North Lincolnshire Homes Value for Money Statement 2013/14

value for money statement 2013 to 2014

page 2

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

page 15

sheltered housing | garages | general housing | new builds, conversions, acquisitions

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 3

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.

Along with Board members and Senior Managers, a group of our tenants was also involved in producing this self-assessment.

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 assessment 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 selfassessment.

involving tenants

carrying out annual value for money impact assessments on resident involvement structures. At a special tenant Ordinary Members Tenant involvement in value for money comes event, all attendees got involved in a value for money workshop to help set future priorities. in many forms, from our Resident Scrutiny Panel assessing value for money as part of Plus, our tenant group, Community Voice, had their service inspection remit, to tenants a workshop session to go through, and feedback, on the draft versions of this assessment also available online - checking it had the right content, was balanced and easy to read & understand. Plus, ongo.co.uk tenants are always welcomed as observers at and in September’s all our North Lincolnshire Homes’ Board Key News meetings. We are also sharing our selfour tenants magazine. assessment with key stakeholders, via email.

page 4

our group

ongo partnership In 2013, North Lincolnshire Homes launched ongo - a partnership of companies with one single vision: creating & sustaining truly vibrant communities.

Ongo Partnership Ltd

North Lincolnshire Homes Ltd

Ongo Commercial Ltd

Ongo Communities Ltd

NL Communities Ltd (a dormant company)

Crosby Employment Bureau (joined 08/04/14) 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 partnership 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 security for North Lincolnshire Homes consultation. The final business case was through reduced costs, which are built around the benefits we believe our spread across a wider range of services adopted structure brings. This includes: and customers within the group  Better protection for North Lincolnshire  An opportunity to develop commercial Homes’ core business and assets, with services and social enterprises, where the ability to ringfence risk any savings made or income generated  Reduced risk of the repricing of current is re-invested into improving landlord favourable banking arrangements services and homes  Better services to tenants through more Our ongo promise is ‘everything we do is put group-wide expertise and innovation back into local communities’.

page 5

our operating

environment

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 management, increased lettings due to higher stock turnover and higher repair costs.

the ongo

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.

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 and reduce our tenancy failure rate know we might need to rethink our priorities  Maintain 90% satisfaction with repairs as customers choices and our working and reduce costs per property by £32.75 environments change, but everything we plan over three years to do in the next five years will meet one or  Increase digital inclusion and more of our Corporate Objectives, which in implement a digital contact strategy turn should help us on the road to delivering  Establish a carbon footprint and plan our plan for top performance and low cost. year on year improvements Our Corporate Objectives are to:  Maintain 100% of properties at Decent Homes standard  Continue to invest in the energy Do the basics well efficiency of housing stock Improve lives  Work with the HCA to deliver our new Grow our business homes building programme Be financially strong  Grow commercial activities to realise Main priorities include: additional profits of £500,000  Achieve a 3.2% increase in operating  Develop an intensive employment and margins over five years training support framework  Achieve top quartile performance in the  Develop relationships with local health management of tenant arrears providers to improve readiness for the  Provide well managed neighbourhoods Social Care bill so 90% of tenants are satisfied  Seek to secure new support contracts  Reduce our void rates to top quartile and market existing services

page 6

delivering 2013/14

corporate objectives

In 2013/14 North Lincolnshire Homes spent ÂŁ34.1m on delivering our services and achieving our Corporate Objectives.

Our Corporate Objectives were updated and approved by our Boards as part of our new 2014/2019 Corporate Plan in March 2014.

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 Prior to March 2014, our Corporate Objectives now 100% complete). were to: Deliver excellent homes and At the end of 2013/14, our Value for Money services (DEH&S) | Maximise resources and Action Plan was 90% complete, with actions opportunities (MR&O) | Put customers at the to carry out activity and service review heart of the business (PCAHOB) assessments carried forward into 2014/15.

We delivered these objectives through an Most of these are now, in fact, complete and annual Operational Plan, which cascaded have been scrutinised by our Value for Money down through team plans and into individual steering group.

Operational Plan 2013/14 *where the target date is beyond Mar 2014, the action forms part of a longer term plan

C/O

Target *

Completion

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

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

Develop a new customer website

01 Sep 2013

03 Sep 2013

Deliver actions from the Welfare Reform Action Plan

31 Mar 2014

31 Mar 2014

MR&O

MR&O

DEH&S MR&O PCAHOTB DEH&S MR&O PCAHOTB

Action

page 7

integrating & assessing

value for money

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.

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.

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 Lincolnshire Homes’ Board, and delivered on a day to We have a Value for Money Strategy, which is day basis by a staff working group.

Efficiency

Effectiveness

Outcomes

Outputs

Economy

Inputs

Costs

Qualitative Quantitative

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.

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.

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.

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 In addition, risk management workshops Council, we delivered 74 new homes in enabled the group to consider its risk appetite 2013/14.

In December ‘13 we asked tenants how they wanted us to spend the savings we made. Here is what they said.

1

Keep rents fair

4

Help young people

7

Help tenants be healthy

2

Target anti-social behaviour

5

Do more repairs

8

Improve homes

3

Build new homes

6

Improve caretaking

9

Help tenants into work

10

Improve neighbourhoods

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.

page 8

our

value for money strategy 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.

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 assessed by ongo’s Audit and Risk Committee.

We are already well underway in delivering our strategy, which is to:

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

“

“

Value for Money is a key part of every employee’s annual appraisal

page 9

how we used

the savings we made In 2013/14, value for money gains of £2.5million were achieved - over £2million was in cashable savings.

This significantly outperformed our annual The table below shows how the cashable target of £989,000 by 255% and represented savings were used to benefit major projects in 2013/14.

2.9% of our total spend for 2013/14.

Details of economies

Value

Impact of economies

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 Development 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

£1.5m

Installation of external wall insulation

Improved lives for 350 homes

£211,913

Secured lower costs and more efficient contract management

Do basics well

British Gas (Energy Company Obligation) funding Savings made through procuring goods & services

Corporate Objective

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 noncontracted 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

page 10

bringing benefits back for

people & places

Other projects and priorities in 2013/14 which led to financial, environmental or social benefits for North Lincolnshire Homes’ tenants and neighbourhoods include: Project

The benefits this project brings

Installation of Combi Smart Valves We have so far fitted 480 valves to boilers, reducing energy costs as part of boiler installations 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 carbon 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 volunteer 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 We were able to transfer 122 tenants and their families to Spare Bedroom Subsidy smaller homes thus helping them to avoid £45,000 worth of additional 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

page 11

new partnerships bring

social value

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.

On 3 April 2014, an employment and training Misuse Team and North Lincolnshire Homes. enterprise called Crosby Employment Bureau It also works in partnership with Safer joined ongo partnership.

Neighbourhoods North Lincolnshire.

One of the many initiatives carried out by Crosby Employment Bureau is the Empowering 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

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.

pic: crosby employment bureau join our group

“

1.5% of our net income is invested in community projects which support our corporate objectives

“

page 12

managing assets effectively for financial strength

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.

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.

North Lincolnshire Homes has a £105m facility with Barclays Bank and has drawn down loans to the value of £71m at end of 2014.

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.

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.

development funding

From 2015/16, North Lincolnshire Homes In 2013/14, a two year plan to increase rents will set future return on assets targets which to 105% of target rent was introduced. will be built into ongo’s five year Growth and Diversification Strategy.

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.

page 13

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.

growth in turnover comparator quartiles our results

upper

median

lower

10.2

6.7

4.9

point score ranking/57

North Lincolnshire Homes 2013/14

9.5 12th

quartile

an indicator of our rate of growth

middle upper

operating margin comparator quartiles our results North Lincolnshire Homes 2013/14

upper

median

lower

27.1

23.1

19.5

point score ranking/57

quartile

21.5 26th

middle lower

an indicator of our profitability and efficiency

weighted average cost of capital comparator quartiles our results North Lincolnshire Homes 2013/14

upper

median

lower

3.8

4.2

4.9

point score ranking/57

quartile

3.1 4th

upper

an indicator of our ability to borrow competitively

page 14

performance of assets This was achieved in March 2012 and continues to be attained now.

Since the transfer of our housing stock in 2007, we have been delivering our key promise to tenants.

But, also since the time of transfer, our housing stock has reduced from 9,953 to 9,754 at the end of March 2014.

“

we promise to bring every home up to a Decent Homes Plus standard

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.

our housing stock, past, present & future 17/18

16/17

15/16

14/15

13/14

12/13

35

11/12

26

10/11

9,927

09/10

07/08

9,953

08/09

Transfer

Opening stock

9,892 9,863 9,878 9,752 9,749 9,732 9,754 9,808 9,849 9,896

DEDUCTIONS RTB sales Demolitions

16

1

16

9

7

120

12

30

8

8

15

22

29

6

26

58

73

62

Conversions out of stock Other disposals

6

1

8

8

4

ADDITIONS Acquisitions

8

New builds

1

15

Empty homes purchase/repair

10

Conversions back on stock

16

Build proposals (inc ringfencing) Mortgage rescue

1

3

4

Ad hoc property purchase

12

5

2

2

Adjustment

42 30

50

50

50

5

5

5

5

2

TEMPORARY ADDITIONS Leased under empty homes bid Closing stock Value of stock (from valuer) £million

2 9,927

9,892 65

9,863 9,878 9,752 9,749 9,732 9,754 9,808 9,849 9,896 9,943 93.5

119

139.5 167.1

174

200.9 203.5 206.2 208.7 211.6

page 15

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 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.

“

there are a further 314 homes to be built, converted or acquired by 2017/18

page 16

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 neighbourhoods.

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.

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 The Sustainability Index contains information determine the preferred options - retention, on 9,754 properties within 796 streets, investment, demolition or remodelling. grouped by 106 geographical areas. It sets out the information we have on properties; The sale of best performing, or high value, tenancies; turnover; potential income; loss of stock is not an option for us as replacement income and demand for services (such as costs would be higher than sale proceeds. dealing with anti-social behaviour, repairs

page 17

how we plan to use the

sustainability index 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.

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.

This will provide us with a Net Present Value of every property.

The results of this review will be used to establish partnerships with various agencies to address issues.

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 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.

All of the results are to be mapped onto a Geographical Information System (GIS).

The process wasn’t in place in time for the publication of this Value for Money SelfAssessment, however, we will look to include this data in our 2014/15 self-assessment.

pic: our value for money working group

page 18

&

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.

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.

The primary purpose was to provide a financial overview of the regulated social housing sector, based on an analysis of regulatory financial returns.

* *

The maintenance costs include those for planned and responsive repairs

total

1,841 1,944 1,704 1,887 1,842 1,882 1,840 1,895 1,576 1,880





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-







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 19

the 2013/14 benchmarking report 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.

‘open sharer’ organisations which have between 7,500 and 15,000 properties.

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.

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 We evaluate our results against 59 members of our peer group - which includes all national deliver.

Key performance indicators for costs 2012/13 actual

2012/13 quartile

2013/14 actual

2013/14 quartile

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 management

255.36

2nd

278.62

3rd

92.73

1st

108.24

1st

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

Direct cost per property for major & cyclical work

Direct cost per property for estate services Overhead costs per unit

“

“

our results

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 20

a closer look at major & cyclical work

“

“

our judgement: medium cost & good performance Key performance indicators for quality 2012/13 actual

our results

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

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.

In 2013/14 this was achieved in roofing, garage rebuilds and adaptations.

£14,064 savings for roofing £6,265 savings for garage rebuilds £10,392 savings for adaptations

Customer satisfaction with the quality of Our costs will continue to reduce as the major homes and neighbourhoods are both top improvement programme is now complete quartile compared to our peers. and any comparisons are dependent on an organisation’s major works cycle.

Satisfaction with the quality of homes has risen from 89.7% to 90% in 2013/14 and this We have been able to offset inflationary rises reflects the major improvement work that has in costs by packaging and phasing work in a been happening since 2007. smart way, negotiating with contractors to waive increases in return for package Our own satisfaction surveys show a extensions. continued improvement too.

2012/13 2013/14 target % 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%

trend

page 21

a closer look at major & cyclical work in 2013/14, we    

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

things we are working on 





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 22

a closer look at responsive repairs

“

“

our judgement: medium cost & good performance Key performance indicators for quality our results

2012/13 actual

2012/13 quartile

% of respondents very or fairly satisfied with the repairs & maintenance service

2013/14 actual

2013/14 quartile

89.7

1st

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

Average calendar days to complete repairs

The direct cost per property of our repairs service has remained in the 3rd quartile compared to our peers.

customer satisfaction with our overall repairs service from 92% in 2012/13 to 96% in 2013/14.

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 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.

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

Our job is to now reduce cost but remain upper quartile for customer satisfaction.

A great deal of work was carried out in 2013/14 to improve efficiency. We: 





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

page 23

a closer look at responsive repairs 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 preinspections 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 refurbishment 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

target savings

completed by

£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

£140,000

Dec 2015

£40,000

March 2016

target savings

completed by

£20,000

March 2016

£40,000

March 2017

objective 3: review out of hours policy & payments Review out of hours operations

Reduce the number of properties requiring more than 10 repairs per year to less than 100 Identify areas/trends where poor condition properties create significant demand. Design planned or batched repair programmes objective 6: embed efficiency/productivity targets Introduce further technology to the empty homes team that will realise back office cost savings Continue to drive down sickness levels to contribute to increasing efficiency

page 24

“

“

a closer look at housing management

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.

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.

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.

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 Additional benefits worth over £583,000 were responded in a similar way. also obtained for tenants by our dedicated Financial Inclusion Team.

Meanwhile, customer satisfaction has increased or been maintained in all areas of Moving forward in 2014/15 we have a our Housing Management services and the comprehensive Welfare Reform action plan percentage of respondents very or fairly and have agreed a company-wide approach to satisfied with our service remains within the income collection ahead of Universal Credit. 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 25

a closer look at housing management delivering our targets in: tackling anti-social behaviour

2012/13 full year

2013/14 full year

2013/14 target

2013/14 status

Respond to reports of racial and other harassment 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 antisocial 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%



2012/13 full year

2013/14 full year

2013/14 target

2013/14 status

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%



2012/13 full year

2013/14 full year

2013/14 target

2013/14 status

2.3%

2.3%

2.9%



4.19%

3.9%

x

2.38%

1.7%

x

delivering our targets in: lettings Percentage of new tenants satisfied with the lettings service

delivering our targets in: income collection Current tenant rent arrear as % of the debit (excluding housing benefit arrears) Current tenant rent arrears as % of the debit (including housing benefit arrears) Former tenant rent arrears as % of the debit

1.7%

page 26

a closer look at housing management in 2013/14, we 



 

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

things we are working on



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 maximise income and gain recharges from former 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

and estate services

“



our judgement: low cost & good performance

Costs of our estate management service remain low compared to peers, and satisfaction levels remain high.

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.

page 27

a closer look at overhead costs 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.

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 commitment to training that will improve the capabilities of all staff. Each functional area within overheads has their own cost reduction 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.

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 2012/13 overheads

£’000 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

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.

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

5,102

325.5

15,674

(less one offs)

page 31

other services

not included in benchmarking Older Persons Support contract. They subsequently granted us a further one year extenCustomer Services costs benchmarking is not sion on the contract. included in the HouseMark Core submission as they tend to be absorbed as part of the core In 2013/14 we also successfully implemented service costs. a new Black & Minority Ethnic support service

customer services

However, performance continues to remain high and we achieved Customer Service Excellence accreditation in 2014.

contract and introduced a Young Persons’ dedicated support service

resident involvement

A budgetary saving of £8,380 was achieved in Our 2013-14 STAR customer survey results 2013/14. It is our plan to continue to reduce showed us that we achieved upper quartile costs and maintain satisfaction. scores with 87.7% of respondents being very or fairly satisfied that their views are being listened to and acted upon.

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

We also retained our Tenant Participation Advisory Service accreditation and made a year on year budgetary saving of £56,508.

our achievements External accreditation is important for us to measure our performance and effectiveness, especially in front-facing services such as resident involvement or customer services.

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.

page 32

our vfm work continues 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: 

Carry out a VFM assessments of core services and activities at least annually



an understanding of VfM  

improve the quality and efficiency of services to customers 

organisations and review areas where our costs are higher 

cost and quality

Strategy to ensure our investment plans deliver the best returns



performance to stakeholders



measure the performance of our properties to inform investment decisions and deployment of resources



scrutinise VfM as part of investigations 

Policy to provide additional social and environmental benefits to communities 



organisations to share costs 

value and value for money

into account when making decisions about allocating resources



and demonstrate value for money



Procedures to ensure that we give consideration to achieving social benefits through procurement



returns are considered in all investment decisions 

In our 5 year financial plan we have committed to: 

  





A 3.2% increase in operating margins for North Lincolnshire Homes by delivering 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 giftaid back to North Lincolnshire Homes by 2019 Grow commercial revenue to deliver £500k of profit by 2019 to spread overheads, 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

North Lincolnshire Homes part of ongo Meridian House Normanby Road Scunthorpe North Lincolnshire DN15 8QZ 01724 279900 ongo.co.uk