New RSH Standard: 1.4.18 Value for Money

1. New RSH Standard: 1.4.18Value for Money Scrutiny.Net 11th April 2018, Habinteg Yvonne Davies, Managing Director Scrutiny & Empowerment Partners

2. VFMEconomy, Efficiency and Effectiveness • Transparency • Accountability It is about: • Economy – minimise resources used while having regard to quality • Efficiency – relationship between output from goods and services and the resources to produce them • Effectiveness – the extent to which objectives are achieved and the relationship between intended and actual impacts

3. Headline social housing costs per unit by provider Median social housing costs per unit (£3,550) shown by the horizontal line. Red markers identify providers where more than 10% of stock is supported housing (excluding housing for older people) or more than 50% is housing for older people

4. Unit cost variations – most important explanatory factors

5. New VFM standard What we knew and what has changed– April 2018

6. New standard in summary • Replaces the old VFM self assessment • Starts reporting on metrics – mainly financial • Produced a VFM metrics technical note, new standard and code of practice – consultation to xmas 2017 • Feedback– social value and impact measurements which were missing – change to ensuring that financial return from assets and resources is optimised • Feedback – publication of metrics in accounts – change to ability to report outside the account sin any way they see fit to encourage transparency with stakeholders • Reporting under headings social housing and other, activities

7. New VFM regulatory standard • Have an approach agreed by Board to achieving VFM in meeting strategic objectives and demonstrate VFM to stakeholders Ensure optimum benefit from resources, assets and optimise the 3 Es • Approach to decision making and improving performance • Targets and monitoring of performance • Publish performance and measurable plans to address underperformance

8. VFM Code of practice • A VFM strategy or embed it in each of your objectives • Maximise return on assets • Operational in activities • Strategic in all decisions • Show understanding of costs and outcomes • Rigorous options appraisal to improve performance • Implications for structures, partnerships, mergers, procurement, geography, business streams • Non social housing activity

9. Business Health • Operating margin (overall) • Operating margin (social housing) • EBITDA MRI as % of interest (on outstanding debt) • B. Development – capacity and supply • Units developed (absolute) • Units developed (as a percentage of units owned) • Gearing • C. Outcomes delivered • Customer satisfaction with service provided • £s invested for every £ generated from operations • in new housing supply • in communities • D. Effective asset management • Return on capital employed (ROCE) • Occupancy (essentially a positive spin on void rate) • Ratio of responsive repairs to planned maintenance spend • E. Operating efficiencies • Headline social housing cost per unit • Rent collected • Overheads as a percentage of adjusted turnover • Plus some context : turnover split by activity, type of stock managed & supported geographical spread • Business Health • Operating margin (overall) • Operating margin (social housing) • EBITDA MRI as % of interest (on outstanding debt) • B. Development – capacity and supply • Units developed (absolute) • Units developed (as a percentage of units owned) • Gearing • C. Outcomes delivered • Customer satisfaction with service provided • £s invested for every £ generated from operations • in new housing supply • in communities • D. Effective asset management • Return on capital employed (ROCE) • Occupancy (essentially a positive spin on void rate) • Ratio of responsive repairs to planned maintenance spend • E. Operating efficiencies • Headline social housing cost per unit • Rent collected • Overheads as a percentage of adjusted turnover Value for Money - Pilot Scorecard

10. Technical note: new metrics x 6 • Reinvestment • New supply • Gearing • EBITDA • Headline social housing cost per unit (includes community /neighbourhood services) • Operating margin • Return on capital employed

11. Formal panels engaged in VFM • Procurement panels • Scrutiny panels • Performance panels • Restructuring services • Participatory budgets • Service Improvement, or task and finish Focus groups • Sending in ideas on saving money or reducing/removing waste

12. Formal engagement • VFM strategy – customer involvement • Critical friend - consumer regulatory standards • Discussions on shared services • Process mapping – flowcharts can help • Right first time – repairs • Benchmarking – like for like • ASB prevention and early intervention • Investigating the private sector offer • Performance - What is measured - is it for tenants or landlords? What matters? Is action taken? • Social value - or impact on health/education services

13. Customer strategic engagement • Do customers know the objectives and the VFM strategy? • Does CI activity review and report on VFM? • Do customers comment on performance indicators? • How can we engage customers in setting qualitative standards and performance – consumer standards • How can we engage customers in underperformance? • Do customers get involved in corporate or annual plans? • Do customers know where they fit in, in terms of support and challenge on VFM? • Do customers know how you benchmark and compare to best in class? • Do customers engage in setting quality standards for customer service?

14. Thank-you - Any questions? yvonne@tenantadvisor.net Tel: 07867 974659 Check out the free housing policy advice on: www.tenantadvisor.net/blogs