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

VFM Economy, 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 Its not about cuts Put less resources in for the same results Reduce costs for same results Improve results using the same resources Increase your resources for proportionate increase in results

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

Unit cost variations – most important explanatory factors Relative explanatory power of each key explanatory variable (ranked in order) 1. Supported housing (%) 0.50 2. Regional wage index (comb) 0.43 3. LSVT (<7 years) 0.29 4. Housing for older people (%) 0.13 5. Neighbourhood deprivation (IMD) 6. Reduction in non-decent homes 0.11 7. LSVT (7-12 years) 0.10

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

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

New VFM regulatory standard WHASP Unconference 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

VFM Code of practice Relatively low costs High productivity 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 Relatively low costs High productivity Successful outcomes e.g. Improved performance, reduced costs, increased customer satisfaction, reduced service failures, reduced waste or added value

Value for Money - Pilot Scorecard WHASP Unconference 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 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

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

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

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 Impact of ASB team Education, Police, Fire, local GPs, your communities Impact of Homelessness team A & E Department, Social Services Impact of supported housing team NHS, Social Services, families, other agencies Social enterprise Handypersons schemes Support into work

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?

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