Nehemiah UCHA (N.UCHA) Value for Money (VfM) Strategy 2016

Transcription

1 Nehemiah UCHA (N.UCHA) Value for Money (VfM) Strategy 2016 Schedule of Contents 1.0 Executive Summary VfM Simply Stated 2.0 Introduction 3.0 What Do We Mean By VfM At Nehemiah? 4.0 How We Compare to Other Social Housing Providers 5.0 How We Assess the Homes We Own and Manage 6.0 Our VfM Successes to Date 7.0 Our Future VfM Plans 8.0 Monitoring and Review 9.0 Regular Self-Assessment 10.0 Scrutiny 11.0 Key Performance Indicators Appendix 1 - VFM Standard Appendix 2 - Benchmark CPU Figures re Peers Appendix 3 - Core VFM Actions for 2016/17 savings Appendix 4 HouseMark Benchmark Results 2015/16 1

2 1.0 Executive Summary VfM Simply Stated This statement will explain value for money as it s understood and applied at Nehemiah U.C.H.A. We consider both the cost of services (as measured by the Association) and the quality of those services (as rated by our customers). It is our mission, as a housing provider, to deliver quality, affordable housing to those who require it. In order to deliver this mission, we must carefully manage the money we receive and balance the costs we incur in running our social housing business. Rents must be collected from our customers in payment for high quality accommodation that is maintained by carrying out appropriate repairs in a timely manner. In addition, attention must be given to the state of the neighbourhoods in which we provide housing. It is a continuous challenge to balance the books to ensure that we live within our means whilst satisfying our customers. In reviewing the costs and quality of our services, through customer surveys and by making comparisons with other housing providers, Nehemiah recognises that it must do more to improve services to the satisfaction of customers whilst reducing unnecessary costs. We recognise that, in challenging economic and political times, there are some difficult decisions to be made. Nehemiah must ensure that the appropriate amount of money is spent on delivering homes and services that our customers regard highly, and that certain services must be delivered differently. The following pages describe some of our thoughts on the journey to becoming better for our customers, our neighbourhoods, the wider community and others affected or influenced by the work that we do. Generally, we are moving in the right direction; but more is to be done! 2

3 2.0 Introduction This strategy will outline: What VfM means to Nehemiah How we allocate scarce resources between competing priorities How our costs compare with other social housing providers How we assess the homes we own and manage Our VfM successes to date Our plans for the future How we will monitor the plans we set We will demonstrate that Nehemiah UCHA strives to be a cost-effective social business providing VfM services to our diverse communities. This strategy takes account of the regulator s VFM standard see Appendix 1 for a summary - and the guidance issued in July 2016 that introduced the sector measure social housing costs per property. These are changing times for the social housing sector, not least due to the 2015 summer budget and the changes outlined in the Housing and Planning Act 2016 (e.g. Voluntary Right To Buy and Pay To Stay). This strategy, therefore, reflects the known outcomes as at August What Do We Mean By VfM At Nehemiah? VfM is achieved when there is a balance between relatively low costs, high productivity and successful outcomes. The traditional approach to VfM focuses on achieving: The same for less More for the same cost/resources Better quality for the same cost/resources Better results in return for an investment in increased resources that is lower than the value of the improvements. The traditional definition of value for money is demonstrated in this diagram: 3

4 Nehemiah s approach to VfM is not just about costs, however. It is about getting the most (including social value) from all the resources that we have available. A high cost service can still be VfM if performance levels are also high and the results for the communities we serve are good. A low cost service may not be VfM if standards are low and the results are poor. Our aim is to achieve the best balance between cost and quality, and then keep this under review. Delivering value for money is not to be seen as a separate or discrete function within Nehemiah, but as integral to the way we work and part of what we as a staff team achieve every day. We aim to be a well-run and effective social business. The diagram below indicates how organisational objectives including VfM - are cascaded throughout the organisation and have a direct impact on individual staff objectives. This structure ensures that Nehemiah s resources are maximised and allocated to the services our customers want: In this strategy the Board aims to provide stakeholders with a view of how Nehemiah is getting to better understand its assets and resources and how they are being used effectively to deliver its social business aims. Our corporate aims and objectives are listed below: 1. To be effective and grow through partnerships; 2. Deliver excellent services; 3. Deliver through the best people; 4. Be open, transparent and accountable in governance, finance and risk management; 5. Support equalities through our work and with communities; and 4

5 6. Deliver social investment through monitoring our environmental, economic and social impact 4.0 How We Compare to Other Social Housing Providers Nehemiah compares its performance with other social housing providers in order to ensure VfM and customer focussed services are being delivered. The organisation is a member of the HouseMark Benchmarking Club and it reviews the figures detailed in the HCA s Global Accounts publication. In July 2016 the HCA issued to every social landlord that managed more than 1,000 homes at 31 March 2015 a social housing property cost measure based upon the information detailed in the 2014/15 financial statements. This RP specific measure was compared with the median social housing cost per property which was 3,550. According to the HCA s dataset, Nehemiah didn t manage 1,000 homes as at 31 March 2015 but, due to housing stock purchases over the last year, the organisation now manages 1,083 homes. We have, therefore, reviewed the way the HCA calculates their measure and calculated the CPU figure for 2014/15 based upon the approved annual audited financial statements. The graph below shows the social housing property cost per home also known as Cost Per Unit (CPU) - for Nehemiah, a selected peer group and the average for the sector: Because of the way medians are calculated, the individual medians for each cost category add up to 3,290 and not the headline total cost median of 3,550, as can be seen in the table below: 5

6 When assessing the above figures, the following needs to be taken into account: Management CPU this figure was expected to be static in 2015/16, despite a commitment to improve efficiency and reduce costs. A desire to improve service delivery across the business is evidenced by increased investment in staff, technology and other resources. Having started the financial year with an assurance of CPI plus rental increases for the medium term, it proved difficult to curtail scheduled plans after the autumn budget in Further, understated allocation of overhead costs (in respect of non-management costs) would also explain the relatively high management costs reported. Service charge CPU the Association s proportion of supported housing stock is larger (on average) than its peers in 2014/15. The service charge cost incurred were recovered via the service charges levied. Maintenance and Major Repairs CPU these two measures need to be considered in aggregate so Nehemiah s total of 1,753 needs to be compared with the sector s combined figure of 1,780. Although Nehemiah s total cost was 4.9% above the total median cost for the sector (i.e. 3,550), it is in line with the reference peer group used to benchmark performance please see Appendix 2 for details of the benchmark organisations and their respective CPU figures. The benchmarking information produced by HouseMark for the same period is detailed below: 6

7 2014/15 The Board have assessed the benchmarking data reproduced above and taken the following actions in 2015/16 to reduce operating costs in the long term and improve the performance measures: 1. Recognised the need to achieve increased efficiency in its overheads by reviewing internal processes, conducting procurement reviews for the purchase of goods and services, and making better use of technology to increase productivity and eliminate waste; 2. Considered the nature of its housing stocks location in 6 different local authority areas of the West Midlands, its impact on higher management costs and awareness of the potential benefits of stock rationalisation; 3. Reviewed the asset management strategy and consideration of asset disposals for difficult to manage stock; 4. Smarter investment in people (i.e. recruitment of income management officer and graduate trainees) to improve housing management and planned 7

8 maintenance services and to mitigate rental income loss and other operating costs in the light of ongoing welfare reform and short-term challenges; 5. Dealt with staffing issues responsible for an exceptional level of sickness absence and associated costs; 6. Commitment to the triennial STAR survey to better understand the relatively low customer satisfaction ratings in service delivery areas and aid in redesign of service provision; 7. Recognised the deficiencies in historic comparative benchmarking data, which measured performance against much larger social housing providers, and sought comparison with more representative peers; 8. Reviewed comparative results for annual benchmarking based on 2015/16 to note trends and areas of concern; 9. Pondered the apparent contradiction of high customer satisfaction ratings in respect of repair quality and timeliness with the relatively poor overall satisfaction ratings recorded. Benchmarking data for 2015/16 (shown in Appendix 4) shows clear progress being made in customer satisfaction ratings, although additional work is to be done to improve satisfaction levels. 5.0 How We Assess the Homes We Own and Manage In 2015, we employed ARK Housing Consultancy to undertake a thorough strategic asset performance review of the homes we own and manage. ARK applied a performance model that conducted a series of Asset Strategic Efficiency Tests that allowed them to understand the relative returns from the assets at a scheme level. The output from the model is summarised in the table below and as can be seen the homes have been categorised into three classes A, B and C best performing are classed at A and worst performing as C: As can be seen from the above table, around 15% of the homes are in the lowest category and will be appraised in more detail. In order to further enhance the way our assets are managed, active asset management software (PIMSS) has been purchased and ongoing property survey data will be input into it. As a result of this strategic approach, Nehemiah will: 8

9 Develop a reinvestment strategy and incorporate it into the long term business plan; Review current procurement arrangements and develop a Procurement Strategy; Expand the Asset Management review to incorporate non-accommodation assets; Consult with residents in order to assess the contractors employed; Review the suite of performance measures used to assess operating efficiency; and Quantify relevant risks associated with the management of our assets. 6.0 Our VfM Successes to Date VfM is not just about cutting costs: it is also about managing resources effectively in challenging operating conditions. Over the last few years we have taken the following actions in order to maintain our income and service standards: Improved production of performance monitoring information; Restructured the rent arrears recovery team; Streamlined the lettings and relets processes; Appointed trainees to ensure there is a succession strategy in the long term, but also to reduce the requirement to use agency staff in the short term; Worked in partnership with other social landlords to reduce the cost of service delivery (e.g. contracted with New Outlook H.A. for delivery of a standard care package and with Bromford Housing to deliver family support work); Reduced travelling time and work disruption for staff by employing SKYPE technology to facilitate meetings; Undertook the transfer of 84 homes from London-based Central and Cecil Housing Trust in January 2015 to provide local better support to customers; Trained customers so that they could assess and have input regarding our VfM performance and initiatives; Rented out surplus office space; Updated our accounting software to allow improved access to management and performance data; Developed focussed and cost effective staff training plans; and Promoted social investment programmes that will enhance customers wellbeing and job opportunities. Supported Housing Services A Point of Emphasis Nehemiah has been able to maintain its provision of an on-site scheme manager at each of its 8 supported house schemes despite the removal of Supporting People funding to a nominal level. The ability to sustain the staffing service reflects a commitment to our most vulnerable customers who take assurance and security from having a physical presence on site. 9

10 The following table shows the reduction in SP income for the last 5 years: , , , ,000 65,000 30,000 The last of the SP funding contracts comes to an end in September After assessing our corporate objectives and our cost base, we targeted the following VfM initiatives in 2015/16: Initiative Savings made in 2015/16 Classed as Ongoing savings Classed as One off savings Comments Asset management 37,800 37,800 2 trainees stock survey work Asset disposal 4,000 4,000 8 loss making bedsit units Asset disposal ongoing Class C loss making stock Enhanced asset register 17,500 17,500 Speedier access to new finance on facility completion Income collection 35,200 35,200 Arrears recovery team change Improving services 4,650 4,650 Customer handbooks digitised Housing trainee 8,000 8,000 Savings in staffing costs Former tenants arrears 21,496 21,496 Managed by Finance Team Loan finance 7m in new funds available to support capital expenditure Refurb programme 9,300 9,300 HfOP scheme void loss saving Refurb programme 27,500 27,500 HfOP scheme repairs component saving Purchase of managed stock 13,171 70,744 Finance cost savings Mobile working 12,500 12,500 Housing staff better equipped Procurement strategy 32,500 32,500 Maintenance programme Total 223, ,040 37,150 The above savings have partly been used to fund our 2015/16 housing growth programme, and the table below shows the homes developed or bought, the costs incurred and how they were funded. A modest development of new homes featured the completion of 6 affordable units in Sandwell at a cost of 573,000 (as discounted under a Local Authority S.106 agreement). The properties, completed in August 2015, have a market value of 924,000 and were funded by loans of 573,000 and internal investment of 150,000. In addition, 64 existing properties in management were purchased from housing association partners. No. Units Rent Tenure Cost Grant Loans Cash 06 Affordable 573, , , Social 785, , , Social 3,296,000 1,422,000 1,700, ,000 10

11 7.0 Our Future VfM Plans In March 2016, the Board approved a 10-year financial plan, and the graph below displays the projected future operating trends for the business: Costs Management Costs 1, , , , , , , Service Costs Routine Maintenance Costs Major Repairs Capitalised repair & maintenance c Total costs 3, , , , , , , , , , , , Forecast Costs Per Unit Trend Management Costs 16. Service Costs 17. Routine Maintenance Costs 18. Major Repairs 53. Capitalised repair & maintenance costs Total costs The chart shows an initial reduction in CPU from 2017 as a result of planned annual efficiency savings of 250,000. These savings are to be found mainly through reducing management and maintenance costs by identifying corporate waste and doing things more effectively, without adversely affecting housing service delivery. A review of the allocation of indirect costs to the respective monitored cost areas (i.e. management, service, support, routine maintenance, planned maintenance and major repairs) is to be undertaken to ensure that the reported operating costs are correctly presented. Further, prudent assumptions for challenging economic assumptions (i.e. interest rates rises) see overall costs increase as a function of those economic conditions in the face of reducing rental income. Ongoing monitoring of costs and opportunities for increasing efficiency savings will, therefore, be vital to ensure that operating costs remain in real terms. 11

12 In order to achieve the above unit costs, the following VfM initiatives have been targeted to take place in 2016/17: Initiative Classed as - ongoing savings Classed as - One off savings Comments Management cost efficiencies 105,000 - Targeted VfM savings p.a. Repairs efficiencies 150,000 - Targeted VfM savings p.a. Total 255,000 - The action plans detailed in Appendix 3 identify the actions that will be taken to achieve the VfM targets and those staff responsible for leading each project. 8.0 Monitoring and Review Our VfM plans will be monitored and reviewed by: Using benchmarking to identify the reasons behind differences in Nehemiah s running costs and those of other providers and as a result taking steps to improve VfM, or to understand the reasons for any differences Measuring service quality against service standards and resident satisfaction Regular and robust budget monitoring throughout the business and by the Board Using KPIs that are VfM focused Adopting best practice in procurement Achieving efficiency improvements year on year by streamlining processes, but maintaining an awareness of any potential diseconomies Working with partners in order to maximise our joint resources. 9.0 Regular Self-Assessment The implementation of the action plans (see Appendix 3) will ensure that Nehemiah s VfM plans satisfy both its business needs and the HCA's value for money standard. As part of this process Nehemiah s annual VfM self-assessment will be: Reported to the Board. Included in the operating financial review section of the financial statements 12

13 Made available as a summarised report that is tailored to meet the needs of the Nehemiah s customers and stakeholders Used as a briefing for staff on the key targets/outcomes of the VfM plans Scrutiny The development of effective scrutiny arrangements through the Trust's governance arrangements are vital elements in delivering VfM. Performance against the targets outlined in this strategy will need to be regularly reviewed by the Audit and Finance committee and, because of the importance the organisation places on VfM, the strategy will also be reviewed annually by the Board Key Performance Indicators The table at Appendix 5 shows the business plan targets for 2016/17. 13

14 Appendix 1 VfM Standard 1. Required Outcomes 1.1 Registered Providers shall articulate and deliver a comprehensive and strategic approach to achieving VfM in meeting their organisation s objectives. Their Boards must maintain a robust assessment of the performance of all their assets and resources (including for example financial, social and environmental returns). This will take into account the interests of and commitments to stakeholders, and be available to them in a way that is transparent and accessible. This means managing their resources economically, efficiently and effectively to provide quality services and homes, and planning for and delivering on-going improvements in VfM. 2. Specific Expectations 2.1 Registered providers shall: have a robust approach to making decisions on the use of resources to deliver the Provider s objectives, including an understanding of the trade-offs and opportunity costs of its decisions understand the return on its assets, and have a strategy for optimising the future returns on assets including rigorous appraisal of all potential options for improving VfM including the potential benefits in alternative delivery models - measured against the organisation s purpose and objectives have performance management and scrutiny functions which are effective at driving and delivering improved VfM performance understand the costs and outcomes of delivering specific services and which underlying factors influence these costs and how they do so. 2.2 Registered Providers Boards shall demonstrate to stakeholders how they are meeting this standard. As part of that process, on an annual basis, they will publish a robust selfassessment which sets out in a way that is transparent and accessible to stakeholders how they are achieving VfM in delivering their purpose and objectives. The assessment shall: enable stakeholders to understand the return on assets measured against the organisation s objectives set out the absolute and comparative costs of delivering specific services evidence the VfM gains that have been and will be made and how these have and will be realised over time 14

15 Appendix 2 A table that outlines the CPU figures for the RP s we benchmark against 15

16 Appendix 3 VfM Plans 2016/ 17 Action 1.1 Staffing and associated costs 1.2 Property management & service charge reviews 1.3 Management costs 1.4 Repairs process and procurement reviews Lead Chief Executive Director of Housing & Care & Business Development Director Director of Finance & Resources Business Development Director Start Date Qtr /17 Qtr /17 Qtr /17 Qtr /17 Anticipated savings 31,400 59,400 73,600 91,400 Total 255,800 16

17 Appendix /16 Headline measures Your value Quartile Costs headlines Overheads as a % of adjusted turnover 19.0 Total CPP of Housing Management Total CPP of Responsive Repairs & Void Works Total CPP of Major Works & Cyclical Maintenance 1, Operational performance headlines Rent arrears of current tenants net of unpaid HB as % of rent due (HAs only) 3.42 Average re let time in days (standard re lets) Rent loss due to empty properties (voids) as % rent due 0.70 Average number of calendar days taken to complete repairs 6.00 Percentage of repairs completed at the first visit NoData Percentage of properties with a valid gas safety certificate Staff turnover in the year % 12.5 Sickness absence average working days/shifts lost per employee 3.4 Satisfaction headlines Satisfaction with the service provided (%) 81.3 Satisfaction that views being listened to (%) 72.5 Satisfaction with the repairs & maintenance service (%) 76.0 Satisfaction with rent VFM (%) 78.5 Satisfaction with quality of home (%) 83.0 Satisfaction with neighbourhood (%)

18 Key Performance Indicators Appendix 5 Department Measures (KPI's) Actual 2015/16 Target 2016/17 F or Q or both* Staff Turnover Voluntary F & Q HR Staff Turnover Involuntary F & Q Number of sick days (average per employee) F & Q Finance Satisfaction with VfM of rent 76% 80% Operating Surplus Margin 28% 35% VfM Efficiency Savings 224, ,000 F + Q F F & Q Property Services Average repair cost (per property) Satisfaction with repairs service Satisfaction with staff helpfulness Overall satisfaction with Landlord services 1,307 1,283 F 75% 80% Q 80% 85% Q 81% 82% Q Void loss % 1% 1% F Housing Management Average re let time F & Q Satisfaction with cleaning 71% 76% F + Q Satisfaction with ground maintenance 71% 76% F + Q Income collection Rent Collection Rate % 101% 99.5% F F or Q* KPI measures financial (F) or service quality (Q) 18