north lincolnshire homes value for money statement 2013/14
DESCRIPTION
This is an assessment of the savings and efficiencies made by North Lincolnshire Homes, part of ongo, in 2013/14.TRANSCRIPT
2013 to 2014
for
money value
statement
inside
our self assessment of value for money page 3
our group, ongo partnership page 4
our operating environment page 5
our corporate plan & objectives 2014 to 2019 page 5
delivering 2013/14 corporate objectives page 6
integrating & assessing value for money page 7
our value for money strategy page 8
how we used the savings we made page 9
managing assets effectively for financial strength return on assets | gearing | development funding page 12
financial indicators compared with other housing organisations page 13
performance of our assets page 14
a review of our property stock sheltered housing | garages | general housing | new builds, conversions, acquisitions
page 15
our asset management strategy & sustainability index page 16
the cost & outcomes of delivering our services page 18
the 2013/14 benchmarking report page 19
our value for money work continues page 32
page 2
involving tenants
our self-assessment of value for money This is a self-assessment, approved by the Board members of North Lincolnshire Homes Ltd, into how we deliver value for money and meet the standard, set by the Homes and Communities Agency, in providing good value services. This assessment covers the financial year from 2013 to 2014. During this time, we set ourselves the target of making savings or efficiencies worth £989,000. But we did a lot better than that - achieving £2.5million - that’s 255% of our target. Most of this, over £2million in fact, was in cash savings. The rest was through being more efficient in what we do. The savings we made represent 2.9% of our total spending. This assessment focuses on the work of North Lincolnshire Homes because, as a registered provider of social housing, we must demonstrate, to our stakeholders and the regulator, how we offer value for money. The North Lincolnshire Homes’ Board leads our Value for Money Strategy on behalf of the whole group, although each part of the group has its own targets to achieve.
We apply the same approach across the group, so we can be satisfied we are operating efficiently, effectively and economically in everything we do. Plus, we look to bring group-wide social & environmental benefits where we can. We have a thorough understanding of our costs & assets and we align these to our corporate objectives. In practice, we can demonstrate that decision making at every level is driven by value for money. This assessment focuses on four themes which help us achieve value for money: our Value for Money Strategy; how we manage assets effectively for financial strength; the costs & outcomes of delivering services; and how we use our gains for the greater good. We know there are current weaknesses in some areas, but we hope this honest assess-ment gives confidence that we have a plan, know our assets and know what to do to address our weaknesses. Our Financial Statements for 2013/14 include an Operating Financial Review, which incorporates this value for money self-assessment.
page 3
Along with Board members and Senior Managers, a group of our tenants was also involved in producing this self-assessment. Tenant involvement in value for money comes in many forms, from our Resident Scrutiny Panel assessing value for money as part of their service inspection remit, to tenants
carrying out annual value for money impact assessments on resident involvement struc-tures. At a special tenant Ordinary Members event, all attendees got involved in a value for money workshop to help set future priorities. Plus, our tenant group, Community Voice, had a workshop session to go through, and feed-back, on the draft versions of this assessment - checking it had the right content, was balanced and easy to read & understand. Plus, tenants are always welcomed as observers at all our North Lincolnshire Homes’ Board meetings. We are also sharing our self-assessment with key stakeholders, via email.
also available online
ongo.co.uk and in September’s
Key News our tenants magazine.
our group
Ongo Partnership: the non-regulated parent company, providing effective financial and corporate services to the group. North Lincolnshire Homes: a registered social landlord and charity which provides 9,754 homes. Ongo Commercial: the commercial arm to generate profits for reinvestment back into North Lincolnshire Homes.
Ongo Communities: a registered charity, supported by North Lincolnshire Homes, which provides projects to improve communities and peoples’ lives. We were very pleased to welcome Crosby Employment Bureau, a local training and employment agency, into the ongo partner-ship in 2014. They bring opportunities to help tenants into work and are a massive asset to our group in delivering our vision.
the business case for ongo
Whilst the ongo brand was launched in 2013, our group structure was actually registered in October 2012, after three months of intensive consultation with tenants, stakeholders, regulators and funders. A number of different group structure models were initially considered, as part of the consultation. The final business case was built around the benefits we believe our adopted structure brings. This includes: An opportunity to develop commercial
services and social enterprises, where any savings made or income generated is re-invested into improving landlord services and homes
Better services to tenants through more group-wide expertise and innovation
security for North Lincolnshire Homes through reduced costs, which are spread across a wider range of services and customers within the group
Better protection for North Lincolnshire Homes’ core business and assets, with the ability to ringfence risk
Reduced risk of the repricing of current favourable banking arrangements
Our ongo promise is ‘everything we do is put back into local communities’.
Ongo Partnership Ltd
North Lincolnshire Homes Ltd Ongo Commercial Ltd Ongo Communities Ltd
Crosby Employment Bureau (joined 08/04/14)
NL Communities Ltd (a dormant company)
page 4
ongo partnership
In 2013, North Lincolnshire Homes launched ongo - a partnership of companies with one single vision: creating & sustaining truly vibrant communities.
our operating environment
the ongo corporate plan 2014-2019 Our top level strategic positioning statement is that we aim to achieve ‘high levels of customer satisfaction and performance but for below average cost’. We know this is an ambitious plan, and we know we might need to rethink our priorities as customers choices and our working environments change, but everything we plan to do in the next five years will meet one or more of our Corporate Objectives, which in turn should help us on the road to delivering our plan for top performance and low cost. Our Corporate Objectives are to: Do the basics well Improve lives Grow our business Be financially strong Main priorities include: Achieve a 3.2% increase in operating
margins over five years Achieve top quartile performance in the
management of tenant arrears Provide well managed neighbourhoods
so 90% of tenants are satisfied Reduce our void rates to top quartile
and reduce our tenancy failure rate Maintain 90% satisfaction with repairs
and reduce costs per property by £32.75 over three years
Increase digital inclusion and implement a digital contact strategy
Establish a carbon footprint and plan year on year improvements
Maintain 100% of properties at Decent Homes standard
Continue to invest in the energy efficiency of housing stock
Work with the HCA to deliver our new homes building programme
Grow commercial activities to realise additional profits of £500,000
Develop an intensive employment and training support framework
Develop relationships with local health providers to improve readiness for the Social Care bill
Seek to secure new support contracts and market existing services
In July 2010 the Homes and Communities Agency published its Regression Analysis into operating costs in social housing to identify factors which impact on operating costs. Two factors impact on our costs: Deprivation Index The research shows that moving from a social provider operating in a neighbourhood ranked as having an average index of multiple deprivation to one operating in the most deprived area is associated with an increase in operating cost of £750/unit. Based on this, North Lincolnshire Homes has nine neighbourhoods with above average index scores of 50%. This accounts for increased costs for more intensive housing manage-ment, increased lettings due to higher stock turnover and higher repair costs.
Stock Transfers (LSVT) The research shows that stock transfer providers are more expensive than traditional providers in their first 12 years. It’s seven years since our stock transfer and operating costs are assumed to be, on average, £600/unit higher than non stock transfer providers. This could mean we expect higher operating costs than others until 2020. Despite this, our operating costs are already £100/unit (5.3%) lower than the average shown in the HCA Global Accounts, and we are challenging this further with a five-year cost reduction plan for all our central services, and some operational areas.
page 5
integrating & assessing value for money
Our Corporate Objectives were updated and approved by our Boards as part of our new 2014/2019 Corporate Plan in March 2014. Prior to March 2014, our Corporate Objectives were to: Deliver excellent homes and services (DEH&S) | Maximise resources and opportunities (MR&O) | Put customers at the heart of the business (PCAHOB) We delivered these objectives through an annual Operational Plan, which cascaded down through team plans and into individual
staff targets, agreed at annual Performance Development Reviews and monitored monthly. The 2013/14 Operational Plan, shown below, was 99% complete at 31 March 2014 (and is now 100% complete). At the end of 2013/14, our Value for Money Action Plan was 90% complete, with actions to carry out activity and service review assessments carried forward into 2014/15. Most of these are now, in fact, complete and have been scrutinised by our Value for Money steering group.
delivering 2013/14 corporate objectives
Operational Plan 2013/14 *where the target date is beyond Mar 2014, the action forms part of a longer term plan
C/O Action Target * Completion
MR&O
Consult with staff over agile working and implement approved recommendations
31 Jan 2014 14 Apr 2014
MR&O Review the branding of North Lincolnshire Homes and develop branding for the group structure
31 Mar 2014 20 May 2014
DEH&S MR&O PCAHOTB
Deliver Health & Safety BSC18001 5 Star Action Plan 01 Dec 2014 19 Mar 2014
MR&O Identify/prioritise commercial opportunities and implement measures to progress
31 Mar 2015 30 Oct 2013
MR&O Deliver actions arising from self assessment against Governance Code, Board appraisals, inductions
31 Mar 2014 31 Mar 2014
DEH&S MR&O PCAHOTB
Deliver an ICT improvement action plan 31 July 2014 31 Mar 2014
DEH&S MR&O
Deliver elemental investment programme and new build schemes due for completion 2013/14
31 Mar 2015 20 May 2014
DEH&S MR&O PCAHOTB
Deliver actions arising from Value for Money Strategy 31 Mar 2015 Carried over
DEH&S MR&O PCAHOTB
Develop a new customer website 01 Sep 2013 03 Sep 2013
DEH&S MR&O PCAHOTB
Deliver actions from the Welfare Reform Action Plan 31 Mar 2014 31 Mar 2014
In 2013/14 North Lincolnshire Homes spent £34.1m on delivering our services and achieving our Corporate Objectives.
page 6
Keep rents fair
integrating & assessing value for money
Value for Money means being effective, efficient and economical - and getting as many social and environmental benefits from our activities as we can. VFM is very much a part of delivering our vision. We have a Value for Money Strategy, which is
outcome focused, so when making decisions we start with what tenants want from us. The strategy is overseen by all the Boards within the group, led by the North Lincoln-shire Homes’ Board, and delivered on a day to day basis by a staff working group.
corporate objectives
In December ‘13 we asked tenants how they wanted us to spend the savings we made. Here is what they said.
1 4
3
2 5
7 Help tenants be healthy
Target anti-social behaviour 8 Improve homes
Build new homes 9 Help tenants into work
Help young people
Do more repairs
10 Improve neighbourhoods
6 Improve caretaking
Much of this critical feedback from tenants has been used to develop our 2014/19 Corporate Plan, and Growth & Diversification Strategy, which were approved by our Boards in March 2014.
Achieving and demonstrating how we meet the Homes and Communities Agency’s value for money standard is integrated into the way we operate - from it’s ownership at Board level to every level of decision making across the organisation.
Effectiveness Efficiency
Inputs
Economy
Outcomes Costs
Quantitative
Outputs
Qualitative
We are committed to ensuring our products and services are affordable and deliver value for money in all areas of our work for customers and stakeholders. During 2013/14 a Governance Working Group carried out a review of governance and risk management arrangements. This included a skills audit of Board members, understanding the HCA’s Regulatory Approach and new regulatory requirements, and revising our Intra-Group agreements and standing orders. In addition, risk management workshops enabled the group to consider its risk appetite
plus a new Growth & Diversification Strategy was approved and identifies how the achievement of delivering value for money can be strengthened over the next five years. Compliance with the Value for Money Standard is assessed by our Group Audit and Risk Committee. We are committed to delivering value for money through our partnerships too. Working with the HCA and North Lincolnshire Council, we delivered 74 new homes in 2013/14.
page 7
“
“
The aim of the strategy is to make sure we meet, and exceed, the Value for Money Standard, delivering excellent value services for customers and achieving our Corporate Plan. The strategy was approved by the North Lincolnshire Homes Board on
20 March 2013. The delivery of our strategy and compliance with the standard is as-sessed by ongo’s Audit and Risk Committee. We are already well underway in delivering our strategy, which is to:
our value for money st rategy
Ongoing Carry out Value for Money assessments of all core services and activities
Ongoing Carry out regular service reviews to improve the quality and efficiency of services to customers
Complete Set meaningful performance targets that measure cost and quality
Ongoing Provide information about costs and performance to customers and stakeholders
Complete Ensure our Resident Scrutiny Panel members have a good understanding of Value for Money so they can scrutinise this as part of their investigations
Complete Put in place a robust procurement methodology, built on best practice, to make sure the best value for money is sought on all goods and services we purchase
Due by Sept 2014
Introduce a Corporate Responsibility Policy to give additional social and environmental benefits to communities
Complete Devise a framework to measure social value and value for money
Complete Introduce a toolkit to help staff understand and demonstrate value for money
Ongoing Ensure value for money and social returns are considered in all investment decisions
Complete Ensure all Board and staff members understand value for money
Complete Provide value for money training to staff and new Board members
Ongoing Compare costs with similar organisations and review areas where ours are higher
Complete Review our Asset Management Strategy to ensure our investment plans deliver the best returns
Complete Introduce a sustainability index to measure the performance of our properties to inform investment decisions and deployment of resources
Ongoing Listen to customers and take their views into account when making decisions about allocating resources
Ongoing Take opportunities to work with partner organisations to share costs
We have a Value for Money Strategy which is overseen by all the Boards within our partnership and led, on a day to day basis, by a Working Group of staff members.
Value for Money is a key part of every employee’s annual appraisal
page 8
value for money st rategy the savings we made
how we used
Details of economies Value Impact of economies Corporate Objective
Landfill communities funding through Waste Recycling Environmental Ltd
£39,500 We provided a landscaped play area for children at Market Hill housing estate, in Scunthorpe
Improved lives for 310 homes
Funding from North Lincolnshire Council £80,000
Provided communal facilities at the Albion Grove older persons housing scheme
Improved lives for 29 homes
European Regional Develop-ment Fund Big Energy funding
£207,529 Installation of external wall insulation, reduced bills
Improved lives for 350 homes
Energy Savings Trust renewable heating premium payment
£35,700 Provided air source heating, for energy efficiency
Improved lives for 30 homes
British Gas (Energy Company Obligation) funding
£1.5m Installation of external wall insulation
Improved lives for 350 homes
Savings made through procuring goods & services
£211,913 Secured lower costs and more efficient contract management
Do basics well
In 2013/14, value for money gains of £2.5million were achieved - over £2million was in cashable savings. This significantly outperformed our annual target of £989,000 by 255% and represented 2.9% of our total spend for 2013/14.
The table below shows how the cashable savings were used to benefit major projects in 2013/14.
page 9
procuring goods & services
You can see, in the table above, that we realised over £200,000 in cashable savings by applying our robust Procurement Policy and Contract Standing Orders. Our Procurement & Value for Money team provides a methodology and toolkit for staff when procuring—one that ensures best value is achieved. The team also manages our Contracts Database and Procurement Plan. This shows all the contracts held by the group and the upcoming procurement activity, new organisational needs and spend analysis on non-contracted spend. Examples of our procurement savings in 2013/14 include:
Details of the procurement Cash saving Tendered insurance services £65,000
Re-procured a supplier to carry out asbestos surveys £34,000
Market tested our cleaning services contract £8,000 per year
Re-procured broadband services £14,000 per year
Changed some of our fleet to smaller, more environmentally friendly vans £52,000
Project The benefits this project brings
Installation of Combi Smart Valves as part of boiler installations
We have so far fitted 480 valves to boilers, reducing energy costs for tenants and bringing environmental benefits
Installation of solar voltaic panels
Provided affordable warmth to 277 households, lowering carbon footprint and reducing costs
Replacement of fleet with ‘Fleet First’
Provided a fit for purpose fleet of 70+ vehicles, lowering our car-bon footprint and bringing lower leasing costs and lower fuel costs. This saves £50,000 in year 1
Introduction of a Young Persons Support Service contract
Supported 80 young tenants with additional training in life skills and budgeting, helped then to enrol on college courses and vol-unteer programmes, supported them at meetings
Invested in schemes supporting our Corporate Objectives
Invested £378,000 in local schemes, to improve employability, training, healthy living and life skills of local people
Recruited 10 apprentices and 2 graduates
At least half of our apprentices come from tenant households, or are individuals who have experienced barriers to employment
Assisted 1,543 tenants affected by Spare Bedroom Subsidy
We were able to transfer 122 tenants and their families to smaller homes thus helping them to avoid £45,000 worth of addi-tional payments
Supported tenants through our Financial Inclusion Team
This work has generated £583,000 of additional benefits being obtained for 1,598 tenants
Supported 21 volunteers with workplace experience
Of 21 volunteers given workplace experience within the group, seven went on to secure employment
Recycled 56 tons of furniture through our Choose to Reuse scheme
This prevented furniture going into landfill, saving us £3,338 in disposal costs, provided affordable home furnishings for tenants (and private customers) and generated £46,646 worth of sales. It provided volunteer opportunities too
Increased the salaries of six employees to Living Wage
This is our commitment that all employees are recognised as valuable contributors and treated fairly
Continued to deliver our Digital Inclusion project
68 people attended digital courses, and 16 volunteered to deliver community-based training themselves
Continued to deliver a Community Payback scheme
This scheme sees offenders helping in the community as part of their sentence. They are managed by North Lincolnshire Homes to deliver general grounds maintenance and estate cleaning. In 2013/14, more than 1,000 offenders worked in Westcliff, Scunthorpe, giving over 7,000 hours of community work
Launched an e-learning platform for tenants and staff
By migrating much of our compulsory training courses onto a digital platform we are making significant savings in tutor fees, room hire, transport costs etc, plus more people, including tenants, can access the modules
Other projects and priorities in 2013/14 which led to financial, environmental or social benefits for North Lincolnshire Homes’ tenants and neighbourhoods include:
people & places
bringing benefits back for
page 10
On 3 April 2014, an employment and training enterprise called Crosby Employment Bureau joined ongo partnership.
One of the many initiatives carried out by Crosby Employment Bureau is the Empower-ing Project - a community based initiative aimed at providing training and employment for former offenders.
The initiative is funded by Job Centre Plus through a Flexible Support Fund, plus the National Probation Trust, local Substance
Misuse Team and North Lincolnshire Homes. It also works in partnership with Safer Neighbourhoods North Lincolnshire.
The programme trains volunteers who have offending history, to use their life experiences and empower clients to make the right choices for themselves and their families.
The Empowering Project creates £19.39 of social value for every £1 invested.
In 2013/14, 156 people passed through the project. 51 gained employment as a result.
social value
new partnerships bring
North Lincolnshire Homes’ Board has committed 1.5% of net income to invest into community development initiatives which help deliver the group’s Corporate Objectives.
page 11
pic: crosby employment bureau join our group
“ “
1.5% of our net income is invested in community
projects which support our corporate objectives
development funding
managing assets effectively for financial strength
return on assets gearing In 2013/14, revenue reserves increased by £5.1m on a gross asset base of £184.6m. This represented a 2.8% return on gross assets (3.1% in 2013) and a 5% return on net assets (5.5% in 2013). This 0.5% difference in net return on assets merely reflects the significant investment in new assets that will deliver returns in the longer term. It should be noted that there was an exceptional one off expense in 2014 of £3.35m for the buyout of North Lincolnshire Council from the Right to Buy/VAT Sharing Agreement. The benefit to North Lincolnshire Homes is that all future profits will be retained, thus improving the return on assets in 2014/15 and beyond. From 2015/16, North Lincolnshire Homes will set future return on assets targets which will be built into ongo’s five year Growth and Diversification Strategy.
North Lincolnshire Homes has a £105m facility with Barclays Bank and has drawn down loans to the value of £71m at end of 2014.
An independent loan security valuation carried out on 31 March 2014 shows the existing use value of the housing stock to be £200.9m.
This equates to an asset cover ratio of 241% (208% at 2013). In essence, this means for every £1 of borrowing, we have £2.41 of assets.
The last published Homes and Communities Agency Global Accounts for 2013 shows North Lincolnshire Homes’ asset cover to be above average for large scale voluntary transfer (LSVT) associations - and well above the average for housing associations as a whole.
In 2013/14, a two year plan to increase rents to 105% of target rent was introduced. This generated £955,000 of new development income. By 2014/15 a further £1,793,000 will be added, providing the financial capacity to build an additional 19 units per year. Interest costs are a key factor in developing new homes and the 2013/14 benchmarking exercise carried out by Housemark has North Lincolnshire Homes as upper quartile on the weighted average cost of capital.
The financial strength of North Lincolnshire Homes is best represented by revenue reserves in the balance sheet; the asset cover ratio & development funding to lever in potential loan finance; and the performance of the housing portfolio in achieving operating surpluses. Having financial strength is of no benefit unless it is used to achieve our vision and corporate objectives.
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HouseMark financial indicators
Here, we show our financial strength compared to our 59 peer organisations. The information is benchmarked against the 2013-14 HouseMark ‘open sharers’ with stock sized between 7,500 and 15,000.
an indicator of our rate of growth
an indicator of our profitability and efficiency
an indicator of our ability to borrow competitively
page 13
growth in turnover upper median lower comparator
quartiles 10.2 6.7 4.9
our results point score ranking/57 quartile
North Lincolnshire Homes 2013/14
9.5 12th middle upper
operating margin upper median lower comparator
quartiles 27.1 23.1 19.5
our results point score ranking/57 quartile
North Lincolnshire Homes 2013/14
21.5 26th middle lower
weighted average cost of capital upper median lower comparator
quartiles 3.8 4.2 4.9
our results point score ranking/57 quartile
North Lincolnshire Homes 2013/14
3.1 4th upper
performance of assets Since the transfer of our housing stock in 2007, we have been delivering our key promise to tenants.
This was achieved in March 2012 and continues to be attained now.
But, also since the time of transfer, our housing stock has reduced from 9,953 to 9,754 at the end of March 2014.
Some of this has happened through 136 right to buys but most is because of demolitions and the remodelling of 199 of our properties.
We did this demolition and remodelling work because of low demand for types of homes in certain locations.
“ “ we promise to bring every home up to a Decent Homes Plus standard
Transfer
07/08
08/09
09/10
10/11
11/12
12/13
13/14
14/15
15/16
16/17
17/18
Opening stock 9,953 9,927 9,892 9,863 9,878 9,752 9,749 9,732 9,754 9,808 9,849 9,896
DEDUCTIONS
RTB sales 26 35 16 1 9 7 12 30 8 8 8 8
Demolitions 16 120 15 22 29 6
Conversions out of stock 26 58
Other disposals 6 1 4
ADDITIONS
Acquisitions 8
New builds 1 15 73 62
Empty homes purchase/repair 10
Conversions back on stock 16 42
Build proposals (inc ringfencing) 30 50 50 50
Mortgage rescue 1 3 4 12 5
Ad hoc property purchase 2 2 5 5 5 5
Adjustment 2
TEMPORARY ADDITIONS
Leased under empty homes bid 2
Closing stock 9,927 9,892 9,863 9,878 9,752 9,749 9,732 9,754 9,808 9,849 9,896 9,943
Value of stock (from valuer) £million
65 93.5 119 139.5 167.1 174 200.9 203.5 206.2 208.7 211.6
our housing stock, past, present & future
page 14
a review of our property stock
Since 2009, we have been carrying out reviews of our property stock so we can rationalise what we have and have a clear picture of where we need to invest.
sheltered housing A review of 580 sheltered housing units was commissioned by North Lincolnshire Homes at the end of 2009. The findings led to the development of a five-year programme which involved:
The retention and upgrading of 356 flats The demolition and remodelling of 224
flats The banking of land on which our former
sheltered homes were located
garages We have carried out a review of garage sites, focusing on those which have poor demand, are in disrepair and subject to increasing rent loss. In 2007, 1,969 garages were transferred to North Lincolnshire Homes. This number had reduced to 1,645 by the end of March 2014. We welcomed the appointment of a dedicated Garage Officer in February 2012, which has helped us to:
Reduce void loss on garages from 21% in 2011/12 to 12% in 2012/13. This level was sustained in 2013/14 and brings in extra revenue
Bank the land of former garage sites for possible development sites in the future.
general housing schemes The North Lincolnshire Homes’ Development Panel considered housing schemes which were proving difficult to let. Based on the findings of the review, the panel took the decision, in 2009, to:
Demolish 55 units at Kingsway House, in Scunthorpe
Demolish nine units at Beverley Court, in Scunthorpe.
Bank the land from these sites.
new builds, conversions & acquisitions
“ “ there are a further 314 homes to be built, converted or acquired by 2017/18
North Lincolnshire Homes embarked a new build programme back in 2008/9. This has culminated in successful bids to the Homes and Communities Agency for Affordable Homes Programmes under the 2011-15 and 2015-18 bid rounds.
Up to 31 March 2014, there were 89 units built of which 15 units are on former garage sites and 41 units on former sheltered housing sites.
From 2014/15 to 2017/18 there are a further 314 units to be built, converted or acquired.
page 15
our & asset management strategy sustainability index Our new Asset Management Strategy, with its four themes, was approved by the North Lincolnshire Homes Board in June 2014. We will:
Maintain and improve our existing housing to ensure it continues to be energy efficient, desirable and financially viable
Increase our housing stock through the development and acquisition of new homes
Ensure our business premises meet current and future needs and offer long term security
Invest selectively in existing commercial shop properties to ensure that they are sustainable in the long term
To do this we will look for triggers in the performance of our stock. In 2013/14 we embarked on a major project to understand better the performance of individual properties, streets and neighbour-hoods. We developed a Sustainability Index which we use as an assessment tool to measure the ongoing viability of properties. The index contains a traffic-light style summary, by street level, and drills down into the details of individual properties. It also uses a number of weighted indicators to help us make decisions. The Sustainability Index contains information on 9,754 properties within 796 streets, grouped by 106 geographical areas. It sets out the information we have on properties; tenancies; turnover; potential income; loss of income and demand for services (such as dealing with anti-social behaviour, repairs
and housing management issues). This information has been used to create 21 Key Performance Indicators (KPIs) for each area.
The lowest combined index score was 80 (which equates to high sustainability) and the highest score was 340 (indicating lowest sustainability). Each street was ranked according to its score and allocated a red, green or amber status.
14% were highlighted as red, with a score
higher than 230 10 streets scored lower than 85 (upper
quartile) 422 streets scored between 85 and 170
(2nd quartile) 321 streets scored between 170 and 255
(3rd quartile) 42 streets scored above 255 (4th quartile)
The Sustainability Index results were reported to North Lincolnshire Homes’ Board in March 2014. The highest scoring location was Albert Marson Court, in Scunthorpe, which is a development of 37 flats on top of shops built in 1978. A full appraisal of this stock is now being carried out, in consultation with tenants, to determine the preferred options - retention, investment, demolition or remodelling. The sale of best performing, or high value, stock is not an option for us as replacement costs would be higher than sale proceeds.
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how we plan to use the sustainability index
This will identify issues arising from turnover rates, crime and other factors which may be affecting the sustainability of an area, including lessons learned from previous initiatives. The results of this review will be used to establish partnerships with various agencies to address issues. The sustainability index currently shows us potential income less repairs costs, empty homes, rent loss and arrears by area. However, this will be developed further in 2014/15 by incorporating additional operating costs to identify a profit and loss per property so we can build this data into our 30 year business plan.
This will provide us with a Net Present Value of every property.
All of the results are to be mapped onto a Geographical Information System (GIS). This will help to display results alongside other socio economic indicators, such as owner occupation, crime statistics, local schools and National Health Service performance, so we get the biggest and best picture we can of all our communities. The process wasn’t in place in time for the publication of this Value for Money Self-Assessment, however, we will look to include this data in our 2014/15 self-assessment.
A working group of staff from our lettings, tenancy enforcement, repairs, regeneration and housing management teams are now identifying the strengths and weaknesses of the three areas within North Lincolnshire which scored the highest on our sustainability index.
page 17
pic: our value for money working group
& the cost outcomes
of delivering our services When compared to other similar housing organisations, it is our ambition to be in the top quartile for customer satisfaction - but below average cost. All of our departments have drawn up five year plans with this target in mind.
the HCA’s big picture In March 2014, the Homes and Communities Agency published its 2013 Global Accounts.
The primary purpose was to provide a financial overview of the regulated social housing sector, based on an analysis of regulatory financial returns.
Here we can show how North Lincolnshire Homes compares, in our management and maintenance (planned & responsive) costs, for the last five years, against the Homes and Communities Agency’s big picture.
We compare well against the maintenance costs year on year.
We believe this is down to the fact that we have an effective internal repairs & maintenance department, which saves us the 20% VAT we would pay if were we using external contractors.
Plus, we completed our Decent Homes ‘plus’ improvement programme in 2012 which means our homes require less day to day maintenance.
Our management costs, on the other hand, appear to follow an upward trend.
Primarily, this is down to the major investments we have made in addressing anti-
total 1,841 1,944 1,704 1,887 1,842 1,882 1,840 1,895 1,576 1,880
* * The maintenance costs include those for planned and responsive repairs
social behaviour, launching welfare reform initiatives to support tenants and introducing ‘First Touch’ software and mobile technology for front line housing and repairs staff.
We are in the middle of reviews of our empty homes processes and finance transactional costs.
Plus, we have produced five year cost reduction plans for our Finance, IT and Corporate Services departments.
These proposed savings have been built into the 2014/15 budget and will feature in future year’s budgets.
page 18
Key performance indicators for costs
our results 2012/13 actual
2012/13 quartile
2013/14
actual 2013/14
quartile
Direct cost per property for major & cyclical work
2,481.82 4th 1,959.28 3rd
Direct cost per property for response & empty homes repairs 768.88 3rd 788.64 3rd
Direct cost per property for housing manage-ment
255.36 2nd 278.62 3rd
Direct cost per property for estate services 92.73 1st 108.24 1st
Overhead costs per unit 494.63 3rd 501.52 3rd
Total overhead costs as % of turnover 11.96 3rd 13.55 4th
Office premises costs as % of turnover 1.38 1st 1.52 2nd
IT costs as % of turnover 2.62 2nd 3.51 4th
Finance costs as % of turnover 1.50 2nd 2.08 4th
Central costs as % of turnover 6.46 4th 6.43 4th
benchmarking report
the 2013/14
We use the company HouseMark to carry out our annual benchmarking exercise, comparing our performance and costs alongside similar housing organisations. Data used here is based on the operational costs of unaudited financial statements for North Lincolnshire Homes.
This information helps us assess if we are achieving value for money.
It offers us an initial indicator for identifying potential efficiency and cost savings and we use the results to inform our annual budget setting process.
We evaluate our results against 59 members of our peer group - which includes all national
‘open sharer’ organisations which have between 7,500 and 15,000 properties.
And of course, we continually check our performance from this benchmarking exercise against our own Corporate Objectives and strategic priorities to make sure we are on track to deliver what we say we are going to deliver.
“ “ we have produced five-year plans for each of our service areas to show where we will reduce costs and where we will invest
page 19
major & cyclical work
a closer look at
Key performance indicators for quality
our results 2012/13 actual
2012/13 quartile
2013/14
actual 2013/14
quartile
% of respondents very or fairly satisfied with the overall quality of their home 89.7 1st 92 1st
% of homes which are ‘non decent’ 0 1st 0 1st
Average SAP rating of self-contained homes 70 3rd 71 2nd
% of homes with a valid gas safety certificate 99.86 4th 100 1st
“
“ our judgement: medium cost & good performance
The direct costs per property of our major works are starting to reduce compared to our peers. According to HouseMark, in 2012/13 our costs were in the fourth quartile, at £2,481.82 per property, but by 2013/14 this had reduced to £1,959.28 and third quartile. Our costs will continue to reduce as the major improvement programme is now complete and any comparisons are dependent on an organisation’s major works cycle. We have been able to offset inflationary rises in costs by packaging and phasing work in a smart way, negotiating with contractors to waive increases in return for package extensions.
In 2013/14 this was achieved in roofing, garage rebuilds and adaptations.
Customer satisfaction with the quality of homes and neighbourhoods are both top quartile compared to our peers. Satisfaction with the quality of homes has risen from 89.7% to 90% in 2013/14 and this reflects the major improvement work that has been happening since 2007. Our own satisfaction surveys show a continued improvement too.
£14,064 savings for roofing
£6,265 savings for garage rebuilds
£10,392 savings for adaptations
2012/13 2013/14 target trend
% of tenants satisfied with quality of improvement work 91% 94% 93%
% of tenants satisfied they were kept informed of improvement work 86% 92% 90%
% of tenants satisfied with the overall improvement service 90% 95% 93%
page 20
major & cyclical work
a closer look at
in 2013/14, we
things we are working on
Delivered our home improvement program to plan
Completed the refurbishment of all our retained sheltered housing
Completed the remodelling of Wold Court retirement scheme, in Wrawby
Delivered an external wall insulation program for 500 homes
Completed the development program to target by building 74 homes
Put in place an asbestos management and data transfer & storage plan
Launched and managed a fire risk assessment inspection regime and delivered resulting actions
The implementation, in August 2014, of a Geographical Information System to improve the management of our assets and major & cyclical improvement work
We are carrying out SAP mapping for our stock to target energy efficiency measures. This will allow us to move towards an average stock SAP rating of 73 and address any homes with a rating below 50. This will have huge social value in delivering affordable warmth for our residents. There will also be a carbon saving of circa 15,000tco2
We are relying less on external support and consultancy and using internal resources for work, such as property surveys and construction design and management
We are delivering the new developments that we have agreed with the Homes and Communities Agency and planning other developments to take advantage of any slippage in the Homes and Communities Agency programme
We will continue to deliver an annual home improvement program to high levels of customer satisfaction and value for money
We are seeking out and sourcing all available external funding to maximise our income. This will include Energy Company Obligation funding and Renewable Heat Incentive funding for our energy efficiency work
We will retain the 18001 standard for health and safety management - valuable in bidding for contracts in commercial and social environments
We are reviewing our commercial shop portfolio and developing long term plans for each site
And, we will improve our environmental measurement & management and prepare for assessment against the 14001 standard in future years
page 21
responsive repairs
a closer look at
Key performance indicators for quality
our results 2012/13 actual
2012/13 quartile
2013/14
actual 2013/14
quartile
% of respondents very or fairly satisfied with the repairs & maintenance service
89.7 1st
Average calendar days to complete repairs 7 1st 13 4th
Average cost of an empty home repair £2,411 3rd £2,421 3rd
Average relet time in days, for standard re-lets 65.15 4th 33.46 3rd
Rent loss of empty properties as % of rent due 2.42% 4th 2.17% 4th
“
“ our judgement: medium cost & good performance
The direct cost per property of our repairs service has remained in the 3rd quartile compared to our peers. In 2013/14, our responsive repairs service cost £788.64 per property - an increase from £768.88 in 2012/13. But customer satisfaction with our work stayed very high. The table above shows the customer satisfaction results from our annual STAR survey. However, we also carry out our own internal, in depth survey with customers on a weekly basis and this has shown an improvement in
customer satisfaction with our overall repairs service from 92% in 2012/13 to 96% in 2013/14. The increased satisfaction is a direct response to the introduction of our new Repairs Policy in April 2013 which emphasises on choice and convenience for tenants. This has increased the average number of days to complete a repair to 13 days (which is 4th quartile) from seven days (which was 1st quartile), however we believe this reflects our commitment to customer choice. Our job is to now reduce cost but remain upper quartile for customer satisfaction.
Implemented an ICT system to digitally allocate work to on-site staff and enable the transfer of live data between systems and stores
Provided iPad tablets to staff on day to day repairs, providing them with jobs digitally, plus access to information about risk, Health & Safety and company messages
Phased the procurement of new vehicles
Introduced new repairs priorities so tenants choose appointment slots
Launched electronic van stock replenishment, with on-site deliveries
Reconfigured van stocks Gave employment to five apprentices Recruited three new apprentices Provided crucial workplace experience
for young people and ex-offenders
A great deal of work was carried out in 2013/14 to improve efficiency. We:
page 22
responsive repairs
a closer look at
We plan to reduce responsive repairs costs, by £32.75 per property over three years, with our Maintenance Cost Reduction Plan
Maintenance cost reduction plan objective 1: control demand for repairs target savings completed by
Gatekeep minor tasks which are tenants responsibility during 2014/2015 to achieve savings
£17,500 Dec 2015
Identify high value repairs and consider pre-inspections or arrange as batched or planned works to achieve savings
£20,000 Mar 2015
Identify repairs caused by damage. Refuse/recharge £10,000 Mar 2015
Work to standardise the materials used in refurbish-ment work and when specifying for new builds
£5,000 Mar 2016
Ensure warranty processes are implemented. Identify trends where sub-standard materials cause issues
£5,000 Dec 2015
objective 2: review provision of materials target savings completed by
Review maintenance materials provision £250,000 Mar 2015
objective 3: review out of hours policy & payments target savings completed by
Review out of hours operations £20,000 Mar 2015
objective 4: empty homes target savings completed by
Spend per property Under £1,800 Mar 2015
objective 5: high demand properties/tenants target savings completed by
Reduce the number of properties requiring more than 10 repairs per year to less than 100
£140,000 Dec 2015
Identify areas/trends where poor condition properties create significant demand. Design planned or batched repair programmes
£40,000 March 2016
objective 6: embed efficiency/productivity targets target savings completed by
Introduce further technology to the empty homes team that will realise back office cost savings
£20,000 March 2016
Continue to drive down sickness levels to contribute to increasing efficiency
£40,000 March 2017
page 23
housing management
a closer look at
“
“ our judgement: medium cost & good performance
Additional finances and resources were put in place in 2013/14 within our Housing Management teams in response to the Governments’ Welfare Reform plan.
From 1 April 2013, 1,543 of our tenants were affected by the Spare Room subsidy. We worked hard to directly contact all of them and provide support and advice. By March 2014, we had 1,153 tenants still directly affected by the Spare Room subsidy. Of these we helped 122 tenants downsize through internal transfers into smaller homes. That saved those people £45,000 worth of Spare Room subsidy. Additional benefits worth over £583,000 were also obtained for tenants by our dedicated Financial Inclusion Team. Moving forward in 2014/15 we have a comprehensive Welfare Reform action plan and have agreed a company-wide approach to income collection ahead of Universal Credit.
Altogether, the direct costs of providing Housing Management services, per property, have increased from £255.36 (and 2nd quartile) in 2012/13 to £278.62(3rd quartile) in 2013/14. This is according to our HouseMark Core Benchmarking results for 2013/14. However, at the time the HouseMark figures were published most of the costings were calculated on 2012/13 data plus inflation. We expect that other Housing Associations have responded in a similar way. Meanwhile, customer satisfaction has increased or been maintained in all areas of our Housing Management services and the percentage of respondents very or fairly satisfied with our service remains within the 1st quartile compared to our peers.
Key performance indicators for quality
our results 2012/13 actual
2012/13 quartile
2013/14
actual 2013/14
quartile
% of respondents very or fairly satisfied with the housing management service
90.95 1st 90.2 1st
% of respondents very of fairly satisfied that their rent provides value for money
86.8 1st 86.4 1st
% of respondents very or fairly satisfied that their views are being listened to and acted upon
85.3 1st 87.7 1st
Current tenant rent arrears as % of rent due (excluding empty homes) 3.28 2nd 4.19 3rd
page 24
housing management
a closer look at
delivering our targets in: tackling anti-social behaviour
2012/13 full year
2013/14full year
2013/14
target 2013/14
status
Respond to reports of racial and other harass-ment and hate incidents within 24 hours 96% 100% 100%
Acknowledge reports of anti-social behaviour and start an investigation within five days
67% 87.2% 80%
Contact customers who have reported an anti-social behaviour problem at least once a month to keep them informed of progress/give support
70% 83% 75%
% of customers satisfied with the handling of their anti-social behaviour complaint
75% 75% 80%
% of customers satisfied that they were kept up to date with what was happening throughout their anti-social behaviour case
71% 78% 75%
delivering our targets in: lettings
2012/13 full year
2013/14full year
2013/14
target 2013/14
status
Percentage of new tenants satisfied with the lettings service 91.4% 92.7% 92%
Percentage of new tenants thinking the time they waited for their property met expectations
86% 88.3% 90%
Percentage of tenants satisfied with the level of support
93% 95% 95%
delivering our targets in: income collection
2012/13 full year
2013/14full year
2013/14
target 2013/14
status
Current tenant rent arrear as % of the debit (excluding housing benefit arrears) 2.3% 2.3% 2.9%
Current tenant rent arrears as % of the debit (including housing benefit arrears)
4.19% 3.9% x
Former tenant rent arrears as % of the debit 1.7% 2.38% 1.7% x
page 25
and estate services
Direct costs, per property, of Estate Services have increased from £92.73 in 2012/13 to £108.24 in 2013/14 and remain within the 1st quartile compared to our peers, according to HouseMark core benchmarking 2013/14. The percentage of tenants very or fairly satisfied with their neighbourhood as a place to live has remained in the 1st quartile improving from 89.4% to 90.8%
This improvement can also be linked to our environmental work, improved vacancy rates and targeting anti-social behaviour.
Our Resident Scrutiny Panel investigated the Caretaking Service in 2013/14 and reported on the improved management of the service, improved customer focus and higher morale of the staff involved.
housing management
a closer look at
in 2013/14, we
things we are working on
Achieved value for money savings or efficiencies of £112,000 against a £30,000 target
Launched a successful pilot scheme to carry out annual tenancy visits, and have now established the team permanently
Retained Housing Quality Network accreditation for income collection
Contacted, supported and advised 1,543 tenants affected by Spare Room
subsidies from April 2014, helping 122 to downsize, avoiding £45,000 of charges
Obtained £583,000 extra tenant benefits Made improvements in our Anti Social
Behaviour key performance indicators Successfully co-ordinated the response
to severe flooding in December 2013 which affected 37 households. Tenants returned home two months before target date
Our former tenant arrears have increased from £629,029 in March 2013 to £925,595 in March 2014. Additional resources were brought in to audit former tenant cases and a tracing agency system to help maxi-mise income and gain recharges from for-mer tenants. This will also enable us to write off uncollectable debt
Our lettings team and the empty homes repairs team need to work more closely to improve re-let days, reducing the rent lost per property whilst vacant
We need to monitor escalating costs to reduce the impact of Welfare Reform, ensuring that costs do not exceed benefits
We will improve the effectiveness of the Income Collection Team and improve arrears case monitoring systems (although this is now substantially resolved)
We will adopt a company-wide approach to Income Collection ahead of the introduction of Universal Credit
“
“ our judgement: low cost & good performance
Costs of our estate management service remain low compared to peers, and satisfaction levels remain high.
page 26
overhead costs
a closer look at
The annual HouseMark exercise has our total overheads in 2012/13 at £4,945,000, which compares to £5,926,000 in 2013/14. The difference of £980,000 is explained by a number of one-off investments and non-recurring costs, which are shown here.
£’000 £’000
2012/13 overheads 4,945
One off costs for 2013/14
Delapidation provision for existing office HQ 75
ICT investment in new & improved systems for mobile working and ongoing efficiencies 430
Additional audit compliance 34
Additional customer service, equality & diversity and asbestos awareness training 62
Appointment of apprentices for future capacity 144
Recruitment costs of senior staff 20
Additional maternity pay 59
824
Other inflationary increases (2.6%) 157
2013/14 5,926
page 27
Key performance indicator for overheads
ranking total overheads £’000 full-time equivalent employees cost per employee
2012/13 4,945 313.7 15,763
2013/14 (less one offs) 5,102 325.5 15,674
Our key indicator for overheads is the overhead cost per employee and we will monitor this annually. The intention is to build this indicator into the financial planning process. It, therefore, follows that if total staff numbers fall, our overheads should also fall.
In particular, this includes a three-year programme of investment in IT to facilitate operational improvements through mobile and digital working, an apprenticeship scheme which provides opportunities for people to work across the group but which is accounted for in overhead costs, and a com-mitment to training that will improve the ca-pabilities of all staff. Each functional area within overheads has their own cost reduc-tion plan, and we have targeted a 10%
reduction in overall overheads by 2016/17. The management team has been tasked and agreed to find £3.5million of savings by 2019, and overheads are one of the key areas where these savings will be found. This includes aiming to reduce overhead staffing costs by £292,750 within three years. These stretch target savings are an internal target only and not included in external plans that go to the regulator or funders.
Our overhead costs appear generally high in benchmarking analysis (pg19). This reflects a conscious decision we’ve taken to invest in activities that bring longer-term benefits.
not included in benchmarking
other services
customer services Customer Services costs benchmarking is not included in the HouseMark Core submission as they tend to be absorbed as part of the core service costs. However, performance continues to remain high and we achieved Customer Service Excellence accreditation in 2014. A budgetary saving of £8,380 was achieved in 2013/14. It is our plan to continue to reduce costs and maintain satisfaction.
tenancy support Our tenancy support service continues to grow and we were pleased to hear that North Lincolnshire Council gave us an excellent assessment rating for our delivery of their
Older Persons Support contract. They subse-quently granted us a further one year exten-sion on the contract. In 2013/14 we also successfully implemented a new Black & Minority Ethnic support service contract and introduced a Young Persons’ dedicated support service
resident involvement Our 2013-14 STAR customer survey results showed us that we achieved upper quartile scores with 87.7% of respondents being very or fairly satisfied that their views are being listened to and acted upon. We also retained our Tenant Participation Ad-visory Service accreditation and made a year on year budgetary saving of £56,508.
our achievements
In 2013/14, we achieved reaccreditation from the Tenant Participation Advisory Service (TPAS) for our Resident Involvement Services. We also secured Housing Quality Network (HQN) accreditation for our Leasehold services and Income Management plus Customer Service Excellence accreditation. Another significant achievement in 2013/14 was the Investors in People Gold award, recognising our commitment to staff development, engagement and wellbeing. Having efficient and effective staff enables the delivery of value for money at every level
across the group. We retained our Investor in Diversity accreditation and two ticks ‘positive about disabled people’ status. Staff also picked up a number of award nominations in 2013/14, including a Housing Heroes Award for Inspirational Colleague, CERT Award for Developing Potential, TPAS Award for tenant scrutiny, PR Week Award for best places to work, North Lincolnshire Business Award for Community Relations, NHS Healthy Workplace Gold Award, and RSPCA Housing Footprint Award.
External accreditation is important for us to measure our performance and effectiveness, especially in front-facing services such as resident involvement or customer services.
page 31
our vfm work
continues
Carry out a VFM assessments of core services and activities at least annually
improve the quality and efficiency of services to customers
cost and quality
performance to stakeholders
scrutinise VfM as part of investigations
Policy to provide additional social and environmental benefits to communities
value and value for money
and demonstrate value for money
returns are considered in all investment decisions
an understanding of VfM
organisations and review areas where our costs are higher
Strategy to ensure our investment plans deliver the best returns
measure the performance of our proper-ties to inform investment decisions and deployment of resources
organisations to share costs
into account when making decisions about allocating resources
Procedures to ensure that we give con-sideration to achieving social benefits through procurement
The North Lincolnshire Homes Board’s aim is to spend any cashable savings released by Value for Money activities to invest in our communities in the areas that our tenants tell us are important to them. So, we will:
A 3.2% increase in operating margins for North Lincolnshire Homes by deliv-ering demonstrable cashable savings
Non rental income reaches 8% of total income
Units under management increase above 10,000
The buy-out of the VAT/RTB Agreement to generate £600k profit in 2014/15 and 2015/16
Ongo Commercial delivers £500k of gift-aid back to North Lincolnshire Homes by 2019
Grow commercial revenue to deliver £500k of profit by 2019 to spread over-heads, returning excess to be used in our communities and enable more
services to be delivered to our customers.
Terminations fall from 14% to 9% by 2019
Increase affordable warmth with a £250k investment in combi smart valves for 2,500 combi boilers
Invest in improving digital inclusion for tenants through training and access
Build on our ‘Top 100 companies’ position and become a two star organisation
Retain our Gold Investors in People rating to ensure staff are fully engaged and invest in staff training to build an even more robust committed workforce delivering excellent customer service
In our 5 year financial plan we have committed to:
page 32
North Lincolnshire Homes part of ongo Meridian House Normanby Road Scunthorpe North Lincolnshire DN15 8QZ 01724 279900 ongo.co.uk