Value for Money Annual Self-Assessment 2016/17. Value at the Heart of the First Ark Group 1

Transcription

1 Value for Money Annual Self-Assessment 2016/17 Value at the Heart of the First Ark Group 1

2 Contents 1. Introduction 2. What value for money means to us 3. What value we are delivering 4. Optimising the value of our assets 5. New homes and investment 6. Social value 7. Procurement Value at the Heart of the First Ark Group 2

3 1. Introduction Value maximisation is at the heart of the First Ark Group, which consists of the following companies: Value at the Heart of the First Ark Group 3

4 First Ark Group First Ark is dedicated to creating success that changes people s lives, through the practice of successful and responsible business, and providing support for positive initiatives across the North West. We work to regenerate and develop neighbourhoods, provide facilities management services to our customers and create lifechanging opportunities that inspire people and generate growth in the communities in which we work. The First Ark Group provide a range of products and services including: Homes for rent including general needs homes and supported living. Homes for sale and shared ownership including a range of purchase options. Business and property services including facilities management, refurbishment and repairs. Delivering social impact through creating and supporting partnerships. Managing, attracting and providing charitable investment that creates life-changing opportunities and stimulates economic growth in the local community. Home solutions including care products and services. A social investment fund to support and grow social impact businesses, creating wider economic and social outcomes. Value at the Heart of the First Ark Group 4

5 2. What value for money means to us At First Ark, we seek to maximise the total value that we create, and by value we mean much more than getting value for money when we buy goods and services - we also aim to generate social and environmental value. Social value is about spending more of our money in and around the areas we operate. This creates greater local economic activity and helps to create jobs and training opportunities for local people. Environmental value is about improving the impact the Group and our customers have on the environment and includes reducing emissions and increasing recycling where possible. This wider definition of value helps us to assess the total value that we create, and underpins everything that we do. Our operating environment During the past year, ongoing rent reduction requirements combined with economic and political uncertainty have meant that KHT has continued to focus on ways in which it can deliver greater efficiencies in delivering its activities. We have continued to implement more automated activities that allow us to reach more customers as cost effectively as possible. In this challenging environment, welfare reform changes have also led to more of our customers having to pay some or all of their rent, reducing their reliance on benefit payments and, in many cases, creating real issues and spending choices for customers. Despite this, we have collected more actual cash from customers than ever before and achieved a cash collection level of 21.4m in 2016/17 ( 19.6m 2015/16). Through our benefit advice teams, we have secured over 2.1m in additional benefits for our customers to help improve their ability to live within their homes and contribute to 300 less terminations. Tackling exclusion In 2016/17 under an agreement with One Ark - we provided 500k to tackle the multiple barriers faced by many KHT tenants, Knowsley residents and those in the wider Liverpool City Region. This achieved a number of outcomes as follows: Engaged and supported 1,156 people across the Liverpool City Region including 263 Knowsley residents back into employment, apprenticeship, traineeships, education or successfully completing a qualification. Supported 351 people and businesses across the Liverpool City Region to become more digitally included including 290 within Knowsley. Improved health and wellbeing for 136 Knowsley residents. Enabled 30 businesses to start up and grow - seven of these located in Knowsley. Value at the Heart of the First Ark Group 5

6 3. What value we are delivering Costs We monitor the costs of running the business closely (the operating costs), and we compare our costs to other organisations to help us drive continuous improvement. KHT s performance against the sector average and regional peer group is in the table below outlining the cost per property: Housing Management & Service Costs To understand the cost of managing and servicing our homes, we extract the one-off costs each year to show us the true underlying and recurring costs per home. Our underlying costs per property for the last five years are shown below via management costs per unit: Repairs & Maintenance Costs A significant element of the Group s annual expenditure is invested back into the housing stock to maintain and improve the value of the assets. An analysis of the repairs & maintenance expenditure over the last 5 years is shown below: Between 2013 and 2017 our underlying housing management has remained stable, despite increased demands of welfare reform. This demonstrates our ability to manage and control our costs effectively. Value at the Heart of the First Ark Group 6

7 Performance To demonstrate whether VFM is being achieved, the second element that we consider is the quality and efficiency of the service that we provide. To do this, we compare our performance against those of other organisations smaller and larger in the North of England (we have selected this comparator group because we feel that no particular business model or size of organisation has a monopoly on efficiency or good practice). Our latest benchmarking data for void loss at the end of March 2016 is shown opposite: Source: HCA Global Accounts It is important to note that over 12% of KHT s homes are in neighbourhoods which are ranked in the 1% most deprived (22% are in the bottom 3%), which has an adverse impact on the number of empty homes and the tenancy turnover rates. Although the cost of repairing our empty homes is reducing through the transformation changes we have introduced, the challenge remains to reduce the volume of empty homes to a more acceptable level. Value at the Heart of the First Ark Group 7

8 By attracting a more economically active customer base, our target is to reduce tenancy turnover to 6% over the next 5 years. This will reduce the number of empty homes that we have to manage by around 400 per year, and reduce our overall cost base even further, as well as improving other key performance indicators, for example rent collection and customer satisfaction. To improve our rent collection performance, over the next 12 months we will continue to develop our outbound contact to customers, and will use our customer and business intelligence to target specific customer groups and neighbourhoods where collection rates are lower than expected. The graphs opposite show performance over the last 5 years with generally improved performance year on year: Value at the Heart of the First Ark Group 8

9 Customer Satisfaction The third element that we consider to demonstrate VFM is customer satisfaction. Our ambition is to provide our customers with an experience that is comparable to the best of all sectors, not just the housing sector. To understand how we compare to other sectors, we are members of the United Kingdom Customer Satisfaction Index (UKCSI). The results of our UKCSI performance, compared to different sectors and well-known brands, is shown below: KHT Score 81.3% The following companies are ranked 48 in the July 2015 UKCSI and have the same CSI score as us The 2016 survey improved our index score performance from 80.2 to 81.8, which is a positive improvement achieved whilst implementing significant change throughout the business. KHT PIs Actual Target Overall satisfaction with KHT 97.6% 86.5% Complaints resolved in target 100% 97% This table shows KHT actual performance against the target despite a challenging year. Value at the Heart of the First Ark Group 9

10 4. Optimising the value of our assets Our main assets are the KHT homes, and an overview of our owned and managed property portfolio is shown: Neighbourhoods One of the Group s key efficiency objectives, and a key driver of the customer-led housing offer, is to improve the surplus per property by creating sustainable tenancies and commercially managing our neighbourhoods. Our in-house system is utilised to evaluate and continuously improve the financial return on KHT s core assets. The financial performance of KHT s assets for the last 3 years, and the target for 2017/18, is shown in the table below: Our asset management and investment plans are supported by a detailed data intelligence system, which has been developed through the accurate mapping of properties, blocks and neighbourhoods. Our approach to using high quality asset performance data enables us to identify properties, schemes and neighbourhoods which are becoming uneconomic or are no longer fit for purpose. The table shows a year-on-year improvement in terms of return on net assets with 3.7% for 2016/17 and a target on 4.5% in 2017/18. Value at the Heart of the First Ark Group 10

11 5. New homes and investment At First Ark, we use our development activity as the catalyst for the social and economic investment in the people and the places in which we operate. The Board considers and sets the parameters for all new homes and investment plans, and each scheme is assessed to ensure it achieves the required financial, social or environmental return. By keeping our operating costs low, we are able to direct significant investment into improving our existing homes, and developing new homes. In the last twelve months, we have invested 11.5m into improving our existing homes, and 9.3m into developing 79 new homes, of which 1m was funded by grants. Over the next 5 years, to further maximise the return on the value of our assets, we plan to deliver 1001 new homes through our housing development brand Oriel Living. The Group s development programme will provide a diverse housing offer that will attract more people to move into our homes and neighbourhoods, and will generate profits for reinvestment into the corporate strategy to further mitigate the increasingly challenging operating environment. One of the Board s key aims is to grow the business by developing new homes without an increase in management costs, which will help us to reduce our overall management costs per unit. Value at the Heart of the First Ark Group 11

12 6. Social value At the First Ark Group, generating social value is at the heart of everything we do. Working at a local and national level to influence the social economy, striving to invest our money in pioneering solutions and growing businesses, and bringing opportunity and prosperity to local communities. All of the companies within the Group deliver social value through the way they work, however a significant element of our social impact investment is driven through One Ark, the Group s social investment charity. Currently, One Ark drives increased outcomes and support for KHT s customers, which in turn contributes to KHT s performance and on-going viability. As part of the Group s planned growth, One Ark has increased its external funding to build capacity and to reduce its reliance on the contract funding from KHT. The way we work: First Ark is committed to: Creating opportunities for younger people and offers a range of apprenticeships across both office and trade disciplines. Voluntarily paying the Real Living Wage as a minimum rate of pay. Trying to maximise impact on the local economy by spending with businesses that are local to where we deliver our services, who in turn create additional employment and training opportunities in the North West. The way we invest: Whether it s charities or social impact businesses, we want to enable organisations to get the backing they need to grow and help more people by looking to invest in people, businesses and government initiatives that support: Employability, skills and economic growth. Enabling life chances for people who need a helping hand. Eliminating the Poverty Premium. Developing sustainable home tenancies. Environmental awareness and impact. Value at the Heart of the First Ark Group 12

13 The way we influence As a social business, we aim to: Influence and encourage responsible business, maximising the social impact and value that a business can create in the way it operates. Encourage the private and public sectors to identify and harness the potential in people by creating life-changing opportunities. Inspire the development of a culture and society that is more entrepreneurial, less dependent and more inclusive. Influence national policy to support the growth of a socially active and inclusive society within the UK. We partner with other organisations, Social Enterprise UK and Social Economy Alliance to extend our reach and our influence. In 2016/17 Our Social Impact was: Value at the Heart of the First Ark Group 13

14 7. Procurement Procurement is an intrinsic element of the Group s drive for efficiency and value for money. The procurement team has delivered over 6m in savings over the last 6 years. To further embed social value within our procurement processes, we adopt a variety of approaches to leverage third party spending to deliver social value and impact to benefit our communities, including: Apprenticeships and training programmes within our procurement contracts where possible. Procuring repairs and maintenance services through Vivark, our social enterprise facilities management arm, which reinvests its profits in the local community to create jobs, training and apprenticeships. Our innovative procurement activity demonstrates First Ark Group s emphasis on social value. Going forward our aim is to further increase the social impact that we obtain from each procurement activity. Inter Group Services Our Group structure enables us to create significant savings, utilising the services provided by one part of the Group to meet the needs of another. Vivark - our commercial services, facilities management and refurbishment company - provides an extensive range of services to KHT and agreed a new sevenyear contract in The contract cost was set to reflect current market rates and the new price provided a saving of 1.27m over the life of the contract, in addition to the 12.8m saving (over the life of the contract) that KHT receive as a result of the inter-group company arrangements. Supporting the local economy by developing partnerships and procuring supplies and services with contractors and suppliers in the local area. Incorporating a social levy into our procurement contracts where possible, where a percentage of the contract value is used to generate social value. KHT is a founder member of Fusion21 which creates a fund for social value projects by reinvesting a percentage of the management fee from its members. Value at the Heart of the First Ark Group 14

15 Going forward Asset Management We are investing in our stock condition surveys to increase coverage and improve our asset management strategy. The information will enable a robust forward plan further into the future, improved cash profiling, and generate economies of scale in procurement. Development The Board has reviewed the strong funding position of KHT and decided to extend the level of development. As a result, the programme of development has been increased from 568 to 1001 homes, with the Board remaining confident in the level of funding and contingencies. New Initiatives We are continuing to look for opportunities that will further enhance our Group and help the Group to grow. The growth of the fellow Group entities enables a greater share of the existing overhead spend in First Ark to be absorbed across the Group and thus KHT benefits from reduced costs. Value at the Heart of the First Ark Group 15