Grand Union Housing Group -...
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Grand Union Housing Group Value for Money Self-Assessment | 2017
Transcript of Grand Union Housing Group -...
Grand Union Housing GroupValue for Money Self-Assessment | 2017
ContentsINTRODUCTION 3
OUR 2020 VISION 4
EMBEDDING VfM INTO THE GROUP 5
VfM APPROACH 5
RETURN ON ASSETS 6
SERVICE COSTS AND OUTCOMES 14
CUSTOMER FEEDBACK AND INVOLVEMENT 22
GAINS ACHIEVED 25
LOOKING TO THE FUTURE 28
CONCLUSION 31
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While the work of the Group continues to be affected by the second year of the 1% rent reduction, GUHG has continued to deliver its Corporate Plan, 2020 Vision, to offer an increased programme of services. The Group's values of integrity, respect, quality, innovation and teamwork remain central to this delivery in such challenging circumstances. This will deliver real social benefits for customers.
In order to achieve the Vision, VfM remains at the forefront of our business, especially in the current economic climate. With this in mind growth of the Group, both organically by development and by the joining together with other providers, has enabled efficiencies to be achieved while making savings. The admission of Rockingham Forest Housing (RFH) into the Group from November 2016 has been a particularly important milestone in strengthening and growing the Group and the savings anticipated are forecast to be achieved.
Our development programme remains ambitious and on track, with 263 homes built last year with an anticipated plan of around 300 per year across a variety of tenures. Furthermore we continued to invest in our existing properties, including more fuel efficient ways for customers to heat their homes.
Each year Grand Union Housing Group (GUHG) assesses how far Value for Money (VfM) has been achieved against the Standard required by the social housing regulator, the Homes and Communities Agency (HCA).
This document aims to demonstrate to residents, investors and other stakeholders, how VfM is being achieved by optimising the use of our assets and resources to achieve our goals of building more homes, stronger communities and better lives.
It also shows the Group’s financial and services performance and how these compare with peers, including satisfaction rates from our customers.
While much of the group’s VfM strategy for the future remains relevant from last year, key milestones have been delivered in growing the Group and refocussing asset management strategy. However, the Group’s commitment to protecting customers and keeping their homes safe has always been of paramount importance. Further strengthening of investment in this area is planned for the coming years.
The Group's housing assets remain at the core of the business and the Group's asset management approach ensures they are maintained and being put to best use.
Introduction
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In 2015 we launched our Corporate Plan, 2020 Vision. This five year plan set out our goals and targets over the coming years and was split into five key areas on which the Group is focusing.
These are:
• New Homes
• Existing Homes
• Communities and Services
• People
• Governance
Everything we do falls within at least one of these key areas and drives us forward over the next five years.
After completing a number of objectives, an updated Corporate Plan was produced in early 2017.
Our updated overall 2020 Vision is to:
• increase our development programme to provide 1,500 new homes over the life of the 2020 Vision plan with a range of tenures, enabling more people to rent or own a home that they can afford
• deliver an ambitious, expanded programme of high quality services that our customers want, in the way that they want to receive them, whilst improving the wellbeing of those who need extra support, particularly the elderly
• be a force for positive change by investing in our homes and local communities to reduce fuel poverty, support people into work and provide opportunities for young people
• give our employees rewarding careers by investing in them and enabling them to exceed the expectations of our customers.
Alongside the work streams and our key goals, the Group has a number of values that are important to us and underpin everything we do:
• Integrity
• Respect
• Quality
• Innovation
• Teamwork
VfM sits alongside these at the heart of the Group, continuing to drive us to fully utilise all the assets available and to provide excellent services, whilst at the same time seeking to reduce costs and improve efficiency. Because of this, VfM plays a central role in all of the strategies, goals and aspirations that have come from 2020 Vision.
Our 2020 Vision
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Embedding VfM into the GroupVfM is achieved when there is a good balance between effectiveness, efficiency and economy resulting in relatively low costs, high productivity and successful outcomes.
The importance of VfM initiatives are understood by staff, Board members and involved tenants throughout the Group.
The Group’s annual staff appraisals and personal development plans all refer to 2020 Vision and confirm that we will:
• ensure VfM is embedded into all our corporate objectives and best practice is consistently applied across the Group
• review and reduce budgets where possible
• increase efficiency by working “smarter”
• review contracts to generate group-wide savings
• seek to market our services to other organisations in order to generate additional income and spread our overheads.
On top of this, the GUHG intranet includes a VfM section, which allows staff to submit their VfM achievements. Once completed, the form is automatically sent to the relevant staff member (who updates the Group's VfM register) to verify the achievement. If agreed, it will be included in the current year's VfM register.
VfM ApproachThe Group delivers VfM through a range of service improvement plans and new initiatives both internally and externally driven. The key elements of the approach are:
Return on Assets - ensuring that assets are appropriately recorded and analysed to enable best appraisal decisions to be made to achieve best use of resources.
Service Costs and Outcomes - ensuring that the cost base is scrutinised and analysed in relation to the performance achieved and customer expectations. Comparisons with others are used to drive decisions around service improvements.
Gains Made and Planned for the Future - directing activity to where the greatest impact can be made and capturing achievements by planning ahead and measuring against the set plans.
Existing HomesGiven its history and geographic spread, the existing portfolio presents a wide range of opportunities and challenges and the Board is committed to exploring and responding to these as effectively as possible, taking account of the current economic circumstances.
Optimisation of SecurityThe Group has always utilised its asset base effectively to leverage cost-effective funding and has benefited from the use of Prudential as security trustee in the recording and management of its stock. This work was further developed in 2016/17 in response to the requirement to maintain an Asset and Liability Register, to ensure that there is a centralised and strategic approach to the control of assets and liabilities by the creation of a database.
The Board has reviewed the Asset and Liability Register which includes documents covering property databases, other assets, insurance, pension liabilities, loan documentation, covenant calculation, VAT shelter, Right to Buy (RTB) agreements, bank details and much more. Independent assurance on the contents
and mechanisms to maintain the register were obtained in 2016/17 from the Group’s internal auditors.
Investment DecisionsThe Board has agreed the new Asset Management Strategy providing a new approach to investing in component replacement and supporting the 30-year business plan. In particular, the transition to a “just in time” methodology enables more targeted investment decisions to be delivered.
The Group has continued to benefit from the use of its net present value (NPV) evaluation software, which enables the NPV of existing properties to be evaluated and compared. This permits a targeted review of specific properties where calculated values appear either low or high when compared with expected market values.
This information then drives decision making around disposal, improvement or change of tenure to ensure the asset value of those homes is optimised. Social and environmental considerations are factored into these decisions to ensure that softer outcomes as well as financial are also achieved.
Return on AssetsThe Group understands that it is the custodian of a valuable and growing asset base and, through its 2020 Vision, seeks to optimise the deployment of those assets for the future. A key driver for asset management decisions is the analysis and appraisal of financial returns but, in addition, wider social and environmental considerations are factored into the decision making process.
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Change of UseThe Group regularly reviews its homes to see if improved value to the community can be achieved by demolishing them, changing tenure or disposing of them. In particular, in 2016/17, progress was made on redeveloping garage sites across our schemes to provide additional affordable homes.
Every Aragon and SNH property has its own energy efficiency rating, which is reconfirmed when vacant as part of the decision making process around disposal, improvement and potential change of tenure. The energy efficiency of our stock has improved year on year with a current average SAP rating of 71.8 across the Group.
During 2016/17, work began on the Group’s Air Source Heat Pump programme, which will see them installed into over 180 off grid properties where old fashioned electric storage heaters and oil fired boilers can be decommissioned, thus alleviating fuel poverty for tenants living in our rural stock.
New HomesThe Group is committed to growing its offer by investment and acquisition to meet the increasing demand for its homes and services throughout its current and adjacent areas of operation.
Investment DecisionsWhere investment in new homes is considered, financial appraisals are required to meet the following criteria:
• pay back within 35 years
• generate a positive NPV when discounted at the cost of capital for the Group.
In addition, all proposals require full sign-off by the Housing and Asset Management teams to ensure that:
• the location fits within the overall strategy and can be cost-effectively managed by existing operations
• room sizes, specifications, site layout and tenure mix are appropriate and manageable
• the homes can be repaired and maintained to a good standard into the future.
There is a meticulous four stage approval process overseen by the Executive Management Team to approve
• authority to undertake feasibility
• authority to acquire sites
• authority to commission contracts and record risks and actions
• review of outcomes and learnings.
This operates within clearly set parameters of delegated authority by the Development and Asset Management Committee, a committee of the Group Board.
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We deliver much of our new build programme through a traditional tendering process to ensure VfM on a design and build basis. This has enabled us to benefit from reductions in build price against our build cost estimates and takes advantage of a competitive market place. We were targeted to deliver savings of 1% on our assumed build costs during the delivery of the Affordable Homes Programme 2011/15 and at the end of the programme we had achieved this.
During 2016/17, we completed 110 new build shared ownership sales, resulting in a gross income of £10.3m.
We benefited from increases in property values and average void periods were reduced significantly compared to the previous year. This resulted in a sales income being received at 26% above budget. In monetary terms this is an increase on our sales income budget of £2,111,175 for the year and the reduced average void period we achieved means that an additional rental income of £158,400 has been received, when compared to the previous year’s average sales void rate.
Deployment of FundingThe Group successfully raised funds in 2013 to finance future development and has been able to invest some of these on a short term basis with partner organisations to finance their own development. This has been achieved by negotiating with the funders to enable on lending to improve the overall return for the Group with the current low levels of investment income achievable.
The Group is on course to invest its existing funds over the next 24 months of the development plan. Negotiations are already underway to achieve the next tranche of funding, in line with a realigned treasury management approach to enable Group capacity to be released, appropriate to investing activities.
Development Programme 2016/17During 2016/17, 263 new homes were completed across the Group, which was a signficant increase of 100 from 2015/16.
2015/16 2016/17
Social Rent 7 3
Affordable Rent 83 127
Shared Ownership 46 133
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GrantThe Group acts as the lead association in a consortium of other local housing associations which secured £6.12m of social housing grant from the HCA for delivery of the Affordable Homes Programme 2015/18 and have started delivering this programme. The consortium arrangements resulted in GUHG generating new fee income of over £13,000 in 2016/17.
During 2016/17 we bid for, and received, an allocation under the Shared Ownership Affordable Homes Programme (SOAHP) of grant funding of £4,868,000. This allocated £1,020,000 for GUHG to deliver 135 units and included grant of £3,848,000 for 104 units to be delivered by YMCA Milton Keynes as part of our consortium arrangements.
Future DevelopmentReducing grant rates and increasing land and build costs have increasingly necessitated a rebalancing of tenures in order to ensure development criteria can be met. This means a higher proportion of shared ownership properties are being delivered relative to affordable rented. While there is rising demand
for all tenures in our areas of operation, the Group is committed to a flexible but measured approach to delivering growth.
It is recognised that to continue to grow the affordable offer, internally generated subsidy will be necessary to replace central government investment. A market sales subsidiary has been set up to enable the Group to pilot selling homes for profit on the open market. Surpluses generated from this activity will then be reinvested in affordable homes for rent or shared ownership. It is recognised that there are significant risks associated with this strategy and these are being managed through clear governance channels.
A cautious business plan has been agreed with strict limits on investment levels for this tenure specialising in smaller scheme delivery in selected locations. Preparations are underway for the first schemes to be delivered in the next 18 to 24 months.
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Asset ValuationsThe majority of the Group’s housing stock is in good condition and is in an area of high demand for housing. The relatively compact geographical area we operate in gives efficiency benefits. The Group has emphasised that future growth will be within our current operating area.
Stock valuations were previously disclosed annually within the financial statements. However, at 1 April 2014, the Group has transitioned to Financial Reporting Standard 102, which now requires properties to be recorded in the financial statements at cost of acquisition (or “deemed cost” for properties acquired before 1 April 2014 i.e. their existing use social housing valuation at that date). This has affected our ability to compare return on assets performance with the wider sector - see table opposite.
However, it is considered critical to obtain and understand up-to-date valuations of the stock to ensure that assets are being effectively deployed both in use and as security for long term financing into the future. Therefore, valuations will be commissioned on a regular basis both to satisfy our funders and for internal asset management purposes. Social housing property is typically valued using a valuation basis known as the “Existing Use Value – Social Housing” (EUV-SH) and is carried out by our valuers, Savills. This valuation is based upon the estimated income and expenditure over the life expectancy of the property discounted to bring the value to the present day.
Case Study – From ASB to homes for families
During 2016/17, the Group transformed a former garage site in Sandy into three family homes. The Cambridge Road site, which is made up of two 2 bedroom homes and one 3 bedroom home, used to be made up of a number of garages which attracted antisocial behaviour.
But after identifying it as a potential site for redevelopment, GUHG transformed it into much needed affordable housing for local people. The site, which was originally not large enough for all three homes, was expanded after two GUHG tenants living adjacent to the site agreed to the release of garden land.
Comparative Performance – Return on AssetsThe following table uses information in the financial statements to derive simple return on assets ratios comparing operating surplus with net book value. It demonstrates that for Aragon, where the majority of the development programme is, the return has improved. SNH shows a slight reduction, but this includes a contribution to Aragon of £1.1m towards developments in their area of operation.
The return on assets from RFH is lower in 2016/17 due to some one-off costs in relation to development and joining GUHG, but the Group will benefit from the ability to share overheads and the additional capacity for future funding.
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2016/17 Results Operating surplusNet Book Value of
housing stockReturn
£m £m %
Aragon 21.3 418.6 5.09
SNH 3.9 76.1 5.12
RFH 1.4 38.4 3.52
Group as whole 25.9 533.1 4.86
2015/16 Results Operating surplusNet Book Value of
housing stockReturn
£m £m %
Aragon 18.5 385.8 4.79
SNH 4.0 74.8 5.35
RFH 1.9 37.4 5.08
Group as whole 22.6 460.6 4.90
HCA Global Accounts £m £m %
2015/16 5.5 134.8 4.09
For 2016/17 onwards, former subsidiary MacIntyre, which was absorbed into Aragon in 2016, has been amalgamated with Aragon which will affect these measures going forward. For 2015/16 the Group position does not include RFH.
Return on Assets - For Security PurposesAragonLeading up to the bond issue in December 2013 a full review of Aragon’s housing assets was undertaken.
At the end of the exercise all Aragon’s stock was valued and allocated as security against the amended loan balance (£150m), the initial bond issue (£115m) and the retained proportion of the bond (£35m). A desktop revaluation is commissioned annually on this stock which confirms that the required cover is in place (110% for the bank loan and 105% for the bond).
2016/17 2015/16
No EUV £m Cover % No EUV £m Cover %
Aragon
Bank loan 3,646 212.3 141.5 3,680 188.0 125.3
Bond Issue 2,484 147.2 128.0 2,490 141.7 123.2
South Northants Homes
Bank loan 2,735 105.7 192.1 2,780 101.5 185.0
Rockingham Forest
Bank loan 177 9.2 108.0 177 8.7 102.0
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All new units completed will be included within the unallocated stock. There is sufficient headroom in the early years security cover to allow for any loss through Right to Buys and asset management decisions resulting in sales or demolition. The management of the security is undertaken by Prudential as security trustee. The valuation basis for security is EUV-SH. It is pleasing to note that, even after the 1% rent reduction until 2020 is taken into account, there is sufficient headroom for the existing financing arrangements.
With effect from 1 April 2016 former subsidiary MacIntyre (MHA) properties have been amalgamated into the Aragon entity, and these are free of charges, so will increase the value of unencumbered stock in future years along with any new completed properties as they are developed.
The shortfall in the RFH loan security has been secured in the short term with available cash balances, while the Group reviews its strategy on entity funding to achieve more synergies. Unallocated stock is readily available to address this shortfall should this be required.
South Northants HomesThe properties that were transferred to SNH from the Council in 2008 are all in charge to cover its £55m bank loan. The management of the security has been undertaken by Prudential as security trustee and the value reflects the stage of maturity of the organisation. It is recognised that there is significant excess capacity in the valuation as a result of the significant investment in stock condition works and we are reviewing how to release this for the future with our advisers.
Financial AnalysisThe Group is committed to understanding the costs and outcomes of the services it delivers in order to better manage the factors that affect them. To do this, costs and performance are compared against other sector providers using the benchmarking service from Housemark. The target is to achieve upper quartile performance.
The tables below and on pages 16 and 17 give the financial and service performance results
of the Group overall and for the individual subsidiaries. The headline cost analysis has been provided by the regulator as a means of understanding the different business models in the sector, as recorded in 2015/16 submissions, and has been used as a starting point to review our position. The more detailed analysis which follows is more recent and seeks to demonstrate trends over time, but this is affected by accounting standard changes over the periods compared.
Overall, total costs per property compare favourably with the median for the sector. Within this however, there are favourable variances for management, service and other costs but with some significantly higher spends relative to the sector in maintenance and major repairs. This dynamic was identified last year
and reflects the Group’s strategy of investing in assets for the future, by maintaining a high quality approach to the physical properties but ensuring day to day costs of administration and management are kept to a minimum by sharing back office services across the Group.
Headline Social Housing Costs per property 2015/16 - HCA analysis
Key
Service Costs and Outcomes
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£’000 pp Headline Management Services MaintenanceMajor
RepairsOther
Aragon 3.46 0.56 0.24 0.88 1.48 0.30
SNH 3.57 1.03 0.02 1.25 1.17 0.10
Median 3.57 1.02 0.36 0.97 0.81 0.21
Cost above upper quartile
Cost between median and upper quartile
Cost at or below median
RFH are not included in the HCA analysis as their stock is under 1,000 units
The strategy of the Group remains to drive efficiencies in the provision of management costs wherever possible by:
• sharing costs of central functions such as HR, IT, Finance etc across the group entities
• generating income from providing central services to other providers e.g. IT and development services
• amalgamating the smallest Group entity, MacIntyre, within Aragon to reduce the costs of servicing a separate board where the numbers of properties do not justify this approach
• welcoming additional smaller providers to the Group, such as RFH, to share in the services provision
• re-aligning the management teams to cover both main trading subsidiaries to achieve further consistency of operation between them.
It is anticipated that further efficiencies can be achieved through even closer group working through amalgamation and the steps to achieve this are currently under review.
The Group has always set out to maintain investment levels in the stock to ensure that the homes remain fit for purpose for
the future. However, the Group is achieving efficiencies in this in its group-wide approach to maintenance by the appointment of a Head of Responsive Repairs for the combined Group to identify where cross-group working can achieve efficiencies. The programme of new technology investment for addressing fuel poverty is still in the procurement phase and it is anticipated that as greater competition is achieved from the suppliers, savings may be achieved in this programme. In addition, there may be opportunities to improve recovery of service costs through improved service charge administration and this is being considered for the future.
The Group has worked with our property advisers to ensure optimum investment levels to remain within decent homes. This has resulted in some re-phasing of our investment programme in such areas as kitchens, windows, doors and bathrooms. This has enabled the Group to respond to the -1% rent decrease, but to ensure that the tenants’ homes remain warm, safe and decent. It is projected that this area will move towards the median over the next three years. The Group is proud of its track record in ensuring homes are maintained to protect tenant safety and will ensure that appropriate levels of investment are maintained in this area.
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Financial Value for Money Analysis – Group overall
Prepared under FRS 102 Prepared under UK Gaap
2017 £/property
2016 £/property
2015 £/property
2014 £/property
2013 £/property
Management and service costs
963 1,094 1,066 1,027 1,027
Routine and planned maintenance costs
1,118 1,089 1,158 1,086 1,094
Major repairs and capitalised improvements
1,185 1,234 1,557 2,115 1,905
Operating costs 3,401 3,646 3,333 3,648 3,496
Operating costs as % of turnover
65% 66% 67% 69% 71%
Chief Executive’s pay (excluding pension) – all stock
13.9 14.0 14.0 13.8 13.5
Net debt per unit – all stock
21,310 21,327 20,867 20,067 19,826
Following the transition to FRS 102, costs appear higher due to the uplift in depreciation calculation. This is an accounting adjustment and does not influence the underlying performance of this business, but it does
affect the ability to compare progress historically. UK Gaap (Generally Accepted Accounting Principles) prepared comparatives are given for information only.
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Financial Value for Money Analysis – across subsidiary associations
Prepared under FRS 102 ARAGON SNH
2017 £ 2016 £ 2015 £ 2017 £ 2016 £ 2015 £
Management and service costs
1,018 1,094 873 998 1,058 1,021
Routine and planned maintenance costs
1,122 964 1,067 1,410 1,361 1,317
Major repairs and capitalised improvements
1,217 1,540 1,633 1,518 1,128 1,398
Social Housing operating costs as % turnover
62.3% 60.1% 59.0% 74.5% 80.5% 81.2%
Overall operating costs as % of turnover
60.1% 60.9% 58.5% 76.1% 75.8% 76.3%
Net debt per unit 28,345 24,732 25,921 10,135 11,758 12,024
The Aragon figures from 2016 onwards incorporate MacIntyre.
Prepared under FRS 102 ARAGON SNH
2014 £ 2013 £ 2014 £ 2013 £
Management and service costs
817 838 1,030 1,059
Routine and planned maintenance costs
996 987 1,122 1,346
Major repairs and capitalised improvements
1,606 1,466 3,580 3,019
Operating costs 3,191 3,090 4,252 4,067
Operating costs as % of turnover
61% 63% 85% 86%
Net debt per unit 23,623 23,319 12,255 11,405
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ARAGON SNH*National Average
2017 % 2016 % 2015 % 2017 % 2016 % 2015 % 2016 %
Percentage of rent collected (excluding arrears)
99.49 99.96 100.20 99.60 99.61 99.70 99.65
Current tenant arrears as % of rent due
1.47 1.60 1.47 2.00 2.06 2.19 3.37
Bad debts written off as % of rent due
0.03 0.03 0.26 0.04 0.20 0.16 0.57
Homes meeting Decent Standard level
100 100 100 100 100 100 100
Average number of days to complete a repair
12.44 10.52 12.02 15.47 12.90 17.40 7.83
Re-let time in days
24.01 24.44 21.85 21.50 20.23 24.00 19.23
Performance Management and ScrutinyThe Group continues to build on its approach to performance management and scrutiny with the use of new reporting tools to develop the production of performance information and trends analysis. Processes have been set up to
enable real time information to be provided to the relevant managers at all levels throughout the Group in a consistent and reliable format. This information is reviewed in detail at management meetings and appropriate actions agreed in response.
*This data is taken from Housemark (an organisation providing and publishing a benchmarking service of organisations providing social housing across the UK) and/or other published information.
Overall, performance has held up reasonably well given current economic and operating challenges. For the first year, Aragon figures include the supported living provider, MacIntyre. Work has been undertaken during the year to integrate MacIntyre and RFH into the Group processes within the constraints of its very different client group and geography. Re-let times continue to be a priority for the Group and work is underway to streamline the void processes to further reduce this timescale, taking account of the differing allocation basis across the Group.
BenchmarkingThe Group understands that the use of data intelligence from a range of sources, including benchmarking, is an important tool in understanding how our service delivery performs and gives a platform for improvement. It is therefore important that we understand our costs and performance in relation to other similar organisations. We do this by undertaking benchmarking exercises. We annually submit data to Housemark and also compare key performance indicators across the Group, analyse the results and share best practice to achieve greater VfM.
The results for 2016/17 have been benchmarked against all those housing providers in the UK who have supplied data to Housemark. These results, in the form of a dashboard, are shown over the page, have been presented to the GUHG, Aragon and SNH Boards. The dashboard for the prior year is also given to show year on year progress.
RFH information has not been provided as they only joined the Group in November 2016.
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Aragon dashboard 2016/17
Value for Money
1 Responsive repairs and void works2 Rent arrears and collection3 Antisocial behaviour4 Major work and cyclical maintenance
5 Lettings6 Tenancy management7 Resident involvement8 Estate services
Poor performance/high cost Good performance/high cost
Poor performance/low cost Good performance/low cost
Cost
Cost
Performance
The bottom right corner represents ‘good performance/low cost’ and five of the eight key service delivery areas are comfortably within this. Year on year responsive repairs and major works and cyclical maintenance costs (1 and 4) continue to show Aragon is spending more than the average, as anticipated by the strategy. This is already an area of focus for the future and is in part explained by our commitment to new technologies to protect our tenants against fuel poverty by installing environmental solutions in villages where gas is not available.
Aragon dashboard 2015/16
Value for Money
Performance
1 4
57
6 2
8
1
4
5
73 2
8
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South Northants Homes dashboard 2016/17
Value for Money
1 Responsive repairs and void works2 Rent arrears and collection3 Antisocial behaviour4 Major work and cyclical maintenance
5 Lettings6 Tenancy management7 Resident involvement8 Estate services
Poor performance/high cost Good performance/high cost
Poor performance/low cost Good performance/low cost
Cost
Cost
Performance
There are two areas where performance and costs are within the ‘good performance/low cost’ corner (tenancy management and estate services) together with two that have moved towards it (rent arrears and major works) following work undertaken during the year to review service delivery.
The remaining area of poorer performance is responsive repairs where work is being undertaken to develop a group-wide approach to this area, at the same time as delivering additional workload following RFH joining the Group. Lettings performance has improved, but the costs remain high due to the allocations arrangements with the local authority. With regard to resident involvement, we have continued our commitment to this area with a revised focus on supporting residents in their pursuit of work.
South Northants Homes dashboard 2015/16
Value for Money
Performance
1
4
57
6 8
2
14
57
3
2
86
Employment Support and Digital InclusionThe Group has enhanced its employment support and digital inclusion offers to ensure maximum benefit is obtained for the investment and new approaches are being tried. Three members of the Community Investment Team have completed their Award in Education and Training (AET) qualification which allows them to deliver more structured training themselves. GUHG will now be less reliant on external trainers for the delivery of employability and digital inclusion training, providing greater VfM to the group.
Resident InvolvementWe continue in our commitment to involve our residents by facilitating them to monitor and scrutinise performance. Our two Stakeholder Panels (one at Aragon and one at SNH) have been successfully established and fully recruited to. We also have a consultative group, GUHG100, who we use throughout the year for less formal and ad-hoc consultations.
Social and Economic ValueThe Group provides a social housing function and our success cannot be just measured by financial and service delivery results. Whilst financial performance is important to enable us to build more new homes, we also want to ensure our activities have a social and environmental return.
Supporting tenants beyond the provision of their home has become an important element of our role as a social landlord. Helping them find employment and maximising their income has continued to be a real focus during 2016/17. The funding of such initiatives comes with VfM savings and has been achieved by the existing staff team through a combination of partnership working and obtaining external funding.
Some examples of achievements during 2016/17 include:
• Aragon’s Youth Involvement Team secured further £19,000 external funding from Shefford Town Council for continued youth and community working in and around the Shefford area.
• SNH continued its Skills4U life skills training courses and trained over 60 tenants in a variety of courses including first aid, manual handling, healthy living and budgeting.
• Aragon’s Youth and Community Participation Officer gained her assessor qualification which will enable her to train and assess the next generation of Youth Workers from amongst our residents. Two trainee youth workers also gained their Qualifications and Credit Framework (QCF) qualifications (Level 2 and Level 3) in youth work, supported and assessed by Aragon’s Youth and Community Participation Officer.
• During the first quarter of 2017 alone, our Digital Inclusion Officer saw over 50 people for one on one digital support and trained almost 150 residents within a group setting, either by herself or in partnership with colleagues.
• Aragon, working closely with the Akabusi Charitable Trust, ran its sixth cohort of Project Mackenzie. This project aims to support young people aged between 16 and 24 with a focus on customer service skills. The participants were helped into a variety of work placements with companies including Aragon itself, Yo Sushi and Golds Gym.
• The Group’s employability offer this year has widened to offer non-standard training. For example – two tenants have been supported to achieve “reach and counterbalance licence training” and have subsequently secured employment.
Customer Feedback and Involvement
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• Both Aragon and SNH Welfare Reform Teams support tenants facing the under-occupancy charge with a range of solutions ranging from moving to a smaller property to ensuring all benefit entitlements are being claimed. A key element of their work has been assisting tenants with debt related problems. The teams helped tenants receive nearly £3million of income in 2016/17 and dealt with nearly 1,200 cases.
SurveysEach year Aragon and SNH take part in the STAR (Survey of Tenants and Residents) survey to gauge our customers’ views regarding their homes and services they receive. The percentage of tenants answering as being either Very Satisfied or Fairly Satisfied is shown below:
* Housemark benchmarking club figures. It is encouraging to note that customers’ views of both Aragon and SNH have continued to be above the national median.
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ARAGON SNH Median
Financial Year 2015/16 2016/17 2015/16 2016/17 2015/16* 2016/17*
Overall serviceGeneral needsShelteredCombined
91.895.693.1
89.695.791.6
91.793.992.4
94.993.494.5 87.3 86.4
Quality of homeGeneral needsShelteredCombined
87.795.190.2
89.496.291.7
86.093.988.6
92.593.492.8 85.6 85.3
NeighbourhoodGeneral needsShelteredCombined
91.095.692.6
90.493.691.5
95.296.495.6
96.496.496.4 86.2 86.0
Rent value for moneyGeneral needsShelteredCombined
89.891.290.2
92.394.993.2
89.789.889.7
94.090.492.8 83.8 84.0
Repairs & maintenanceGeneral needsShelteredCombined
88.796.191.1
85.796.889.5
85.689.686.9
86.790.487.9 81.2 80.6
ViewsGeneral needsShelteredCombined
77.885.180.2
79.182.980.4
78.787.781.6
87.487.587.5 71.0 71.0
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In relation to the number of contacts with customers we receive on an annual basis, the number of officially recorded complaints continues to be particularly low given that the Group owns and manages almost 12,000 properties.
Additionally our staff have received a number of compliments. While our customers are happy to tell us when we aren’t performing to the standard they expect, the figures below demonstrate that they are equally keen to praise us when they have received good customer service.
Compliments and Complaints
2015/16 AHA SNH GUHG TOTAL
Compliments 45 22 3 70
Complaints 75 19 6 100
2016/17 AHA SNH GUHG TOTAL
Compliments 56 31 0 87
Complaints 67 36 11 114
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ProcurementSpecialist procurement software has now been installed within the Group, with a view to compliance for procurement above EU threshold to be achieved before the deadline. The system is currently being tested by early adopters within the Group, with several procurement activities already live within the system, and being responded to by selected suppliers.
The system is planned to be rolled out around the entire Group by early 2018, bringing visibility of all procurement activities into one system.
This will enable the Group to be compliant with tendering legislation, and further enable VfM driven through the procurement process to be monitored more effectively.
Procurement LogAs in prior years, VfM is embedded in our staff values and we encourage all our staff to record money saving and efficiency measures on our register. We recorded over £636,000 of known efficiencies during the year in a whole variety of different areas.
Gains Achieved
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These savings are additional to the ongoing savings from previous years’ procurement exercises.
The chart illustrates where the largest proportion of savings has been achieved this year.
VfM Achievements 2016-17 VfMAccommodation charges £55ID badges £581Waste collection £765Vehicle costs £1,003Legal fees £2,100Phone charges £2,521Cleaning costs £2,639Barn door replacements £3,000Training fees £3,793Equipment maintenance £3,860Texting contract £5,140Subscription charges £8,710Comms department print savings £11,512Insurance £32,208Property rental £36,976Business rates £39,604Utility charges £62,518Window replacements £170,000Gas servicing £250,000
£636,985
Subscription charges
Comms department print savings
Insurance
Property rental
Business rates
Utility charges
Window replacements
Gas servicing
Rockingham Forest Housing joining the GroupIn November 2016, Rockingham Forest Housing (RFH) officially joined the Group.
One of the benefits to RFH from this was making the most of the Group's strength and size in insurance matters.
By merging their insurance policies with GUHG’s, RFH have benefitted from higher levels of cover in most instances at a reduced cost, circa £20,000 per annum.
Gas ServicingWe have started to see savings from the Group’s gas servicing contract that came into effect in 2015/16.
Now in its first full year, Wheldons are responsible for all gas servicing for Aragon, RFH and SNH properties. This is a much more efficient contract to manage than what was in place before, with a different contractor for each subsidiary.
Compared to the previous contract, the Group is set to make a saving of over £1.7m over the course of the seven year contract.
Garden waste reuseThe Grounds Maintenance Team at SNH is responsible for landscaping and the upkeep of green spaces, as well as any arboricultural works.
When they have cut back trees and hedges, they had previously been creating wood chipping which needed to be taken to a waste disposal centre at a cost of £10 each time.
The team leader found a solution that used up the chippings, meaning the trips to the waste disposal centre were no longer needed.
By using mulch created by the wood chippings on borders, they have created an aesthetically pleasing way to keep weeds at bay and have saved £500 in tipping costs so far and the savings will be ongoing.
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VfM Achievements 2016-17 VfMAccommodation charges £55ID badges £581Waste collection £765Vehicle costs £1,003Legal fees £2,100Phone charges £2,521Cleaning costs £2,639Barn door replacements £3,000Training fees £3,793Equipment maintenance £3,860Texting contract £5,140Subscription charges £8,710Comms department print savings £11,512Insurance £32,208Property rental £36,976Business rates £39,604Utility charges £62,518Window replacements £170,000Gas servicing £250,000
£636,985
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Following RFH joining the Group, a number of savings have been made or will be in the coming years.
RFH negotiated consent fees on a loan with Nationwide when they joined the Group. By negotiating the fees down from 60 basis points on the value of the loan, to a one off fee of £5,000, the Group will benefit from an estimated saving of £20,000.
Savings continue to be made on business rates following the move to apply the Charity Dispensation for the Derwent House office, CASS office at Beverley Court and the Aragon Depot. As a result of this, a saving of £38,000 was made in 2016/17.
The decorating voucher scheme we introduced in 2015/16 continues to drive cost savings into the Group of around £25,000 to £35,000 per annum depending upon the number of new tenancies requiring such vouchers. This is an ongoing saving and has now been adopted by RFH.
Astraline took over the Group’s out of hours calls service from January 2017 which saw a saving of £1,500 in the year up to 31 March 2017 and will continue to see savings of £500 per month moving forward.
Following the implementation of our 2020 Vision, we have been working on future savings in each of our work streams.
New HomesBuilding new homes has remained one of the main goals for us in our 2020 Vision. We are also striving to make the most of our stock and take opportunities to innovate where possible.
One of our goals was to utilise the skills we have within the organisation, such as development services delivery, and offer them to other housing associations. This was implemented in 2016/17 and brings in almost £30,000 per annum for the Group.
Another goal was to extend our current operational area. With RFH now part of the Group, we are building in new areas across East Northants and Daventry.
Existing HomesOur record of investment in our existing properties demonstrates that in the last five years we have invested around £150m in maintaining and improving our homes. Our intention is to build on the work we have already carried out and, where feasible, procure all major contracts on a group-wide basis.
In 2016/17 we procured a new group-wide window contract. Over its lifetime, this new contract will generate a saving of circa £1,700,000 compared to that previously in place.
Looking to the Future
Communities and ServicesThe Communities and Services work stream covers a range of activities including general housing management, community investment, supported housing and customer services.
One of our targets was to develop and encourage use of our websites and other digital communication formats.
In 2016/17 we launched four new websites which allow customers to self-serve more than ever before. In Aragon and SNH, a customer mobile phone app was launched which allows users to pay their rent, check rent statements, report or track repairs, find out when gas services are due and much more on the go.
PeopleWe believe that everyone who works for, and is involved with, Grand Union contributes to the success of the Group.
One of the main aims in this work stream was to continue to invest resources in recruiting, training and developing our staff in order to develop a high performance culture. Coaching has become a major part of this and over the past few years it has been embedded across the Group.
In 2016/17, in supporting and embedding the Group's coaching culture, it was decided to increase our pool of coaches. While sourcing training courses for these coaches, the Group’s Learning and Development Co-ordinator negotiated a 21% discount with the training
provider. This negotiation saw a saving of almost £3,800 and the increased number of coaches in the Group will benefit even more staff moving forward.
GovernanceIn the Governance work stream, a number of our main goals revolved around the Board and its efficiency.
In 2016/17, we collapsed our Board structure, moving from three separate subsidiary Boards and a main Group Board, to a much more manageable and efficient structure. This reduced the number of Boards and Board members, with a new Joint Operational Board taking the place of the subsidiary Boards. While the introduction of Board remuneration has increased annual governance costs, this brings the Group into line with peers at fully benchmarked levels. This will ensure Board composition, recruitment and performance can be optimised into the future.
This streamlining has also included the transition to electronic board papers which has significantly reduced administration time and costs. Significant further work is anticipated in this area over the coming years to achieve the benefits of further entity amalgamation. This will not only unlock significant borrowing capacity but will also deliver efficiencies of group operation such as more centralisation. This will enable the Board to stay focussed on delivery of strategy, by ensuring a clear line of sight is maintained for decision making and scrutiny across the growing Group.
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The Group is keen to participate in national initiatives to improve the reporting and understanding of the work of the sector as a whole, and of the Group in particular, and is currently taking part in the pilot Sector Scorecard exercise.
The Sector Scorecard has been developed to deliver a short set of high-level measures which could be used to investigate the efficiency of English housing associations. This has been a sector-led initiative from the very beginning, from development and design and is now in pilot phase, where over 200 organisations have signed up to take part.
Initial reporting has identified that for the Group as a whole, the ‘Business Health’ operating margin has improved year on year for both the overall business and the core underlying social housing lettings business.
Further benchmarking on this and other key areas such as development capacity and supply, outcomes delivered, effective asset management and operating efficiencies are anticipated which will enable comparisons to be more easily made. These will be reviewed and published as they develop over 2017/18.
GUHG has contributed to the pilot and supports the principle of providing a standard set of measures that can be used across the sector to demonstrate how we are meeting the value for money challenge.
Sector Scorecard2015/16 2016/17
Operating Margin 35.31 36.96Operating Margin – Social Housing Lettings
34.36 34.73
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Conclusion - What you, the reader, can doThe Group remains fully committed to both achieving and demonstrating VfM in a clear and accountable way. If you are unclear about anything contained in this statement, please let us know. We are always keen to hear your thoughts so if you have any ideas to make the services we provide more efficient or effective, we would appreciate your comments. Please contact our Group Director of Finance, Anna Simpson.
Email: [email protected] Web: www.grandunionhousing.co.uk
Tel: 0300 123 55 44
Registered address: Grand Union Housing Group Ltd, Derwent House, Cranfield Technology Park, University Way, Cranfield, Bedfordshire, England MK43 0AZ. A registered society under the Co-operative and Community Benefit Societies Act 2014 No. 30388R. Registered with the Homes and Communities Agency No. L4518. Member of the National Housing Federation.
Grand Union Housing Group comprises: Aragon Housing Association, Rockingham Forest Housing and South Northants Homes
