Value for Money Statement 2016 Contents Purpose ..................................................................................................................................... 1 The structure of our business and cost drivers ..................................................................... 1 Our approach to value for money ........................................................................................... 1 Objectives .............................................................................................................................. 1 Framework ............................................................................................................................ 2 Performance management and scrutiny ............................................................................ 2 Delivery against our strategic objectives ................................................................................ 3 Developing new homes ........................................................................................................ 3 Providing affordable rented homes ..................................................................................... 3 Outcomes from our LiveWell services ................................................................................. 4 Innovation in health and social care ................................................................................... 4 Social Value........................................................................................................................... 5 Efficiency and cost reduction .................................................................................................. 5 Overview ................................................................................................................................ 5 Examples of value for money gains in 2015-16................................................................. 6 Examples of value for money gains over longer periods ................................................... 6 Benchmarking .......................................................................................................................... 7 Our approach to benchmarking ........................................................................................... 7 HouseMark benchmarking – general needs housing and overheads .............................. 7 Maintenance ...................................................................................................................... 7 Housing management ..................................................................................................... 10 Overheads ........................................................................................................................ 11 Asset management and return on assets ............................................................................ 12 Understanding our assets and our strategic position ...................................................... 12 Our decision making and use of data ............................................................................... 12 High level performance of our assets ............................................................................... 13 Measuring value in our portfolio ........................................................................................ 14 Using receipts from property disposals ............................................................................. 16 Delivering value for money in the future .............................................................................. 17 Efficiency ............................................................................................................................. 17 Delivering new homes ........................................................................................................ 18 Asset management............................................................................................................. 18 Overall self-assessment ........................................................................................................ 19 Glossary of terms ................................................................................................................... 20
Purpose This statement is targeted at our customers and our varied stakeholders. It aims to give a rounded self-assessment of our performance. A version of the statement is available on our website.
The structure of our business and cost drivers The South Yorkshire Housing Association (SYHA) group comprises SYHA (the parent organisation) and two active subsidiaries, Alliance Housing Association and SYHA Enterprises. SYHA is a registered provider of social housing, with two main parts to its business. We own and manage around 3,800 rented homes, and provide supported housing and care services to over 2,000 customers under our LiveWell brand. We are also a developer of new homes. Group turnover for 2015-16 was £47.2 million. Alliance HA is a charitable RP, managing 217 homes. SYHA Enterprises is a limited company providing property sales and letting services under the Crucible Homes brand. Annual turnover for each organisation is around £1 million. A defining characteristic of SYHA is that a large proportion (around 60% of turnover) of our business is derived from the provision of a wide variety of care and supported housing services. The markets, business dynamics, cost drivers, and asset management issues for this part of our business are often quite different to those for social rented housing. This report will often, therefore, distinguish between these two activities.
Our approach to value for money Objectives Our objectives can be summarised as:
Using the resources at our disposal in the best possible way to achieve our purpose – in particular creating capacity to build new homes. Reducing our costs, enabling us to continue to deliver high quality services, but more efficiently. Ensuring our services meet the needs of our customers and service commissioners, and provide good value to the public purse.
Delivering on value for money allows us to reduce the amount of funding required to provide our services, and to recycle any additional surplus made into developing new homes.
Value for Money Statement 2016 | 1
Framework We have a value for money framework, approved by our Board. The key components of this are:
Our Corporate Plan – updated each year, setting out our high level objectives, and with a focus on delivering value for money. Our Business Plan is updated at least once each year, setting out our medium to long term financial objectives. Our annual budget setting process incorporates robust value for money challenges, and has a focus on targeting resources towards priorities set in our Corporate Plan. A system of budget setting and budget management which places control and accountability with budget holders right across the business. SYstates – a suite of ‘mini-value for money statements’, maintained by all key functions in the business, covering cost and quality measures relevant to those functions. Regular reporting to the Board on financial performance and a range of operational performance indicators. Our asset management strategy – one of five key strands within our Corporate Plan.
Performance management and scrutiny We look to bring together the cost and quality of our services to form an overall view on value for money, using tools such as SYstates referred to above. However, we do use a range of methods to manage simply the performance aspects of our services:
Management and the Board receive a performance report each quarter – covering all areas of our business, giving current and trend performance, benchmarked where this is appropriate, and with commentary from the appropriate manager. The outcomes of any material external evaluation of our services are reported to the board – for example, inspections of our services by the Care Quality Commission, and reports received from the Homes and Communities Agency (HCA). We have an ongoing programme of reviews undertaken by internal auditors, which are considered by our Audit Committee. We use a variety of ways to engage with customers, including sharing performance information in our Annual Report to Customers: o We have a customer scrutiny panel, our Challenge Group, which reviews performance and selects areas of our service for review - this group attends Board meetings from time-to-time to report on the findings of this work (most recently they looked at our approach on anti-social behaviour).
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Delivery against our strategic objectives Developing new homes Land aside, the cost of building new homes does not vary substantially from one region of the UK to another. However, rents in our region are low when compared to many other parts of the country, and this makes it challenging for us to deliver new homes in a financially viable way. Despite this, we continue to invest resources in order to deliver new homes. In 2015-2016, we: 
 
Built or acquired 153 new homes for rent or shared ownership: o This represents a 4% expansion of our general needs portfolio in the year (compared to a national average of 2%) and a material increase on the 44 homes we delivered in 2014-2015. A number of these developments are projected to make operating losses, and it is very unlikely that we could commit to these schemes without the operating efficiencies we are making. We signed a deal with an investor which will deliver 219 homes in the Sheffield City Region over the next 3 years
Looking forward, our relatively high level of gearing, and challenges in delivering financially viable developments, limits our ability to deliver new homes. However, we continually look to maximise this output, and to look at innovative ways we can work with others to increase supply. The table below sets out our targets for new homes over the next five years, including numbers we already have in our pipeline. Our aim will be to replace any homes sold under Voluntary Right to Buy (VRTB) on a one-for-one basis. Funding
SYHA funded
Sub total Funded by others Total
Strand within programme Growth (supported with grant and market-facing products) VRTB replacements
New homes secured
New homes to be secured
Total
101
170
271
51
139
190 461
Manage and maintain
219
500
719
371
809
1180
Providing affordable rented homes For the 3,774 social rented homes we provide, on average, our rents are 21% below those charged in the private rented sector. We provide a comprehensive management and maintenance service, which goes beyond that typical in the private rented sector. We dedicate resources to tackling anti-social behaviour, offering debt advice, and supporting community initiatives. All of our homes exceed the Decent Homes Standard. Value for Money Statement 2016 | 3
We have chosen not to move properties to higher ‘affordable rents’ as part of our HCA development agreement, minimising rents payable by our customers, and thus limiting any call on housing benefit.
Outcomes from our LiveWell services Many of our care and supported housing (LiveWell) services provide support to vulnerable clients, and there is much research which shows that these types of services reduce the potential burden on public services such as local authorities, police and health services. Our LiveWell services currently support 2,742 people with health, social care and housing needs. This compares to 1,872 in 2013, and this increase has been achieved despite material reductions in the Supporting People funding received for these services. We provide 396 units of extra care provision, enabling older people to remain in their own home for longer, thereby avoiding residential care. Research found that an average 60 unit extra care scheme delivers savings to the social care system of £326,000 per annum (‘Establishing the extra in Extra Care’, ILC- UK). Extrapolating from this, our rented extra care homes give a saving of £1,543,000 per annum. 299 people use our mental health services. We deliver a range of services which prevent admission to residential care and hospital, or enable people to leave hospital more quickly. The Department of Health estimate that delaying admission to residential care through offering supported housing can save up to £28,080 per person per annum. Our 97 units of supported accommodation for homeless families enable vulnerable families to stabilise whilst seeking a permanent home. We support these families to manage their finances, housing needs and to manage their health and wellbeing.
Innovation in health and social care A key part of our strategy for LiveWell is to identify areas where we can deliver savings for the health and social care system, by offering services which prevent people from having to access more costly health interventions. Doncaster Social Prescribing is a project which gives healthcare professionals the option to prescribe non-medical support to patients, aiming to reduce unnecessary GP appointments and hospital admissions. Last year, we worked with 985 people to reduce their use of health services. Research by Sheffield Hallam University into a social prescribing service indicated that the average cost saving to the health system from social prescribing was £378 per person. Using this measure we estimate our service saved local health services £372,330 last year.
Value for Money Statement 2016 | 4
Living Well is a project run in partnership with Sheffield Health and Social Care NHS Foundation Trust. It enables people placed in out of city hospitals or treatment units to return to Sheffield and live in the community. This year we supported 24 people to leave hospital and live independently. Using prudent estimates, this service has delivered over £1 million savings to the local health economy. Age Better in Sheffield is a project funded by the Big Lottery. It tackles the issue of isolation and loneliness in people aged over 50, which leads to negative impacts on individuals’ health. This year, we supported 756 people, delivering a range of interventions from home based counselling, to peer mentoring. The impact is being evaluated locally by Sheffield Hallam University, and nationally by Ecorys.
Social Value We set ourselves a challenging target of delivering 5,000 hours of volunteering per annum, and achieved 6,332 hours. The ONS uses a median hourly wage to value this type of work, and using this measure the value of our programme was £79,150. Taken together, the estimated value to the public purse of the examples above is £3,022,560 per annum. The cost of providing the support in these services is just £359,000 each year.
Efficiency and cost reduction Overview This section explains the ways in which we are looking to reduce costs, sets out how costs have reduced in 2015-2016, and gives examples of value for money. We look to reduce costs in a number of ways right across the business, but there are four areas we would highlight:
Investment in IT to bring about efficiencies and reduce staffing costs. Insourcing further elements of maintenance services. Procurement savings on goods and services we purchase. Systematic redesign of processes.
We have made substantial savings in recent years, and we are seeing the number of ‘big ticket’ items, which deliver relatively quick and easy savings, diminish. Increasingly, our actions result in relatively modest savings in any one area, but which are material when aggregated across the business. This is evidenced by the reduction in core operating costs we have achieved, which is illustrated in the chart on the next page.
Value for Money Statement 2016 | 5
1200 1100 1000
Actual 948
Total costs per unit (£) 955
1060 935
900 800 700
880 850
856
Forecast
812 738
844
600
698
690
2016/17
2017/18
500 400 2013/14
2014/15
2015/16
Management
Routine maintenance
Management (HCA)
Maintenance (HCA)
Our total cost per unit for housing management in general needs housing was £844 in 2015-2016, a reduction of £12 on the previous year (equivalent to £49,000). For context, we show the average cost nationally, published by the HCA, which is £880. Our routine maintenance (responsive repairs, void works and cyclical maintenance) cost per unit is £935, a reduction of £20 per unit (equivalent to £80,000). The HCA published average is £1,060 per unit.
Examples of value for money gains in 2015-16 The pattern of our savings now tends to be one of smaller savings across a number of areas. These are examples of year-on-year savings in 2015-2016:
Staffing costs in our rents team were reduced by £30,000. Flooring procurement gave us further savings of £22,300 per annum. Savings on gas and electricity costs of £30,000. Moving to electronic tenants newsletter saving £17,325. Using e-learning to deliver health and safety training saving £15,000. A further reduction in IT network costs saving £7,610.
Examples of value for money gains over longer periods
In October 2015 we undertook a review which shows that our investment in a range of IT enhancements has already, or will, reduce annual operating costs by at least £317,000 per annum. Over the past three years, we have restructured our marketing function, insourcing various activities and attracting grants to support some of our wider social value initiatives o As a result, our net annual marketing costs have fallen by £31,000 (to £145,000) in 2015-2016, and will fall by a further £42,000 in 20162017. Value for Money Statement 2016 | 6
Benchmarking Our approach to benchmarking Benchmarking the costs and quality of our services against similar organisations is a key part of assessing the relative cost and quality of the services we provide. We set out below the context and rationale for our work on benchmarking. LiveWell We derive around 60% of our income from the provision of care and supported housing (LiveWell) services. This is a competitive market, where we have to compete to win or retain contracts. We will only do this if we are able to clearly demonstrate that we deliver value for money. With this constant driver, allied to the fact that we provide a very wide variety of services, we see little value in general high level benchmarking against peers. Our approach is to undertake more targeted work:
Regular market research to ensure our service offers remain fit for purpose. Conducting competitor analysis for specific contracts, looking at price and quality. Analysing feedback on tender submissions. Carrying out an annual ‘health check’ assessment on all care and support services. Using data to evidence the preventative or social benefits of our services.
General needs Our general needs housing service lends itself much more readily to benchmarking against other social housing providers. We subscribe to HouseMark, the most commonly used benchmarking service in our sector and compare ourselves to a peer group consisting of similar social landlords across the North and the Midlands. We also use HouseMark to benchmark our overhead costs.
HouseMark benchmarking – general needs housing and overheads The information below derives from Housemark data for financial year 2015-2016. Maintenance The charts on the next page plot direct maintenance costs - that is excluding all overhead and ancillary costs. The first of the charts combines all elements of maintenance. The second excludes major works, as this spend can fluctuate form one period the next. The third shows just major works.
Value for Money Statement 2016 | 7
Maintenance costs
1,800
Direct cost per property (ÂŁ)
1,600
259
179 216
1,400 225 1,200
186 227
230
175
Void Works
1,000 646 800
590
Cyclical Maint.
687 823
Major Works Responsive Repairs
600 400 547
545
200
537 363
0 2013/14
Direct cost per property (ÂŁ)
1,200
2014/15
2015/16
Median
Maintenance costs (excluding major repairs)
1,000 259
216
179
800
225
230
227
600
186
Void Works Cyclical Maint. Responsive Repairs
175 400 547
545
537
200
363
0 2013/14
2014/15
2015/16
Median
Value for Money Statement 2016 | 8
Major repairs
Direct cost per property (ÂŁ)
900 800 700 600 500
823
400 300
646
Major Works
687 590
200 100 0 2013/14
2014/15
2015/16
Median
We reduced the cost per unit of void works, cyclical maintenance and responsive repairs in 2015-2016. On void works, we improved processes, refined the type of work undertaken and drove out inefficiencies with contractors. This helped us to reduced average costs by ÂŁ37 per unit (equivalent to ÂŁ13,000). This has not had an adverse impact on our ability to let properties, evidenced by our sustained performance on void rent loss. We made a slight reduction on cyclical spend, but our costs remain above the median. Gas servicing is the biggest element in this and our performance is routinely at 100%. We have reduced responsive repair costs slightly, but our spend is above the median and has been for some time. There is a link here between the amount we spend on major works, which is well below the median for our peer group. We have undertaken analysis to understand the reasons for this. Our view is that there is no inherently correct balance of spend, but we will continue to review this. We have embarked on a major insourcing project which will achieve further savings over the next three years.
Value for Money Statement 2016 | 9
The following are the key performance indicators we monitor in relation to maintenance: Measure DSO repairs completed on first visit Calendar days to complete a responsive repair Customer satisfaction with day-to-day repairs Properties meeting Decent Homes Standard Properties with valid gas safety certificate
2015
2016
Peer group average
89.29%
89.49%
87.81%
6.3
10.1
7.8
79%
86%
86.5%
100%
100%
N/A
100%
100%
99.95%
The number of calendar days taken to complete a responsive repair increased to 10.1 from 6.3. This increase is the result of a mid-year termination of a large external contract, which did adversely impact on performance. This has been addressed, and we expect to see a marked improvement in 2016-2017. Overall, our summary is that our total repair costs are slightly above those for our peers, with our performance (aside from the blip in days taken to complete repairs this year) being slightly better overall than our peer group. Housing management 400
Housing management costs
Direct cost per property (£)
350
The chart above plots direct housing management cost per property, excluding all overheads82 and ancillary costs of providing these services. We have reduced total cost per 300 unit by £39 since 2013-14, which equates to savings of £145,000 per annum. However, 74 at £316 per unit, our cost is higher78 than the £293 per unit median for our peer group.
75 Tenancy Management 39 Analysis published by the HCA cites a number of factors which contribute to variances in Lettings 40 operating costs. It shows that associations which operate in areas with lower average 200 46 44 ASB higher costs. 52 earnings levels and higher levels of social deprivation are likely to have 52 SYHA operates in a region with lower than average earnings. WithinResident the Sheffield City Involvement 36 44 150 Region, our main area29of operation, 17% of areas fall within the 10% most deprived 22 Rent Arrears & Collection areas in the country. We will continue to look for efficiencies, but believe that these 52 100 factors add to our costs. The areas of spend where we are above the median are ASB 250
51
and rent 132 collection, where we have targeted resources to ensure we minimise rent 133 arrears and maximise our impact124 on neighbourhoods. The impacts can be seen in our 50 86 arrears collection performance and our low levels of evictions. 0
The following are the performance outcomes relating to housing 2013/14 2014/15 2015/16 Median management:
Value for Money Statement 2016 | 10
Measure Current rent arrears Number of evictions Void rent loss Satisfaction with anti-social behaviour cases
2015 2.4% 27 0.83%
2016 3.08% 25 0.83%
Peer group average 3.46% N/A 0.83%
91%
89%
87%
At 31 March 2016, our current rent arrears were 3.08%, up from 2.4% at March 2015. However, the 2.4% figure was artificially low due to a timing technicality. The overall trend remains downwards – arrears stood at 4.7% in 2010 – and our figure is below the peer group median. Our summary is that our performance is better than average for our peer group. Although our costs are slightly higher, this is influenced by the areas in which we work. Overheads We use HouseMark to benchmark our overhead costs. This indicates that our overhead costs overall are comparatively low, being in the top quartile (i.e. lowest cost) in our peer group. The diagram below shows position in relation to our peers, using percentage of direct revenue costs as the measure. Our overall overheads are 9.2% of turnover compared to a median for the peer group of 12.65%. They are below the peer group average in all areas except IT, where they precisely on the group average. We have invested quite heavily in technology to support front line services, and we will continue to do so. As we comment elsewhere, this investment has led to productivity and efficiency improvements.
Overhead costs as a percentage of adjusted turnover 14 12 2.94 10 2.76
8
2.94
2.30
5.75
6 4 2 0
4.08
4.61
4.15 1.62
0.76 1.17
0.81 1.28
0.91 1.20
2.34
2013/14 (%)
2014/15 (%)
2015/16 (%)
Median 15/16
Finance
Office Premises
Central & Other
IT & Communications
Value for Money Statement 2016 | 11
Asset management and return on assets Active asset management is one of five core strategies within our overall Corporate Plan. We aim to derive maximum value from our property assets by investing in maintenance, or through a change of use or disposal where this is appropriate. In this way, we provide our customers with quality homes and neighbourhoods, or release capital for investment in the providing new homes.
Understanding our assets and our strategic position Our stock profile is diverse, comprising: 1,638 properties where we provide care or support – a mix of self-contained homes and specialist properties such as extra-care schemes or residential care homes. 3,774 social rented properties – a mixture of houses and flats, dispersed across our area of operation, and generally with small numbers in any one location. 306 shared ownership homes. Broadly, for our care and supported housing properties, we regard the social value, delivered through the care and support services provided, as more important than maximising financial return using conventional asset management metrics. This does not mean that we ignore the financial aspects of the return on these assets, but this is secondary to fulfilling their role in providing services for our communities. Our approach on social rented housing is slightly different. We regard the maximisation of the overall number of quality homes in our region as a key objective. This means that we are likely to give more weighting to the financial performance of these properties when making asset management decisions, in order to maximise the amount available to develop new homes. For shared ownership properties, our objective is to operate at a surplus, whilst enabling our customers to maintain or increase their equity stake.
Our decision making and use of data We use the principles set out above, using data referred to elsewhere in this section, to support decisions on: Where to invest resources in developing new homes. Where to invest resources in major repair and improvement works – including energy efficiency measures. How we can target investment to improve neighbourhoods. Where and when to dispose of properties.
Value for Money Statement 2016 | 12
Every void property is reviewed to determine whether to re-let, sell or change to an alternative use. Whilst the majority of properties are re-let we will consider the disposal of a property when the following circumstances exist:
It has high void repair costs and, or high maintenance costs. There is low demand. It is in an area we have decided to exit or where we’re working to change the tenure mix . Sale will generate a high capital receipt to invest in providing new homes .
High level performance of our assets Because we develop and invest in our property assets largely to achieve social purposes, and are funded to do so, we cannot be driven solely by conventional financial performance metrics. This is particularly true for supported housing. For example, we may (and do) choose to retain properties which offer a lower return, where we feel that investment in a particular neighbourhood, property type or service is justified. Similarly, we may dispose of properties which perform well financially, if the capital receipt can be used to increase the overall number of homes in our region. Notwithstanding these points, we use various metrics to inform our choices. The table below shows the Return on Capital Employed (ROCE) for our three main categories of properties. This measures the profit made for three categories of properties, expressed as a percentage of the net amount we have invested in them. The average ROCE for our assets is 6.8%, and the cost of the capital for year ended 31 March 2016 is 2.5%. The primary purpose of this data is to indicate the relative, rather than absolute, performance of these categories of assets.
Cost (£000) Social Housing Grant (£000) Capital employed (£000) Profit excluding interest and property depreciation (£000) Return on capital employed
General needs 228, 265
86, 662
Shared ownership 14, 013
328, 940
96, 156
52, 275
6, 956
155, 387
132, 109
34, 387
7, 057
173, 553
8, 792
2, 513
457
11, 762
6.7%
7.3%
6.5%
6.8%
LiveWell
Total
Average cost of capital 2015-2016 – 2.5%
Value for Money Statement 2016 | 13
Measuring value in our portfolio We undertake analysis on the performance of our social rented property portfolio each year. We measure financial value, and use a range of housing and neighbourhood performance indicators - these include demand, customer satisfaction measures, and deprivation. From this analysis, we measure:
Financial performance – using net present value (NPV). Social housing value – using a scoring system, this combines NPV with housing and neighbourhood indicators to give a rounded measure of performance.
An extract from a traffic light (green, amber and red) report showing this data by neighbourhood is set out below: Neighbourhood Inside Sheffield City Region Abbeydale and Inside Netheredge Aldersgate Inside Court Ashover and Inside surrounding Auckley Inside Balby Inside Barlborough Inside Barnsley Inside Centre Beighton and Inside Mosborough Bentley Inside Bolsover Borders Bramley Inside Brimmington, Hollingwood Inside and Staveley Broomhall Inside Canklow Inside Cantley Inside Carlton Outside Chapeltown Inside Chesterfield Inside Central City Road Inside
Net present Difference value 2015 (%)
Difference (£)
Net present value 2016
£47, 715
-3.7%
- £1, 701.78
£46, 013
£15, 389
0.33%
£50.44
£15, 440
£34, 788
- 10.78%
- £3, 385.21
£31, 403
£26, 807 £32, 933 £35, 618
- 10.99% 19.61% N/A
- £2, 653.88 £8, 033.47 N/A
£24, 153 £40, 966 N/A
£19, 742
17.04%
£4, 054.57
£23, 797
£73, 279
- 5.81%
- £4, 024.08
£69, 255
£31, 165 £21, 323 £61, 999
5.34% 18.72% - 0.04%
£1, 759.17 £4, 911.22 - £25.34
£32, 924 £26, 234 £61, 973
£31, 139
16.36%
£6, 089.19
£37, 228
£21, 699 £40, 173 £56, 975 £41, 597 £29, 689
17.9% 6.56% 2.58% - 4.6% - 6.01%
£4, 730.71 £2, 818.95 £1, 509.65 - £1, 827.52 - £1, 682.97
£26, 429 £42, 992 £58, 485 £39, 769 £28, 006
£18, 836
18.38%
£4, 241.06
£23, 077
£55, 730
- 9.14%
- £4, 667.29 £11, 783.54
£51, 063
£4, 366.33
£34, 616
Clifton
Inside
£4, 527
72.25%
Crookes, Crookesmoor and Broomhill
Inside
£30, 250
12.61%
£16, 310
Value for Money Statement 2016 | 14
Although this is not an exact science, we use this data to indicate whether our asset management strategy and decisions are having the intended impact. For example, if we are investing heavily in a particular neighbourhood, we would expect to see a positive impact on these indicators over time. In financial terms, we use the net present value (NPV) as our indicator of performance. We do not have an intrinsic objective of increasing NPV, and it can be affected by factors beyond the control of asset management actions. For example, we must decrease rents in future, which will reduce the return on our assets. However, we aim to use this data to indicate whether our asset management decisions are having the impact we would expect. For 2015-2016, we have continued to dispose of properties with higher repairing liabilities. All other things being equal, we would expect this to evidence itself by increasing the NPV of our portfolio. It should also reduce the number of poorly performing properties within the portfolio. For last year (2014-2015), the average NPV per unit was £31,658. For this year (20152016), applying 1% rent reductions will see the average NPV per unit fall to £31,080. We also ran our analysis using the same rent assumptions as last year, to give an indication of underlying impact excluding the effect of rent reductions. Doing so, the average NPV per unit has increased to £34,620. The charts below, and overleaf, show the proportion of our portfolio in bands of NPV per unit, green being over £30,000, amber between £10,000 and £30,000, and red being below £10,000. As we would expect from our disposals policy, the proportion of properties in the red band has fallen. 2016 NPV without rent reductions
2015 NPV Red 483 13%
Red 320 9% Amber 1055 28% Green 2354 63%
Amber 947 26% Green 2244 61%
Turning to the social value measure, the charts overleaf show our portfolio in scoring bands, green being highest and red lowest. As you can see from the charts, by eliminating the impact of rent reductions, we have substantially reduced the number of properties within the lowest performing band.
Value for Money Statement 2016 | 15
2016 SHV without rent reductions
2015 SHV Green 807 22%
Red 636 17%
Green 1622 44%
Red 1084 29%
Amber 1783 49%
Amber 1471 39%
Using receipts from property disposals A summary of property disposals over the past three years is set out below. In aggregate, we have brought in £9.21 million, with the largest share of these disposals being of older properties with high repairing liabilities. Our actions reduce future costs, and this can be seen in the increase in the overall net present value of our portfolio. All of the receipts from disposals are recycled to provide additional new housing. This is part of the reason we have been able to increase our development activity in 2015-16, and have created capacity to develop new homes in future. Disposals (units) Sales receipts (£000) Surplus (£000)
2013/2014
2014/2015
2015/2016
Three year total
79
23
30
132
5, 220
1, 614
2, 376
9, 210
2, 184
696
893
3, 773
Value for Money Statement 2016 | 16
Delivering value for money in the future Our overall aim is to maintain the quality of our services whilst reducing the cost of delivering them.
Efficiency The introduction of rent decreases in particular led us to undertake a fundamental review of our business, and led to a reworking our business plan in October 2015. Mainly through a continuation of initiatives already underway - such as investment in IT, insourcing, and system reviews - we developed a schedule of specific actions which will reduce operating costs by a total of £1.68 million per annum by financial year 2018-19. £1.1 million of this is planned to take effect in 2016-17. We also agreed a number of principles to which we will adhere in improving our VFM:
We will continue to grow and develop profitable new services – our ‘growth engines’ should not be materially damaged. Remaining resources should be sufficient to safeguard revenue streams customer satisfaction may fall from its current level of over 90%, but will not be allowed to fall to levels which lead us to question our ability to provide good quality services. Our jobs should continue to be sustainable and worthwhile - we are not moving to a high stress, factory farm model. We must continue to be able to add value to customers’ lives, to local infrastructure and to local neighbourhoods - if this cannot be delivered, it will be time for us to consider other options.
Some of the actions in the ‘savings schedule’ referred to above, began to take effect in 2015-2016, and played a part in helping us to reduce our operating cost per unit. Most of these actions though will impact in 2016-2017 and through to 2018-2019. The chart on the next page shows how our core management and repairs cost per unit (this is the total cost including all overheads and ancillary costs) has actually reduced, and how this will reduce further with the implementation of our plans.
Value for Money Statement 2016 | 17
Total costs per unit (£) 1200 1100 955
948
1000
1060 935
900
880
800
856
850
812 738
844
700 600
698
690
2016/17
2017/18
500 400 2013/14 Management
2014/15 Routine maintenance
2015/16
Management (HCA)
Maintenance (HCA)
These are examples of actions we are taking and the projected impact over three years:
Enhanced use of technology – we will make net productivity gains of £172,000 through a series of projects under our Modernising Customer and Business Services initiative – these include rolling out ‘mobile working’ to more front line staff, implementing electronic document management across the business, and automating maintenance invoicing systems. Insourcing: o We have made savings already, and will expand the range of repairs undertaken by our in-house team to make further savings of £519,000. o We will create a larger in-house pool of temporary staff in LiveWell, saving £51,000 per annum on agency cover arrangements. Procurement – for 2016-2017, savings will include: o £98,000 on insurances. o £25,000 on telephony. We have introduced salary exchange for pensions, which will save £34,000 per annum in national insurance costs. We will bid for grants to cover the cost of “value added” activities we currently pay for ourselves, for example volunteering. Our target is to bring in £50,000 per annum.
Delivering new homes Our target for delivery of new homes is set out in the ‘Delivery against our strategic objectives’ section.
Asset management We will continue to apply our processes in accordance with our Asset Management Strategy and the principles outlined above. This should both improve the financial performance of our portfolio over time, and provide resources to recycle into providing additional housing supply. Value for Money Statement 2016 | 18
We will continue to regularly review the social and financial performance of our LiveWell assets, and we will dispose of these where their performance is lacking against both measures. We have already taken the decision to dispose of one scheme and this will be completed in 2016-17.
Overall self-assessment The assessment below aims to give a fair and rounded picture of value for money within South Yorkshire Housing Association: We believe that we continue to deliver against our key corporate objectives, and continue to improve the value we deliver year-on-year: o In particular, we are working hard to develop new services which both reduce costs and improve outcomes in health and social care. The competitive nature of the market for our LiveWell services means that we will only win or retain business where we demonstrate that we provide value for money: o We have reduced costs substantially, and will continue to look for efficiencies and to develop new and more efficient services, but the scope for further efficiencies is limited. o We aim to further increase revenues derived from new funding sources, to support our core infrastructure costs. We have reduced our social rented housing operating costs, and as indicated by our projected costs per unit, we will reduce these further in the next two years. Benchmarking for our social rented housing indicates that, overall, our operating costs are just above the average for our peers, and we deliver a level of service which is above that provided by our peers: o Our aim is to maintain performance whilst continuing to invest in value added services and reducing costs. o In quality terms, we will focus on any areas where our performance falls below average compared to our peer group. We have improved the quality of data we hold on our property assets, and use this systematically to inform our decision making: o We have disposed of properties, which has improved the financial performance of our portfolio. o Receipts from disposals are recycled into the provision of new homes, and we have increased the number of extra homes we have provided. We have made gains in procurement, but intend to explore ways to make further savings, either by working with other organisations, increasing internal resources, or using collective procurement vehicles. Insourcing of services has proved to bring material cost reductions, and we aim to continue this process – within our capacity to manage this. We have increased the number of new homes we have delivered: o Relative to our size, we have ambitious plans for future supply - operating in a region where identifying financially viable development is challenging.
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Glossary of terms
ASB – Anti-social behaviour.
Decent Homes Standard - To meet the Decent Home Standard, your council or housing association home must: meet the minimum safety standards for housing, be in a reasonable state of repair and have reasonably modern facilities and services.
DSO - Direct Services Organisation, the previous title for our Home Maintenance Team.
General needs – Homes which are solely for rent and don’t include extra support.
HCA – Homes and Communities Agency.
HouseMark – A leading provider of social housing data and insight.
LiveWell – Our supported housing services.
NPV – Net Present Value.
ONS – Office for National Statistics.
ROCE – Return on Capital Employed.
SCR – Sheffield City Region.
SHV – Social Housing Value.
SYHA – South Yorkshire Housing Association.
VFM – Value for money.
VRTB – Voluntary Right To Buy.
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