YHN Limited Wednesday 7 December 2016 at 5.00 pm YHN House, Benton Park Road, Newcastle upon Tyne NE7 7LX Contact Officer: Jill Davison
– Tel: (0191) 2788624 Email: jill.davison@yhn.org.uk
AGENDA Page No Introduction items 1.
Reminder to switch off mobile phones
2.
Apologies for Absence
3.
Declarations of Interests
4.
Chairs Items
Items for approval 5.
Minutes of the previous meeting held on 1 November 2016
1-8
6.
2017 Annual schedule of business
9 - 12
7.
Appointment of Company Secretary
13 - 16
Items for discussion 8.
Annual update from Asfaleia Limited
17 - 26
9.
Annual update from Abri Trading Limited
27 - 42
10.
Health and Safety 6 month update report
43 - 50
Your Homes Newcastle Limited. Registered in England and Wales Registration Number 5076256 Registered Office: Newcastle Civic Centre, Barras Bridge, Newcastle upon Tyne NE1 8PR. A company controlled by Newcastle City Council
11.
Items for Information (a)
Delegated Decisions
51 - 54
(b)
Board Forward Plan
55 - 56
(c)
Committee minutes
57 - 72
Service and Strategy Delivery Committee 5 July Group Audit Committee 11 August To exclude the press and public during discussion of agenda items 12 - 14 because of the likely disclosure of confidential information. The definitions of what is considered confidential are contained within Section 16 of the Company's Standing Orders. 12.
Confidential minutes of the previous meeting held on 1 November 2016
13.
Business and Financial Planning 2017-18 To be circulated as a supplemental report
14.
Governance review presentation by Campbell Tickell
15.
Date and Time of Next Meeting 7 February 2017 10am – 4pm (away day) Mansion House, Jesmond
2
73 - 76
Board 1 November 2016 (5.15pm to 6.30pm) Present: O Grant (Chair), P Dibbs, L Doherty, P Dutton, V Dunn, D Huddart, A Mirza, T Moore, J McCarty, M Page, L Stephenson, P Scope, E Snaith, J Streather, D Slesenger, M Talbot. In attendance: J Davison
Group Governance Manager & Company Secretary
T Drury
Managing Director
D Langhorne
Director of Property Services
L Forrest
Head of Finance (until 6:30pm)
A Senior
Newcastle City Council
G Clark
Group Audit Committee Chair (until 5.35pm)
J Reid
Retired Board member
J Purvis
Retired Board member
J Ritchie
Director of Finance and Commercial (due to commence Jan)
M Foreman
Director of Customer Service (due to commence Jan)
A Baker
Governance Support Officer
504
WELCOME The Chair welcomed everyone to the meeting, including Jon Ritchie and Matthew Foreman who will join YHN in January as our new Director of Finance and Commercial and Director of Customer Service.
505
APOLOGIES None.
506
DECLARATIONS OF INTERESTS No declarations
507
CHAIRS ITEMS Governance Review – The Chair gave an update on progress of the consultant’s report, a draft will be circulated as soon as possible prior to the December meeting when the consultants will attend the meeting. The Chair therefore suggested that a change in board structure in relation to Vice Chairs was difficult to implement when we are all unsure of future structures. The Chair asked for board agreement to re-appoint Lynn Stephenson and Lisa Doherty to the position of Vice Chairs for a further term of 1 year.
JD
The Chair also noted that the three Tenant member vacancies would be held until the outcome of the review was complete. The committee membership will stay as same for now, so Jill Davison has prepared 2017 dates on this basis but may be liable to change Membership of subsidiary boards remain same as well Risk and fraud prevention training - Phil Dibbs has kindly sourced some free training which we will complete in Jan or Feb and Jill Davison will be canvassing for dates, and hope all can attend.
Board resolved to;
508
MINUTES 11 October 2016 • • • •
509
Appoint Lisa Doherty and Lynn Stephenson to the position of Vice Chair for a term of one year.
Agreed as a true record Matters arising Letter from NCC regarding the pensions deficit support had been supplied to Abri Board as requested. Supplemental information regarding delegated decisions had been circulated by David via email. Board date in December confirmed as Wednesday 7th.
GROUP AUDIT COMMITTEE ANNUAL REPORT George Clark, Group Audit Chair presented the report, noting a busy year for the committee providing constructive challenge to senior management, internal and external audit. Three main areas were noted. Firstly, with regard to the internal audit opinion, the committee can provide substantial assurances to the board that YHN’s current controls and processes are working effectively. Secondly, a clean bill of health on the Annual Accounts and financial statements, and given a difficult year end it is a testament to the finance staff at YHN. Finally, as set out in section three of the report YHN is still challenged by the occasional “hiccup” but demonstrates the will of the committee to continue to keep an eye on the nuts and bolts of the organisation as well as taking a strategic view. The Audit Chair gave assurance that they will continue to monitor any area where systems are not working properly to a point where they have been adequately addressed and will not happen again. On behalf of the Group Audit Committee, the Chair noted thanks to all the staff which support the committee, turn up regularly and respond professionally to committee requests. Questions/Comments A board member questioned the note regarding three IT audits which received moderate and limited assurances and asked the Audit Chair to comment further.
JD
The Audit Chair assured the board that moderate assurances were quite a good level; a higher level would be awarded only if no recommendations were made. A Board member requested more detail on the two issues noted in the report with regard to the pension deficit and the Palatine account. The Chair noted that the committee’s concerns with regard to the pension was that whilst YHN was being asked to be more businesslike, the effect of the deficit on the balance sheet could look like we weren’t a going concern to potential customers. After seeking further information we have been given assurances by the external auditors, NCC and senior staff at YHN that we were a going concern and would do their best in the risk assessment to mitigate the risk of loss of customers due to the view on the balance sheet. The assurances received were adequate to recommend the accounts to the board. The issues at Palatine, the committee are keen to understand what has gone wrong, and how it can be stopped from happening in the future. There has been a thorough investigation completed and the outcome will be reviewed at the next Group Audit Committee. Clearly it is a concern, we need the systems and processes in place to drive the business, but from experience it is very difficult if someone is determined to break the controls they will. The Chair thanked the Chair of the Group Audit Committee for his report. 510
FINANCE AND PERFORMANCE QUARTER 2 Tina Drury presented the report detailing the financial and non-financial performance, noting that there will be review of how we present performance information in the future, as it is not easy to read and difficult to follow appendices and cross reference the information. Assurance was given that this would be improved. There are 41 business targets, a mixture of strategic and operational targets. It was noted that we have quarterly performance monitoring meetings with the Council, as well as with Leazes Homes and Byker Community Trust our customers. The last performance report will be presented to BCT up to the end of September 2016 when the contract then ended. The performance of BCT which will be reported to their November board show 4 targets which are red. These were very stretching and challenging targets and external factors played a part. In the last 6 months of the BCT contract there were a large number of terminations, which were out of the control of YHN, which impacted on the former tenant arrears. Similarly a lot of tenants in Byker were moved onto Universal Credit and this had an impact on the collection of rent and services charges. The Leazes Homes performance was reported as fine with no difficulties. The performance of the rent collection target reported as amber was affected by the timing of housing benefit payments which is quite common and will recover. The target with regard to re-let times, it was important to note that the majority of Leazes Homes properties are supported housing with a specific client need, therefore the emphasis
TD
is on getting the right client and not getting the property let as quickly as possible. Lisa Forrest presented the financial performance which set out the Group finances for the first 6 months of the year, and highlighted the important points to note covered in the executive summary. With regard to income at quarter 2 YHN is £372,000 ahead of plan, the main reasons were noted as contributions from new areas of work, in particular the Syrian and Afghan interpreters contract. There has also been underspend in ICT budget as in forecasting for the year we have been more prudent. There has been higher redundancy costs that have been earlier than planned, and the contingency budget has not been utilised yet. The main area for board to note is due to FRS102 we may need to increase our pension costs by an additional £1.6m, which would mean that after pension costs we would break even. With regard to the balance sheet current assets and liabilities are showing a healthy position, and even though this now shows the pension deficit and some long term commitments on vehicle leases, this doesn’t affect bottom line. In relation to the HRA, we have some management of the finance budgets, and the highlight to note is the capital programme has seen a drop in actual expenditure, which brings us in line with NCC approved budget. Highlights from the financial KPI’s were discussed. It was noted that the trading surpluses, an area we are more reliant on, are ahead of target which is due to operational factors. In relation to the housing management costs per property, whilst this has gone over the target set, this is because we are doing extra work for the city, in other words it is extra activity taking place. With regard to the Ostara income and concerns around conversions, there was slightly better news at the end of quarter 2 as the potential loss of £229,000 was now estimated to be £175,000. Questions/Comments A board member questioned the decision made at previous board to have a two staged approach to the capital programme spend and whether this would increase the spend once the second part was approved. D Langhorne confirmed that the performance figures related to this financial year and the two staged approval was in relation to the next financial year programme. A board member understands a review will be taking place of Ostara, but wanted to question the £38k bad debt provision and how that compared to previous years. L Forrest commented that the bad debt was a provision and not actual debt, and that it was difficult to compare as previous years the service was covered by supporting people funding, so the provision has been made on the amount of invoices
sent out to customers who had yet to confirm whether they would be continuing with the service. T Drury commented that a consultant has been commissioned to complete the review, the brief was written and approved with the Asfaleia Chair. The review is due for completion by February 2017. We are now looking to second a member of staff from the service area to assist with the review. The purpose of the review is to find a way to make it work, and so that Board are making informed decisions about the support and subsidy it will provide to the service. T Drury also updated Board that a STAR chamber was held by NCC last week to review the impact of removing the SP funding, it was a positive discussion and is now looking at new ways of working with the council on assisted living. T Drury advised the Board that Rob Clark, Service Manager, is really knowledgeable on the service and has regularly gone on visits to other areas of the country to see what they do and has lots of experience and ideas, so we need to use this and he will be working closely with the consultant. A board member questioned whether there could be other markets for the Ostara service. T Drury agreed that it should not just be seen as an older persons service, whilst there is a service for older people, we could also develop the service to help families who for example have disabled children or people with epilepsy. What we need to understand is how we market this and what the costs will be so we can make decisions. Veronica Dunn declared an interest as a Byker Councillor. V Dunn noted the BCT performance and updated the board that there have been a lot of complaints and concerns made to the councillors regarding the new service providers in Byker, and a meeting will be held with BCT to discuss these concerns. The Chair noted it was interesting to hear but sad from the perspective of customers. A Senior noted that there are links we could be making in regard to adult care, there are currently working groups at the university and NECCA have also commissioned some work around NHS Social Care, Local authority funding and Public health. A Senior will pass on further details. T Drury concluded the item by discussing the recovery actions in appendix 3, relating to amber targets. It was noted that voids are still an issue and needs to be understood more as a whole. We need to understand more fully the true cost of a void and lots of work is ongoing and board will hear more from the work coming out of the voids time limited committee. A board member welcomed the comment with regard to presentation of the report as it is very confusing. It was also noted that the graphs are very hard to read on a tablet, so consideration needs to be given to digital presentation. It would also be good to have an understanding of which targets are reported to who and why, and what is the tolerance level which triggers an amber or red status.
AS
A Board member added that they had difficulties in interpreting the data in the way it is presented and this does need to be clearer for all users. The Chair thanked the Board member for their input and agreed that this area needed to be addressed from all perspectives. A board member questioned the repairs and maintenance targets, as their understanding was maintenance was planned and repairs were reactive, and using a 80/20 split this should be considered together as a whole. Tina Drury commented that this is closer to 70/30, and doesn’t always work in practice. The concept is that spending more on planned maintenance reduces the cost of ongoing repairs, but in Newcastle we have a transient population with a high turnover of properties which can lead to high void repair costs. A board member commented that the application process via the Tyne and Wear Homes online system should be accessible on smart phones and tablets, and we should be promoting the Own Your Own options to tenants to purchase tablets. Tina Drury responded that a lot of advertising had been completed on Own Your Own, but unfortunately the take up and approval rates of applications was low. We do also direct tenants to services and online facilities in libraries and hubs where they can access computers to get on line. The Chair commented that this was sometimes a problem due to the time limit restrictions and if you are not computer literate it does take longer to complete applications. Board resolved to; 
511
note the performance of quarter 2.
YHN BUSINESS PLAN AND BUDGET PROCESS L Forrest presented the report which outlined the process to develop the delivery plan and budget. These are developed taking into account key risks, opportunities, contractual requirements and resources required. L Forrest highlighted some of the differences this year due to being a group structure as the subsidiaries have to be clear on what is required of them from the parent, so additional steps have been built into the process this year before we can arrive at the final budget. As we haven’t finalised what transformation will look like specifically, we need to be able to flex the three year efficiency plans which were signed up to last year, in line with transformation aims and objectives. For the purpose of planning we are assuming the 5% reduction on the management fee will remain. The report set out the key milestone dates and the benefits and limitations of the approach. The Chair also noted that within the dates set out for 2017, it is proposed that the February meeting be an away day to consider all the
different challenging aspects such as implications of the Housing & Planning Act, transformation plans and hopefully the review of Ostara will be complete. This is so we can, as a Board, consider the future and this will help the team in their planning. Board resolved to;
512
approve the proposed approach
NCC 2017-2018 BUDGET Tina Drury introduced the report which gave board a brief summary of the possible impact of the proposed Newcastle City Council Budget 2017/18 budget cuts on YHN services and flag up and issues. The Council are facing huge challenges and for each of the proposals we have looked at an integrated impact assessment on how this will impact on services. It is a three year budget proposal and we have looked at the first year. One of the concerns from YHN perspective is the localised services and the impact on communities, as this may start to make estates look unattractive which could deter people from wanting to live there and may impact on void rent loss, this is something we will monitor closely. The report is for information for board members to make them aware that we are considering the possible outcomes. A board member questioned once the decisions are taken what will happen with regard to mitigating the effects. Tina Drury confirmed that once we know what proposals are being implemented we will look more closely at the effects and actions required and update the risk map. Board resolved to;
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acknowledge the potential impacts identified
ITEMS FOR INFORMATION RESOLVED that the following information be received for information;
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SAFEGUARDING REPORT
DELEGATED DECISIONS
BOARD FORWARD PLAN The meeting dates for 2017 were agreed, with the alteration of 7 February 2016 being an away day 10-5pm rather than a 5-7pm meeting.
EXCLUSION OF PRESS AND PUBLIC RESOLVED – That in accordance with the organisation’s Access to Information provisions, the press and public were excluded from the meeting during the consideration of all further agenda items.
……………………………………….. Mrs O Grant Chairman 7 December 2016
Board 7 December 2016 2017 Annual schedule of business Report by Company Secretary For Approval 1.
Background information
1.1
It was agreed in the governance improvement plan in 2015 that an annual cycle of business should be developed to ensure that the Board have an appropriate, robust and prudent business planning and control framework and that financial and performance reporting to Board was planned in advance.
1.2
The board last received a work plan in August 2015, which covered the period to December 2016.
2.
2017 work plan
2.1
Appendix 1 presents a proposed annual schedule of business for the YHN Board meetings in 2017. The work plan has been scheduled around the quarterly reporting schedule to ensure performance reports are in line with board report deadlines.
2.2
Board are asked to note the inclusion of two strategic away days in the work programme, as discussed during the governance review.
2.3
This approach ensures that business which is reserved for the board is planned in advance. Board should also note that some reports for decision will arise throughout the year and need to be scheduled into the meeting dates. These will be noted in advance with as much notice as possible.
2.4
Meeting dates and work plans for the separate committees and subsidiaries will be agreed between the lead officers, Chairs and members at their next meetings.
2.5
An additional section has been included in the work plan: Assurances from subsidiaries and committees. This is to replace the annual report from committee and subsidiaries. It is proposed that instead of including the minutes from meetings for information, the Chair or Vice Chair of each committee and subsidiary gives a verbal update of their last meeting. This will include: 
Outline of key areas discussed

Any issues which need escalating to the Board

Key risks and assurances
It is hoped this will increase communication and line of sight for Board members on the work of the committees and subsidiaries which they do not attend. Board may wish to consider if they wish for this feedback to be in the format of a one page cover report or a verbal update. 2.6
This work plan will be attached to every set of meeting papers for information, so board members are kept up to date throughout the year.
3.
Conclusions and Recommendations Board is asked to note and agree the: 1. Proposed YHN Board work plan for 2017. 2. Agree the new format of assurances from subsidiaries and committees.
If you have any questions about this report that you would like clarifying before the meeting, you can contact Jill Davison by telephone on 0191 278 8624 or email Jill.Davison@yhn.org.uk
YHN Board Annual Schedule of business 2017 Agenda Item
Freq
Board date 07/02/2017
21/03/2017
09/05/2017
AWAY DAY
20/06/2017
Board date 08/08/2017
AWAY DAY
19/09/2017
07/11/2017
19/12/2017
AGM
Finance & Performance Finance & Performance Report incl cap prog
Qtrly
Q3
Q4
Q1
Delivery Plan
Annual
X
X
Budget
Annual
X
X
Strategic Risk Register
Annual
X
X
5 year plan & Stress testing
Annual
Treasury and cashflow update
Annual
Annual report & Financial Statements
Annual
X
Approval of year end reserves
Annual
X
Assurance from Subsidiaries and Committees Abri Trading Ltd. Asfaleia Ltd. Audit Committee Service & Strategy Delivery Committee REGULATORY Safeguarding report Health & Safety report
Update to accompany the minutes after every meeting
Q2
X X
X X
X X
X X
X X
X
X
X
X
X X
X X
Annual
X
X
X
6 monthly
X
X
STRATEGY, PLANNING AND POLICY Schedule of strategies to be confirmed GOVERNANCE X
X
X
Governance review Directors retirement by rotation/reappointment process
Project Annual
Directors reappointments
Annual
X
Board members learning and development plan
Annual
X
Appointment of Vice Chairs REPORTS FROM SPECIFIC SERVICE AREAS Repairs and Maintenance review Voids Time Limited Committee update
Annual
X
X
X X
Board 7 December 2016 Change of Company Secretary Report by Chair For Decision
1.
Background information
1.1 The purpose of the report is to seek the Board’s approval for a change of Company Secretary 2.
Company Secretary
2.1 YHN’s Articles of Association require the organisation to have a Company Secretary. Article 36 states ‘that the Secretary and any deputy or alternate secretary shall be appointed by the Board for such term, at such remuneration and upon such conditions as they may think fit and any Secretary so appointed may be removed by them’. 2.2 The Company Secretary is the chief administrative officer of the company with responsibility along with the directors for undertaking certain tasks under the Companies Act. The Company Secretary performs an important role in ensuring that YHN complies with the procedural rules, regulations and requirements of UK company law. The Company Secretary also ensures that the directors comply with corporate legislation and the Articles of Association and YHN’s other governance documents. 2.3 The current Company Secretary, Jill Davison is due to take maternity leave from 23 December, for a period of approximately 7 months. 2.4 Due to the importance of the role, it was important to have the position covered by an individual with the relevant experience and knowledge. Unfortunately internal and external recruitment advertising did not result in any suitable applications. An initial request to the agency framework resulted in one suitable candidate, but unfortunately shortly after commencing she has secured a permanent job and has decided to leave. A further request to a wider range of agencies has been initiated and we will keep Board updated on the progress.
2.5 It is proposed that in the interim period whilst Jill Davison is on maternity leave, Jon Ritchie, Director of Finance and Commercial is appointed as the Company Secretary of YHN Limited. This option has been chosen to ensure a permanent member of staff at a senior level is responsible for the role rather than temporary agency worker. 2.6 Andrew Baker will continue to support the work of the governance team in his role as Governance Support Officer.
3.
The Business Implications
3.1
Mission and Strategic Objectives: : YHN’s governance function helps contribute towards the achievement of the organisation’s three strategic objectives.
3.2
Value for money/efficiencies: N/A
3.3
Financial Implications: The coverage arrangements for the maternity leave period will be factored into YHN’s governance budget according to the financial approval protocols. The position is uniquely placed in the organisation, and YHN requires that the post is covered for the duration of the maternity leave period, which we anticipate concluding around August 2017.
3.4
Resources (financial, property, technological or human): The interim position has been secured on 4 days per week.
3.5
Impact on services/performance: There will be no impact on the governance service or function at YHN with regard to the change in Company Secretary. A 6 week handover period has been factored in to ensure there is no disruption to service.
3.6
Outcomes for tenants/leaseholders: N/A
3.7
Risk (reputation, relationship): There is a risk to the organisation if the position was left vacant during the period, due to statutory requirements.
3.8
Environmental: N/A
3.9
Legal: YHN’s Articles of Association require the organisation to have a Company Secretary. The Company Secretary will ensure that governance within the organisation is delivered both effectively and efficiently and that the Board and YHN both fully comply with their legal and statutory responsibilities.
3.10 Equality and Diversity and Community Cohesion: N/A 3.11 Stakeholder Involvement/consultation: YHN’s stakeholders can be assured that the organisation has a strong governance function and fully distinguishes its legal and statutory responsibilities.
4.
Conclusion and recommendations
4.1 In conclusion it is for the Board to decide the appointment of company secretary for the organisation. 4.2 Board is recommended to:
5.
Resign Jill Davison as Company Secretary Appoint Jon Ritchie as Company Secretary
Implementation
5.1 Notification to Companies House will be required once the Board has made the appointment and Jill Davison will be resigned from the role.
Contact Officer: If you have any questions about this report that you would like clarifying before the meeting, you can contact Jill Davison by telephone on 0191 2788624 or email jill.davison@yhn.org.uk
YHN Board 7 December 2016 Asfaleia Limited Annual Update Report by Chair of Asfaleia Ltd. For Discussion 1.
Background Information & Governance Arrangements
1.1 This report provides a summary of the activity of Asfaleia Limited (Asfaleia) from the formation of the subsidiary in September 2015 to the end of the last financial year, and performance to date. As it is the first annual update, it contains details outlining governance arrangements and background information to give YHN Board members a wider view of the subsidiary. Subsequent reports will be shorter in length, concentrating on finance and performance. 1.2 As part of the wider review of YHN by Newcastle City Council (NCC), including the transfer of strategic management of the Housing Revenue Account (HRA) to NCC and the transfer of non-core landlord services into YHN, an alternative company structure was presented to Board to mitigate the effects of corporation tax. Members agreed recommendations to create a YHN Group structure and establish charitable and trading subsidiaries, the former of which would take responsibility for the activities of Advice and Support, Young Peoples Service, CCAS/Ostara, Sheltered Housing and Employability. 1.3
Asfaleia was registered as a Community Benefit Society on 5 October 2015 under the Co-operative and Community Benefit Societies Act 2014 with the Financial Conduct Authority (FCA). YHN is the sole member, as outlined in the rules.
1.4
As a Community Benefit Society, Asfaleia can receive gift aid payments from the commercial profits of Abri Trading Ltd. without risk of incurring Corporation Tax. Other income sources for Asfaleia include: • • • •
Sub-contract income from YHN Telecare income Income via grants Income via NCC for specific projects
1.5 The first meeting was held on 3 December 2015 and scheduled quarterly thereafter. Nitin Shukla holds the position of Chair, supported by appointed members Gordon Burns, Doreen Huddart, Lynn Stephenson, Rachel Tshibuyi, Alison Washbourne and up to May 2016, Loraine Wilson. With the exception of items for approval across the year as and when required, the finance and performance of Asfaleia services is the main regular agenda item. During the first year of its operation the Board focused on the following: • • •
establishing good governance arrangements, including formal agreements between the subsidiary and the YHN parent company considering the risk register supporting business development opportunities
To aid their understanding of the services provided by Asfaleia, members have also spent time with officers who work in these areas. 1.6 In order to satisfy legal requirements and set out the arrangements between the parent company and Asfaleia, the following agreements were entered: Business Transfer Agreement This completed the transfer of non-core landlord activity to YHN and its new subsidiaries, the agreement incorporated contracts, assets and permission to use premises. Intragroup Agreement This confirmed the relationship between YHN and Asfaleia, to regulate key aspects of interaction; governance arrangements, adoption of group policies and the provision of services made available to the subsidiary. Loan Agreement During disaggregation it was made clear that YHN would have to on-lend to subsidiary companies. An informal loan had been in effect during the interim period, and the loan agreement of £193K presented to Asfaleia Board sought to formalise the arrangement. Service Agreement This agreement set out specific details as to the services provided by each party in order to meet the agreed KPI’s for the YHN Group, including specific service indicators and staff provisions. 1.7 The YHN Group Governance Handbook was updated to confirm the matters reserved for the subsidiary, setting out responsibilities and working methods (section 3.3). Members will annually review their duties. 1.8 Asfaleia Board members receive the same governance provisions as YHN Board by the Company Secretary and Governance Support Officer. A lead officer takes responsibility in overseeing the report writing and ensuring deadlines are met. This role was previously taken by Neil Scott, currently, Tina Drury holds this position. Following each YHN Board, Asfaleia members also receive a synopsis for information.
2.
Performance against Delivery Plan 2015/16 and 2016/17
2.1 2015/16 Members were given an end of financial year performance update across Asfaleia services: Advice and Support • • • • • • • • •
Generated £3,198,390 income including £1,331,226 housing benefit going directly onto tenants rent accounts Facilitated the rehousing of 64 refugees into council tenancies Resettled 11 Syrian families exceeding contractual obligations Resettled 10 Afghani Interpreter households into council tenancies, meeting contractual obligations Referred 176 cases to employability activities, including 62 to YHN Employability Services. Exceeded target of 120 referrals Provided pre tenancy support for 483 new tenants to set up home, undertaking 2084 pre tenancy risk assessments Reduced rent arrears for clients supported by an Advice and Support Worker by an average of £124 per client during the year Moved 188 clients through the Pathways service into independent council tenancies during the year Supported 2343 service users across the service during the year
Young Peoples Service • • • • • •
Supported 296 sixteen/seventeen year olds through the homeless prevention service based at the Housing Advice Centre Received 206 referrals into the floating support service, including 43 care leavers Accommodated 30 young people aged sixteen to twenty one years old in the Hostel Accommodated 36 young people aged sixteen to twenty one years old in the North Kenton supported block Family Intervention service supported 47 families, incorporating 159 children Youth Voice ran 139 group sessions and 120 Employability one to one sessions totalling 755 attendees, (NB some people attended more than one session)
Care Services • • • • • •
Maintained accreditation with the Care Quality Commission In terms of the 3% growth target of the number of Telecare customers the service has seen a small reduction in the number of clients Exceeded the rent collection target of 99.49%, achieving 99.8% In terms of the average void re-let period target of 28 days this has not been achieved although the number of void properties has reduced significantly. The actual performance was 49 days Continued to meet targets for the Enquiry Centre service to customers Retained the Telecare Services Authority Platinum award for service
following inspection Employability • •
• •
•
81% of apprentices and Your Homes Your Jobs Trainees progressed into employment or education, exceeding the 80% target 41 new businesses were created through our Make Your Own Money project, exceeding the target of 40. Businesses created included an Indian takeaway restaurant, photographer, painter and decorator, afro Caribbean hairdresser, cupcake maker and a retro lampshade maker Worked with the Northern Learning Trust to develop a National Lottery Bid that was successful and will sustain the Walker Learning Hive for a further three years Ten tenants were employed by construction partners. This was achieved by aligning closely with construction partners following the procurement of work, and through construction partners supporting the YHN Jobs Fairs Recruitment of tenants from Walker for Your Homes Your Jobs and apprenticeships increased by 25%
2.2 2016/17 The agreed headline 2016/17 performance targets for Asfaleia services are as follows: Advice and Support •
Successfully sustain 98% of all tenancies referred into the Advice and Support service by 31/03/2017
CCAS and Sheltered • •
The void rent loss amount not to exceed 2% by 31/03/2017 Collect £4.21m (100%) of rent from current and former tenants as a percentage of rent owed by 31/03/2017
Young Peoples Service •
Successfully sustain 98% of all tenancies that Young Peoples Services support by 31/03/2017
Employability • • • •
85% of apprentices or Your Homes Your Jobs finishers during 2016-17 moved onto education, employment or training Customers involved in our employment programme complete 350 hours of volunteering time by 31/03/2017 Ensure that YHN has a key role in the delivery of the European Social Fund resource that is being invested in the region over the coming four years Implement a programme to ensure that our employability provision is directed to those in most need. This includes tenants and families who are going to be further affected Welfare Reform, tenants with disabilities and tenants who are furthest away from the job market
2.3 In September, members were provided with an update on performance for the current financial year covering up to period four (July 2016). YHN Board were given a further update as part of finance and performance for quarter two (July to September): Advice and Support •
Performance was above target at 99.77% of tenancies sustained (green)
CCAS and Sheltered • • •
Ostara currently have 3,357 customers, 3,295 of whom pay for the service However, due to the removal of supporting people funding and the review of the service offer and pricing structure, there has been a decline in customer numbers by 25%, 699 fewer than planned Efforts are focusing on attracting new referrals
Young Peoples Service •
Performance was above target at 99.21% of tenancies sustained (green)
Employability •
Overall status was amber, as explained: o All trainees and apprentices who completed their placement prior to the end of quarter one have progressed into employment or further training o By the end of quarter one, four Your Homes, Your Jobs trainees and one apprentice progressed in July, followed by three apprentices progressed in August o However, the team have experienced challenges with progression rates for apprentices, with six not progressing as planned, reducing the likelihood that the target will be achieved by March 2017. The next intake at the end of the year will involve the running of an assessment centre to give an early indication of the management support required and suitability for the positions for each apprentice o As there were more successful outcomes, the split of Your Homes, Your Jobs recruits and apprentices this year will be 45/15 (previously 30/30). It is felt that there are competitive apprenticeship opportunities in Newcastle that create difficulties in recruiting to YHN
3.
2016/17 Budget
3.1 The 2015/16 outturn is as follows:
3.2 As part of the 2016/17 budget setting process, all YHN services have sought to reduce costs to reflect the lower management fee received from NCC over the 2016/17 to 2018/19 period. Results of implementing efficiencies; Advice and Support The service was able to approve three voluntary redundancy (VR) applications from staff. It has also committed to find staff reductions equivalent to 1.5 fulltime staff either by TUPE or further redundancy following the end of the Byker Community Trust (BCT) contract. Total: £146k Young People’s Service The service will review how night time cover is given to hostels, using resources from other services. The service will cut back on some schemes that are no longer funded by NCC, but will earn more income by carrying out new projects such as the care leavers scheme and the settling of Afghan and Syrian refugees. The service will also delete some posts that have been vacant for some time. Total: £246k
Employability A relatively small service, Employability could not make any significant savings without directly impacting on the apprentice or Your Homes Your Jobs intake. Therefore no savings are proposed for the next financial year. Sheltered Service Savings may need to be made as the number and the distribution of managed properties changes across the city. As the sheltered investment programme is still in its early stages, no firm plans have been made. Telecare As Board are aware, in March 2016 NCC confirmed the intention to remove Telecare funding for 2,800 users who had the service paid for them by the council. YHN Board had agreed to allow Ostara to operate at a greater than budgeted deficit for 2016/17 to allow users to retain the service free of charge until 30 June 2016, providing an opportunity for customers to be contacted to facilitate a high retention rate. At the same time existing paying customers were advised of a price increase from April 2016. In terms of the impact on finances, customer numbers have recently remained steady during quarter two after the initial fall when charges commenced, therefore the budget is forecasted to be missed by £175,000 (previously reported in July as -£229,000). Following NCC’s decision to stop funding customers to take up the service, the focus for the first year will be to maximise customer retention to reduce the financial impact. Afterwards the service will assess its level of income and align its resources accordingly. 3.3 The Board have approved a review of Ostara, of which is at an early stage with the recent appointment of a consultant. An initial completion date of March 2017 was suggested; however there is a desire to seek outcomes much earlier, therefore a member of staff will be seconded to the project to support the process. 4.
Audit/Risk
4.1 Following the creation of the subsidiaries, Asfaleia Board members were consulted on the significant risks that their services are exposed to. The size, likelihood and impact of the risks facing Asfaleia services were determined as: 1. 2. 3. 4. 5. 6.
Income does not meet expectations and plans Failure to meet contractual requirements within a fixed fee Income for telecare service is significantly lower than expectation Inability to re-model sheltered stock in line with expectations Lack of appropriately skilled staff provided from YHN Inability of Board to provide effective governance
4.2 Controls and additional improvement actions implemented by the services to manage risk include: • •
The launch of the Ostara brand to the wider public, diverting resources into marketing and sales activity Plans to arrange specific training for NCC and Health staff with the aim of encouraging more trusted partner referrals to Ostara
4.3 The view of Asfaleia Board and the Group Audit Committee (at which Gordon Burns attends as the subsidiary representative) were taken into account, and the Group Risk Register was then approved by YHN Board in May: 1. 2. 3. 4. 5.
Group income does not meet expectations and plans Group costs fail to meet requirements and expectations Failure to comply with statutory Health and Safety (H&S) regulations Substantial damage to YHN Group’s reputation Significant disruption to service provision affecting YHN, Abri Trading Ltd. or Asfaleia Ltd. 6. Ineffective governance of YHN Group 7. Inability of YHN staff to fulfil the business needs of the Group 4.4 It was agreed that the Head of Business Strategy could consult with representatives from each subsidiary during the year to discuss any potential changes to the Strategic Risk Register, allowing for timely responses to any emerging risks without the need to wait for a scheduled board meeting. 4.4 The Independent Chair of Group Audit Committee attends an Asfaleia meeting annually to provide an update on the work of that committee, which includes the quarterly monitoring and assessment of the group strategic risk register. 4.5 Asfaleia Board continues to receive updates on mitigating actions taken on risks encountered with their component services as part of regular finance and performance updates. 5.
Future Plans/Challenges
5.1 Since formation, officers of Asfaleia services have been supported by the valuable knowledge and experience of Board members. Their guidance will aid business development in dealing with current challenges and as new ones approach: Advice and Support Amidst the increasing demand for benefit advice, impacts of welfare reform regulations and funding reductions, the Advice and Support team will continue to provide personal support, debt and benefits guidance to clients, tenants and refugees to help sustain tenancies, prevent homelessness, promote independence and maximise income for the HRA.
Young Peoples Service Like the Advice and Support Team, the Young Peoples Service will face similar challenges in assisting clients to thrive in their community: • • • •
Increasing demand for services The impact of welfare reform regulations including bedroom tax and Universal Credit Funding reductions to the Supporting People budget Proposals to restrict housing benefits to 18-21 year olds
Sheltered Housing Sheltered Housing will continue to: • Prevent homelessness and sustain tenancies by providing appropriate support to vulnerable individuals and households, and to promote financial inclusion to maximise income for tenants and the housing revenue account • Implementing appropriate information technology solutions • Provide a responsive, flexible support and care service, to reduce admissions to residential and nursing homes Remodelling programmes and new build developments will also have an impact on staffing levels and place an emphasis on saving revenue costs for NCC. Employability The Employability team will continue to be mindful of the changing labour market, tailoring specific support and targeting areas of under representation. Whilst maintaining and developing current partnerships with organisations, new opportunities will be explored for employment, training and courses with local businesses. They will focus on reducing sickness absence, providing bespoke business start-up support to the Make Your Own Money scheme, incorporating current priorities (e.g. digital, Universal Credit) into projects and, most importantly, maintain the successes achieved with the development and progression of their apprentices and trainees across YHN. Ostara The review of Ostara will help inform the future direction of the service, until this is concluded it is unknown what this will be. Asfaleia members will continue to offer support and guidance to the officers in establishing a service which is sustainable and of value to vulnerable customers. 6.
Conclusion and recommendations
6.1 Board is recommended to note the work of Asfaleia over the period covered by this report. Members will receive a report covering the complete 2016-2017 financial year in June 2017.
Background Papers - Asfaleia Ltd. Board 3 December 2015 - Asfaleia Ltd. Board 3 March 2016 - Asfaleia Ltd. Board 2 June 2016 - Asfaleia Ltd. Board 1 September 2016 Contact Officer: If you have any questions about this report that you would like clarifying before the meeting, you can contact Tina Drury by telephone on 0191 278 8710 or email tina.drury@yhn.org.uk
Board 7 December 2016 Abri Trading Limited Annual Update Report by Chair of Abri Trading Ltd.
For Discussion
1.
Background Information & Governance Arrangements
1.1
This report provides a summary of the commercial activity of Abri Trading Limited (Abri) from the formation of the subsidiary in September 2015 to the end of the last financial year, and includes some additional information on overall performance to date. As it is the first annual update, it contains details outlining governance arrangements and background information to give YHN Board members a wider view of the subsidiary. Subsequent reports will be shorter in length, concentrating on finance and performance.
1.2
As part of the wider review of YHN by Newcastle City Council (NCC), including the transfer of strategic management of the Housing Revenue Account (HRA) to NCC and the transfer of non-core landlord services into YHN, an alternative company structure was presented to Board to mitigate the effects of corporation tax. Members agreed recommendations to create a YHN Group structure and establish trading and charitable subsidiaries, the former of which would take responsibility for the commercial activities of Newcastle Furniture Service (NFS) and Palatine.
1.3
Abri was registered at Companies House on 10 September 2015 under the Companies Act 2006 as a Private Company Limited by Shares. YHN is the sole shareholder, as outlined in the Articles of Association.
1.4
The first meeting was held on 27 October 2015 and scheduled quarterly thereafter, hosted at NFS and Palatine in rotation. Ammar Mirza holds the position of Chair, supported by Phil Dibbs as Vice Chair and members Joyce McCarty, Tony Moore and Paul Scope. With the exception of items for approval across the year as and when required, the business position of both NFS and Palatine is the main regular agenda item. During the first year of its operation the focus of the Board has been on: •
establishing good governance arrangements, including formal agreements between it and the YHN parent company
• • • 1.5
reviewing financial and non-financial performance of NFS and Palatine considering the strategic risks Abri Ltd faced, which informed the group Strategic Risk Register supporting business development opportunities
In order to satisfy legal requirements and set out the arrangements between the parent company and Abri, the following agreements were entered: Business Transfer Agreement (signed 15 October 2015) This completed the transfer of non-core landlord activity to YHN and its new subsidiaries, the agreement incorporated contracts, assets and permission to use premises. Intragroup Agreement (signed 27 October 2015) This confirmed the relationship between YHN and Abri, to regulate key aspects of interaction; governance arrangements, adoption of group policies and the provision of services made available to the subsidiary. Loan Agreement (signed 10 May 2016) During disaggregation it was made clear that YHN would have to on-lend to subsidiary companies. An informal loan had been in effect during the interim period, and the loan agreement of £3.7m presented to Abri Board sought to formalise the arrangement. This included the additional acquisition of Leazes Homes and Byker Community Trust furniture contract assets amounting to £328K. Service Agreement (signed 26 July 2016) This agreement set out specific details as to the services provided by each party in order to meet the agreed KPI’s for the YHN Group, including specific service indicators, staffing provision and Byker Community Trust & Leazes Homes sub contracts.
1.6
The YHN Group Governance Handbook was updated to confirm the matters reserved for the subsidiary, setting out responsibilities and working methods (section 3.3). Members will annually review their duties.
1.7
Abri Board members receive the same governance provisions as YHN Board by the Company Secretary and Governance Support Officer. A lead officer takes responsibility in overseeing the report writing and ensuring deadlines are met. This role is currently held by the Director of Property Services.
2.
Opportunities / risks and Performance 2015/16 and 2016/17 to date
2.1
Strengths, Weaknesses, Opportunities and threats (SWOT) Identified below are the key areas that are affecting the service in the current commercial environment.
Strengths and Opportunities • • • • •
Healthy pipeline of 23 potential customers. London housing market is not hampered by LHA rates, this is due to low social rents and higher rates than the rest of the UK. New rental contracts signed. Expansion across the UK. Greater use of distance transport.
Weaknesses and threats • • • • • 2.2
Changes to the benefit system, including LHR rates and benefit caps. Clients taking smaller pack of furniture. Increasing weekly rental costs could make the scheme unaffordable for some customers. IT systems are poor and need integration carried out. Brexit and the possible fallout.
As Abri was created part way through the financial year the Board took on responsibility for scrutiny of targets that were set by YHN Board in March 2015. In October 2015, Board approved recommendations to monitor a balance of financial and operational indicators. They approved a dashboard style graphic representation of quarterly performance, with accompanying commentary. 2015/16: Profit/Loss
1.49 0.53 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Surplus (£m)
£1.49m profit was made (after deduction of £1.7m operating costs).
Contribution to overheads
£6.1
£4.9
£3.5
£2.8
£1.5
£1.0 YHN Rentals
Abri Rentals
Abri Sales
Income
Palatine
Profit
Furniture rentals provide the bulk of income and all of the profit for Abri, Palatine activities and other sales are a relatively small part of the business and don’t generate a profit. Stock holding days – the ‘lean-ness’ of the warehouse
38
35
Feb
Mar
Jan
Dec
Nov
Oct
Sep
Jul
Aug
Jun
May
Apr
28
Stock days
Pack size summary – number of packs rented by customers, listed by option size
4707 3156
2810 1077 340
Mini Option 1 Option 2 Option 3 Option 4 Option 2014-15 2015-16
339 Other
Growth came from customers taking smaller packs, discussions with customers have shown they are being more cautious due to welfare reform.
Service Standards (target – 10 days)
7.85
5.97
6.80
4.82 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Days
Customers are given a ten day window to choose a preferred date, performance by the end of the financial year stood at 6.8 working days. Aged debt profile – total amount owed to Abri that has not yet been paid
Since customers are invoiced at the beginning of the month, reporting showed aged debt to total £1,7m, which has since fallen.
Palatine profitability
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
-118.9 -135.7 Target (£000's)
Surplus (£000's)
Was behind budget (down -£16,734 at -£135,622) mainly due to sales volumes falling behind targets. Jobs not completed first time
134
125 81
Total deliveries: 13,144 100
95 64
97 73
60
97
68
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
Jobs not completed first time
7.5% of all jobs were not completed first time; this amounted to 994 deliveries out of 13,144, due to repeat visits and missed appointments. Some instances were out of NFS control; however some reasons for failure can be addressed by direct action of management. Total shop sales for Palatine at the end of the financial year were £282K, the highest retail sales achieved so far in a single financial year. By the end of quarter four, contract sales for Palatine were worth £347K compared to the previous year of £320K.
2.3
The headline performance targets for 2016/17 included in YHN’s management agreement with NCC are: Target
Performance at the end of P6
Attend on time for 95% of furniture collection and deliveries by 31/03/2017 (measured using the workforce scheduling system)
98%
Generate a net surplus of £2.96m from NFS and Palatine by 31/03/2017
£1.95m (£305K ahead of target profile)
2016/17 to August: The Abri Board also agreed an updated series of financial and non-financial indicators for the current year. Performance up to the end of August was reported to members on 25 October; Profit/Loss
Gross profit was ahead of target at £820,000, the level of overheads charged was less than expected. Contribution to overheads £2.33 £1.30
YHN Rentals
£2.66 £1.49 £0.49
£0.64
Abri Rentals
Abri Sales
Palatine
Income
Contribution
Furniture rentals continue to provide the bulk of income and all of the profit for Abri, the scheme has generated a contribution to overheads of £2.79m.
Stock holding days – the ‘lean-ness’ of the warehouse (target – 35 days)
56 46
64
71
47
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Numbers have risen from the start of the financial year to 71. More white goods are being cleaned and re-used, resulting in larger stock holding. Pack size summary – number of packs rented by customers, listed by option size
3,156 3,357
4,707 4,491 2,810 2,607 1,077 956
340 290
Mini Option 1 Option 2 Option 3 Option 4 Option 2015-16
339 356
Other
2016-17
2015-16: 12, 429 2016-17: 12,130 Trends continue to show a decrease across most pack sizes and an increase in customers selecting the mini option (3,357 orders compared to 3,156 the previous year), this may be more sustainable given the future outlook for welfare reform and benefits restrictions.
Service standards – average number of working days taken to deliver an order
6.14
5.97
Apr May Jun
Jul Aug Sep Oct Nov Dec Jan Feb Mar
2015/16
2016/17
Current performance is currently at 6.14 days compared to the 5.97 for the same period in 2015/16. A protocol will be established for deliveries requested beyond the 10 day period for future reporting Aged debt profile – total amount owed to Abri that has not yet been paid £0.7
£0.6
£0.1 Uninvoiced
< 30
30 to 60
£0.0
£0.0
61 to 90
> 90
Invoices created within 30 days amount to £600K, only £100K has remained unpaid beyond this. £700K was reported as one month of turnover that has yet to be invoiced; this is expected as customers are billed just after the end of the month reported.
Palatine profitability Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar -£126.1 -£129.0
Target
Actual
Slightly behind target at -£129,000. Jobs not completed first time
56
70
80
69
59
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Total jobs in period: 7,305 This is lower than the last financial year at 4.57% (of 7,305 deliveries made during the period so far) due to extra measures being taken by NFS to reduce delivery failures Debtor days – the average number of days taken by customers to settle their invoices
38
47
58
63
61
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2.4
There are plans to introduce information on average cost per transaction as a measure of productivity, once IT systems have been developed to report against this indicator as part of the Service Improvement Programme for 2016/17.
2.5
Supported employment Palatine employs 22 full time staff, 15 of whom have a disability and 3 part time temporary staff who also have a disability. In the past year they have also provided meaningful employment opportunities to 11 disabled people through a number of employment initiatives, these include work trials, placements, apprentices, work based learning and probation service. Palatine has a Government contract through Workchoice, they are measured on the number of staff progressed off the Workchoice contract into employment or training, the current target is 8% (or two staff members). During 2015-16 Palatine exceeded this target and achieved a 12% progression rate.
3.
2016/17 Budget
3.1
2015/16 Outturn: £'000 Draft Surplus before Gift Aid Gift Aid paid to Asfaleia Draft Outturn Board August 2016 Bad debt provision Tax estimate reversed Revised Profit in final accounts
Abri Trading 1,126 547 579 (35) 2 546
3.2
As part of the 2016/17 budget setting process all YHN services have sought to reduce costs to reflect the lower management fee received from NCC over the 2016/17 to 2018/19 period.
3.3
In response to reductions, the following considerations were made in setting the 2016-17 Business Services budget: • • • • • •
Realignment of income targets and resources IT improvements Revision of the cost apportionment between Abri and YHN to reflect resource distribution Reducing the number of production (by three) and sewing (by one) operatives Realigning marketing and support budgets to reflect requirements of the business plan Review of the 1907 operating model
3.4
During 2015 a review of NFS was carried out, aiming to identify an appropriate service structure to inform a new business plan, maximise efficiency, value for money and income generation. A project team led the review and, with contributions from external scrutiny, identified opportunities relating to customer service and operations. In January 2016, Abri Board members received a review update, detailing the implemented changes, including: • • • • • • • • •
A new structure for office staff and warehouse operations Telephony improvements; to reduce missed calls and enable query responses to be more efficient Staff training Continuation of Own Your Own Review of the product offer; specialised items, safety standards Marketing; rebranding, attending local and national events Finance analysis ICT systems Business development; bespoke customer offers, efficiency targets
An officer working group of Business Services and Business Strategy continues to monitor progress. 3.5
Since the service review completed last year, NFS has seen improved satisfaction and productivity levels. This in part attributed to the change in warehouse staffing hours, moving from flexi time to a fixed working pattern. This has allowed for better control of duties, incorporating additional responsibilities to job roles for efficiency, such as van drivers assisting with loading.
3.6
Looking forward, the Service Improvement Programme has focused on projects that will deliver net savings over the next three years. Following the outcomes of the changes listed previously, there are specific changes to IT systems designed to benefit NFS planned to start at the end of 2016, including updates to the Prisym stock management system, integration of the workforce scheduling and stock management systems, and rollout of an online portal for use by clients and their tenants.
4.
Audit/Risk
4.1
Following the creation of the subsidiaries, Abri Board members were consulted about the commercial key risks that NFS and Palatine are exposed to. A revised Strategic Risk Register was reported to Group Audit Committee in February 2016 (at which Tony Moore attends as the subsidiary representative), followed by approval at YHN Board in May.
4.2
Members were consulted regarding the size, likelihood and impact of key risks facing NFS and Palatine: 1) 2) 3) 4)
Costs fail to meet meet expectations and plans (high) Income does not meet requirements and expectations (high) Lack of appropriately skilled staff provided from YHN (low) Significant reputational damage to Palatine beds as a supported workforce employer (low) 5) Inability of Board to provide effective governance (low) 6) Significant disruption to service provision (low) Controls and additional improvement actions required by the services to manage risk include: • • • • • • •
Deliver actions from the NFS business plan and service improvement plan Realise efficiencies from workforce scheduling Deliver actions from the NFS and Palatine Beds marketing & sales plan Analyse the impact of welfare reform and Housing Benefit changes on business Training warehouse delivery assistants to drive HGV’s Achieve 10% progression rate for Work Choice employees Review the database of contracts and suppliers
The Group risk register approved by YHN Board in May took into account the views of Abri Board and the Group Audit Committee, the Abri risks are summarised as 1. 2. 3. 4. 5.
Group income does not meet expectations and plans Group costs fail to meet requirements and expectations Failure to comply with statutory Health and Safety (H&S) regulations Substantial damage to YHN Group’s reputation Significant disruption to service provision affecting YHN, Abri Trading Ltd. or Asfaleia Ltd. 6. Ineffective governance of YHN Group 7. Inability of YHN staff to fulfil the business needs of the Group 4.4
Evaluation of all new commercial activity for both NFS and Palatine includes an assessment of risk; covering resources, financial implications and logistics with the YHN Business Strategy in mind.
4.5
Abri Board has continues to receive updates on mitigating actions taken on risks encountered with NFS and Palatine. Most recently members were informed of an error with the annual accounts; it had been discovered early in the audit process that there was a difference of around £250K between the financial system and bank statement, due to a combination of human and system errors indicating that invoices had been paid. The impact to the annual income and expenditure account is a reduction in profit by £100K to £470k. Remedial action has been taken; discussions will be held with customers to
secure payment, and alongside changes to back office processes there will be system upgrades that will remove some processing steps and provide a better level of transparency, issues will be spotted earlier and easier to locate. Ongoing work in this area is progressing well and members will continue to receive updates. 5.
Future Plans
5.1
Since formation, Abri Board members have supported officers with their valuable knowledge and experience to aid business development, and will continue to do so when commercial activity is presented for scrutiny and when new challenges approach, such as forthcoming changes to welfare reform and housing benefits.
5.2
NFS has developed a strong reputation, becoming a market leader in providing furniture rental to social housing landlords, expanding commercial activity across Yorkshire and the North West over the last few years, and, more recently, beyond into Scotland and Wales. With an agent now operating in the Greater London area helping to secure new contracts, the range is further extended. The team will continue to monitor the progress stages of potential clients via a â&#x20AC;&#x2DC;hot leadsâ&#x20AC;&#x2122; database.
5.3
Palatine aims to maintain commercial business targets whilst upholding its recognised status as a supported employer to disabled people, to seek new training and placement opportunities.
5.4
The Business Services team plan to continue attending both local and national events to showcase the business, such as the annual exhibitions of the Chartered Institute of Housing and National Housing Federation.
5.5
Board approved a review of retail outlet and production teams of Palatine, which is now underway. Members will continue to receive progress updates in this area, alongside the implementation of ongoing IT system upgrades of both businesses and other post-NFS review elements.
5.6
At the board meeting in July, discussions were held regarding a potential strategic review of Business Services, considering IT investment, branding and market conditions. The Managing Director of YHN advised that this would form part of a larger project, called the transformational change programme, which is designed to identify areas for efficiencies, improvement and investment.
5.7
In utilising the new service structure to deliver an improved, more efficient experience to clients and customers, Business Services, with the guidance and support of Abri Board, aim to maintain successful client relationships whilst securing new contracts and business, generating income to enable YHN to continue delivering core tenant services and meet overall group objectives.
6.
Conclusion and recommendations
6.1
Board is recommended to note the work of Abri Trading Ltd. over the period covered by this report. YHN Board will receive a report covering the complete 2016-2017 financial year in June 2017.
Background Papers - Abri Trading Ltd. Board 25 October 2015 - Abri Trading Ltd. Board 26 January 2016 - Abri Trading Ltd. Board 26 April 2016 - Abri Trading Ltd. Board 26 July 2016 Contact Officer: If you have any questions about this report that you would like clarifying before the meeting, you can contact David Langhorne by telephone on 0191 278 7701 or email david.langhorne@yhn.org.uk.
Board 7 December 2016 Health and Safety Update Report by Director of Property Services
For Discussion 1.
Background information
1.1
In June 2016 Board received an updated health and safety report detailing an overview of YHNâ&#x20AC;&#x2122;s construction related activities and work undertaken to ensure compliance with relevant legislation.
1.2
This report incorporates the requirements of HSG 65 Managing for Health and Safety, the recognised health and safety management system of the Health and Safety Executive (HSE).
2.
Occupational Health and Safety Advisory Service (OHSAS) 18001
2.1
YHN achieved OH SAS 18001 accreditation in August 2013, to demonstrate we had a recognised health and safety management system in place. Following a presentation to Health and Safety Committee in September 2016 detailing the advantages and disadvantages of holding the accreditation as well as the associated costs, Health and Safety Committee appraised and debated the following business case options: 1. 2. 3. 4.
Remain with OHSAS. Self-audit in line with the guidance outlined in HSG 65. Undertake specific specialist audits from accredited third parties. Undertake audits carried out by NCC Internal Audit.
2.2
Committee chose to undertake Option 2. All outstanding actions identified at the June 2016 OHSAS audit have been closed off by the Health and Safety Team.
3.
Boardâ&#x20AC;&#x2122;s roles and responsibilities
3.1
It is acknowledged that YHN Board has a strong commitment to health and safety observed by attendance at Health and Safety Committee, and health and safety Board training.
3.2
Training will be delivered to Board on Governance, Compliance and Health and Safety as required subject to Board member availability.
4.
Health and Safety Committee Roles and Responsibilities
4.1
Health and Safety Committee will meet bi-annually with the revised membership, H&S Champion, H&S Manager, H&S Officers, Trade Union representatives (GMB and Unison), Property Services representative (nominated stand in for H&S Champion), Strategic HR Representative, nominated Board Members (three at present).
4.2
The agreed Quorum is a minimum of H&S Champion (or nominated stand in), one H&S Team representative, one Trade Union representative, Strategic HR representative, one Board Member.
4.3
The Committee will debate and propose corporate health and safety actions.
5.
Health and Safety Reporting
5.1
General health and safety monitoring Monitoring of health and safety legislation is an integral part of the health and safety teams function. Areas of higher risk activity are proactively monitored and reported to Board. The following areas will be reported to Board every six months.
5.2
Accidents
Accidents to Employees 2016/17 (Q1 & Q2) 16 14 12
Q1
10
Q2
8
Q3 Q4
6 4 2 NEAR MISS
Slipped, tripped or fall on same level
Sharps
RTA
Physically assaulted by a person
Manual Handling
Injured by animal
Hit something fixed or stationary
Hit by moving, flying, falling object
Hit by moving vehicle
Fall from height
Contact with moving machinery
Contact with electrical discharge
Another kind of accident
0
5.2.1
Annual accident trends for 2016/17 to date still highlight manual handling as the main cause of accidents.
5.2.2
Accidents categorised as RIDDOR (Reporting of injuries, Diseases and Dangerous Occurrences Regulations 2013) include fractures, amputations, loss of sight, crush injuries, burns, scalping, loss of consciousness, closed space injuries and any injuries that result in a loss of seven working days. RIDDORs reported during 2016/17:
Quarter 1 = 3 Quarter 2 = 3
During 2016/17 to date details of RIDDOR’s: One was another kind of accident injuries involving NFS staff (staff member aggravated an existing condition whilst alighting from a works vehicle). Two were manual handling accidents involving Palatine and CCAS staff. One involved an physical assault of a Garden Care member of staff. One involved an RTA by a CCAS member of staff. One involved slips/trips/falls by an Employability member of staff.
5.2.3
Significant near misses are reportable under RIDDOR. During 2016/17 there have been no near misses in this category.
5.3
Incidents
Incidents to Employees 2016/17 (Q1 & Q2) 10 8 6 4 2
5.3.1
Verbal abuse
Racial Discrimination
PRI request only
Physical Violence
Other (attempted suicide of tenant)
Inappropriate Behaviour (over familiar etc)
Firearm related
Animal related (bitten by or present)
Aggressive, threatening, intimidating behaviour
0
Q1 Q2 Q3 Q4
Annual incident trends for 2016/17 to date highlight aggressive/threatening/ intimidating behaviour and verbal abuse remain the main areas of concern. The Housing and Anti-Social Behaviour Enforcement Team (HASBET) deal with incidents against YHN staff via various methods of recourse eg Potential Risk Indicator (PRI) reporting, issuing of anti-social behaviour orders and involvement of relevant third party agencies where required such as Police.
5.4
Health and Safety Training
5.4.1
Targeted, risk based and proportional training for staff delivered during 2015/16.
5.4.2
The Health and Safety Team are reviewing required training across the organisation following recent redundancy trawls; there is a shortfall in trained first aiders and fire wardens across the organisation.
5.5
Fire Risk Assessments The Health and Safety Manager is responsible for a cyclical programme of fire risk assessments in accordance with the Regulatory Reform (Fire Safety) Order 2005. Following redundancy, nine staff were trained in the institute of fire safety managers accredited fire Risk Assessors for high rise and low rise blocks. A dedicated team of three accredited staff are assessing YHN portfolio on a rolling programme. During quarter 1 and quarter 2 of 2016/17 389 fire risk assessments have been carried out. All identified compliance actions have been forwarded to the relevant managers to action within specified timescales.
5.6
Construction Related Health and Safety Monitoring Management and monitoring of construction and premises related risks are proactively monitored and managed by the Health and Safety team. The following higher risk areas of activity will continue to be reported to Board every six months.
5.6.1
Compliance with the Construction, Design and Management Regulations 2015 Following revision of CDM regulations in 2015, all construction related work is subject to CDM. This includes all repairs carried out under R&M contract.
5.6.2
Contractor Performance Contractors engaged by YHN to carry out construction related activity are monitored to ensure compliance with relevant legislation. During Quarter 1 and Quarter 2 of 2016/17 five contractor performance issues were reported to the Health and Safety Section. All issues were investigated and rectified. None of the issues were RIDDOR reportable or required intervention by the HSE.
5.7
Compliance with the Control of Asbestos Regulations 2012 YHN Health and Safety Officer (Asbestos) resigned his post leading to a review of the reappoint or feasibility of moving asbestos management to an external consultant.
5.8
Reduce asbestos spend YHN’s asbestos spend for 2015/16 was £973,000.00. YHN committed to a corporate target to reduce this by 10%. Spend predictions for 2016/17 are currently projecting a total asbestos spend of £637,000.00. This figure is subject to fluctuation based upon capital projects and R&M workloads.
5.9
Water hygiene monitoring and control YHN engages a specialist contractor to undertake water hygiene monitoring on behalf of the organisation. Risk assessments are undertaken as required by the contractor. Follow on actions are actioned by Property Maintenance.
6.
Major Incident Reporting
6.1
During quarter 1 and quarter 2 2016/17 Board received no individual detailed reports on specific incidents by the Director of Property Services.
7.
Legislation Updates
7.1
The Control of Electromagnetic Fields at Work Regulations came into existence on 01 July 2016. These have implications for YHN staff working in the vicinity of electromagnetic field producing devices e.g. mobile telephone masts.
8.
External Agencies
8.1
There have been no further cases of cross party intervention with external agencies during 2016/17.
9.
The Business Implications
9.1
Mission and Strategic Objectives The management of health and safety is an integral part of YHN’s overall management of staff, properties and office accommodation and impacts on all three service objectives:
9.2
Keep the housing stock decent, and neighbourhoods clean and safe
Collect the rent and let properties efficiently
Promote health and well-being and support vulnerable people to enjoy independence
Value for money/efficiencies The health and safety team manage risk proportionately and effectively to reduce the likelihood of accidents or incidents, leading to staff absences or construction related delays.
9.3
Resources (financial, property, technological or human) Current and planned activity is to be contained in existing budgets. Properties and people are protected by this area of work. The proportionate and effective management of health and safety reduces the risk of financial loss through litigation and staff absence.
9.4
Impact on services/performance The health and safety team proactively manages compliance with legislation, staff training and construction related activity. The effective management of health and safety ensures there is no negative impact on the delivery of services or organisational performance.
9.5
Outcomes for tenants/leaseholders The health and safety team engage with staff, residents and contractors to ensure work undertaken poses no risk to tenants, leaseholders or the general public.
9.6
Risk (reputation, relationship) Mitigation against risk is managed through a continued programme of risk assessments and audits. Following risk assessment and audit, proportionate, and relevant risk mitigation measures are implemented, where necessary.
9.7
Environmental There are no direct environmental impacts from this report. Effective management of health and safety, and risk mitigation frequently deliver positive environmental impacts
9.8
Legal YHN Board will receive six-monthly health and safety reports and undergo relevant health and safety training to ensure compliance with health and safety legislation.
9.9
Equality and Diversity and Community Cohesion There are no direct impacts on equality, diversity or community cohesion from this report.
9.10
Stakeholder Involvement / Consultation It is recognised that it is essential to have continued staff engagement to embed a health and safety culture throughout the organisation. Stakeholder consultation is undertaken through the health and safety forum, engagement with trade unions is undertaken through regular Joint Consultative Committee (JCC) meetings and bi-annual Health and Safety Committee meetings.
10.
Conclusion and Recommendations
10.1
Board are recommended to: ď&#x201A;ˇ
Receive and comment on this health and safety report
11.
Implementation
11.1
Board will receive six-monthly health and safety monitoring reports plus interactive sessions on higher risk areas of business.
Background Papers: YHN Board 21 June 2016 Contact Officer: If you have any questions about this report that you would like clarifying before the meeting, you can contact Paul Lumsden by telephone on 0191 278 8609 or email paul.lumsden@yhn.org.uk
Board 7 December 2016 Delegated Decisions – Schedule of non-confidential Delegated Decisions taken between 20 October 2016 and 24 November 2016
No.
Directorate/ Delegated Officer
Scheme
Cost/ Budget provision
Units
Contractor
Wards
Westgate
1
David Langhorne Property Services
Vallum Court Soil Stacks Replacement
Funding of £528,711 from Lifecycle Other
120
Meldrum Construction Services Limited
2
David Langhorne Property Services
EXT0011 Brunswick Village
Funding of £1,174,711 from Lifecycle for re-roofing, brick work pointing and wall tie renewal
93
Keepmoat Homes Ltd
Castle
3
David Langhorne Property Services
Participatory Budget No 15 St Oswald Walk
Funding of £127,200 from Participatory budget for perimeter fencing
52
Highways & Localised Services
East Gosforth
INT0011 - Citywide Bathroom Replacements
Increased funding allocation of £1,047,000 for additional works on originally approved £2,904,663 funded from Lifecycle
1,250
Delta Electrical and Mechanical Services Ltd (NEP Procured)
Cross City
4
David Langhorne Property Services
5
David Langhorne Property Services
Monkchester Road Community Centre Project 3
Funding of £22,027from Participatory budget to cut back existing tree line and fit Pallisade fencing to the perimeter of the centre’s rear grounds
1
Highways & Localised Services
Walker
6
David Langhorne Property Services
2016/17 Door and Window Replacement
Funding of £1,389,926 from Lifecycle
406
Building & Commercial Enterprise
Cross City
7
David Langhorne Property Services
Participatory Budget 29 - Gibson Street Fencing
Increased funding allocation of £25,226 for additional works on originally approved £25,145 funded from Participatory budget
104
Building & Commercial Enterprise
Ouseburn
8
David Langhorne Property Services
Replacement ICLS and communal doors
Funding of £200,000 from Lifecycle
144
Building & Commercial Enterprise
Cross City
9
David Langhorne Property Services
PB28 Milton Estate
Funding of £25,824 from Participatory budget to repair and renew footpaths and soft landscaping
39
Highways & Localised Services
Ouseburn
10
David Langhorne Property Services
Group Bungalow Boiler Upgrade
Funding of £10,600 from Energy Efficiency/Fuel Poverty measures
7
Building & Commercial Enterprise
Kenton
David Langhorne Property Services
YHN House Car Park environmental refurbishment
Funding of £13,780 from Regeneration Non-housing Assets to refurbish and replace corroded lighting
1
Openview (installation) Barrier LED Ltd (equipment)
Dene
11
12
David Langhorne Property Services
Belvedere House remodelling scheme Home Loss & Disturbance payments
Funding of ÂŁ203,520 from Sheltered housing remodelling
13
David Langhorne Property Services
Low rise flats - Fire door replacements.
Funding of ÂŁ390,012 from Health and Safety
30
Home Loss and Disturbance payment
South Heaton
350
Building & Commercial Enterprise
Westerhope
Board 7 December 2016 Board Forward Plan 1
Board Forward Plan
1.1
This Board Forward Plan lists the reports known at the present time that will be presented at the next three Board meetings in 2017 (or amended date subject to confirmation).
7 February 2017 - business meeting Draft Delivery Plan & Budget 2017-2018
For discussion
Draft Strategic Risk Register 2017-2018
For discussion
Asfaleia Ltd feedback from 19 January 2017 meeting
For discussion
Voids time limited committee update
For discussion
Away day Governance review journey
Speaker to be confirmed
Transformational change Major reviews update 21 March 2017 Quarter 3 Finance & Performance
For discussion
Final Delivery Plan & Budget 2017-2018
For approval
Final Strategic Risk Register 2017-2018
For approval
Abri Trading Ltd feedback from 24 January 2017 meeting
For discussion
Audit Committee feedback from 16 February 2017 meeting
For discussion
Service and Strategy Delivery Committee feedback from 14 February 2017 meeting
For discussion
Governance review journey
For discussion / approval
9 May 2017 Quarter 4 Finance & Performance
For discussion
5 year plan and stress testing
For discussion / approval
Asfaleia Ltd feedback from 20 April 2017 meeting
For discussion
Service and Strategy Delivery Committee feedback from 11 April 2017 meeting
For discussion
Health and Safety report
For discussion
Governance review journey
For discussion / approval
Contact Officer: If you have any questions about this report that you would like clarifying before the meeting, you can contact Jill Davison, Company Secretary by telephone on 0191 278 8624 or email jill.davison@yhn.org.uk
Service and Strategy Delivery Committee 5 July 2016 (5.00 - 6.10 pm) Present: P Dutton M Page V Dunn J Streather
(In the Chair)
IN ATTENDANCE D Langhorne J Urwin A Allison L Waters A Pearce A Gibson C Nicholson L Hinshelwood H Horan S Darroch 46
- Director of Property Services, YHN - Head of Housing Options, YHN - Head of Income and Tenancy Management, YHN - Regeneration Liaison Manager, YHN - Asset and Programme Manager, YHN - Technical Services Manager, YHN - Procurement Manager, YHN - Investment Programme Officer, YHN - Lead Customer Involvement Officer, YHN - Democratic Services, NCC
APOLOGIES FOR ABSENCE Apologies for absence were received from L Doherty.
47
DECLARATIONS OF INTERESTS Councillors Dunn and Streather declared a general interest as Newcastle City Council Cabinet Members.
48
MINUTES OF THE PREVIOUS MEETING HELD ON 17 MAY 2016 RESOLVED â&#x20AC;&#x201C; That the minutes of the previous meeting held on 17 May 2016 be agreed as a correct record and signed by the Chair.
49
ACTION LIST AND WORK PLAN REVIEW D Langhorne presented the Action List and Work Plan to November 2016. Action Plan: It was confirmed that information had been circulated on how the measure had been arrived at for a 30% open rate on the Welfare Reform newsletter.
Work Plan: It was agreed that the work plan would be updated to include those items identified by YHN Board as to be received by the Committee by way of update or regular report (e.g. performance information for voids). RESOLVED – That the Action List and Work Plan be received and comments noted. 50
INCOME MANAGEMENT STRATEGY - CLOSURE REPORT Submitted: Report of Head of Income and Tenancy Management (previously circulated and copy attached to Official Minutes) A Allison presented the report which sought approval to close the current Income Management Strategy, established to mitigate against the impact of Welfare Reform for both YHN’s clients and customers. It was noted that the request followed an update report to the Committee at its March meeting on the four themes covered by the Strategy. The following key points were noted for the Committee’s information:
Many of the actions within the Strategy had now become embedded as “business as usual”, not being time limited. Certain other actions, while achieved, still required further ongoing work e.g. under Theme 1: Promoting a Positive Payment Culture - ensuring tenants understood the importance of prompt rent payment, and making rent collection “everyone’s business”. Theme 2: Preparing for Universal Credit – The action to review the tenancy agreement would be progressed following receipt of awaited guidance around the Housing & Planning Act. Theme 3: Maximising Rental Income & Minimising Arrears – Whilst it had been decided not to progress the use of credit rating information, work to better understand predictive customer behaviour and intelligence was being explored. Theme 4: Maximising Financial Inclusion: Many of the actions under this theme would continue e.g. promoting the use of credit unions and promotional campaigns. Next Steps: Having delivered and embedded many of the steps under the current Strategy, a small working group had been established to produce a new refreshed Income Management Strategy. This would be completed by September 2016 and brought to the Committee for approval.
Comments/Questions: (i)
Whilst welcoming the rise in the number of tenants paying rent by Direct Debit (DD), it was noted that overall levels were still quite low and a query was raised around work being done to encourage and promote DD payment. A Allison responded that a number of initiatives had been implemented, including the use of a prize incentive draw, to try to raise the profile of this payment method. There had been call campaigns and efforts made to use data to identify where customers were paying for other services by DD e.g. Council Tax and/or to identify where they had bank accounts. YHN had not insisted on DD payment as a condition of tenancy. However, within the lettings policy it was now being explicitly stated that there was an expectation
that customers would pay rent by DD. As a result there had been an increase in the number of Direct Debits being put in place at the start of new tenancies.
(ii)
(iii)
(iv) (v)
A Allison noted that if a customer refused to set up a Direct Debit or failed to maintain an arrangement, YHN would not go to court to enforce it. However, every opportunity was taken to encourage this payment method and this approach would continue. Referring to section 4.3 of the report, an update was requested on how funds allocated to establish a reserve for welfare reform related activity, had been used to help customers. The Committee was informed that funding had supported a range of activities around welfare reform and income collection including the establishment of the Rent Sense IT system, Call to Collect service and training and IT provision for co-located staff in Job Centres. Responding to a query as to the proportion of customers paying by Direct Debit, A Allison noted that 7,400 out of approximately 26,000 tenants used DD to pay their rent. Whilst it was acknowledged that this was still a relatively low figure, A Allison explained that not all tenants had rent liability. In response to a request, A Allison undertook to provide Committee members with YHN’s target for Direct Debit payment. Committee members congratulated the Income Management team on the high collection rate achieved. The Chair noted the requirement to have a bank account in order to be in receipt of Universal Credit and asked whether relationships were being developed with DWP such that notification was obtained when a tenant established a bank account. A Allison confirmed that notification was received via co-located staff in Job Centres who offered Personal Budgeting Support which included helping people to set up bank accounts as part of the tenancy support offered. Overall the aim was to make it easier for people to pay their rents on an agreed pattern as part of their tenancy arrangement
A Allison concluded by noting that she would welcome any comments or ideas which Committee members may wish to see included in the development of the new Income Management strategy that would be presented to the Committee. RESOLVED – That (i) (ii) (iii) 51
The Income Management Strategy and Action Plan be closed; Information be provided A report on a new refreshed Income Management Strategy be presented to the September meeting.
HEALTH AND HOUSING SERVICE REVIEW - CLOSURE REPORT Submitted: Report by Head of Housing Options (previously circulated and copy attached to Official Minutes) J Urwin, presented the report which updated on a review of the Health and Housing Service which had been established by the amalgamation of three service areas following a restructure exercise in 2014. The following key points were noted for the Committee’s information:-
ď&#x201A;ˇ ď&#x201A;ˇ
ď&#x201A;ˇ
The review had been driven by a range of factors outlined in section 1 of the report. The expected outcomes from the review and the key achievements made were noted as set out in sections 2 and 3 of the report. With regard to achievements, areas of improvement included leaner and more effective systems and processes; better working with other YHN services; and more effective working with NCC. A review of the adaptations process had also been carried out to align with the void end to end process in order to make best use of available stock. Next steps were highlighted as set out in section 5 of the report. o A new team structure would be introduced by September 2016 which would be less specialist and more generic to support a wider customer base and reflect the diversity of need. o A new Health and Wellbeing Policy was being prepared which would set out how YHN would support individuals to maintain their independence. This would look at both adaptations and housing options and would also consider support for registered providers and vice versa. o There would be a shift to more mobile staff working, away from an office based environment to dealing with customers as individuals, speaking directly to them in order to identify need, with less reliance on form based assessment. o Improvements would be made to make data more accessible in the housing management system e.g. to identify those properties with adaptations, warranty information etc.
Concluding, J Urwin asked the Committee to accept the findings of the review and agree its closure. Comments/Questions: (i)
(ii)
(iii)
Responding to a query, J Urwin explained that incentivising more customers to move to adapted properties was both to the benefit of tenants and budget considerations. As more people lived longer, there had been an increasing demand to adapt traditional three bedroom homes. Whilst tenants would not be forced to move, there was benefit if they could be encouraged to move to existing adapted accommodation. This would help to sustain stock, avoid unnecessary expenditure and was also likely to offer the tenant accommodation that was more suited to their needs. It was acknowledged that it could at times be challenging to encourage tenants to consider moving to more appropriate accommodation, but visits were often helpful in enabling people to understand the range of housing options available to them. A committee member queried the significance of the proposed changes to the team structure. In response it was explained that reductions had already been made to capacity, to realise necessary budget reductions. The focus was now more on using the existing skills and experience of the team more broadly in support of complex cases.
(iv) (v)
Responding to a request, J Urwin undertook to ensure that elected members were provided with relevant staff contact details under the new structure. It was agreed that as the new Health and Wellbeing Policy was essentially an operational document rather than a strategy, there was no specific requirement for Committee sign off. However, given the changes to approach it was agreed that the policy would be included on a future agenda as an information item.
RESOLVED - That (i) (ii) (iii) (iv) 52
The report be received and the Health and Housing Service Review closed; Members comments noted in taking forward this area of work; Elected members be provided with relevant staff contact details under the new structure; and The Health and Wellbeing Policy be included on a future Committee agenda as an information item.
HOUSING INVESTMENT PROGRAMME - 2015/16 FINAL OUTTURN AND 2016/17 PROGRESS Submitted: Report by Head of Assets and Regeneration (previously circulated and copy attached to Official Minutes). A Pearce and L Waters presented the report which detailed outturn on the 2015/16 Housing Investment Programme and current progress with the programme in 2016/17. The Committee was referred to section 2 of the report detailing the outturn position for investment in 2015/16 and progress with the 2016/17 programme as set out in section 3. Highlights within 2015/16 and plans for 2016/17 were noted as detailed in section 4 including:
Continuation of delivery of the Lifecycle Programme to maintain decency (section 4.1 refers). Investment under Spend to Save (section 4.2), including areas such as boiler replacement before the end of the lifecycle to deal with anticipated repair issues and soil stack replacement in high rise blocks. Investment around Energy Efficiency/Fuel Poverty, Environmentals, and Communals was noted (section 4.3 refers). Arrangements for Participatory Budgeting were explained including work to progress actions agreed with the Committee in January 2015. This included undertaking an Equality Impact Assessment on the YGTP project; promotion of more active involvement by BME tenants; and the creation of three new project categories to encourage a wider range of suggestions (improving the appearance of your estate; safer communities; and uniting neighbourhoods through healthy activities). The timescale for submitting suggestions had now closed. The process for reviewing suggestions was outlined and it was explained that this would
culminate in a vote by tenants in December/January with results being collated in February 2017. Regeneration projects and New Build and New Housing investment were outlined as set out at sections 4.4 and 4.5. It was confirmed that the Central Walker development was progressing well and a detailed update would be included in the next report to the Committee. Average customer satisfaction ratings were noted at section 5.1 and in more detail at Appendix two. A key area of concern was noted to have related to scaffolding and it was confirmed that steps had been taken to address this. Key Challenges for the coming year were outlined as set out at section 6. These were noted to include financial pressures arising from the government requirement to reduce social housing rents by 1% for the next four years from April 2016 and issues impacting on the programme arising from the Housing and Planning Act 2016.
D Langhorne informed the Committee that although 2015/16 had been particularly challenging from a financial perspective as a result of the imposed 1% reduction in rent, it had also been a very successful year in terms of delivery. He reported on recent attendance at the Council’s Investment Development Group (IDG) which reviewed capital investment across the city, of which the HRA was the single largest element. It was noted that whilst the Housing Investment Programme next year would be smaller, he had informed IDG that procurement for 2017/18 needed to begin this summer to enable delivery from next spring. Given the uncertainty arising from the Housing and Planning Act 2016, it had been proposed that £20m of the programme would be put forward for approval by NCC Cabinet (probably in October) with the remaining £9m tranche pending approval until there was more clarification around the implications of the HPA. Comments/Questions (i) (ii)
(iii)
(iv)
D Langhorne confirmed that although Cabinet had approved a four year Housing Investment Programme, there was still a requirement to re-submit this each year in case of any change. A Committee member queried the extent to which the £9m of pending investment may be at risk. D Langhorne noted that to the extent to which any funding was at risk, then that element was the most vulnerable. The remaining investment had to be carried out to maintain decency standards. It was confirmed that work at Cruddas Park and Church Park was included in the £9m tranche. A Committee member commented that it would be useful to understand what other schemes were covered by this element of funding. D Langhorne commented that the proposed approach offered a pragmatic solution, which avoided potential liability until the full position was better understood. If information became available sooner than anticipated, then it may be possible to include this £9m tranche in the report to Cabinet. A report would also be submitted to the August meeting of YHN Board, at which there would be an opportunity for more detailed discussion. A Committee Member congratulated the team on its excellent performance in delivering the 15/16 programme in difficult conditions.
(v)
(vi)
(vii)
(viii) (ix)
(x)
In response to a query, regarding the allocation of properties at Central Walker Tree Tops Village it was confirmed that the development was proceeding well, with a lot of interest being generated. The site was only two months behind schedule and an overview was provided of the number and types of properties in phases 1 and 2. It was agreed that a copy of the delivery programme for the Central Walker development would be shared with the Committee. It was confirmed that there was no local lettings policy in operation in respect of phase 1 but some criteria were being applied to certain properties in phase two. The Committee was informed that interest was being expressed in the retail spaces at Central Walker and a consultant had been appointed to establish which services residents would like to see. Work was also underway with local residents to establish a Reminiscence Library. With regard to the £8.1m underspend from 2015/16 a Committee Member asked how much of this would slip and how much had been lost. D Langhorne confirmed that funds relating to the 1% rent reduction had been lost. The remainder, which had simply slipped, continued to be included in the programme. £2m uncommitted budget from 2015/16 had therefore been lost while the remaining £6m would carry forward in the programme. Referring to Spend to Save investment, a Committee member noted the investment made to deal with problems with boilers and queried what steps were being taken to ensure that the procurement process delivered products with a good shelf life and suppliers who were able to provide replacement parts. There was agreement that it was important to have robust warranties in place. It was noted that in this case, there had been an issue with a particular boiler type, for which parts could not be provided. It was important that as far as possible “one off” products were not used and feedback was obtained prior to procurement. The Chair queried the extent to which YHN worked with manufacturers when negotiating a supply contract. It was confirmed that investment relating to Tenant Investment Priorities (section 4.2 refers) was HRA funding and therefore more likely to fall under the remit of the Council’s Environmental Health team than Public Health. In response to a request it was agreed that a list would be circulated of YHN Community Buildings in the Asset Transfer programme, identifying where relevant any issues/reasons why transfer had not so far progressed. It was noted that Coxlodge Community Centre was about to go live with Asset Transfer (pending signature of leases) and good progress was also being made with Westerhope Community Centre. In response to a query from the Chair, D Langhorne confirmed that through the Council’s IDG, proposals were being looked at for a 100m Euro lease back model which would cover some items which had fallen out of the Housing Investment Programme.
RESOLVED – That (i) (ii)
The outturn position for the 2015/16 programme and current progress on the 2016/17 investment programme be noted; A breakdown be provided of the £9m capital investment identified as potentially “at risk”, for the 2016/16 Housing investment Programme
(iii) (iv)
53
A copy of the programme for the Central Walker development be circulated to Committee members; and A list be circulated of YHN Community Buildings in the Asset Transfer programme, identifying where relevant any issues/reasons why transfer had not progressed.
CORPORATE PROCUREMENT STRATEGY ACTION PLAN PROGRESS REPORT Submitted: Report by Procurement Manager – Development and Procurement (previously circulated and copy attached to Official Minutes) RESOLVED – That the report be noted for information.
54
CUSTOMER INVOLVEMENT UPDATE Submitted: Report by Lead Customer Involvement Officer (previously circulated and copy attached for information) RESOLVED – That the report be noted for information.
55
DATE AND TIME OF NEXT MEETING RESOLVED – That the next meeting of Service and Strategy Delivery Committee be held at 5pm on Tuesday 6 September 2016, YHN House.
Group Audit Committee 11 August 2016 (5.05 pm - 7.05 pm) Present: G Clark J Reid D Slesenger L Stephenson M Talbot T Moore G Burns
(In the Chair)
IN ATTENDANCE T Drury L Forrest L Horsefield M Burn J Davison J Clifford C Mulley S Beaumont I Pattison A Lister J Miller 39
Managing Director Head of Finance Head of Business Strategy Head of Support and Care Company Secretary Financial Controller EY EY Internal Audit Resources Directorate Democratic Services
MINUTES OF THE PREVIOUS MEETING HELD ON 19 MAY 2016 The minutes of the meeting held on 19 May 2016 were approved as a correct record and signed by the Chair.
40
ACTION LIST REVIEW Community Care Alarm Service M Burn reported that the process for the reprocurement of the Jontek system had started with a view to having a new system in place by July 2017. A member stressed the need to identify how to meet the gaps in the process identified by the audit, and the need to ensure the system that was procured was able to meet the necessary requirements. M Burn advised that the systems available in the market place were developing but there may not be a system available that would be able to do everything the service required. It may be that some aspects of the work would still need to be undertaken via manual system.
In response to a members query M Burns confirmed that Asfaleia Board could receive progress reports on the procurement progress. M Burn advised that an email had been sent to NCC councillors advising them they could collect copies of the CCAS leaflets, to use to promote the service to residents, from Member Services. Following discussion he undertook to send another email to councillors advising them of the availability of the leaflets and where they could obtain copies. RESOLVED – that the action list be noted and updated accordingly. 41
FINANCIAL STATEMENTS AND AUDIT RESULTS Submitted: Report by Financial Controller (previously circulated and copy attached to Official Minutes) L Forrest introduced the report which introduced the Reports and Statements for the financial year 2015-16 for YHN Company and Group and Abri Trading Ltd, which had been prepared in conjunction with EY, YHN’s external auditors. She explained that ordinarily members of the committee would be asked at this stage to make a recommendation to Board in relation to the accounts, however, as there were still significant issues outstanding in relation to a final decision on the pension accounting being reached; and further work being undertaken to investigate the Palatine bank issues to the satisfaction of EY and management. It was therefore being proposed that the final recommendations to Board be delegated to the Chair and Vice Chair, who would consider the revised financial statements, the going concern assessment, and review progress on the issues arising from Palatine bank at a later date and make their recommendations to Board. L Forrest advised there were a few minor amendments to be made to the draft accounts to correct some balancing errors and to reinstate some narrative amendments made by J Davison which had been lost in a later draft version of the accounts. It was confirmed that EY had been made aware of these changes. C Mulley, EY introduced the section in the report on the EY Audit results for the year ended 31 March 2016. She confirmed there were some substantial outstanding matters the main one being in relation to defined benefit pension scheme accounting, aside from these issues the rest of the audit work was complete. Defined Pension Benefit Accounting C Mulley outlined the issue relating to defined benefit pension scheme accounting, as detailed in the report. The committee discussed the matter in detail, the following key issues/comments and queries were made during debate on the issue:
L Forrest stated that discussions were ongoing with Newcastle City Council (NCC) as to whether the existing letter in relation to pension liability was to be rescinded and replaced by a new form of words which would result in the £14.4m pension liability having to be shown in the YHN accounts. If this liability were to appear on YHN’s balance sheet, it would create a net liability
position in YHN’s accounts. The discussions would include what assurance NCC could provide YHN in relation to this pension liability to enable YHN to continue to operate as a going concern. L Forrest explained the discussions with NCC were about the form of words to be used in the letter. EY had advised that the form of words in the draft letter were not strong enough for the pension deficit not to appear on the YHN accounts as a liability. C Mulley advised that the Board’s going concern assessment would be affected by the outcome of the discussions with NCC in relation to pension liability.
In response to a member’s query as to what this would mean in lay terms, L Forrest explained that the statutory accounts for most other ALMO’s showed negative liabilities. However, YHN was unusual as it traded with other external bodies. If the pension liabilities were shown in the YHN balance sheet this could result in YHN receiving a poor credit rating which, although it could be explained, could create problems for YHN as a trading company when it tendered for work. It would make external creditors hesitate in relation to doing business with YHN, companies could just look at the high level information and not accept tenders from YHN based on this initial information.
A member commented that NCC had in the past accepted full liability for the pension deficit for YHN and queried whether contractually NCC could change their position in relation to this matter.
A member commented that this was a circular issue, the Council were stating that they would subsume the pension deficit liability if YHN were not able to continue as a going concern, yet he suggested that if this £14.4m had to be added to the YHN balance sheet, YHN may not be a going concern.
L Forrest explained that NCC had a pension deficit for its employees but this was reversed out of the accounts and did not impact their reserves.
A Lister, NCC, commented that for many years this had not been an issue as the YHN pension deficit liability had not appeared in either the NCC or YHN accounts, NCC would not be able to reverse out of the accounts the pension liability for YHN because they were not NCC employees so it would affect the ‘bottom line’ in terms of the NCC accounts as they would have to show the £14.4m liability.
Members were opposed to this change by NCC and expressed strong concerns about the fact that this change would mean YHN would be unable to properly trade with third parties and stressed the need for resolution in relation to this matter.
In response to members’ concerns L Forrest commented that there was no suggestion that YHN would be put in an insolvency position, she believed that YHN would continue to be a going concern. It would, however, cause problems in relation to the trading elements of YHN such as the Furniture Service.
T Drury advised the committee that she was fully aware of this issue. She confirmed that YHN were unique in that they had a trading arm unlike other ALMOs. It was looking like this liability would need to appear in the YHN accounts, she was in discussions with senior officers at NCC to try and find a solution to the issue and advised that they were aware of the impact it would have on YHN’s ability to trade.
In response to a member’s comment, L Forrest confirmed that although the wording in the new Management Agreement was stronger than in the previous Management Agreement and included a form of words about the pensions it was not enough for the liability not to appear in the YHN accounts.
A member queried whether the fact that NCC were YHN’s biggest creditor was a strong enough covenant for the pension liability not to appear in the YHN accounts.
A member queried whether if the directors of YHN felt there was sufficient ‘comfort’ in the Management Agreement in relation to the pension issue this would be acceptable assurance to the external auditors or whether in such a case the external auditors would qualify the accounts. C Mulley responded that if this were the case EY would have to record this as a disagreement which would lead to qualified accounts.
T Drury undertook to feed into the discussions with NCC the concerns and strength of feeling from this committee, demonstrated in debate on this issue.
Palatine Bank L Forrest reported on the Palatine Bank issue in relation to the Abri Trading Ltd accounts, she outlined the issue which had arisen was a result of a number of factors; the impact on the accounts and the actions that had been put in place to correct the issue, as detailed in the report. She stated that from 1 April 2016 and going forward the reconciliation process was back under control. It was hoped that the outstanding debt would be recovered as a result of the actions that were being put in place, however, it had been decided that as the ‘virtually certain’ test could not be met, the £105,000 be recorded as bad debt. It was noted that if this cash was subsequently collected, it would increase profit in 2016- 17. The Chair thanked L Forrest and her staff for the amount of work they had undertaken to try and resolve this issue. He expressed concern that two year earlier the committee had been assured that the previous issues with the IT systems had been resolved but it now appeared that the system was inadequate and had required extensive manual intervention by finance staff. T Drury advised that the ICT system was being given the utmost priority. RESOLVED – that:i. ii.
The report be received; The final recommendations to Board be delegated to the Chair and Vice Chair.
iii.
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The opposition to, and strong concerns of the Committee, in relation to the NCC position that the pension liability for YHN should in future be shown in the YHN accounts and the impact this would have on the Group’s ability to trade with external bodies, be shared with NCC in further discussions on this matter.
INTERNAL AUDIT ANNUAL REPORT AND OPINION OF THE HEAD OF INTERNAL AUDIT Submitted: Report by Head of Internal Audit (previously circulated and copy attached to Official Minutes) I Pattison introduced the report which set out the Internal Audit Annual Report and Opinion of the Chief Audit Executive (Head of Internal Audit) as required by the Public Sector Internal Audit Standard 2013. The report also provided evidence to support an annual review of the effectiveness of Internal Audit. RESOLVED – that the Annual Report including the opinion on the Council’s control environment and the effectiveness of the Internal Audit function be received.
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APPOINTMENT/RE-APPOINTMENT AND REMUNERATION OF EXTERNAL AUDITOR L Horsefield reported that there was a 3 year cycle for the procurement of the external audit contract. The current contract with EY was coming to an end. Following discussions with L Forrest, the Chair and Vice Chair, in the light of disaggregation it was being recommended that the current 3 year contract with EY be extended by 12 months, after which a procurement exercise be undertaken for the following 3 years contract. RESOLVED – that it be recommended to Board that the contract with the current external auditors (EY) be extended by 12 months.
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INTERNAL AUDIT PROGRESS REPORT Submitted: Report by Head of Internal Audit (previously circulated and copy attached to Official Minutes) I Pattison introduced the report which provided details of internal audit activity undertaken as part of the 2015/16 and 2016/17 audit plans. Voids Management In response to members’ comments T Drury advised that voids management performance was a concern and needed to improve, tackling this issue was a high priority. The findings of the Voids Review would be implemented from September, however, she commented that this was the start of a process and that there was more that could be done to improve performance. She commented that one of things that needed to be improved was the process to let the property. A member queried whether given the issues around the voids management audit it would be better to bring this audit forward from the scheduled date.
A member commented that there was a need to identify those areas where the voids performance was poor as this was skewing the overall voids performance figures, with a view to tackling the issues in these areas to improve the overall figures. It was acknowledged that even with the poor performing areas taken out the performance targets were not being achieved. It would be important to closely monitor the impact of the implementation of the review recommendations on performance. Community Care Alarm Service Officers acknowledged that currently it this was a very manual system which relied on a number of manual processes and that there needed to be an IT system in place to take out the risks that had been identified in the audit. Officers gave an assurance that the actions that the audit had recommended be put in place were happening and that all the recommendations that had been made in relation to IT had been accepted and were being addressed. RESOLVED – that:i. ii. iii. iv. 45
Progress against the Internal Audit plan and performance indicators be noted. Progress on the implementation of audit recommendations be noted. The fraud update be noted. Discussions be held with the service manager about whether the timing of the Voids Management audit should be changed.
STRATEGIC RISK REGISTER 2016-17 - QUARTER ONE UPDATE Submitted: Report by Head of Business Strategy (previously circulated and copy attached to Official Minutes) R Burns introduced the report which provided an update against the 2016-17 Strategic Risk Register. In response to a member’s query as to how members could be provided with an overview of what was happening in the YHN Group structure T Drury advised that this was one of the issues that would be considered as part of the Governance Review. GR1.7 Retention of funded customers on the Ostara Respond – M Burn explained that he was rechecking the information on conversion rates as he thought they were not as high as the stated 85%. He advised that following on from the retention work, work would now be undertaken to increase the number of new customers for the service. Training was to be given to NCC Adult Services staff on Ostara, as referrals via these staff had stopped. RESOLVED – that:i. ii.
The report be received. Future reports to be amended to show the risk and improvement controls on the same sheet; indicate the probability of a change in the risk; identify the
lead officer for each risk and to provide consistency of terminology used in the ‘Actions taken’ column. 46
COMMITTEE WORK PLAN Submitted: YHN Group Audit Committee Forward Plan (previously circulated and copy attached to Official Minutes) RESOLVED – that the report be received.
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DATE AND TIME OF NEXT MEETING It was noted that the next meeting would be held on Thursday 17 November 2016 at 5pm – 7pm.
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CHAIR'S REMARKS John Reid The Chair reported that this was John’s final meeting. On behalf of the committee he thanked John for his contribution to the work of the committee over a number of years and wished him well for the future. Louise Horsefield The Chair reported that this was Louise’s final meeting before she went on maternity leave and wished her well on behalf of the committee.