WM Housing Group
Value for money
self-assessment
2014 - 2015
Introduction to self-assessment
This self-assessment reflects the first year of
our business strategy, which outlines our aims
for the next four years. This is also the first
self-assessment that includes Family Housing
Association (Birmingham) who we welcomed
into our Group in April 2014.
Why do we produce a self-assessment?
As part of the Homes and Communities
Agency’s regulatory framework, registered
providers must produce an annual value for
money self-assessment. This allows us to
demonstrate to our stakeholders how we are
making use of the rents our customers pay,
how we manage our financial and physical
assets and to highlight the improvements we
are implementing to achieve greater value.
Value for money is central to our work. The
further we can make the money we receive go
the more we can invest in improving customers’
homes, developing new services and building
new homes.
WM Housing Group comprises four registered
providers:
Family (Birmingham) Housing Association
and Optima Community Association who
together own around 4,700 homes primarily in
Birmingham and Solihull.
West Mercia Homes with around 7,000 homes
in Herefordshire and Worcestershire
Whitefriars Housing (LSVT) with 18,500 homes
in Coventry.
These are supported by our Group services
covering finance, development, governance,
regulation, human resources and information
technology, among others.
We have a turnover of around £140 million
each year and we own assets of £1.3 billion.
The Group’s approach to VFM helps to
demonstrate how we maximise the potential of
our income and assets whilst maintaining an
awareness of financial risks and uncertainties
facing the Group. Our strong approach to
maximizing VFM allows us to maintain our
credit rating, minimise the regulatory burden
and, in turn, increase our opportunities to attract
funding for new homes and services.
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In order to meet the HCA’s standards registered
providers must:
• have a robust approach to making decisions
on the use of resources to deliver our
objectives, including an understanding of
the trade offs and opportunity costs of our
decisions
• understand the return on our assets, and
have a strategy for optimising the future
returns on assets – including rigorous
appraisal of all potential options for
improving value for money including the
potential benefits in alternative delivery
models - measured against our purpose
and objectives
• have performance management and
scrutiny functions which are effective
at driving and delivering continual
improvement in value for money
• understand the costs and outcomes of
delivering specific services and which
underlying factors influence these costs and
how they do so.
Our value for money self-assessment is one
way in which we show how well we are meeting
these standards. It:
• enables stakeholders to understand the
return on assets measured against our
objectives
• sets out the absolute and comparative costs
of delivering specific services
• shows the value for money gains that have
been and will be made and how these have
and will be realised over time.
As well as describing our work, for each section
of our self-assessment we have graded our
performance against the standards using a tick
system.



Means we do not fully meet the
HCA’s standards
Means we fully meet the HCA’s
standards
Means we exceed the HCA’s
standards.
Our self-assessment should be read in
conjunction with:
• Our business strategy
• Our value for money strategy
• Group Financial Statements for the year
ended 31st March 2015.
We have included a range of tables about our
stock as Appendix A.
Following the general election in May, and
the subsequent budget on 8 July, we have
taken the opportunity to reflect, in broad terms
and where appropriate, our approach to the
changes in the environment brought about by
the rent reduction and welfare changes set out
in the Welfare Reform and Work Bill and the
proposed introduction of right to buy for housing
association tenants.
Our operating environment
Recent years have seen major changes in the
housing sector. Changes in welfare benefits,
the need to make full use of available assets
and continuing financial restraint for our
partners have all meant we need to do more
with less.
The last year has seen a relatively stable
operating environment.
• The widespread introduction of universal
credit has not yet happened.
• As part of our medium term strategy the
Group issued bond debt in 2012 to finance
investment through to 2017 and as such
our loan and bond arrangements have
continued with no significant change in
2014/15.
• We have seen greater clarity regarding
future development funding.
Internally, however, we have made significant
progress towards achieving the aims set
out in our business strategy, in particular the
implementation of key projects. We have
taken the opportunity to consolidate our
recent growth and have been developing new
governance arrangements that reflect the
approach articulated in our business strategy.
We have continued to introduce changes
in our operating systems to modernise our
service delivery approach alongside a major
reconfiguration of many of our support and
frontline services
Our new business strategy established clear
targets for the future and projects to help us
achieve them. As a result we have continued
to deliver our investment and development
programme and have seen improvements in
energy efficiency across the Group and full
compliance with decent homes in every part of
the Group except Family.
The growth of the Group has brought financial
strength and an ability to deliver better
services to our customers, it has also brought
new complexities and challenges to our
management. Unlike many housing groups we
will maintain our federal structure so our staff
and subsidiary Boards can tailor their services
to meet local needs. This requires us to have a
clarity of purpose and an understanding of how
the various parts of the group work together.
Our business ethos is built around three
concepts:
Unity: we all share the same vision, values and
objectives.
Efficiency: we recognise that to achieve some
of our objectives we need to have shared
strategies and approaches.
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Individuality: our partner associations know
their business and customers the best. We
recognise they should set and deliver their own
strategies for service delivery and ensure these
meet our shared objectives and vision.
Following the May general election we face
renewed pressure to change further and
to adopt different ways of working in an
environment which continues to see, at best,
restraint on the benefits many of our customers
rely on. Furthermore proposals to extend the
right to buy create complexities which require
us to develop more strategies to ensure our
financial security as a leading landlord within
the West Midlands.
Our business strategy
In 2014 we published our new five-year
business strategy. Using our mission of
‘creating places where people are proud to live
and work’ we established six key priorities for
the Group.
Strengthening our governance and corporate
configuration: This ensures that, following a
period of growth, our governance arrangements
meet the needs of each part of the Group whilst
being efficient and effective and maintaining our
regulatory ratings.
Delivering excellent customer service: Our aim
is to make sure that the services we deliver
meet the needs of our customers in ways
they value and that optimise efficiency and
effectiveness.
Maintaining and investing in our assets: Our
assets are worth in excess of £1 billion. They
act as security for our investment borrowing
and are the places 30,000 families call home.
With effective investment and maintenance we
can strengthen our business and improve the
quality of our customer’s lives.
Growing the number of homes we provide and
diversifying our services: There is a universally
acknowledged shortage of housing in the
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United Kingdom. We are using our resources
effectively to increase the number of homes
we provide and are exploring opportunities
to use our skills and expertise to help other
businesses and generate revenue for us to
invest in services.
Enhancing our financial strength: If we are
financially strong we can continue to borrow to
invest at excellent rates and this means making
sure we are efficient and clearly demonstrating
this to the market, regulators and credit
agencies.
Developing awareness of our work amongst
our people and partners: We are a major
employer and we have much to be proud
about. We want to make sure our people feel
valued and proud of us and that our partners
and the communities we serve recognise this
too.
Our approach to value for money
The importance of achieving value for money
for our customers and securing a return on
our assets is central to our and new business
strategy. There are seven major areas in which
we work to manage and strengthen our value
for money.
1) Governance and decision making
We operate a clear scheme of delegations
within our financial regulations and Group
standing orders. These identify individual
authority limits and approaches to ensuring
decisions are taken transparently and with
appropriate oversight. During 2014 we have
been working with our boards to review our
governance framework and ensure they are
robust and reflect our federal structure.
We have a clear programme for reporting
financial decisions to our boards. Members are
aware of timings for key reports through our
annual Board planner and have the opportunity
to challenge recommendations and the thinking
behind them. Following the July 2015 budget,
we have adapted this
The Group Board is supplemented by local
Boards for Optima, West Mercia Homes and
Whitefriars as well as key standing committees
for Audit and Risk Management, Finance and
Development, Human Resources and a Chair’s
Group.
All reports presented to Boards and committees
must set out the financial and value for money
implications for each decision and these are
supported by options appraisals as appropriate.
The Group Board takes overall responsibility
for agreeing budgets and establishing financial
parameters for the Group and its members.
As we have grown we have needed to absorb
a variety of governance models. During
2014/15 we have been concluding our review
of governance arrangements which set out
clearly the accountabilities and responsibilities
for the Group board, subsidiary boards and
executive directors. This review, established
as a key project in our business strategy,
reflects the varying historic arrangements and
understandings of subsidiaries. Following the
review we now have a single, modern suite
of governance documents which align with
our business strategy, mission and operating
principles.
2) Financial management
Our approach to financial management is set
out in our Group standing orders and financial
regulations. These include details of levels of
financial delegation, our budget setting and
variation processes. The requirements of these
documents are shared with all colleagues as
part of our induction process with refreshers
provided when documents change.
of interest cover. We also annually refresh and
seek Board approval for our Value For Money
Strategy.
Key investment decisions, for example new
developments and capital projects, must be
supported by a financial appraisal which details
the return expected on investment.
All budgets are monitored monthly by the
appropriate budget holder, together with
their nominated accountant. As part of this
variations from profiled expenditure are
examined as well as projected out turns.
Each local Board and the Group Board receive
budget reports and these are scrutinised further
by the Finance and Development Committee.
In our last internal audit we received a
double substantial assurance rating from our
independent internal auditors for the design
and effectiveness of our approach to value for
money.
Our financial statements are published each
year and audited by our external auditors.
3) Procurement
In 2013, we revised our approach to
procurement and our procurement policy
was approved in March 2014. This details
the principles underlying our procurement
approach. We use an electronic tendering
system which ensures tendering is secure
and conducted fairly and transparently. Each
tender is appraised on the basis of the most
economically advantageous tender and
balances cost and quality considerations in
proportions that vary according to the works,
goods or services being procured.
Budget proposals are developed each year by
the Group’s Senior Management Team and
submitted to member and then Group Board
for approval. Budgets are set in line with the
Group’s 30 year business plan to ensure the
Group delivers its objectives while meeting its
loan covenants and provides appropriate levels
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Our detailed procurement procedures are
published on our intranet so that all staff
responsible for buying works, goods or services
can comply with our policy and procedures.
We also provide regular communications and
training to ensure staff are fully aware of the
need to maintain probity in all procurement.
Our procurement approach aims to deliver
economic, environmental and social benefits
to the communities in which we operate, in line
with the Public Service (Social Value) Act 2012
and our procurement team provide a range of
consultancy advice to assist staff throughout
the procurement process.
4) Customer involvement and scrutiny
5)
Performance management
We produce a monthly detailed performance
report for the Senior Management Team which
is also considered by each Board.
This sets out performance against target and,
where performance is below target, the reason
for this and actions being taken to improve.
Our subsidiary boards are responsible for
day-to-day performance management and
consider indicators, project progress and risk
actions as part of their consideration. The
Group Board looks at key strategic indicators,
those that relate directly to the success of the
Business Strategy, and hold subsidiary boards
accountable if their operational targets are not
met.
Each local association operates a scrutiny
panel of tenants and leaseholders whose role
is to examine policies and services and provide
commentary on improvements to efficiency and
effectiveness.
We are members of HouseMark and use
their benchmarking service to tell us how we
compare with other organisations.
They are given access to all documentation
and can call staff to provide evidence when
they are carrying out scrutiny reviews. In the
last year our panels have carried out a number
of reviews including voids performance at
Whitefriars and in Worcestershire and reviews
of grounds maintenance at Optima and energy
efficiency in Herefordshire. The results of these
reviews are presented to the relevant subsidiary
boards, often by the panels themselves, who
agree actions with local managers.
Our staff are one of our largest costs but also
one of our most significant assets. We have
clear procedures in place to ensure we get the
best from them through training advice, guidance
and support.
We involve customers in decision making
through tenant and resident associations and
customer panels who are asked to comment
on new or changing services. Whitefriars
and Family and Optima also have tenants on
their boards and so their views are reflected
at Group Board through the respective chairs.
As part of this customers have an opportunity
to balance the costs of providing services with
quality expectations. We include key financial
and performance information in our annual
report to customers, this includes showing how
we compare with others.
We also recognise the need to grow our
own staff and through one-to-one meetings,
performance reviews and development
opportunities we seek to enhance their skills to
enable them to take on more responsibilities.
The last year has seen the beginnings of major
changes in the way we deploy our people. This
began with the launch of the new business
strategy in June, which saw our entire workforce
brought together for the first time to hear firsthand the content and business direction.
Throughout the year we have been redesigning
many of our services to deliver recurring
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6)
Managing people
It is important for us to employ the right people
with the right skills for the work we do. We
advertise the majority of vacancies on the open
market and recruit using clear job descriptions
and person specifications.
savings of £3.3 million and arranging for around
250 Group services staff to move to a new
office building in Solihull. We have invested
considerable time in ensuring our staff remain
informed and engaged during this time of
change. As a consequence of this approach
we have seen no noticeable increase in staff
absence nor staff turnover.
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•
•
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As we prepare for the fundamental changes
in our operations due in September, we
are confident we have maintained a skilled,
motivated and committed workforce. During
late 2015 and early 2016 we will be carrying out
a survey to determine how well we are doing
in meeting our business strategy objective of
improvements in colleague satisfaction.
7)
How we are doing
Overall our approach to value for money
meets the requirements of the HCA’s
regulatory framework.
Risk management
We maintain a Group-wide strategic risk map,
which is updated at least annually following a
Senior Management Team workshop. Each
service or directorate also has its own risk
map, again updated regularly. Each risk is
ranked for likelihood of happening and potential
impact and they are recorded on our Covalent
performance management system.
Our Audit and Risk Committee considers these
risks and scrutinises progress against them at
each meeting.
How we are doing
In last year’s self assessment, we said we
would:
• Begin to carry out robust value for money
reviews of our central services and key
landlord services
• Enhance our approach to performance
management to give a broader set
of information that reflects more than
performance indicators.
• Continue to develop our scrutiny
arrangements to encourage customers
to examine the value for money of our
services more closely.
As a result we have:
• Reviewed our approach to first line IT
support
Reviewed our central services achieving
£175k of savings
Established clear mandates for all key
corporate projects
Developed a new performance dashboard
which includes risk and project performance
Reinforced our scrutiny arrangements with
external support to undertake more in-depth,
outcome focused reviews.
Over the next year, to improve further we
need to:
1. Continue to improve our scrutiny
approach to enquire more forensically
into service performance to support
subsidiary boards in their performance
management and build upon successes
in 2014/15.
2. Introduce and monitor our new
governance framework and work with
colleagues and Board members to
ensure it is implemented effectively
Overall we score for our
approach to value for money.
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Managing our assets
WM Housing Group owns and manages over
30,000 homes and a further 3,000 garages.
In addition, the group is responsible for a
considerable land portfolio associated with its
stock, common parts and wider land holdings
incorporated within the areas where its stock
is located. Across the Group, we invest over
£50m per annum in stock maintenance,
repair and improvement. The Group has a
turnover of around £140m per year and owns
assets, at cost, of £1.3 billion.
We recognise the need to identify which of
our assets are performing well and which
should be disposed of or improved to deliver
a better financial return.
Our stock is in the West Midlands and we
own and manage properties in Herefordshire,
Worcestershire, Birmingham, Solihull,
Coventry and Warwickshire. Whilst we work
across a large region, we are traditionally
significant providers in every area in which
we operate. With the arrival of Family into
the Group we now have a small number of
homes in other local authority areas, these
form an important part of their revenue
stream and, whilst we continue to place that
part of the Group on a firm financial footing,
we do not propose to examine disposal or
alternative arrangements further at this time.
Our boards have debated and been clear
and consistent in their assessment of stock
usage and investment for a number of years.
Many of our less-well performing assets
were in high and medium-rise blocks within
cities. Given the shortage of affordable
housing in these areas, and recognising
redevelopment would not allow us to match
the density of homes currently provided,
we will seek to improve homes and our
management of them, rather than dispose
of them. To reinforce the rationale for this,
our stakeholders have raised concerns that
a strategy for disposal in these blocks would
add to historic social and management
problems with private landlords owning and
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renting properties. As the evidence shown in
the ‘How we are doing section’ demonstrates,
we have a continuing programme of
assessment for poorer performing properties
and have introduced solutions that increase
their performance and remove liabilities
within the context of providing homes for
people in need.
Recent Growth
In April 2014, Family (Birmingham) Housing
Association successfully joined the Group,
increasing our size by around 2,500 homes.
During 2014/15, we completed 358 new
homes across the Group’s operational areas.
These provide a broad range of housing
that reflect the needs of local communities
and include a new centre of excellence, The
Gateway.
Growth must support the delivery of our
corporate objectives to meet housing need
and create homes where people are proud to
live and work. Our programme is developed
in close liaison with our local housing and
asset management teams as well as local
authority partners. Each new development
is subject to a financial viability assessment
to ensure we are achieving sufficient return
on our investment and rental income for our
business plans.
In addition to our affordable housing
programme, our outright sale subsidiary,
Signature New Homes, secured £2.5m
income from the sale of 12 open market
homes in Coventry and Herefordshire. The
profit from these sales will be re-invested
back into our core business to support the
delivery of new affordable housing.
WM is an HCA Investment Partner and leads
the Spectrum partnership, a consortium
of independent RP’s across the midlands.
Collectively the consortium has delivered
more than 900 new homes as part of
the HCA’s 2011-2015 Affordable Homes
Programme.
2014/15 was the final year of the HCA’s 4
year Affordable Housing Programme (AHP
2011-15) and like many registered providers,
our focus has been on ensuring that we
met our key delivery targets to complete our
programme on schedule, which we have
done.
Our approach to providing homelessness
accommodation within Coventry has been
completely transformed with the provision of
the new Gateway Centre. This is now open
and provides accommodation, training and
support to homeless people to help them
improve their lives, in attractive, secure
accommodation.
Asset Management Detailed Assessment
Our new Asset Management Strategy
defines how we meet the HCA’s regulatory
expectation and supports delivery of the
Group’s business strategy. The strategy’s
objectives are;
• to ensure retained assets are maintained
in good order
• to ensure we understand stock
performance and address assets of
concern
• to increase income from non-residential
assets.
The strategy has been developed following
Group-wide consultation and ensures that
we meet the requirements of our funders
and that our stock continues to provide the
collateral needed for future borrowing.
The new strategy strengthens our
commitment to identify assets that are ‘cause
for concern’ and in need of detailed option
appraisal. Our aim is to manage this portfolio
for each subsidiary against a clearly defined
asset plan considering alternative uses,
disposal or redevelopment as appropriate.
These plans are owned by each subsidiary.
Stock retention and investment decisions
are based upon an appraisal of the financial
advantages or disadvantages, and the
social or non-financial benefits available.
We include any work required for homes
being retained within an investment work
programme agreed by each subsidiary board.
Each asset plan includes: conclusions from
this work, the approved five year rolling
asset management plan, and thirty year view
of future retained stock and its investment
requirement.
In arriving at its Asset Plan each partner
association must first ensure that the Group’s
priorities for investment are met, which are:
• ensuring compliance with safety
legislation and regulation,
• delivery of the Decent Homes Standard,
• ensuring that all homes achieve a
minimum band D energy efficiency rating
by 2020.
Our strategy provides the focus for WM
Housing to demonstrate that assets are
appropriately maintained to deliver good
value for money and mitigated risk.
Stock condition data provides the foundation
upon which future investment requirements
are identified and planned. When combined
with rental income, responsive repair costs,
cyclical maintenance and tenancy turnover
information it also provides the basis upon
which we calculate the financial performance
of our stock. Later this year we will add an
assessment of social value and non-financial
benefits. When all these are combined, we
will have an overall performance appraisal
score for our assets.
Due to expansion, the Group currently
uses three asset management systems.
We are now consolidating these into one.
This provides a consistent approach to
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the management of stock condition data
for each subsidiary, including Housing
Heath and Safety Rating System (HHSRS)
requirements. The process commenced in
2014 when we used industry best practice
to define a new Group standard for stock
condition surveys. We tested this through
a full stock condition survey programme for
Family which we completed in March 2015.
The results have been loaded into Promaster.
By 2020 we aim to ensure that we have, at
least, replaced existing stock condition survey
data with new surveys undertaken to the new
standard for 85 per cent of Group homes.
This will give us a high confidence in the
accuracy of asset planning and investment
forecasting
subsidiary will consider the alternatives, such
as rationalisation of the housing stock, and
holding or palliative works to give a limited
or defined life solution. Any work required
will be included in an investment work
programme for each subsidiary. Conclusions
will be built into subsidiary’s asset plans
currently under development and due for final
approval in June 2016.
Stock performance is calculated using the
Strategic Asset Management System. This
applies projected future investment cost
extracted from Promaster, which will replace
the other systems in use in the Group, with
management, repair and maintenance costs
and income received, into a 30 year net
present value (NPV) model to produce a
measure of financial return over the life of the
business plan. The model can be applied at
Group, subsidiary, neighbourhood, street or
property level. The result either concludes
that retention under current investment
assumptions is viable, or identifies the need
for more detailed option appraisal .
Resulting from our options appraisals in
older people’s housing, we are currently
redeveloping two sheltered accommodation
schemes in Coventry and building new
bungalows. We are also currently working
with Coventry City Council regarding their
proposals for decommissioning further
services provided in our older person’s
properties. As a result we are evaluating
options for future use of our assets to ensure
best use of stock.
In 2015, using this new model, each
subsidiary will review cause for concern
properties. These will have one or a number
of the following features: poor quality design
or construction (and as a result considered
no longer fit for purpose); high investment
costs; high running costs or low demand.
They are likely to produce a negative (or
negligible) NPV, particularly when factoring
actual investment costs. Retained properties
will have a positive return on investment after
accounting for all income and expenditure.
Any investment works will be carried out in line
with the subsidiary’s approved business plan.
Before agreeing investment works, each
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We have undertaken a significant number
of option appraisals over the last 18 months
which has included investigation into stock
with an NPV of less than £10k over 30
years. Of the 57 properties which showed a
negative value only one now remains and this
has been flagged for disposal when empty.
As one example of this in practice, we have
examined Family’s care and supported
housing. This provides accommodation for
older people; people with learning disabilities,
some who also have sensory impairment
or physical disabilities; people with mental
illness; homeless people and vulnerable
women. There are 30 schemes with a total of
237 homes. We have identified we need to:
• Evaluate the impact of Family’s Care and
Supported Housing Portfolio on business
plans. This is ongoing.
• Review and analyse for robustness
existing option appraisals for each
scheme
• Develop asset values of each scheme
and assess options
• Evaluate robustness of managing agents
arrangements
• Evaluate completed asset reviews of
condition and ensure sinking funds are in
place for all schemes.
This will allow us to:
• Develop a financial model for care and
supported housing to support business
plan assumptions
• Have outline option appraisals for all
schemes including robust exit strategies
for non-viable schemes
• Identify future funding requirements in
relation to assets for all properties
• Develop and carry out due diligence with
existing providers
• Develop a current position and market
direction which considers:
• current and future demand/supply
issues within the local and national
context
• current and future customer housing
and care needs, aspirations and
expectations.
• requirements of wider health and
social care
• emerging funding and policy
environment including the implications
• Personalisation and the new
commissioning arrangements for health
services.
Other examples of option appraisal work are
highlighted in the How we are doing section.
We monitor the social and financial
costs of anti-social behaviour and other
behavioural issue on our estates and we
are exploring how to include this along
with other sociographic information within
the social return on investment element
of the return on investment model we are
currently developing. Enhancing our use of
our GIS capability is also an element we are
considering within our models.
Investment Plus
We are continuing to deliver our ‘Investment
Plus’ programme in Coventry having
completed the first two years of a five-year
plan with a focus on the anticipated return on
investment. We monitor how our investment
decisions improve the financial and social
performance of our homes and estates
utilising a range of indicators including
improvements in the energy efficiency of
homes, reductions in crime and customer
perceptions of our estates.
In 2014/15 we delivered £24.5m of
investment work and received £0.54m
of ECO funding. This provides for a total
investment over two years of £55.5m
including £4.64m of ECO funding.
This year we have delivered external
wall insulation to 600 homes in Tile Hill,
Whoberley and Henley Green which has, on
average, saved our residents £300 a year on
their energy bill and contributed to Coventry
City Council’s target to reduce carbon
emissions by 27.5 per cent by the year 2020.
This added to previous years’ work brings
our total number of homes benefiting from
external wall insulation to 4,225 and a total of
£13m of grant received from CESP and ECO
funding. Since the start of our programme
we have saved our Coventry customers more
than £1 million from their energy bills.
Other projects include the completion of
external and internal improvements to four
high rise blocks which has benefited 478
households. We have increased the energy
efficiency of the accommodation where
appropriate with external insulation and
efficient heating systems, enhanced the
appeal of the blocks through design and
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product specification and have improved
safety with secure by design doors and the
installation of a sprinkler system to our city
centre tower block.
Future conversions to support our 2015 – 18
development programme will undergo full
appraisals to ensure we convert stock which
offers the greatest return on investment.
Where we have carried out significant
improvements to accommodation we have
also enhanced the external environment
with a range of projects delivering additional
off road parking, landscaping and fencing
to create defensible space around our flats
providing for a safe, secure and attractive
environment and enhancing the overall
appeal of our estates. This adds to their
sustainability as desirable places to live in
which we can more easily sustain tenancies
and let homes.
How we are doing?
At Family (Birmingham), we have provided
an energy advice service to deliver tailored
solutions to help customers reduce their bills
and do their bit to be greener. In 2014 we:
• Undertook 153 home energy visits
including 31 to non-customers generating
£2,760 of income, this has generated a
saving of around £130 a household and
saved 0.4 tonnes of CO2 and 96 cubic
metres of water.
• Issued 38 energy performance
certificates.
As Family and Optima move closer together
as organisations we are examining how to
expand this service.
Affordable rent conversions and
development
For the 2011-15 Affordable Housing
Programme, we converted 1,120 properties
from social rent to affordable rent generating
an additional £14,388 of rental income
per week. This has enabled us to deliver
a fully funded 2011-15 Affordable Homes
Programme as the extra rental income
helped to support the debt that made up the
shortfall between build costs, social housing
grant, borrowing that the schemes would
support on their own, one-off property sales
and West Mercia Development profits.
12
In last year’s value for money self
assessment we said we would:
• Complete stock condition surveys in
parts of our Group to strengthen our
knowledge of our assets and investment
needs.
• Improve our knowledge of the return of
our assets regarding responsive repairs
and planned maintenance.
• Make use of our growing knowledge of
the influence of social factors to improve
our asset model.
• Continue to be rigorous in our appraisal
of empty properties to ensure we
are clear on where we should invest
or dispose of assets that meet our
established criteria and have clear
targets for savings
• Ensure delivery of our 2011/15
development programme.
As a result we have:
• Reviewed our methodology for
completing stock condition surveys and
brought this in line with the latest industry
thinking.
• Completed 2,800 stock condition surveys
to the new standard and have committed
to replace current stock condition survey
information with new surveys to 85% of
all Group stock by 2020
• Commissioned Savills to support the
development of an enhanced return on
investment model for the Group
• Concluded option appraisals for:
• Manor Farm in Coventry
• Unity flats in Coventry
• Sheltered housing in Coventry
• Homeless provision in Coventry
• Commenced option appraisals and
reviews for:
• Care and supported housing for
Family in Birmingham
•
•
•
•
• Care home management agreements
for West Mercia Homes.
• Truscon maisonettes in Spon End,
Coventry
• High-rise accommodation in Wyken,
Coventry.
In total, for Spectrum partnership, we
completed 769 new homes against an
original target of 690.
Secured funding through additional HCA
programmes and delivered a further 134
homes, giving total delivery of 903 new
homes in the region.
Completed 275 homes in 2014/15
and a further 81 homes through our
development services for other RP’s,
generating £202k of fee income
Sold 12 Signature New Homes
generating sales income of £2.5m and an
estimated profit of £220,000 which is giftaided to the Group to support delivery of
new affordable homes.
How we are doing
Overall our approach to managing our
assets meets the requirements of the
HCA’s regulatory framework.
Over the next year, to improve further we
need to:
1. Complete development of our investment
modelling
2. Conclude our evaluation of Family’s care
and supported housing portfolio.
Overall we score for our
approach to value for money.
13
Managing our finances
Financial viability
The HCA’s latest Annual Viability Review
(issued in September 2014), affirmed the
Group’s financial viability as V1 (the highest
rating available on the V1 – V4 scale). This
assessment is supported by Moody’s, one
of the world’s major credit rating agencies,
who affirmed our credit rating at A2 following
the 2014 annual credit rating review (report
published on Moody’s website in November
2014). This is the 6th highest rating
achievable on Moody’s scale and matches
the ratings of similar RPs and is well within
the ‘investment grade’ standard for credit
ratings.
The Group’s debt portfolio includes around
90 per cent of fixed rate debt, giving absolute
certainty over interest payments. The Group’s
Financial Plans and budgets also contain
prudent assumptions in relation to the 10 per
cent variable rate debt, with assumptions
over 1 per cent above current variable
interest rates.
cycle. The Group Board understands the
size of any net expenditure increase in the
2015/16 financial year that would cause a
breach of loan covenants. We recognise that
we still have work to do to with the Group
Board around the recovery planning element
of our “business destruction” testing.
Operational Re-design
Our Journey to Excellence project is
redesigning the way we deliver our services
across the Group to improve efficiency and
provide greater value. The programme will
save around £940k a year once complete.
As part of the project we are modernising
and standardising our computer systems
and introducing a Group-wide customer
service centre and online access portal for
customers. This has led to detailed service
reviews across our operational teams and the
rationalisation of office accommodation and
refurbishment of customer-facing offices.
In 2015/16, we will be moving our central
services to a single location which will
also accommodate the customer service
centre. We are also providing more online
opportunities to allow our customers to
fully self-serve. This allows us to release
The Group’s interest cover measure for
resources and target our work towards
2014/15 (a measure of how comfortably it
can meet interest payments from its operating those customers who require it. We expect
to recover fully the £3 million cost of the
surpluses, after adding back depreciation)
programme by 2021.
was 218%. This means its operating
surpluses were sufficient to pay its interest
costs twice over. This is a high ratio brought Comparisons of Costs
about by our growth and the Board’s desire
We compare our costs in three ways:
to make sure that new entrants to the Group
• Year on year comparison
would not prejudice our financial position.
• Comparison against our local peers – the
M6 Group
The Group outperformed all of its lenders’
• Comparison against national peers
financial covenants for the 2014/15 financial
through HouseMark.
year and its Financial Plans forecast
compliance throughout the long-term financial
Our year on year comparisons show
planning horizon. The Group’s Board
us whether we are managing our costs
understands the impact of stress-testing of
effectively in each budget round.
key business plan assumptions on existing
loan facilities and covenants. The impacts of
Our local peer comparisons show us how
multi-variable stress-testing are reported to
much we are spending compared to our local
the Board through the financial plan update
14
peers who are of a similar size and operate in the same regional conditions.
Our national comparators show how we are doing compared to the best registered providers.
This helps us examine how well we are meeting our aim to be excellent.
Year on year Cost Comparisons
Expenditure on Social Housing Lettings
Management
Major repairs
Planned
maintenance
Routine
maintenance
Service
charge or
support costs
Other
TOTAL
WMHG
13/14
£m
WMHG
13/14
% of costs
WMHG
14/15
£m
WMHG
14/15
% of costs
31
11
5
HCA
Average
13/14
% of costs
28
6
9
HCA
Average
12/13
% of costs
28
6
9
21.6
11.1
5.5
24
13
6
30.1
10.0
4.4
13.6
15
13.5
14
20
21
12.0
14
10.6
11
15
15
25.0
88.8
31
100
26.7
95.3
28
100
22
100
21
100
In 2014/15, the Group’s expenditure
increased in overall terms after Family joined
the Group on 1 April 2014.
Our major repairs expenditure profile
is higher than the HCA average due to
Investment Plus expenditure, which is
charged directly to the Whitefriars’ income
and expenditure account.
The main cause of other costs being higher
than the HCA average relates to additional
non-cash housing property deprecation
charges arising from historic acquisitions
within the Group. These arise as a result of
following the Statement of Recommended
Practice in respect of accounting for how
subsidiaries are included within the Group’s
accounts.
15
Local Peer Group Cost Comparisons
We are active members of the M6 group,
comprising the six largest midlands housing
associations: Accord, Bromford, Midland
Heart, Orbit and whg. We undertake detailed
benchmarking exercises to compare our
costs and performance.
WMHG WMHG
2014/15 2013/14
Operating Margin (%)
Social housing lettings operating margin
(%)
Net debt to turnover
Operating cost per general needs home
(excluding depreciation) (£)
Rent void losses per home (£)
Board and Executive pay per home (£)
28.6
29.0
22.4
24.6
M6 Group
Average
14/15
24.7
32.3
M6 Group
Average
13/14
23.2
31.8
3.33
2,939
3.06
2,872
3.11
2,568
2.87
2,696
70.40
39.61
77.47
38.53
80.87
58.42
82.16
48.18
The Group’s margins have improved
compared to 2013/14 which is a combination
of two main factors:
• a higher proportion of the 2014/15 major
works programme being capitalised than
we assumed when the 2014/15 budget
was set
• a £2.5m reduction in the non-cash fair
value depreciation adjustments (£3.5m
compared to £6m in 2013/14) which are
charged directly to operating costs.
and expenditure account with a £5m charge
assumed within operating costs each year
until 2017/18. Excluding the £5m charge
to operating costs, the Group’s operating
cost per general needs home (excluding
depreciation) would have been £2,660 in
2013/14, which would be in line with our peer
group average, rising to £2,735 in 2014/15
due to the effect of inflationary increases in
costs and the profiling of stock condition works
to our properties.
Excluding this additional depreciation charge
within the Group’s accounts, the 2014/15
operating margin would have been in excess
of 31% and the social housing lettings
operating margin would have been in excess
of 31%.
In addition to the adjustment described above,
with £5m less of operating costs, the Group’s
operating margin would have been around
35 per cent and the social housing lettings
operating margin the same.
The Group’s operating cost per general
needs home is higher than our peers. When
we undertook a refinancing exercise in
2012, we deliberately set out to use £50m
of the proceeds over a five year period on
our existing estates. We assumed half of
this work would be revenue in nature and
therefore be charged straight to the income
Even at this level of detail, we understand
how the accounting policies that we have to
apply in our Group accounts and operational
decisions made regarding estate investment
impact on our financial measures when
compared to our peers.
The Group’s rent loss per property and Board
and Executive Pay per home continue to be
below the average levels of our peer group.
National comparisons
KPI
Adjusted net leverage
National performance quartiles WM Group
(2013/2014)
Upper
Median
Lower
Result
33.7
40.8
50.6
44.8
WM Group
(2012/13)
Result
61.2
Growth in turnover (%)
6.9
4.9
2.9
5.5
18.5
Operating margin (%)
29.9
26.5
22.8
25.2
30.3
Value for money service review – central
costs
During 2014 we carried out a high level
comparison of our central services costs against
a small peer group. This showed, in broad terms
our costs up until that point compared favourably
with our peers. Our central costs represented
around nine per cent of turnover and were
typically 15 per cent lower per property than the
average.
Whilst this has offered some reassurance that
our cost base in these areas is good, it has also
led us to look at how to achieve improvements
in these areas, especially through a clearer
governance approach.
As the achievements section shows, we have
achieved significant savings in our costs in the
last year but, through the creation of our customer
service centre will see our headline costs rise.
We need to ensure that we continue to look at
the detail of our costs through a series of reviews
of central services and continue to exemplify the
advantages of our federal structure.
How we are doing
In last year’s self-assessment we said we:
• must ensure we maintain our credit rating
to enable us to provide reassurance to the
market and access the market for funds
when appropriate
• must ensure that Family (Birmingham) joining
the Group does not affect our financial viability.
that we continue to reflect financial matters
as a key part of our strategic risk framework
• successfully integrated Family into the Group
and delivered the necessary savings identified
at the time of their agreeing to join us
• begun a service restructuring in Family and
Optima to align delivery of services more closely.
How we are doing
Overall our approach to managing our
finances exceeds the requirements of the
HCA’s regulatory framework.
Over the next year, to improve further we
need to:
1. Carry out service reviews of two other
Group functions. Which two will be
determined through our budget appraisal.
2. Meet the challenges of the HCA’s new
regulatory framework by carrying out
destruction-based stress-testing of our
finances using at least two economic
cycles to identify trends.
3. Undertake detailed benchmarking reviews
of our corporate services with local peers.
Overall we score for our
approach to value for money.
As a result we have:
• kept an A2 rating with Moodys and ensured
16
17
Our performance
We compare our performance against
those of our national peer group. We have
used 2013/14 figures as no figures are yet
available for 2014/15. We can, though,
look at our year-on-year comparisons to
ensure we are not experiencing a decline in
performance.
Key to performance comparators
Top quartile performance
Upper-mid quartile performance
Lower-mid quartile performance
Lowest quartile
67.6) and 0.6 for Optima (up from 74 to 74.6).
The rating for Family is 68.3, up from 67.
Success measures
During 2014/15 Whitefriars achieved 100 per
cent decent homes for the first time. This
now means that all of Optima, Homes and
Whitefriars stock meets the standard. In
Family 2.1 per cent of stock does not meet the
standard.
In the last year the energy efficiency rating,
as recorded by SAP ratings, for our homes
has increased by around 1.25 for West Mercia
Homes (up from 73 to 74 in Nexus and 70 to
71.6 for Kemble), 3.6 for Whitefriars (from 64 to
Responsive repairs and voids
Financial performance indicators
KPI
Major Works and Cyclical Maintenance
KPI
National performance
quartiles
Upper Median Lower
Total CPP* of Major Works & Cyclical 1,138 1,377
1,912
Maintenance
Total CPP of Major Works (Service
812
1,012
1,444
Provision)
Total CPP of Major Works
65
91
126
(Management)
Total CPP of Cyclical Maintenance
179
241
281
(Service Provision)
Total CPP of Cyclical Maintenance
(Management)
*CPP is cost per property
programme, a garage site review and a shared
service agreement with Coventry City Council.
30
42
As we continue to make significant
investment in our homes, particularly in
Coventry, we continue to see higher than
average costs per property. Our investment
approach, as described earlier, means that
whilst our costs may be high the return
on these assets is also increasing and
improving the lives and living conditions of
many of our customers. We are satisfied
that, whilst our programme of improvements,
driven by Investment Plus, is continuing our
benchmarked costs will remain high.
Through procurement arrangements, sound
project management and cost control we are
also content that our expenditure represents
value for money as the return on investment
and net value of refurbished properties rises
18
55
WM Group
(2013/2014)
Result
1,822
WM Group
(2012/2013)
Result
1,945
1,416
1,699
183
79
159
132
63
34
and as our customers benefit from more
energy efficient, modern homes.
2014/15 saw the second year of Investment
Plus. Over the course of the programme so
far, in line with project plans and predicted
outputs, the programme has seen:
• 2,150 homes insulated
• Seven high-rise blocks refurbished
• Around 5,000 properties benefiting from
improvements in their environment
• £5 million of grant funding secured
• £1.76 million of right to buy receipts
reinvested
Total CPP of Responsive Repairs &
Void Works
CPP of Responsive Repairs
(Service Provision)
CPP of Responsive Repairs
(Management)
CPP of Void Works (Service
Provision)
CPP of Void Works (Management)
National performance
quartiles
Upper Median Lower
680
847
990
WM Group
(2013/2014)
Result
936
WM Group
(2012/2013)
Result
899
378
436
528
575
531
95
124
170
124
137
163
198
277
199
209
34
43
54
38
23
We have seen some increase in our average
costs per property for repairs, much related to
the introduction of Family into the Group and
increasing prices for building materials. We
have, though, achieved significant savings in
our management of responsive repairs as we
have streamlined parts of our management
structure.
Over the last two years the DLO,
“Homeworks”, serving Whitefriars Housing,
has undergone a significant programme
of change. An external health check of the
service, undertaken by Just Housing and
reported to the Board in 2013, identified
a series of improvements across 24 key
business areas. An overall assessment score
of 4.6 out of 10 was awarded in the 2013
report. The execution of an improvement
plan has been largely completed, with
a reassessment by Just Housing taking
place in July 2015. All areas have improved
significantly and an overall assessment score
of 9 out of 10 has now been awarded.
In addition to improving customer service,
operational efficiency and health and safety
standards, cost reductions were also realised,
through an organisational restructure which
reduced the management team by 4 posts
and closed an expensive, fully staffed, out of
hours repairs service. This has delivered a
saving of £150K per annum.
The programme has also delivered enhanced
security, an upgraded safety inspection
19
Housing management
KPI
Total CPP of Housing Management
National Performance
Quartiles
Upper Median Lower
427
497
595
WM Group
(2013/2014)
Result
556
WM Group
(2012/2013)
Result
466
Direct CPP of Housing Management
265
289
329
253
282
Direct CPP of Rent Arrears &
Collection
Direct CPP of Resident Involvement
71
80
90
81
88
31
39
55
34
22
Direct CPP of Anti-Social Behaviour
34
41
50
42
60
Direct CPP of Lettings
36
45
52
35
43
Direct CPP of Tenancy Management
52
73
96
62
68
Rent loss due to empty properties
(voids) as a percentage of rent due
1.05
1.25
1.61
1.25
1.18
With the arrival of Family into the Group,
we have seen our overall costs per property
increase; in particular Family has traditionally
invested heavily in customer involvement
which these figures reflect. As we complete
our restructuring of service arrangements we
expect these costs to reduce overall.
Throughout 2014/15 and into 2015/16, we
have been investing heavily in our Journey
to Excellence Programme. The aim is to
reduce our costs by £947k a year by 2019 or
approximately £31 a property in total. The
first phase of the programme will go live in
September 2015 and includes a new customer
service centre to deal with 80 per cent of calls
at first contact and a new integrated housing
management system.
As a result of our growth in recent years we
have been using three different systems which
has prevented us from providing consistent
scripted services to customers. In the last year
much of our improvement focus has been on
ensuring that as many services as possible are
suitable for delivery through the centre with the
correct information available to help customers.
20
Between September 2015 and March 2016,
further stages of the programme will go
live, further increasing the level of services
deliverable.
To support this, each subsidiary is undergoing
a full service redesign to release resources
for the service centre, leading to identified
long-term savings within subsidiaries of £1.66
million a year.
For rent arrears costs we expect our new
service centre and trialling of alternative
approaches to collection will drive down the
cost per property to closer to the national
average whilst keeping our business strategy
target to be a top decile performer based upon
2014 performance benchmarks.
Satisfaction with WM Housing Group’s service
is 77.3 per cent. Customer satisfaction that
their rent provides value for money ranges from
64 per cent to 75 per cent. The results of a
recent survey, completed just after April 2015,
shows overall satisfaction is now 86.1 per cent
for services.
Operational performance
This feedback is used within our service
reviews to ensure we are delivering high quality,
valued services that are cost efficient and
effective.
We report on our operational performance to
our senior management team and Boards.
We also use Housemark to compare our
performance with others.
At present performance is assessed for each
subsidiary rather than at a Group level. We are
now concluding work on a dashboard which
reports performance against our business
strategy at a Group level and subsidiary.
This includes project and risk management
performance.
We recognise the important role our customers
can play in improving services through
critical appraisal at scrutiny panels, tenant
representation on our Boards and customer
satisfaction.
We want our services to be based on what
customers actually need and want. We have
worked with our customers to develop Local
Offers, which we call Service Agreements. The
agreements are specifically designed to meet
local needs and priorities.
Our current Service Agreements include
supporting new customers when taking on
a tenancy, communal cleaning, gardening
service, repairs, digital inclusion and working
with the local community. All service
agreements are published on our website and
we continue to work with our customers to
develop further agreements.
Our two lowest quartile performances for
cost (rent arrears and anti-social behaviour)
reflects the nature of much of our stock
and the areas we serve. In large parts
of Coventry and Birmingham, we provide
services in some of the most deprived
communities in the country and high numbers
of high-rise flats. Whitefriars, in particular,
has always consciously invested heavily in
tackling anti-social behaviour and was one of
the founders of the Social Landlord’s Crime
and Nuisance Group now Resolve ASB.
Whilst we are not complacent, the results
achieved justify our higher than average
expenditure.
21
Indicator
Rent collected as percentage
of rent owed
Current tenant arrears as
percentage of annual rent
debit*
Former tenant arrears as
percentage of annual rent
debit
Percentage of rent lost
through dwellings being
vacant
Optima
Family
Kemble
Result Quartile
2014/15 100.2
Result Quartile Result
99.98
97.30
2013/14
Quartile
2014/15 4.80
N/A
2013/14
Quartile
2014/15 3.27
N/A
2013/14
Quartile
2014/15 0.56
N/A
2013/14
Quartile
Average re-let time in calendar 2014/15 20.24
days*
2013/14
Quartile
Average number of days taken 2014/15 6.04
to complete repairs
2013/14
Quartile
Percentage repairs completed 2014/15 94.65
at first visit*
2013/14
Quartile
Percentage repairs
2014/15 99.80
appointments kept
2013/14
Quartile
Percentage of dwellings with a 2014/15 100
valid gas safety certificate
2013/14
Quartile
3.33
0.72
0.51
Nexus
Whitefriars
National
upper quartile
Quartile Result Quartile Result Quartile
98.13
98.99
100.06
2.84
3.05
2.80
1.73
0.95
0.84
1.59
0.78
0.99
0.33
1.59
0.70
21.60
14.17
26.72
19.90
N/A
23.40
N/A
6.10
5.61
7.84
6.61
6.50
93.00
92.34
97.49
95.80
100.00
99.72
94.66
99.37
100
100
100
100
N/A
97.60
N/A
96.98
Our benchmarked performance continues to
show that in many areas the Group is operating
within the top quartile. Our comparators for
rent collection and arrears, as well as voids in
Whitefriars, continue to be outliers.
In the last year we have seen major
improvements in rent collection and arrears
within Optima, and whilst performance there
continues to be comparatively weak we expect
further improvements this year as a result of
new services through our central customer
service centre and redesigned processes. The
latter will also help improve performance in
Whitefriars and Family.
For rent arrears and rent collection we have
redesigned many of our approaches but also
need to go further in optimising our approach
to collection. Working with Warwick Business
School we are conducting in-depth analysis
and trials of alternative approaches to rent
collection, most notably risk profiling and early
contact, as well as payment in advance rather
than arrears, including for benefit recipients.
Initial results are due for the end of 2015/16.
Analysis of data is showing that in Whitefriars
there is clear separation between voids that
are let in a short period of time and those
which take considerable time to let. It appears
clear that to address this we need to conduct
a fundamental review of how these properties,
notably bedsits, are used. Whilst they show
a notionally positive net present value, the
changing marketplace, and likely removal of
housing benefit for many younger people,
illustrates a potentially higher turnover and
longer void time for these properties.
N/A
100
N/A
* For these indicators our business strategy target is to achieve top decile performance, using 2014 national information as a benchmark, by 2019. For all
other indicators our strategy demands continual improvement year on year.
22
23
How we are doing
How we are doing
Our achievements
In last year’s self-assessment we said we
would:
• use performance information to inform our
plans to improve services
• look at changing our approach to
performance management to reflect other
factors on top of performance indicators.
This should include progress on key projects
and against risk plans and audit reports.
Overall our approach to managing our
assets meets the requirements of the
HCA’s regulatory framework.
Savings
As a result we have:
• developed a new performance dashboard
that aligns performance to our business
strategy objectives using profiled targets
and a range of performance information
including project milestones and risk
mitigation actions
• used our current performance as a
benchmark to redesign services as part
of our Journey to Excellence programme.
Notably through increased scripting, selfservice and refreshed processes that aim
to improve efficiency and effectiveness.
Over the next year, to improve further we
need to:
1. Introduce our new customer service
centre and ensure that 80 per cent of
customers are dealt with at the first point
of contact to improve efficiency and
effectiveness.
2. Complete the restructuring and
relocation of front-line teams to reduce
our operating costs.
3. Evaluate the efficiency of maintenance
arrangements in Birmingham where
delivery is split between a direct labour
organisation and external contractors
4. Complete analysis and assessment of
alternative approaches to rent collection
in Optima.
Overall we score for our
approach to value for money.
The last year has seen us continuing
preparations for a fundamental change in the
way we work through our Journey to Excellence
programme. The first stage, which includes a
new housing management system, redesign of
front-line services, creation of a new customer
service centre and rationalisation of our office
accommodation, is set to go live in September
2015.
Alongside this, in the last year, we have
achieved significant cost savings for our services
and made a major contribution to the financial
well-being of many of our customers.
Cost savings
In the last year we have:
• retendered our insurance and legal services
contracts. As a result we will see a reduction
in these costs of £525k a year.
• successfully implemented the return of the
ICT Helpdesk to in-house provision achieving
savings of £120k a year.
• integrated Family (Birmingham) into the
Group delivering savings in support services
of £800k with front-line savings totalling a
further £344k.
• carried out a review of corporate services
which has achieved savings of £175k a year.
The total savings identified and achieved in
2014/15 in these areas alone amounts to almost
£2 million a year or around 1.4 per cent of
turnover.
Investment
Partially as a result of savings accrued, we are
able to:
1. Relocate Group services to new offices
allowing us to rationalise our office premises
and reduce the number of area offices in
Whitefriars.
2. Invest in a new customer service centre and
integrated housing management systems
24
3. Ensure that Family has a viable future as part
of the Group and that we can, in time, bring
together our legal entities in Birmingham
without prejudicing our collective or individual
financial position.
Each of these represents a significant invest to
save opportunity which secures ongoing savings
of around £3.3 million a year, or 2.5 per cent of
turnover, by 2021.
Adding Value
The continuing economic climate has an impact
on the ability of some of our customers to pay
their rent and household bills. As part of our
work we try to make sure our customers have
sustainable tenancies. Our work to support
customers covers and
Welfare reform and financial inclusion
The Group took a proactive approach to facing
the changes brought about by welfare reform. A
comprehensive impact assessment has been
completed and reviewed. An action plan is in
place to ensure we are best placed to mitigate
any negative effects.
In 2013/14, we had estimated the impact
across the Group as being £1m, and £1.1m in
2014/15. The actual financial effect was £714k in
2013/14 and only £131k in 2014/15. The delay
in introducing universal credit has had an impact
on this. Early actions on under- occupation
charges and the benefit cap helped us minimise
losses and ensure we were able to help
customers before they found themselves at risk
of losing their tenancy.
We have received praise from our partners
for the work we have completed with local
authorities, the DWP and advice agencies.
25
Tenancy support
Our Money Advice Officers have supported over
2,000 customers during 2014/15 by offering
budgeting and benefit advice. They have helped
customers access an additional £1.3 million of
income.
Affordable warmth
External wall insulation added to 600 homes in
Tile Hill, Whoberley and Henley Green and has,
on average, saved our residents £300 a year on
their energy bills, whilst contributing to Coventry
City Council’s target to reduce carbon emissions
by 27.5 per cent by the year 2020.
Access to Employment
Our procurement team identifies social value
outcomes which are relevant and proportionate
to the works, goods or services being procured
and will evaluate tenders in accordance with
those social value outcomes. This includes the
goods and services we procure to help run our
business as well as larger-scale works contracts
that we commission.
We ensure that our procurement processes
are accessible to a diverse range of small and
medium sized enterprises (SME’s) including
social enterprise and will offer support to all
suppliers to help them through the procurement
process.
Examples of social value in action include:
• Residents with an idea for a business
This year the group has consolidated its
approach to employment support by agreeing
a set of Group-wide principles for offering
employment support and work experience
opportunities for our customers.
We have taken advantage of our strong partner
relationships with providers of employment
support, both national and local to ensure
that our residents are able to access support,
guidance and opportunities.
Social Value
As a social business, we want to ensure that we
provide services that achieve wider social value
for our customers.
We have a group-wide social value statement
which outlines the key areas of work within
which we will identify opportunities to deliver
wider benefits for our customers and seek to
measure the impact of the work or activities that
are carried out. The key areas are:
Procurement
Customer involvement
Property investment
Social enterprise
Social finance.
Procuring Social Value
26
continue to enjoy funding through our social
loan programme. Introduced a year ago,
we award social loans to those who come
forward with their ideas and win over a
panel of residents and staff. The loan is
paid back as their enterprise grows. Our
first two recipients were Bedouin Nights,
and Love Coventry furniture recycling. This
scheme follows our highly successful Pride
in our Street project which ran for five years
and saw £500,000 invested in over 200
community projects, from community chicken
coops to summer play activities.
• In Family, we continued to deliver the
Training and Employment National Career
Service Contract between April-September
2014. The contract offered one-to-one
job coaching support, through which we
delivered 105 advice sessions to residents
and the wider community. The income
generated from this contract was used to pay
for an additional part-time advisor.
Energy Advice – The Green Team
Our home energy service encourages our
residents to change their behaviour towards
energy in their home. Our home energy adviser
offers tailored advice on various areas including
energy supplier switching, water saving,
recycling and installing draught proofing and
other energy saving devices. By providing this
support we give our residents the knowledge to
help keep warm, reduce their bills and indirectly
reduce CO2 emissions.
The service also aims to cross-refer people into
other support services. This means we work
closely with our employment coach, money
advisers, assets and repairs teams. Our
energy advisor will carry out EPC’s to properties
(that do not hold them) during his home energy
advice appointment.
Through their work, the team has identified
savings of up to £16,754 from energy bills,
making the average saving per household
£159.
Supported Housing for Young People Project
(SHYPP)
This part of our business works with 16-25 year
olds in Herefordshire. We offer emergency and
medium term accommodation in supported
housing projects, outreach support to young
people and young parents, a ‘Nightstop’
emergency accommodation project and
education in schools.
SHYPP works with around 200 young people
every week. We offer extra support to manage
tenancies, access accommodation and gain
employment or training. We work to help
young people towards independence and we
recognise the importance of looking at the
whole of the young person not just their housing
situation. During the last year, SHYPP has
provided support to over 400 young people,
and we have supported over 430 education,
training or employment placements.
Mobile Telecommunications Services
The successful contractor for our services is a
social enterprise and incorporated the delivery
of social value within their offer in the form
of digital inclusion support, for example pay
as you go WIFI for tenants and access to IT
training and affordable IT equipment.
Kemble Maintenance and Reactive Repairs
Successful contractor demonstrated examples
of supporting our most vulnerable customers.
Contractor’s employees and supply chain are
local, generating multiplier effects in the local
economy.
Temporary Recruitment Services
Successful service providers have offered
to make any opportunities accessible to our
communities. Also offered employment support
workshops and coaching seminars.
Legal Services
All appointed firms have offered to deliver
social value to our communities through work
experience and placements, employment
coaching and support, and the provision of pro
bono legal advice to customers.
How we are doing
In last year’s self-assessment we said we
would:
• have a robust approach to managing key
corporate projects which clearly set out
what we plan to achieve and how
• monitor and report on these projects
to ensure we make continual progress
towards meeting our objectives.
As a result we have:
• ensured all corporate projects have project
mandates in place to ensure clarity of
approach and outcomes
• monitored progress against these through
our management teams and reports to
boards
• incorporated achievement of project
milestones within our corporate
performance dashboard.
27
Our plans for 2015/16
Over the next twelve months we face significant
challenges brought about by:
• A new regulatory framework emphasising
awareness of our principle causes of stress
• A different operating environment brought
about by an incoming government
• The relocation of many parts of our business
and the restructuring of many teams to meet
the requirements of our Journey to Excellence.
We carry out detailed risk assessments and
analysis of these projects and policy changes
and keep our staff and boards informed through
regular communications including policy briefings,
e-news and a monthly corporate brief.
Following May’s general election and the
emergency budget in July, we have appraised our
value for money targets for 2015-16 and remain
confident these are achievable. For future years
we are revising our financial forecasts and plans to
reflect the changing operating environment.
During this year, as well as the specific
improvements identified for each area of our selfassessment we will:
• Align budgets for Optima and Family Housing
Association (Birmingham) Ltd
• Review the opportunities a single legal entity
for Optima and Family will bring
• Combine Optima and Family’s scrutiny roles
• Consider the in house benefits of expanding
Family’s Estate Services Team
• Review our approach to contract management
and consider aligning contracts across the
Group
• Review repair costs at Optima and Family as
part of preparing for the re-procurement of
repair and void contracts
• Review customer involvement and scrutiny
functions at West Mercia Homes
• Adopt the Promaster Asset Management IT
system for all future investment programme
determination and management for the Group.
• Enhance our Strategic Asset Management
28
•
•
•
•
•
•
•
•
•
•
•
•
System (SAMs) to provide a more
comprehensive stock performance appraisal
package.
Create a detailed model to inform our asset
investment decisions based upon the financial
and social returns of the investment.
Completion our latest high-rise refurbishment
scheme of three blocks in the centre of
Coventry
Conclude the option appraisal for Truscon flats
in Spon End, Wyken high-rise.
Apply the new Return on Investment model
to identify additional “cause for concern” stock
and incorporate these in asset plans
Review older people housing and former
sheltered schemes in West Mercia Homes
Expand SHYPP services in Herefordshire and
consider our accommodation offer
Review sustainability actions and community
switch.
Carry out a fundamental review of our
development strategy in 2015/16 to consider
how we can best deliver 300 new affordable
homes per annum at a net cost of £100k per
home to generate a rent of £100per week.
Utilise our current asset base to support the
delivery of new homes through conversion of
existing homes to affordable rents and through
disposals of one–off properties.
Utilise profits from outright market sales to
reinvest in new homes
Maximise opportunities on our own land and
within our existing stock
Build on our partnerships with local authorities
and other stakeholders to maximise
opportunities on public land.
Overall assessment and direction
of travel
Specific Development Targets 2015/16
Targets 2015/16
Completions (excludes Signature)
Grant received
Target yield
Development agency work for
others
Fee income
Shared-ownership units sold
Shared-ownership sales income
Fee income
Units sold
Sales
Target profit margin on outright sale
235
£1,251k
5.2%
64
£228k
34
£2,198k
£55k
17
£4,261k
20%
How we are doing
Overall our approach to our achievements
meets the requirements of the HCA’s
regulatory framework.
Over the next year, to improve further we
need to:
1. ensure that our senior colleagues and
boards continue to follow sound project
management principles
2. provide ever greater clarity around our
achievements through our performance
monitoring and colleague, customer and
stakeholder communications
3. test our projects, once complete, against
outcomes identified at project initiation.
Overall we score for our
approach to value for money.
Having examined our value for money
performance against our business strategy,
peer performance and the value for money
standard we believe we fully comply with
the standard and are making steady
improvements in performance. In some
areas we already exceed the framework
requirements.
In particular our approach to understanding
our asset performance and stock condition
has shown considerable improvements.
The last two years have seen the Group
consolidating its growth and ensuring our
systems are fit for purpose into the future
and our financial position remains strong.
These have been the focus for our value for
money work over this time. With delivery
of our Journey to Excellence in September
2015, we will begin to change focus to
areas of performance where we feel we can
significantly improve operational change to
improve value for money.
Our work to develop detailed stock information
for new entrants to the Group has further
improved our awareness of asset values and
returns. This, in turn, has fueled our new
asset management strategy which drives
activity and investment to delivering ever
greater returns.
We are a successful HCA development
partner and continue to lead the Spectrum
consortium. This generates cash flow to the
business and helps deliver a sustainable,
value for money, development programme
for ourselves and consortium members.
Our build for sale subsidiary, Signature New
29
Homes, has made a major contribution to our
resources and we are now looking at how
this may be grown to deliver more across the
Group.
We recognise that with a new government we
face considerable change in our environment
and must move quickly to understand,
quantify and mitigate these changes. Our
pace of change for harmonising systems has
been positive and enables us, more easily,
to prepare sound response strategies to
whatever changes lie ahead.
Overall, therefore, we believe we provide
a value for money regime that meets
the requirements of the HCA regulatory
regime in full. There are, though, areas for
improvement, set out in this self-assessment.
As we address these we expect to maintain
and improve the value for money of our Group
to optimise the return on our assets for the
benefit of our customers and the public purse.
We are confident that, despite the challenges
of a new government, we are well placed to
achieve this now and in the future.
30
Appendix A
Group statistical information
31
Age of homes by stock holder
Homes in ownership
Stock owner
Family
Optima
West Mercia Homes
Whitefriars
Total
Number of homes
2607
2238
7009
18277
30031
Percentage of Group total
8
7
24
61
100
Figures include social rent, affordable rent, intermediate market rent, leasehold and shared ownership properties.
Percentage of tenancy types by stock owner
Year of build
Family
Optima
West Mercia Homes
Whitefriars
Up to 1945 (prewar)
1945 - 1950
1950s
1960s
1970s
1980s
1990s
2000s
2010s
Total post war
60.8
0.1
4.0
18.3
0
0.3
0.4
4.3
10.3
16.4
5.6
1.9
39.2
0
5.5
25.0
33.2
0.0
0.5
31.9
3.7
99.9
0.1
2.1
0.6
19.4
16.0
25.4
25.4
7.0
96.0
6.9
37.2
25.5
4.4
5.0
0.0
1.4
1.2
81.7
Tenure
Family Optima
West Mercia Homes
Whitefriars
General needs
Care and supported housing
IMR/Mortgage Rescue/Market
rents
Leasehold
Shared Ownership
Owned by the Group –
Managed by others
Owned by others -Managed by
the Group
74.0
6.7
5.3
84.2
3.2
0.8
60.6
8.6
3.3
87.6
4.4
0.4
1.1
6.0
7.0
8.8
3.1
0.0
6.9
14.1
4.1
7.5
0.1
0.0
35000
0.0
0.0
2.4
0.0
25000
Bungalow Flat
House
65
1079
482
56
0
1682
6%
0
23
3494
7336
862
11715
39%
1083
6632
6036
195
2
13948
46%
27158
24147
20000
Breakdown of Group stock
March
2014
Bedsit
1 Bed
2 Bed
3 Bed
4+Bed
Total
% of all
homes
29828
30000
Maisonette Sheltered Very
sheltered
0
227
50
40
101
323
1115
9
0
364
0
0
8
0
0
1527
337
373
5%
1%
1%
32
Single
Rooms
449
0
0
0
0
449
2%
15000
10000
5711
5000
0
2008
2009
2010
2011
33
2012
2013
2014
2015