VALUE FOR MONEY SELF-ASSESSMENT STATEMENT
Introduction 2014/15 has been an important year for the Accord Group and the Group continues to demonstrate value-for-money (VFM) to its customers and communities. With over 1,500 homes built through the 2011-2015 Affordable Homes Programme for the Group and its partners and successful acquisitions of Heantun Housing Association and Domus, the Group is proud to have underpinned its ambitious growth with consistently top-level regulatory judgements on viability and governance (G1 and V1). The Accord Group now collectively own almost 13,000 homes and provide care across the Midlands and the north of England to more than 100,000 customers. With further financial pressures being placed on customers, it is more important than ever that the Group offers choice and value. There is recognition of the ongoing challenges local authority partners and commissioners face, which is why the Group is working collaboratively to deliver affordable high-quality, value-added services to those in need. The VFM self-assessment statement is produced annually and reports on the performance against VFM strategic objectives and the actions taken to ensure services are not only high-quality, but deliver value for customers, communities and stakeholders. Embedding VFM across the Group enables it to demonstrate that every pound spent is invested efficiently and effectively to maximise the return on investment. The Group continues to ensure that best value is a prerequisite throughout all it does; delivering social housing, building new homes, providing care and supported by efficient corporate services.
A. Parikh C. Handy Chair Group Chief Executive
VFM at the Accord Group VFM in business planning The Accord Group’s vision is to be a strong, diverse group which makes the most of its individual and combined strengths to deliver positive outcomes to improve life chances for its customers and the wider communities which it serves. This vision provides customers, colleagues and stakeholders with a clear understanding of what is important to the Group, and delivering value is a fundamental part of that vision. Accord Group’s Business Plan sets out strategic objectives and the activities and initiatives required to achieve these goals and support the Group’s vision. A VFM strategy supports the delivery of these strategic objectives and ensures that the Group’s resources (e.g. assets, finances and people) are used effectively and that processes are carried out efficiently when work is undertaken. Evidence of how the VFM strategy is aligned to the Group’s strategic objectives is outlined within this document. The Group communicates its commitment to achieving VFM through business planning and annual financial reporting, as well as in this self-assessment statement.
Value for Money Self-Assessment Statement 2015
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Accord Group
Embedded governance and reporting
The Group’s VFM approach is firmly embedded across the organisation. All levels of governance are involved in delivering value across all activities.
Reporting / assurance / performance monitoring
Board VFM strategy sign off and ownership
Executive Board Key strategic deliverables identified Reporting / assurance / performance monitoring
Senior management Implementation and ownership of VFM operational aspects of the strategy
Group Board Strategic decision–making and setting the vision and key objectives is led and directed by the Group Board of Management. VFM is a key strand within this. The Board receive regular reports on VFM achievements. Finance, Risk and Audit Committee and local Boards Budgetary control and reporting is scrutinised by the Finance, Risk and Audit Committee and the locality Boards review performance and financial viability and report back to the Group Board. Executive Board The operational delivery is overseen by the Executive Board which also ensures that all strategies and policy documents clearly demonstrate how they support VFM approaches to the specific service area.
Directors Group and senior managers Senior management are responsible for ensuring that the strategic objectives are cascaded to front-line staff and that the VFM approach is ingrained throughout. Colleagues are empowered to challenge spend at all levels and for many years, the Accord Group has encouraged and enabled staff to make suggestions about improved and more efficient ways of working or procuring.
The annual self-assessment statement enables the Group to demonstrate how it protects its assets and ensured a return on the investment in them over the last 12 months. The statement has been externally validated by the Group’s Statutory Auditors, Grant Thornton. This review sits alongside the Group’s internal audit reviews of service which include the VFM approach to delivery in scope/terms of reference document. Grant Thornton has reviewed the statement content against its own interpretation of the VFM regulatory standard and highlighted where compliance was considered to be good and suggested where further disclosures could be made to further enhance the quality and transparency of reporting. The suggestions made by Grant Thornton have informed the final version of the 2015 VFM Self-Assessment Statement.
Financial Statements 2015
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VFM strategy and action planning The Board-approved VFM strategy has been developed to ensure regulatory expectations are embedded in every aspect of the Group’s operations. The 2015-2018 strategy consists of five strategic themes which are each aligned to regulatory requirements and the Group’s strategic objectives. The table below outlines the objectives and the key actions required to deliver the objectives.
Theme
Objective What are we going to do? l
l
Be a better buyer
l
l
l
Increase transparency in reporting
Accord Group
Deliver a strategic procurement approach to buying to drive VFM through the implementation of transactional controls and processes.
Prepare an annual fully compliant VFM selfassessment statement in accordance with regulatory requirements Demonstrate to stakeholders how we are delivering against Business Plan objectives relevant VFM targets in all performance appraisals
l
l
4
Value driven contract management – drive best value from contracts awarded over the entire life of the contract.
l Incorporate
l
Evidence the impact of social value
Strategic decisions on insourcing and outsourcing – ensure that the most value is driven from investment decisions.
l
Implementation How are we going to do it? l
l
l
l
l
l l
l
Each department/ function within the Group to have a local VFM action plan with measurable outcomes. Improved reporting on how procured goods and services improve the economic, social and environmental well-being of our communities (as per Social Value Act). Improved reporting on how the Group’s work improves the life chances/opportunities for customers and service users. Using proven methodologies capture, measure and report social value impact in a meaningful way.
l
l
l
l
Closely monitor purchasing and contracting arrangements to ensure the Group standing orders are followed at all times Take advantage of the Group’s growing scale and reach by collaborative large-scale buying in order to drive out value in procurement. Ensure active contract management is applied at all times ensuring that value is driven out of all outsourced and contracted activities Focus on driving value out of local smaller scale companies to ensure VFM is achieved whilst ensuring the local economy and supply chain is supported.
Continue to deliver internal ‘Make it Count’ campaign to raise awareness of colleagues across the Group Introduce VFM measures to the appraisal process. Capture and monitor VFM targets for each major team/function within the Group Challenge departmental action plans to ensure they are maximising efforts to provide VFM.
Continue to deliver awareness raising campaigns on social value amongst colleagues across the Group Develop a Group-wide Social Value strategy including a set of targets, indicators, measurements and formal reporting frameworks Apply a proven methodology to capture the amount of social value added by the Group’s activities. Prepare an annual social value statement/annual report.
Theme
Objective What are we going to do? l
l
Plan and manage our costs
l
Develop a VFM framework/model to measure VFM achieved on strategic business objectives.
Implementation How are we going to do it? l
l
Review and reorganise overheads to drive efficiency and increase VFM
l
Improved use of performance management and benchmarking data to understand costs and drive business improvement.
l
l
l
l
l
Improve return on investment/ assets
l
Improve operational outlets and assets (disposal/change of use/ continued investment) through active asset management Development, asset management and other major investment decisions are always clearly linked to strategic business outcomes/ objectives Improve return on investment in people – demonstrate increased added value from our investment in staff costs.
l
l
l
l
l
l
Align all major investment decisions with Business Plan objectives Continue to robustly apply zero-based budgeting to ensuring that only wholly necessary costs are budgeted for Undertake benchmarking exercises to understand costs in the context of the marketplace and analyse the reasons why comparative cost under-performance may occur. Put targeted, specific interventions in place to improve performance. Provide timely, high quality financial management information to internal stakeholders Carry out robust cost appraisals, challenge and scrutinise new projects and financial commitments Early intervention and challenge where approved budget performance is not being achieved.
Using existing intelligence and data, identify those assets with major investment requirements to inform disposal strategy, and conversely those which provide the greatest yield/return and require future additional investment to maintain these returns. Through the use of the Group Register of Assets and Liabilities we will understand those assets which have a high market value and therefore generate significant proceeds on disposal. Reduce exposure to overheads associated with commercial property by 25% by 2020 Enhanced Return on Assets measured at a corporate level (income earned as a percentage of assets held) will demonstrate increased VFM Through improved utilisation of existing staff and through improved HR metrics, such as sickness and attrition, increased value will be driven from Accord’s investment in its people. Early intervention and challenge where approved budget performance is not being achieved.
How we deliver In order to implement the strategy, a VFM action plan has been developed. Progress against the action plan is monitored by an internal VFM working group made of colleagues from central services and locality-based teams and is reported to Group Finance, Risk and Audit Committee and Group Board periodically. In addition to the action plan, each major function has their own VFM targets which are captured within departmental action plans. As at 31 March, 2015, there were 233 individual VFM actions from across the Group – with all of actions implemented, highlighting the level of commitment to a fully embedded Group-wide approach to delivering VFM. Value for Money Self-Assessment Statement 2015
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VFM for stakeholders Customers The Accord Group is committed to achieving VFM on behalf of its customers. This not only requires the Group to manage the financial aspects of VFM but also ensures the social value outputs of its operations meets the needs of its customers and communities. The added social value the Group helps to create for customers and local people includes:
Providing energy efficient homes with affordable fuel bills to reduce fuel poverty
Integrated flexible health and housing offer allows customers to benefit from care and support services in their existing homes
Retrofitting schedule to ensure improvements and enhancements are made to customers’ homes
Opportunities for customers to increase their skill sets and meet new people through volunteering, involvement activities and community days
Creation of jobs for customers including roles at the LoCaL Homes factory and Home and Garden Services team, as well as support to help customers create new enterprise start-ups
A range of ways to get in touch, including an mobileoptimised customer portal, 8am – 8pm customer contact centre and local offices
A variety of tenancy types including tenant management organisations and co-operatives, offering customers increased choice and responsibility over how their rent is spent and local decisions about their schemes
Pre-tenancy courses and support services to help customers to improve their financial and digital confidence.
Customers themselves have a role in helping the Group deliver VFM and one of the ways in which they drive improvements is through the Group-wide Scrutiny Panel. The Scrutiny Panel solely comprises customers and independent members and is part of the Group governance structure reporting into the Chairs Committee. The panel works independently to scrutinise and review services throughout the Group. They compile a report of their findings and make recommendations to improve the efficiencies and effectiveness of the services we provide. The Group also regularly asks for feedback about its services through customer satisfaction surveys. This feedback assists the Group in developing services to achieve even better VFM.
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Accord Group
Regulators The HCA regulatory standard outlines its expectations for providers to demonstrate that VFM services are being delivered, and moreover that VFM is embedded in the culture of the organisation. The Accord Group understands the importance of being able to confidently demonstrate that it can manage finances and resources diligently, whilst continuing to provide excellent services to its customers. The Group’s achievements have been benchmarked against the requirements of the standard, as below:
Registered providers shall… “Have a robust approach to making decisions on the use of resources to deliver the provider’s objectives, including an understanding of the trade-offs and opportunity costs of its decisions.”
How Accord Group delivers against these requirements Business planning and objective setting at Board away days. This ensures the commitment of financial resource aligns to the business plan objectives. Annual Board-approved budget assumptions report identifies resources to be committed. Internal senior management Project Approval Panel (PAP) which reviews all major investment decisions, business cases and business development opportunities with recommendations to Board. Opportunity costing is incorporated into the PAP approval process to demonstrate the rationale behind proposed business and investment decisions. Financial planning is integrated into business planning cycle. Annual detailed financial plans are prepared identifying the extent of the financial resources available to deliver the Board’s strategic objectives and ambitions.
Value for Money Self-Assessment Statement 2015
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Registered providers shall… “Understand the return on its assets, and have a strategy for optimising the future returns on assets – including rigorous appraisal of all potential options for improving VFM including the potential benefits in alternative delivery models - measured against the organisation’s purpose and objectives.”
How Accord Group delivers against these requirements The Stock Disposal strategy was further enhanced as part of the delivery of the Affordable Homes Programme and supports the Group’s approach to active asset management. The Group has a detailed active asset management approach which determines, at a unit level, whether to invest in or divest of social housing assets. Considerations include high value, high investment, low yield, high tenancy turnover and location. PAP makes informed decisions on disposals/retentions. This includes a non-financial value element which ensures the Group maintains a strong commitment to existing operational areas and the communities it serves. Scheme enhancement initiatives see the provision of long-term asset management solutions which offer financial and environmental benefits. For example, LED lighting, photovoltaic panels and other retrofit installations. Accord Group continues to receive ongoing accreditation for its long-term work on environmentally sustainable initiatives through the Eco Management and Audit Scheme (EMAS). The Accord Group is one of only a small number of providers to achieve this accreditation. Satisfied customers are considered to be a good measure of resources being invested appropriately. The Group undertakes a STAR survey to understand customer satisfaction levels and develop and enhance products and services. External benchmarking agencies (e.g. HouseMark) and internal bespoke benchmarking exercises are used to assess peer performance. Outputs are used to drive positive performance as a commitment to continuous improvement. The Group invests more than 50 per cent of operating costs in wages and salaries. The return on this investment is measured through a number of performance indicators including attrition and sickness absence. As well as through twice-yearly performance appraisals. A review of commercial property is ongoing to enable a measured and appropriate rationalisation programme which encompasses modern working practices and increased customer contact.
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Accord Group
Registered providers shall… “Have performance management and scrutiny functions which are effective at driving and delivering improved VFM performance.”
How Accord Group delivers against these requirements Board, Committees and the Executive Board receive regular reports to understand performance against KPIs in the context of agreed targets and the Business Plan. The Performance and Quality team undertake performance interventions where operational performance is less than expected to drive improvement and challenge at operational level. Performance data including trend analysis and cause and effect assessments are presented to the Executive Board and Directors Group regularly. Monthly management accounts are prepared and reviewed at a corporate, management and budget-holder level. The Group has an embedded, mature and agile approach to risk management and risk appetite, owned at a Board level. People management processes include an appraisal framework which measures performance against agreed objectives. Performance scrutiny exists with a wider audience through internal colleague forums and the Customer Scrutiny Panel. A Board approved VFM strategy and implementation plan is in place to ensure delivery of key objectives VFM successes are promoted internally and individual achievements formally recognised Contract management and review processes are in place to assess spend against tendered and quoted work. The Group has mechanisms to challenge suppliers and contractors on areas of unsatisfactory performance where necessary. Regular ‘temperature checks’ from colleagues and customers take place to gather feedback on contractor performance.
Value for Money Self-Assessment Statement 2015
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Registered providers shall… “Understand the costs and outcomes of delivering specific services and which underlying factors influence these costs and how they do so.”
How Accord Group delivers against these requirements Service level and corporate performance is benchmarked to contextualise current performance and identify future service improvements. This information is reported to the Executive and the Board. Year-on-year trend analysis allows the direction of travel to be understood. Finance colleagues adopt a zero-based budgeting approach each year to ensure that only necessary costs are included in the budget. The budget is informed by the Boardapproved business plan objectives. Monthly budgetary and financial reporting allows budget-holders and senior management to ensure financial performance is in line with agreed expectations. The Group carries out close and continuous monitoring of the impact on housing services in relation to the roll-out of Welfare Reforms and Universal Credit. Accord Group has developed a range of services (including money advice and jobs and skills support) to address the increasing financial difficulty experienced by our customers to ensure rent is paid. Board and senior management have established effective and strong relationships with local authorities, commissioners and regulatory bodies. This helps the Group better understand the requirements of the market and shape services to meet emerging needs. Performance and delivery in the context of the Group’s purpose and objectives is captured through its adherence with the ethos and principles of the Social Value Act.
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Accord Group
Colleagues The Accord Group continues to be a major employer with c3350 employees across the Midlands and 51 per cent of the Group’s turnover being directly invested in local communities through employment. Commitment to its people and the excellent services they provide makes the Accord Group a proud employer. The graphics below demonstrate some of the ways in which VFM is achieved through investment in people.
% of turnover reinvested in communities via employment
2014-15
51% 2013-14
52% 2012-13
49% Executive salaries as % of turnover
1.2% 2013-14 1.2% 2012-13 1.2% 2014-15
Emoluments payable to the Group CEO as a % of turnover
0.17% 2013-14 0.18% 2012-13 0.18% 2014-15
Value for Money Self-Assessment Statement 2015
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To ensure VFM is at the heart of the Group’s activities, an internal campaign, called Make it Count, has been developed to: l
Communicate the importance of providing value-added services in the context of the social housing and care sectors l Educate colleagues in ways in which they can contribute to delivering the strategy l Encourage constructive challenges and suggestions to improve VFM l Share and celebrate VFM successes. The campaign is championed by the VFM working group, which is made up of colleagues from a variety of functions and departments. The internal working group meet regularly to co-ordinate VFM activities, oversee the progress for each departmental action plan and shape the key messages as part of the internal campaign which is promoted in staff newsletters and on the intranet. The Make it Count campaign supports the Group’s strong commitment to recognising the contributions colleagues make to embedded VFM. During 2014/15 over 20 individuals were formally recognised for their personal actions and activities. The Accord Group also includes a Make it Count award at its annual Great People Awards, which celebrate those colleagues who deliver outstanding work. Through the VFM working group, the Accord Group has also introduced an employee discount scheme that offers colleagues access to discounts and savings from many high-street shops and supermarkets. The benefits scheme can help colleagues spend more efficiently and receive over £600 of annual savings for themselves and their families.
Maximising return on assets
The Accord Group prides itself on providing high-quality homes, and in order to do that it is important that the Group understands the return on assets and investment. Understanding the Group’s asset base The Accord Group’s business is built on the homes it owns and manages, which is why it is vital to ensure accurate and useful data about these properties. As a developing organisation, one which consistently out performs targets for delivering new homes, the Group carries out regular valuation exercises as part of the security process when seeking private finance. This information provides the assurance that the Group has ongoing oversight of the value of the stock and is able to use this information to help inform the management of assets. As well as developing new homes to deliver a supply of much-needed housing, the Accord Group maintains and enhances its existing assets to drive value through standing stock. Examples of how this data is used to measure and improve performance and support the development and delivery of the corporate asset management strategy is outlined below:
Responsive repairs cost per property
2014-15
£644.36 12
Accord Group
2013-14
£695.97
2012-13
£674.77
% of homes with gas safety certificate
2014-15
100%
2013-14
100%
2012-13
100%
Spend on building homes
2014-15
£35,004,000
2013-14
2012-13
£27,402,000
£29,223,000
Total asset management spend per property
2014-15
£1,213.61
2013-14
2012-13
£1,350.83
£1,172.02
Total asset management investment
2014-15
£15,158,000
2013-14
£14,951,000
2012-13
£12,782,000
The Group has further developed its data collection and analysis tools and asset registers and now has an even greater insight about its homes, customers and other members of the household. Geo-mapping tools are used to ensure housing and asset management services are arranged and deployed in the most efficient and effective ways possible to ensure these services are designed with the primary purpose of providing excellent service and added value. In addition, geo-mapping data helps to identify appropriate locations for building further new homes, helping the Group deliver an integrated approach to planning new homes and the delivery of wider locality and community services.
Value for Money Self-Assessment Statement 2015
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CASE STUDY
Understanding our asset base – active asset management
The Corporate Asset Management team has developed a tool which uses existing property and customer data to inform the Group’s strategic and disposal strategy. The tool is populated with a series of data fields which allows management to make an informed decision: l l
Is this a home the Group should retain and continue to invest in as it generates a future return on investment? Is this a home the Group should dispose of and divest from as it does not generate a sufficient future return on investment?
The tool considers the following information: l Market value: is the market value sufficiently high enough to support a decision to sell the home? A property with a high market sales value upon becoming void may generate funds to help the Group to develop several new homes. l Location: does the location of the home support efficient housing and asset management practices? Geographically outlying stock is inherently more costly and therefore less efficient to manage. l Rent levels: does the home generate high rental income streams? Those properties with a higher rental value will generate greater future income streams for the Group. l Stock condition - recent investment: has the Group invested significantly in this home in the last five years? If investment in major planned works and component replacements in the home has taken place in the last five years then it may support the decision to retain the property. l Stock investment - future requirements: by using the long-term asset management investment strategy, the Group can identify whether there is a significant investment in the property required in the next five years. Where a property is in need of major investment in the next five years, a decision may be made to divest in this home upon it becoming void. l Tenancy turnover: A property with a history of high tenancy turnover may support a decision to dispose of the home as there has been increased exposure to historic costs. Trends may suggest this exposure to increased costs could continue in the future. The outcomes of these individual considerations provide management with an overall decision to invest or divest in certain properties. The decision is based on sound reasoning. Each time this tool is used the Group is making an informed and demonstrable contribution towards increasing its return on assets. This decision making tool supports the implementation of the Group’s Stock Disposal Strategy – it also ensures that each decision maximises the benefit to the Group.
Location
Market value
Rent yield/current and future rent levels
Decision making process
Investment/return
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Accord Group
Recent major works/condition
Future major works required
Tenancy turnover
(Exec. and Board)
Divestment/sale/reclassification
During 2014/15, £2.25 million of income was generated from the disposal of housing stock. These funds have been re-invested in the development of new homes and further improvements. Furthermore, in the next five years, the Group’s approach to strategic asset management sees the disposal of housing stock identify a further £25.1 million return on assets from strategic stock disposal over the life of the five year business plan. The Group Business Plan identifies how income from the strategic disposal of property will support the development of new homes over the next five years, as outlined below:
2015 2016 2017 2018 2019 2020 Actual Budget Forecast Forecast Forecast Forecast Number of housing units disposed
46
51
40
35
30
30
2,255 338
4,195 108
5,558 183
5,172 603
4,729
5,521
Investment in new homes developed
28,615
32,510
66,589
32,439
Investment in existing housing stock
14,040
13,948
13,263
12,950
12,719
13,007
Total investment in housing
42,655
46,458
79,852
45,389
12,719
13,007
Net loan debt required/(repaid) to finance investment programme
17,682
14,559
44,048
10,860
(12,622)
(14,997)
24,973
31,900
35,805
34,529
25,341
28,004
Return on assets generated through strategic asset management Number of new homes handed over in year
Return on Assets available to reinvest in new and existing homes
£25,174,000
£197,426,000
£155,578,000
Forecast to be generated from sales of assets over life of 2015 – 2020 Business Plan
Forecast total investment in new and existing homes over life of 2015 – 2020 Business Plan
Forecast return on assets generated over life of 2015 – 2020 Business Plan
Value for Money Self-Assessment Statement 2015
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Performance and cost management
The Accord Group has benchmarked its performance on a number of key areas. A benchmarking cohort of 20 registered providers has been selected to reflect the scope and nature of the Group’s work, particularly the commitment to care services and community-based initiatives. The findings of the benchmarking process are outlined below.
COR POR ATE IN DICATORS
O P ER AT IO NA L IND ICATORS
Benchmarked indicator
What does this measure?
Ranking*
2015
2014
2013
2012
Social housing lettings operating margin
The percentage of income from lettings converted to operating surpluses
8 (9)
32%
31%
29%
26%
Social housing lettings total operating costs per home
The total cost of managing each social housing home for one year.
13 (14)
£3,228
£3,430
£3,416
£3,408
Void losses per home
The total amount of void income forsaken in the year averaged across all homes in management.
16 (16)
£83
£115
£106
£77
Total asset management spend per home in management
The average investment in each home in management per year.
5 (5)
£1,214
£1,292
£1,172
£1,295
Bad debts per home
The total amount of bad debts written off in the year averaged across all homes in management.
6 (2)
£15
£58
[£1]
£37
Return on assets: Turnover (all activities)
The return on assets expressed as total turnover as a % of total assets less grant
10 (9)
20.3%
22.6%
21.4%
16.1%
Return on assets: Operating Surplus (all activities)
The return on assets expressed as total operating surplus as a % of total assets less grant
17 (14)
3.13%
3.6%
3.6%
3.2%
Income earned per executive officer
The value of income generated averaged across the number of Executive Officers
6 (11)
13.9%
£11.2 m
£10.1 m
£5.8 m
Executive costs as a percentage of total staff costs
The percentage of total costs of the Executive as a percentage of total staff costs.
1 (1)
2.33%
2.4%
2.5%
4.0%
Average interest rate
The average cost of debt being interest paid as a % of total debt held
4 (7)
3.9%
3.8%
4.2%
4.0%
* Ranking out of cohort of 20 comparible organisations. Brackets denote 2014 performance.
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Accord Group
Direction
Key influencing factors
2015 - future commitments and actions
Impacts of welfare reforms, housing management policies, local authority interactions, budget performance, rent policy, market wage inflation.
The Accord Group continues to improve on its overall financial operating effectiveness of its social housing activities demonstrating the Group’s commitment to driving efficiencies and adding value in front line services. This will continue to be a priority going forward and further efficiencies have been built in to the 2015/16 budget.
Welfare reform, housing management policy, contractor performance, social mobility, customer economic pressures, demand.
Close monitoring of voids and re-let process undertaken in 2014 has seen an improvement in performance in this measure. Again, there will be an ongoing commitment to further improve on performance going forward and the 2015/16 budget includes stretch target re-let times.
Contractor performance, cyclical investment need, customer aspirations, compliance with standards, demand, service reorganisation.
As outlined in the 2013/14 VFM self assessment statement there was a commitment to continue to improve upon the financial efficiency of asset management procurement processes. This has been borne out in 2014/15 with improved performance identified on this measure whilst still delivering against the planned programme of works for improvements to our homes.
Welfare reform, housing management policy, social mobility/abandonment, customer economic pressures, demand.
A commitment was made in 2013/14 VFM self assessment statement to improve performance on this measure. Accord has substantially reduced its financial exposure to bad debts in 2014/15 and will continue to focus on further improvement going forward.
Income generation/welfare reform/ public sector spending, economic influences.
The addition of Heantun to the Group part way through the year has impacted negatively on the performance of overall Return on Assets measures. There has been substantial asset growth but only part year effects of increases in turnover leading to an unfavourable impact on 2014/15 performance. Improvements in reported performance for this measure are expected in 2015/16.
Income generation/welfare reform/ public sector spending, management performance/cost control.
The addition of Heantun to the Group has impacted favourably on this measure as top-line growth was achieved without adding to the Executive costs.
Income generation/welfare reform/ public sector spending, management performance/cost control, wage inflation.
The Accord Group again achieves VFM by demonstrating that only a very small percentage of overall staffing costs are committed to the Executive.
Interest rates, economic market performance, Treasury Management Strategy.
The Group continues to demonstrate a competitive and average cost of finance through effective and efficient treasury management practices.
Value for Money Self-Assessment Statement 2015
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Key VFM achievements from 2014/15
VFM initiative
Financial achievement
Non-financial achievement
In-house Construction Services team made savings across the Bushbury, Greenfields and Beechdale phase one developments and the Holtshill project.
£723,125
64 low carbon homes have been developed, providing affordable housing to over 250 local people.
External Green Deal funding was secured to install solid wall insulation in hard-to-treat homes in Walsall.
£132,000
45 homes were made more thermally-efficient, reducing energy bills for customers.
£46,000
Review and redesign has seen improvements to the IS systems which have led to enhanced working practices and a more effective internal service from the IS team
Renegotiated material costs for LoCaL Homes factory
£50,000
Financial savings are re-invested into research and development in order to promote continuous improvement and innovation into low carbon technologies.
Relocation of teams as part of the creation of the Ashrammoseley partnership
£125,000
Reorganisation of resource to meet the evolving needs of the Group’s customers and communities in Birmingham has led to an enhanced local offer.
Efficiencies against existing contracts and agreements for a range of goods, works and services
£475,213
Detailed understanding of the services received from external suppliers and contractors have led to more effective and accurate KPIs.
£24,000
Colleagues are able to deliver ‘on the spot’ solutions which helps the Group to deliver an improved customer experience.
Redesign of IS infrastructure to significantly reduce hosting costs.
Invested and installed mobile working solutions of locality-based staff
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Accord Group
VFM initiative
Financial achievement
Non-financial achievement
As part of Heantun joining the Group, an annual corporate service saving of £120,000 was included in the business case (this doesn’t include the supply chain review or new business). This has been exceeded.
£120,000
Savings made have been re-invested into frontline services, including the development of a community hub at Springvale House. This will directly benefit the customer as they will be able to access financial advice, get online and meet with their housing officer in a refurbished, informal environment.
Supply chain review as part of Heantun joining the Group.
£126,000
Increased opportunities for local business to work with the Group.
New business secured for Heantun’s Direct Services team
£160,111
Job creation, skills development and apprentice opportunities for local people.
Former tenant collection in 2014/15 sees the recovery of money from previous customer arrears for the benefit of current customers.
£123,116
Reinvestment into services for existing and new customers.
Care and support services were reorganised, identifying cost efficiencies.
£1.3m
Care and support service redesigned to meet the new and emerging needs of local communities.
Total financial achievement:
£3,404,565
Value for Money Self-Assessment Statement 2015
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Managing money
The Group recognises that to be an effective organisation which provides a value-added service, it is important that income and expenditure are managed in the most effective manner to provide the greatest return on investment possible. The information below demonstrates how the Accord Group reinvests its incoming resources to deliver the key objectives around meeting need, delivering new homes and providing excellent services. To meet these strategic aims, the Group has major commitments it needs to fund. This includes the resources needed to build new homes, pay people to deliver services and maintain and repair existing assets. During 2014/15 the Group expended £134.1 million of financial resources. A breakdown of this is provided below:
Developing new homes: £35 million
£35.0 million was spent on the development of new homes as part of an ongoing major commitment to deliver new housing supply.
Maintaining existing homes: £15.2 million
In addition to the development of new homes £15.2 million was spend in maintaining our existing homes.
Wages paid to colleagues: £56.4 million
Accord is a significant employer and has supported the local economy by committing over £56.4 million into employing people from our communities.
Direct service costs / overheads: £13.3 million In the provision of housing and care services £13.3 million of direct costs and overheads were incurred.
Loan interest: £14.2 million
Accord paid £14.2 million in loan interest to its funders to service the debt borrowed to build new homes.
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Accord Group
26% 11%
of total expenditure
of total expenditure
42%
of total expenditure
10%
of total expenditure
11%
of total expenditure
The Accord Group generates income from the sources below to fund the expenditure commitments above, which therefore support the work required to meet the strategic goals.
Turnover: £110.8 million
83%
During the year the Group earned £110.8 million of income from the delivery of social housing and care services.
Net new borrowings: £17.7 million
The Group borrowed a net amount of £17.7 million of loan debt in the financial year.
Social Housing Grant received: £5.6 million £5.6 million of social housing grant was received from the Homes and Communities Agency this year.
13% 4%
Total expenditure:
of incoming resources
of total expenditure
of total expenditure
£134.1 million
Value for Money Self-Assessment Statement 2015
21
Performance against targets Core service Key Performance Indicators 2014/15 The Executive and the Board both receive regular performance management updates with respect to performance against KPI targets for aspects of core services. Core KPI performance for 2014/15 is outlined below: Housing services
Care and Support services
2014-15 2014-15 2013-14 2013-14 2014-15 2014-15 2013-14 2013-14 Actual Target Actual Target Actual Target Actual Target
Current tenant arrears (%)
3.72%
2.9%
3.3%
4.1%
3.08%
3.00%
3.6%
3.3%
Former tenant arrears (%)
1.96%
1.45%
2.1%
2%
4.62%
2.00%
3.5%
2.2%
Re let time (days)
27.26
14
27.4
15
30.5
14
32.6
22.7
Void losses (%)
1.0%
0.80
1.0%
0.60%
6.88%
4.50%
7.3%
3.4%
Repairs satisfaction with service (%)
96%
85%
99%
95%
96%
85%
99%
95%
Repairs first time fix (%)
94%
80%
92.2
86%
94%
80%
92.2%
86%
Gas compliance CP12 (%)
100%
100%
99.9%
100%
100%
100%
99.9%
100%
Social and environmental return on assets
The Accord Group is committed to the communities it serves and recognises the importance of delivering more than just a core social housing service. Social value Social value is achieved by utilising and investing resources carefully in order to maximise opportunities to benefit customers health and well-being and improve their life chances. The Group has been able to deliver social value by ensuring that new and existing initiatives align to its values and continues to champion innovative solutions to meeting need at a local level. The Accord Group delivers social value in many ways due to the diverse nature of the Group’s operations. Many of the activities the Group undertakes generate a significant amount of social value added, for example: l
Housing management services: the provision of housing to those in need meets social outcomes. Accord Group provides around 13,000 homes to those in need of housing and it continues to develop a substantial amount of new homes each year to meet this as a growing demand. l Community-based activities: Community is at the heart of Accord Group. It is deeply committed to improving the communities in which its customers live. This is achieved through community housing officers working collaboratively with customers and other partnering organisations to create and nurture sustainable communities. l Care and support services: Accord Group delivers care services to a significant amount of people. The services are delivered to the highest standards to ensure customers receive excellent care services, delivered with consistency and professionalism. l Youth offender services: Fry Housing Trust and Heantun Housing Association both deliver youth offender services. Both organisations have an excellent track record of working with ex-offenders to re-integrate them into society. Through this work, the Trust and Heantun are able to equip their customers with the skills to improve their life chances and their employability in the future.
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Accord Group
In addition to the delivery of services where social value added is wholly embedded in the activity, the Group also operates a number of initiatives which have the specific intention of adding significant additional social value, examples of these include: Holiday Kitchen The Group and partner organisations have launched a school holiday programme providing children and families with food and activities in attempt to reduce the impact of child poverty. See case study on page 30. Already Loved Furniture Already Loved Furniture is a second-hand furniture project run by the Accord Group. Based in Walsall town centre, the shop offers good quality furniture and household items at affordable or discounted prices. Much of the stock sold comes from donations of unwanted items from colleagues and community members, which is reconditioned to sell on. The project aims to help people to furnish their homes affordably, reducing the need to borrow money or take out pay day loans to buy items. Time for Real Set up by Caldmoreaccord, the Time for Real time bank allows people to exchange a host of skills free of charge. For every hour that someone spends doing a task, such as gardening or dog walking, they get an hour’s worth of ‘work’ from another member of their community. Time for Real, based in Caldmore Green, has 74 members who in total have exchanged 1,000 hours, which is the equivalent of 142 working days. The time bank brings people from across the community together. It helps tackle social isolation by providing free services to those who may struggle to undertake tasks themselves or are unable to afford them. Moseley garden party Customer and community events provide a great opportunity to bring people together in an informal and fun way to not only celebrate being neighbours but to get advice on a range of subjects. Over the years the garden party in Moseley has seen hundreds of customers come together to play games, enjoy food and refreshments and browse stalls offering information on reducing energy bills, employment support and health and well-being advice. ROLE programme ROLE (which stands for Recruitment, Opportunity, Learning and Employment) is the Accord Group’s exciting recruitment, training and apprenticeship programme. It is open to Accord Group customers and their families and can lead to a real job, caring, supporting and working with people with health and social care needs. ROLE includes: l
Employability skills including literacy and numeracy A six week unpaid work experience placement to gain vital skills and knowledge l Apprenticeships where you can learn on the job and get paid at the national apprentice rate. l Importantly, everyone who completes an apprenticeship will be offered a contract of employment, caring and supporting people including the elderly, young people and those with mental health concerns. l
Residents who successfully complete the six week programme or an apprenticeship can include the Accord Group as a referee on their CV, new skills to add to their CV and training certificates. Old Tree Nursery Heantun Housing Association has acquired a licence to occupy Old Tree Nursery, a horticultural centre in Wolverhampton. The site will provide plants for its various housing schemes around the Black County as well as supplying seasonal fruit and vegetables for kitchens in its residential and sheltered care homes. Additionally, the site will act as a base for Heantun’s successful Skills for Life scheme, a training programme which helps people with learning disabilities or mental health needs to develop the skills and confidence they need to live more independently.
Value for Money Self-Assessment Statement 2015
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CASE STUDY
Holiday Kitchen
Holiday Kitchen is just one of the initiatives the Accord Group has launched to increase opportunities for customers. Holiday Kitchen offers family learning, food and play opportunities during the school holidays. The aim is to improve children’s well-being, educational outcomes and life-chances through the provision of fun activities and experiences. The Holiday Kitchen concept was created on the back of customer research which suggested that customers required support in holiday periods. To ensure activities and interventions are impactful, a robust and comprehensive evaluation programme was implemented. The evaluation looked at how the initiative achieved the core objectives of: l
Improved social inclusion and aspiration Improved family nutrition and well-being l Reduced financial and emotional strain. l
In 2014, Holiday Kitchen worked with local and national partners to co-deliver 2,300 activity days and meals to almost 300 participants across 11 sites in Birmingham, Sandwell and North Solihull. There was no large grant applied for in 2014 to cover costs so delivery drew upon multiple small investments, including corporate product sponsorship, donations and in-kind contributions which maximised local resources. It is estimated that the 2014 summer project saved families from our communities a total of £30,000. The evaluation programme drew on the principles of the SROI (Social Return on Investment) methodology and data collection techniques included: child-centric visual activities, parent/carer questionnaires and guided 1:1 interviews, interviews with centre managers and a feedback session with commissioners/funders. The evaluation clearly showed that Holiday Kitchen met the short term outcomes for children of ‘reduced opportunity gap’, ‘increased physical activity’, ‘improved opportunities for family bonding and learning outside the home’, ‘improved nutrition’ and there was partial achievement of the ‘increased exposure to reading and language development’ and ‘increased awareness of illegal money lending’ outcomes. For parents/carers there is strong evidence that the ‘improved opportunities for family bonding’ and ‘improved social inclusion’ outcomes were achieved, particularly through the shared meal times. There is also evidence that the ‘reduced financial strain’ and ‘reduced family indebtedness’ were realised through the provision of meals and free activities for the children. The Group continues to work to develop Holiday Kitchen in to a nationally recognised model of holiday learning, food and play.
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Accord Group
Environmental matters
The Accord Group is aware that VFM and environmentally conscious activities go hand-in-hand. The Group has a strong history in ensuring eco-friendly practices are in place across the organisation. Its commitment to the environment is demonstrated through the achievement of ISO 14001 quality management systems accreditation and EMAS (eco management and audit scheme), the launch of the first timber-home manufacturing facility to be opened by a housing association and its commitment to retrofitting properties for the benefit of the Group and the customer. The Group has a detailed environmental policy and each function has a departmental action plan. Each of these actions contributes to the reduction of waste, paper, carbon emissions and water usage. The actions are monitored by an internal Environmental Improvement team. The Environmental Improvement team meet once a quarter to review progress against departmental action plans, share internal best practice and hear from external experts about their approaches to improving environmental performance. One of the main ways the Accord Group has demonstrated its commitment to delivering environmental and social added value is its ongoing investment in its LoCaL Homes factory and the in-house construction services team.
The Environmental Improvement team meet once a quarter to review progress against departmental action plans, share internal best practice and hear from external experts
LoCaL Homes is a timber-frame manufacturer which makes highly insulated properties. By investing in over 300 timber homes over the next four years, around 1,200 people will benefit from significantly reduced fuel bills. In addition, by guaranteeing work to the factory, the Group is supporting sustained employment for over 20 factory-based colleagues and move through the supply chain. The Group recognises that there is also a significant impact from the properties that house customers, not only from their use, but also from their construction. That is why the Accord Group set up the LoCaL Homes factory, enabling the Group to annually produce around 200 offsite manufactured low-carbon homes. The properties produce on average 50 per cent of the carbon emissions of traditional brick built homes and 50 per cent lower fuel bills, reducing costs for both the Group and customers of the new homes. The embodied carbon in the manufacturing process is also a fraction of that in traditional homes, as timber locks in carbon from the atmosphere as it grows. Around 20 local jobs have also been created at the factory, putting further investment into the community and helping to reverse local unemployment levels and manufacturing decline. The factory process also benefits the contractors erecting each property on site, offering both time and waste savings. A site waste management plan is provided for the contractor which considers the project’s design and access statement, to ensure that efforts are maintained in reducing the creation of waste on site from building, in line with the Group’s environmental policy, Environment Management System (EMS) and the legal requirements. However, it is not only new homes that are of environmental concern to the Accord Group. As part of its asset management strategy the Group has sourced external funding to retrofit older properties to increase their environmental performance, offering customers the benefit of reduced heating bills as outlined in the case study overleaf.
Value for Money Self-Assessment Statement 2015
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CASE STUDY
Environmental Impact of the ERDF Retrofit Project
The Accord Group retrofit project is a £3million initiative which is 50 per cent funded though European Regional Development Fund (ERDF). The funding is split into capital and revenue; the revenue stream of the project has been set up to provide Business Support to SME’s in the region. The capital stream has a number of elements all of which are geared towards making homes more environmentally sustainable. Examples of this include the use of new technologies to harvest and utilise energy from self-generating sources, and retrofitting homes with a number of existing technologies which make homes substantially more thermally efficient. To date the project has spent £1.375 million and achieved a carbon saving of 2,362 tonnes against a target of 3,000 tonnes. The remaining target will be achieved and exceeded before the end of the project in December 2015. These savings have come from various interventions throughout the project: l
45 homes have benefited from external wall insulation which in itself will lead to carbon reduction of 900 tonnes. This part of the project has also been funded by Green Deal, who provided 75 per cent of the funding with the remainder funded through ERDF - demonstrating Accord Group‘s commitment achieving excellent VFM by maximising external funding opportunities. l 1,200 properties have received cavity wall treated which will make an estimated carbon saving of 2,600 tonnes over the life time of the project l The planned works programme has been bolstered by the ERDF funding. Along with replacing bathrooms, kitchens and windows with more modern energy efficient solutions, 15 per cent of the properties will also receive internal wall insulation. In addition, 15 per cent of all the new windows will be replaced with upgraded double glazing which saves additional carbon. By continuing to attract external funding Accord Group is able to make significant environmentally sustainable improvements to its homes at a fraction of the total overall cost. These homes are permanently more efficient to live in therefore also generating VFM for our customers too.
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Accord Group
Performance against VFM targets
In 2013/14 we set ourselves 11 commitments. Below explains the progress we have made to meet these commitments:
Target We will undertake a review of the reorganisation of our operational services to ensure those services are delivering effectively for customers and in a way which clearly demonstrates good VFM aiming for c£300,000 savings in 2014/15
Achieved?
What we have done l
l
l
Ashrammoseley partnership saw the reorganisation of resource to meet the evolving needs of the Group’s customers and communities in Birmingham Insourced further work as part of the Home and Garden Services offer Rationalisation of commercial properties as part of the Ashrammoseley partnership
We will undertake future work to 300 units to upgrade the energy efficiency ratings to improve running costs for those customers
To date we have upgraded 245 units with the remaining to be completed over the next year.
We will undertake a further review of our care and support dedicated housing stock to identify key actions for the future and determine whether any of the units should be modified, redeveloped or sold, particularly where there is uncertainty around future commissioning of services
Review carried out in Walsall and Birmingham and Care and Support housing stock has been identified. Units have either been sold, invested in or converted to general needs tenure ensuring the maximum return on assets
We will combine our assets management operation with our building, development and regeneration team to ensure a more integrated approach to asset development and management
Restructure has been implemented and sees a holistic joined-up approach to property management.
We will carry out further procurement activities which will realise a further £400,000 to £500,000 of procurement savings, particularly in the supply of products and services in relation to asset management
Efficiencies against existing contracts / agreements for a range of goods, works and services have seen a saving of £475,213
Value for Money Self-Assessment Statement 2015
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Target
Achieved?
What we have done
We will review our external contractors and supply chain and further develop in-sourcing and growth of the in-house team, Homes and Gardens
A review has taken place and recommendations have been made to improve internal working practices and increase opportunities for our customers to gain work experience, apprenticeships and employment.
We will undertake a review of the Local Homes factory to ensure it has delivered good VFM since it’s commencement of operation in 2012
LoCaL Homes are accredited and work to the BM TRADA Q-Mark, which is regarded as one of the most rigorous certification processes available for construction products, it is recognised by controlling authorities, home warranty providers such as the NHBC (National House Building Council) and is used by world-class construction companies and manufacturers.
We will realise further synergy savings of £400,000 across our Group wide care and support operations
The locality model has seen rationalisation of operating structures in line with current service delivery requirements. This ensures that value is achieved in the care and support staffing structure, whilst allowing sufficient capacity to achieve growth aspirations. This provided an annual staff cost saving well in excess of £400,000.
We will realise further synergies and savings for Heantun to the value of £120,000 in backoffice services as a result of Heantun joining the Accord Group
Heantun joined the Group in July 2014 and savings in excess of £120,000 were made.
We will carry out a detailed review of commercial buildings and rationalise office space as well as reduce office costs by 25 per cent in order to invest in new services for customers
The commercial building review has been carried out and a building rationalisation plan is place. Stock investment / divestment decision making process is in place hand-in-hand with a review of locality working. Going forward, the Group will look at how to optimise office space in line with increasingly modern approaches to working practice.
We will increase the income stream through Matrix Housing partnership by the delivery of further development services
Partnership successfully secured the funding to facilitate 551 properties as part of the Affordable Homes Programme 2015-2019.
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Accord Group
Aims for the year ahead
For 50 years the Accord Group has been providing choice, support and opportunity for local people and communities. Going forwards, the Group will continue to adapt to meet the changing needs of its customers and stakeholders demonstrating not only innovation but improved VFM in the services it provides now and develops in the future. To ensure VFM is at the core of strategic decision making for the future, the Group aims to deliver the following targets:
Timeframe
Target VFM targets 2015/16 l
l
l
l
l
l
l
Complete and realise the benefits of the first phase of the Group’s review of its commercial properties, identifying capital receipts on disposal and substantial overhead savings. Complete and realise the benefits the Group’s review of its care and support assets, identifying capital receipts on disposal or re-commissioning assets into alternate usage e.g general needs to ensure an appropriate return on these assets. Identify property disposal proceeds in accordance with the Group Stock Disposal strategy and financial targets included in the Group Business Plan Create a Social Value strategy and framework that consistently measure social value for the Group’s activities. Continue to divert £400,000 of existing budget into the delivering against the Group’s Big Issues objectives without increasing establishment staffing Deliver against the Group’s care and support growth and new business target objectives of £1.5 million Deliver against the Group’s approved 2015/16 budget which includes £3.6 million of built in operational VFM targets.
These targets will be delivered throughout 2015-16 financial year with a target final implementation/delivery date of March 2016
VFM targets included in the 2015 – 2020 Business Plan l
l
l
l
l
l
Have reduced office/ commercial building costs and other associated overheads by 20 per cent in order to invest in new services for customers Continued implementation of the strategic stock investment and disposals process achieving 186 units sold Significantly environmentally improve 2,000 existing units ensuring they remain high quality homes and help reduce fuel poverty Procurement and other efficiency programmes delivering 20% savings to reinvest into core purpose and evidencing high quality services and products and standards Have achieved £150 million turnover and approaching £10m surplus to plough back into supporting those most in need Have achieved a 20% increase in customer satisfaction ensuring delivery of services that are relevant and meet needs of customers and stakeholders
These objectives are embedded within the Group’s key strategic priorities for the forthcoming five years, as outlined in the 2015 - 2020 Business Plan
Value for Money Self-Assessment Statement 2015
29
178 Birmingham Road, West Bromwich, West Midlands, B70 6QG Telephone: 0300 111 7000 Email: customerfirst@accordgroup.org.uk Visit: accordgroup.org.uk Tweet: @theaccordgroup Like: facebook.com/accordgroup Watch: youtube.com/theaccordgroup