connected Implement strategies to encourage residents to embrace our digital services and to do more for themselves at any time and from any device Collect and use customer and property data intelligently to help us plan, design and personalise services residents have signed up to an online account 11,374 transactions to pay rent online or through the allpay app A further 13% reduction in payments made via the Post Office or PayPoint 2,888 contacts made online via web form, social media or . Smart Contact Smart Culture Smart Data Digital Smart Service Design Smart Systems To enable data-driven decision making, we need to have the right data, at the right time, in the right place, in the right format, which is available to relevant users. The first stage in achieving this ambition is to understand where we are now. 19

20 Project 1 We re assessing our current data and reviewing what information we currently hold on our properties and residents, to ensure that we are only collecting the right data which is used to plan, design and personalise our services. We ll also be reviewing how new data sources such as social media feeds can be used to personalise our relationship with our current and prospective customers. Project 2 A joint integrated systems project with DCH will bring together all relevant customer, property and financial data into one single database, giving users access to the data they need at the time they require it. The joint data project will also look at how data quality can be improved, controlled and maintained both in our current and future integrated systems. VfM deliverables: Both these initiatives will make our data management more efficient, allowing us to concentrate our resources on a personalised service for our customers. Smart Systems In 2017/18 we ll be upgrading our Housing Management System, enabling us to take advantage of improved functionality built into the latest version of the software. This will allow us to monitor the impact of Universal Credit so we can provide our customers with guidance in managing their rent account. The second major systems project is the procurement and implementation of a new integrated Housing Management System for the newly merged business. This will significantly improve efficiency by: Redesigning business processes to ensure efficient working Providing automated end-to-end digital processes for our customers Providing improved functionality in order to manage our business Providing better reporting to allow proactive management of our customers and properties Introducing new technologies, e.g. Internet of Things, which will allow us to bring new and improved services to our customers. VfM deliverables: Improved tenancy sustainment Introduction of auto-texting to enable us to keep our customers up to date through a more immediate channel. Smart Culture Organisational design and development is a key focus, enabling us to create the right culture to embrace and optimise digital advancement. VfM deliverables: Multi-skilled and mobile work force Self-serving colleagues, managing talent, training, personal development and wellbeing Operations aided by technology and automation CRM seen and used as the lifeblood of all activity. Smart Service Design We ll review and agree a new single service design for the newly merged business, based on customer driven efficient and effective design, and enabled by new technology. VfM deliverables: Efficient configuration of a new integrated system Services streamlined into single service Informed changes to resourcing, including staffing. Smart Contact We re currently piloting a digital engagement strategy starting with Facebook to: Engage with our customers in a targeted way Build a digital community that drives value Develop and execute a social strategy through Facebook First (leading to Omni Channel) Develop ambitious performance targets that contribute to wider transformation. Facebook first million UK Facebook users by Facebook: 74.03% Market Share of UK Social Media Market. Facebook 74.03% Twitter 12.03% Pinterest 7.8% VfM deliverables: Increased number of customer queries resolved at first point of contact Fewer number of people a customer has to communicate with Shorter end-to-end times for resolution More self-serve options Stats as of April Source: Statisat UK Improved customer service and reduced operating costs. 20

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