Board Value for Money Self-Assessment. September Aldwyck Housing Group

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1 Board Value for Money Self-Assessment September 2013 Aldwyck Housing Group

2 Statement from Aldwyck Housing Group s Board of Directors Aldwyck Housing Group is governed by a Board of Directors with responsibility for strategic oversight of the Group s activities. The Board considers Value for Money to be a key area for the Group and its customers and is committed to securing year on year improvements in this area. Why is Value for Money important to Aldwyck Housing Group? Value for Money has always been a key area of focus for Aldwyck Housing Group but the current economic climate makes it even more important that we adopt a comprehensive and strategic approach to getting the most from the Group s resources. The Group has limited income and long term funding obligations, so must ensure that all expenditure is considered fully and carefully. Aldwyck recognises that to ensure Value for Money where the Group is resourced constrained means comparing the relative costs and outcomes of different activities being planned across the Group. From April 2013 Aldwyck Housing Group, as with all Registered Providers of Social Housing, is required to carry out a robust self-assessment indicating how well we are meeting the Homes & Communities Agency (HCA) standard on Value for Money and how wisely we spend the money our customers give us through their rents and service charges. This first annual self-assessment comes in two parts. Firstly in June 2013 the Board reviewed and approved the existing Value for Money Strategy. This document sets out what Value for Money means for Aldwyck Housing Group. Importantly this document recognises that Value for Money is the relationship between cost, performance and quality of the service being provided. Value for Money is high when there is an optimum balance between all three such that the group provides services at a relatively low cost, with high productivity (performance) and with successful outcomes (quality). The second part of our self-assessment is contained within this document, which explains how well Aldwyck Housing Group meets the HCA standard. 2

3 Our costs and our performance Aldwyck has benchmarked its costs and performance against both the sector generally, based on the latest 2012 Global Accounts of Housing Providers published by the social housing regulator the HCA, and against a smaller peer group of registered providers in our local area through our subscription to HouseMark. Aldwyck is part of a peer group of 21 social landlords in the local area (covering the Eastern region and North London). This peer group has been chosen to be large enough group for a meaningful comparison and includes social landlords with a unit size of several thousand to around 50,000. Indicators of operating performance The table below sets out Aldwyck Housing Group s indicators of operating performance against those published in the 2012 Global Accounts of Housing Providers. Indicator Aldwyck Housing Group Sector Average Stock failing to meet Decent Homes Standard at year end 0% 0% 1.9% Voids for the year 1.44% 1.47% 1.75% Bad debts for the year 0.24% 0.23% 0.8% Current tenant arrears at year end 4.1% 4.2% 4.8% Aldwyck s indicators of operating performance in 2012 were better than the sector average for each of the four indices detailed above. The Group has no properties which fail to meet the Decent Homes Standard and voids/bad debts and arrears performance is well below the sector average. 3

4 Financial highlights and key financial ratios The table below sets out Aldwyck Housing Group s financial highlights and key financial ratios against those published in the 2012 Global Accounts of Housing Providers. Indicator Aldwyck Housing Group Sector Average Operating margin 41.4% 39.5% 23.4% Growth in turnover 6.8% 7.6% 8.7% Growth in total assets 6.6% 12.2% 5.6% Debt per home ( ) 38,477 37,204 18,372 A key element of Value for Money as detailed in the HCA Standard is for social landlords to obtain a detailed understanding of both their absolute and comparative costs. Aldwyck has concentrated on cost control for many years and the Group s operating margin is a key measure of focus for both management and the Board. This key ratio is derived from audited statutory accounts and measures the total cost of providing services including overhead. Aldwyck is ranked 3 rd in our local benchmarking group through HouseMark (out of 21 social landlords) and is in the top decile (top 10%) nationally for this indicator. 4

5 How we compare against other social landlords One way of looking at our costs and comparing them against other organisations is to calculate the cost per property of the various activities we undertake. This ensures, as much as possible, that a like for like comparison is being made across different landlords. The HouseMark benchmarking service calculates costs in this way and once this has been done it is possible to see which landlords are performing best (those in the top quartile) and those that are performing least well (those in the bottom quartile). Some of our results compared to our benchmarking group are shown below. Housing Management - Total cost per property 5

6 Major & Cyclical Works Total costs Overhead costs as a % of adjusted turnover 6

7 Quality and customer satisfaction Value for Money is not just about costs; we also need to take account of quality and customer service satisfaction when assessing our performance. In the past Aldwyck has, in common with other social landlords, participated in a biannual survey of tenant satisfaction. In an effort to get more timely feedback on our customer satisfaction data the Board has, in the last 18 months, asked the management team to move away from this approach and towards conducting a smaller number of surveys on a continuous/rolling basis after a customer has received a service from us, for example when they have had a repair done. The questions used include those used via the STATUS/STAR surveys added to by bespoke questions requested by the Board. Some of the results of these surveys are shown below: 87% of customers were satisfied with the most recent repair that had been performed (up from 82% in 2012) 83% of customers are satisfied with the service provided by Aldwyck (up from 80% in 2012) 86% of customers are satisfied with the quality of their home (up from 71% in 2012) The results of these surveys will inform us more quickly of areas in which we need to improve our customer service. The Board recognises that we need to get better at what we do and within Aldwyck s Corporate Strategy we have set ourselves a target to achieve 90% overall customer satisfaction by March How our assets perform We know from the information we receive from our staff and customers that some properties are more expensive to repair and some are less popular than others. In a number of instances we have taken the decision to sell individual properties where the repair costs are high or where there is no demand from customers wishing to rent properties from us. A number of projects are ongoing to convert bedsits into flats; places where people want to live. In addition, Aldwyck is engaged in a review of the financial performance of its properties by comparing the future rental stream for each property with its projected costs of maintenance. The outcome of this, together with layering information about our local communities (such as instances of antisocial behaviour) will form an integral part of our new Asset Management Strategy. 7

8 Social and environmental impact Social and environmental value can be a difficult to quantify, certainly in financial terms. For this reason we have chosen not to attempt to monetise every example of the value created. The major social value we create is clear, in meeting the long term housing needs of almost 25,000 customers. We believe that the quality and security of this accommodation leads to a range of benefits including improved health and well-being and general quality of life. In addition to this we detail below some case studies of other examples of our social and environmental work. Welfare reform Prior to the implementation of welfare reform the Board made a decision to invest in a Housing Debt Advice team to support individual arrears cases, to help resolve benefit entitlement issues and prevent evictions. The team has provided frontline support to residents, both from the start of new tenancies and to existing customers. The direct financial impact on the Group has been to mitigate the budgeted increase in arrears. But in addition to this there have been substantial additional benefits for a number of our customers themselves through increased benefit entitlement. The additional support provided by the Housing Debt Advice team has allowed the Rent Services team to work more closely with residents in managing payment agreements, as evidenced by the arrears performance trend analysis remaining stable despite the implementation of welfare reform. To date there has been no increase in the number of evictions in comparison to figures from previous years. Youth and antisocial behaviour interventions Aldwyck Housing Group recognises that youth nuisance and antisocial behaviour impacts not only on the communities in which we work, but on the organisation as a whole. The Group has developed an in-house intervention and preventative delivery model to combat such issues working closely with community groups. Delivery of these programmes provide great financial savings compared to outsourced products and ensures that the needs of our whole community are met, which is not always the case with external delivery partners. These initiatives demonstrate a measurable decrease in antisocial behaviour/youth nuisance complaints, a reduction in vandalism costs and other intangible benefits. In turn these initiatives have also shown a decrease in rent arrears and voids against an increase in customer satisfaction ratings relating to their communities. 8

9 Building for life The Group submitted a proposal to St Albans District Council to provide a small number of apartments that would be targeted at older residents, to take full advantage of the surrounding families. The proposal includes a second benefit, whereby it allows the Local Authority to target initial lettings at older single residents who have existing tenancies in large family houses. The scheme has allowed the Local Authority to offer modern accommodation that is seen as more attractive to older residents, and thereby releasing much needed family accommodation for other families in housing need. The internal design and fit out of the scheme enables the units to be fully adaptive to meet older clients future needs. All units are wheelchair accessible with a lift servicing the 2 nd floor. The flat layouts are designed to accommodate wheelchair turning areas and special provision was allowed for any future potential adaptations, for example knock-out panels to bedrooms and the provision of tracked hoists. Drainage was provided so that baths can be easily adapted into walk-in showers. The aim of these properties is to provide a home for life set within a busy and active neighbourhood. The development incorporates solar panels to the slate roof which provide hot water to each flat. The systems are independent and serve each flat separately. This cuts down on the running costs for the residents and reduces the impact on the environment. Timber frame construction uses timber from sustainable sources. High levels of thermal insulation and energy efficient boilers have been used, the dwelling emission rates achieves a 25% improvement over the requirements of Part-L of the Buildings Regulations and the project has achieved Level 3 of the Code for Sustainable Homes. St. Paul s Place in St. Albans was awarded the Building for Life Silver Standard and achieved 14 of the 20 Building for Life criteria. 9

10 Some of our other successes to date Asset management and development We have achieved cashable savings of over 1m by renegotiating some of our development contracts We have also made savings on our VAT payments by turning our subsidiary Lea Valley Developments into a design and build company. This is estimated to save the Group 200,000 each year Connect Property Services (our repairs subsidiary) saved over 300,000 last year by hiring more operatives and using fewer subcontractors whilst still providing the same level of service Connect Property Services also saved 115,000 by joining CHIC (Central Housing Investment Consortium), a group of landlords who purchase materials and service contracts together in order to secure bulk buy savings. Housing We have re-tendered our gardening and grounds maintenance contracts, reducing the number of contractors from over 200 to just one supplier for part of our stock locations. This process, only recently completed, is intended to both save money and increase service standards We have invested over 50,000 in refurbishing our residential care home at Celia Johnson Court. Anyone interested in accessing our Older Persons Services can now apply online through Hertfordshire County Council s emarketplace We have added a number of new posts including two Housing Debt Advisors and a Youth and ASB Intervention Officer. These posts are critical to ensuring our customers are assisted through the significant changes arising from welfare reform and reducing levels of anti-social behaviour within our communities Better void management has reduced the number of days taken to re-let a property from 23 days in 2011/12 to 21 days in 2012/13. This compares to an average of 27 days to re-let a property for the sector generally. For each day a property is vacant we lose 53 of rental income and two days reduction in the length of re-let equates to an annual saving of 60,000. Finance We have renegotiated a number of our significant contracts including those for insurance and internal and external audit services. Annual savings are expected to be in the region of 40,000 The Group entered into a number of swaps in 2007/2008 as part of a de-risking strategy against upward movements in interest rates. During the year we entered into a number of interest-offset swaps which has led to a saving of over 1m in our annual interest bill. During 2012/13 our loans increased by 5.5% but our interest bill rose by only 8k (or 0.4%). 10

11 How we monitor performance Aldwyck has developed mechanisms for monitoring performance generally and for scrutinising performance in relation to Value for Money. The Board takes a keen interest in ensuring that Aldwyck delivers services that our customers consider to be of good value. The Board receives and reviews (through our Service Delivery Committee) key performance data on a quarterly basis and have access to monthly performance packs that are reviewed by the Executive team. 11