Connect Housing’s 2015
Value for Money (VFM)
Self-Assessment
Connect is a not-for-profit community-based housing and support provider with over
3,000 homes across Leeds, Kirklees and Calderdale. Connect is one of more than 100
housing associations (with over 750,000 homes) working to the ‘Placeshapers’ principles
of:



Putting our residents and customers at the center of what we do, ensuring they
have real influence on our organisation.
Providing more than just landlord services because we care about the people and
places where we work.
Recognising the importance of a local focus and working actively with our local
authorities and other local partners to improve and shape places at both a
strategic and operational level.
Connect defines Value for Money as doing:
 the right things (what customers want and what the business needs);
 things right (first time);
 it at the right price (not necessarily the cheapest); and
 it in the right way (the most streamlined way that meets requirements).
At the heart of the Value for Money Strategy, Connect aims to:

Embed Value for money into Connect’s culture, seeking to reinforce Value for
Money as one of the principles at the heart of everything we do and keeping
affordability center-stage in decision-making.
‘Value for Money’ (VFM) is a term used to assess whether or not an organisation has
obtained the maximum benefit from the goods and services it acquires and provides,
within the resources available to it. Achieving VFM is often described in terms of the
‘three Es’ and extended (in Connect’s approach to VFM) to include ‘Equity’ as a
fourth ‘E’:
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


Economy – careful use of resources to save expense, time or effort;
Efficiency – delivering the same level of service for less cost, time or effort;
Effectiveness – delivering a better service or getting a better return for the same
amount of expense, time or effort;
Equity – ensuring services are delivered fairly to a wide range of customers in line
with Connect’s Values and, for example, prioritising those most impacted by
Welfare Reform changes.
In line with regulatory requirements, this self-assessment reports in a way that is
transparent and accessible to our stakeholders how Connect is achieving value for
money in delivering its purpose and objectives. This self-assessment aims to:

enable stakeholders to understand the return on assets measured against
Connect’s objectives – Connect considers it reasonable to have achieved a
Return on Assets of 4.7% in 2014/15 against the Homes and Communities
Agency (HCA) Global Accounts benchmark of 5.3%

provide details on the costs of delivering specific services and show how
they compare to similar organisations – Connect is committed to continue
improving its mainly top / middle-upper quartile performance on its key
services (see Housemark VFM/Efficiency statement below), and strives to do so
at the most affordable cost.

evidence the value for money gains that have been, and will be, made and
how these have been, and will be, realised over time – In addition to wider
operational efficiencies and robust fiscal stewardship, Connect has again
increased its year-on-year recorded VFM gains from £211k to £235k in 2014/15
and has ambitious plans to deliver more in the coming years and continue to
reinvest these resources in areas that our tenants have told us are important to
them.
The Board of Management therefore believe that, as detailed in the selfassessment that follows, Connect complies with the Regulator’s Value for Money
Standard, whilst recognising that scope remains for further continuous
improvement, particularly in further developing its approach to return on assets.
In reaching the above conclusion, the Board would note that the future plans for
Value for Money reflect the Business Plan that was approved in March 2015 and
as such do not reflect any additional cost saving measures required as a result of
the Government’s 8th July Budget announcement. Work is currently on-going in
this regard and will be reflected in the next VFM update.
David Wolverson
Chair of the Board of Management
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Jenny Brierley
Chief Executive
RETURN ON ASSETS (ROA)
The affordable homes in which our residents live are the main assets which provide
Connect with income. As custodians of these assets, managing the performance and
financial return from these homes is essential to ensure that the organisation can grow
and continue to deliver social benefit for future generations.
Connect is active in developing homes of the quality and type which meet our
customers’ needs. Our new development plan recognises the need to continue to meet
demand but in addition seeks to deliver value by concentrating development of
properties in two key strategic geographical areas. This will enable Connect to combine
our asset and support offer, ensuring a coordinated approach to delivering value for
money.
Active management of our assets enables Connect to ensure that assets maximise their
contribution towards organisational objectives. In addition to measuring ROA on each
scheme, Connect has undertaken individual property appraisals on underperforming
assets or on other properties at practical intervals as permitted by tenancy agreements.
This has included calculating NPV’s of future cash flows and utilising them for a variety
of purposes.
Examples include renegotiating commercial leases, renegotiating
agreements with some managing agents and to inform invest / disinvest decisions on
properties and disposal decisions. Implementation of a stock profiling tool in 2015 will
enable Connect to implement a more pro-active approach to management of assets and
will give a better understanding of the social benefits delivered across its portfolio.
Connect actively disposes of properties which no longer make a positive financial
contribution to our business plan or the quality standards which we expect our stock to
achieve. A disposal strategy has been approved by our board and this enables officers
to make clear recommendations and progress disposals with management approval in a
diligent and timely manner and minimise the income lost whilst decisions are made.
Connect continues to deliver social value by providing a wide range of supported
housing in partnership with various managing agents. Connect recognises that this is an
area of high risk as partner organisations funding cycles are relatively short. To facilitate
management of these assets Connect has developed regular asset management
meetings to enable communication across the organisation. This enables all staff to
anticipate Asset Management issues and to formulate potential exit plans to enable a
proactive approach to the management of assets.
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What have we achieved in the past 12 months?
We currently benchmark against the Homes and Communities Agency (HCA) Global
Accounts 2014 in terms of financial return on assets. The Global Accounts report an
overall return on assets (ROA) figure of 5.3% (see table 1 below) which we are currently
using to assess our general performance:
Table 1 – HCA Global Accounts 2014 extract showing overall Return on Assets
Operating surplus* (Aggregate Income & Expenditure)
£
Depreciated Net Book Value* of housing properties (Aggregate Balance Sheet)
£
Overall ROA (Traditional Registered Providers)
2,586m
48,376m
5.3%
* Operating surplus is arrived at by taking net rents receivable and deducting attributable expenditure
** Depreciated Net Book Value (NBV) is arrived at by taking the cost of housing properties and deducting
any applicable grant and depreciation
Connect’s ROA analysis is based on the latest published accounts for the year ended
31st March 2015 which the auditors have confirmed show a True and Fair view. This
ROA analysis (see table 2 below) has been performed for the overall stock and for each
tenure type or business income stream:
Table 2 – Connect’s Return on Assets (ROA) 2014-12015
Operating
Capital
2014
2013
surplus
deployed
ROA
ROA
£'000
£'000
%
%
Rented social housing
2,302
49,918
4.6
4.6
Shared ownership
50
3,042
1.6
5.4
Commercial & Student accommodation 325
3,760
8.6
10.8
_______________________________________________
OVERALL
2,677
56,720
4.7
5.0
_______________________________________________
Based on the analysis above it can be seen that the Association’s ROA of 4.7% is
broadly comparable to the 5.3% delivered by ‘Traditional’ Registered Providers of social
housing. This year’s return is however lower than the 5.0% achieved by Connect in
2013-14 (reflecting as it does both an increase in operating costs as well as continued
investment in new and improved housing), and will therefore continue to be closely
monitored by the Board going forward.
Further investigation of benchmarking at a tenure type level is also planned for 2015/16,
but looking at the current tenure type year-on-year returns the following observations
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can be made:
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

Commercial and Student accommodation – delivers the highest return on
assets as it requires relatively little management/support and so operating costs
are low compared to turnover. The decrease in the return from 10.8% to 8.6%
however has arisen because of an increase in operating costs impacted by
necessary planned maintenance work with income remaining largely static;
Rented social housing – delivers the next highest return on assets with the
vast majority of properties being let at social rents. The return has remained
static year-on-year at 4.6% with both operating costs and income increasing
steadily. During 2014-2015 we have seen investment in our social rented
housing stock, improving the services we offer, and maximising our realised
income;
Shared ownership housing – delivers the lowest return on assets reflecting
an increase in operating costs but with income remaining largely static. This
has led to a decrease in the return from 5.4% to 1.6% with a re-alignment of
allocated management time and associated salary costs being the main
contributing factor alongside a small decrease in the surplus realised on first
tranche shared ownership sales in 2014-2015.
This year we have also been able to further develop our ROA analysis to take it down to
scheme level by better utilising the data held in our property/fixed asset database from
Real Asset Management (RAM). This has enabled us to identify our better and poorer
performing schemes from a ROA perspective with the results ranging from 185% for
our best performing scheme (a large Housing for older People scheme in Kirklees) down
to 4% for our worst (a small General needs scheme in Guiseley, Leeds). This scheme
level analysis is to be considered alongside the results from our new stock profiling
software which is coming on board during 2015/16 and is discussed in more detail later
on in this section.
How does the return on assets help to deliver Connect’s objectives?
Achieving a healthy financial return from assets is important to enable Connect to invest
in improvements to existing homes and to continue to deliver quality services for
residents. In addition maximising financial return enables Connect’s business to grow
through acquisition and development of new homes.
Reviewing performance of assets enables Connect to ensure that its assets are
orientated towards market need. Providing affordable homes that meet peoples need is
a critical organisational objective and this can only be delivered through a market
awareness of housing supply and demand. In previous years Connect pursued a
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program of “de-converting” properties that had previously been turned into small flats
(for which there was very limited demand in a local market that was over-supplied) back
into large energy efficient family homes for which there was great demand. We also deconverted a small number of properties for open market sale, re-investing the proceeds
in further regeneration work. More recently, we have identified obsolete forms of
supported housing provision, which we have remodelled or replaced with modern
facilities, disposing of the old schemes where appropriate. We continue to explore these
avenues and also to gradually reduce (at void) the Association’s stock of back-to-back
properties as these continue to represent generally poor quality accommodation that
struggles to meet the Association’s quality requirements and customer aspirations. In all
cases the proceeds from disposals are reinvested into the Associations’ development
programme.
During 2014/15 Connect was able to invest £3.1m* (2014: £3.2m) on the
acquisition / construction / improvement of housing properties including:


bringing back 18 empty properties back into use through the HCA empty homes
programme;
Developing the award winning Heatherstones Step Forward hospital discharge
scheme which completed in December 2014. This scheme provides transit
accommodation which reduces individuals stays in hospital, reduces “bed-
blocking” and allows individuals to maintain their independence whilst
recovering from hospital surgery. The scheme has received acclaim for the quality
of its offer to residents and it is also delivering financial savings for other public
authorities.
*The £3.1m net sum invested by Connect is comprised of: Gross cost of investment
£4.0m less Grant monies received £0.5m less funding from housing sales £0.4m.
Connect is also part way through completing a current pipeline of schemes and has
other projects currently in progress which include:



Empty Homes – acquisition and refurbishment of properties during 2015/16
Kirklees Care and Specialist Supported Housing – selected as delivery partner
and aiming to get on site mid-2015.
16 x 1 bed apartments at Boggart Hill Road which will be developed using an
in-house delivery model to PassivHaus standards.
Connect understands the environmental impact of properties and is committed to
achieving a high level of thermal efficiency across our stock to reduce environmental
impact and to improve residents thermal comfort. During 2014/15 Connect has
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continued to review its data on energy efficiency and has invested in improving over
500 properties during the course of the year including new boilers, new external
doors, replacement windows and thermal insulation of solid walls. Connect has a target
of delivering an average SAP level of 70 and a minimum SAP level of 55. During the
course of the year the average SAP has increased to 69 and only 11 properties do not
meet the target SAP threshold. As Connect moves towards delivery of this target,
research will be undertaken to review total property costs to ensure that they are
financially sustainable for residents.
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Connect’s Service costs and performance
Delivering affordable quality in homes and services for our tenants is one of the key
objectives for Connect. It is therefore very pleasing to report that in the introduction to
the 2015 Tenant Report (available on the Association’s web-site) the Chair of the
Connect Residents Federation (CRF) noted “Connect has worked well with the CRF,
listened to tenants’ concerns and priorities and responded in good time. The CRF has
seen improvements after a number of changes have been implemented this year.” The
annual Tenant Report is written on behalf of tenants by the CRF - Connect’s Critical
Friend, as they chose to call their scrutiny function. For 44 service commitments that
could be measured and/or evidenced, tenants on the scrutiny group found that 29
(66%) were achieved, 8 were almost achieved but with some concerns and 7 were not
achieved. Remedial action has been agreed and will be monitored by the Service
Improvement Forum (SIF) as the CRF scrutiny group is called. A recent internal audit of
Connect’s Critical Friend scrutiny arrangements found these to be robust and requiring
only minor amendments.
Meeting targets – supporting affordability
Connect recognises the importance of fiscal stewardship in ensuring the financial
viability of the association and in supporting its wider corporate objectives and social
investment. It is therefore very pleasing to report another strong financial performance
for the year with a surplus of £839,000 (2014: £1,147,000). As with last year, this
level of surplus significantly outperformed budget (£474,000) and reflects a strong
operating performance, combined with efficiency savings and the continuing savings
from the low level of interest rates. Also supporting the savings from low interest rates
has been the favourable impact arising from a re-financing exercise just prior to the
‘credit crunch’ with substantial on-going margin savings compared to current rates.
Connect’s default position at budget time is to question the current level of all major
budget headings and to push for reductions or assume 0% increases as a minimum
unless there is a compelling VFM business case supporting any proposed increase.
Further supporting this approach, and following consultation with the CRF, a rent
increase policy was agreed maintaining target rents at +2% resulting in
average rent increase of 2.1% and a further saving of approximately £194k
in rent paid by tenants (compared to rents levels if they had been set at the
maximum +5%). On the cost side with Salaries being the biggest Revenue
cost budget, and with the Retail Price Index forecast to rise at that time to
2.6%, the Board agreed a marginally lower 2% pay review for 2015/16 (also
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mindful of the previous 4 years of 1% pay reviews). Looking forward, the
Board are however mindful that surplus levels are projected to be much lower in the
short to medium term (reflecting in particular the impact of on-going Welfare
Reforms) and will therefore maintain a conservative approach to budgeting in times
of increasing uncertainty.
The Board of Management was also very pleased to receive the Homes and
Communities Agency’s Viability Review assessment in November 2014 confirming
Connect “meets the requirements set out in the Governance and Financial Viability
standard.”
How we spend your pound 2014/2015
Other social housing
activites, £0.11
Non social housing Other, £0.02 Depreciation such as
value of homes, £0.13
activities, £0.01
Improving your homes
through major repairs,
£0.03
Services such as grounds
maintenance, care
alarms and communal
offices, £0.06
Housing
Management costs
such as staffing and
offices - General
needs & Leasehold,
£0.14
Interest on our loans,
£0.14
Housing Management
costs such as staffing
and offices - Supported
housing & Housing for
Older People, £0.11
Planned and routine
repairs to your home,
£0.26
From a broader operational perspective, Connect continues to perform above or near
target in many key areas despite an ever more challenging backdrop:

Overall satisfaction with Connect remains high at 88.5% (based on
telephone surveys carried out for the Association by external consultants),
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and customer satisfaction with repairs hit a challenging target of 93% (up
from 90% the previous year).

Arrears performance was 4.0% (before write-offs) – and although this
represented an increase on the previous year (3.7%), it is nevertheless
considered to be a very good outturn in the current climate and against
the target of 5.9%.

Void loss was 1.6% - again this outturn was significantly better than
budget (2.1%), and the previous year outturn (also 2.1%).

Lettings performance was again poor with only 64% of all properties
(Supported Housing, General Needs and Housing for Older People) being
let in less than 5 weeks against a target of 75%. This in part reflects an
increase in the number of offers made per re-let (from 1.2 to 1.8) to
ensure lettings are both affordable and sustainable. Additionally, the team
is currently working to improve the void contractor performance
management framework. The overall re-let time did however improve in
2014/15, standing at 28 days compared to the 35 days achieved in
2013/14.

96% of Anti-Social Behaviour (ASB) cases reported were responded to in
line with target (1 or 7 days), down from 98% the previous year. All
emergency ASB reports that required a 1-day response were responded to
within target. 81-83% of respondents are satisfied with the ASB service
but this does drop to 74% of respondents satisfied with being kept
informed about progress of their complaint. Work including consultation
with customers is currently in hand to communicate more effectively with
complaints.
How does Connect compare?
In addition to the monthly and quarterly performance reports, and the annual Tenant
Report, Connect also uses HouseMark’s benchmarking service to help assess its relative
performance in terms of the ‘three Es’ and also to provide an independent and
transparent source of information to our tenants. Connect was one of the very first
associations to publish the Dashboard summary on their website, and Connect’s
Residents Federation (CRF) have endorsed this approach to promoting a greater
understanding, transparency and comparability of VFM performance at Connect.
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Housemark Dashboard Summary
As part of their service, Housemark provide a ‘Dashboard Summary’ to give at-a-glance
comparative information on landlords' costs and performance. The dashboard and
accompanying data enables Budget Holders to assess broader comparative
performance and to consider potential best practice examples from top quartile
performers. HouseMark’s review of the most up-to-date data currently available, the
2013/14 dashboard (shown below, and comparing with, in full, 50 other Northern and
Midland Registered Providers) concluded “In respect of most functions, specifically
responsive repairs, planned maintenance, rent arrears and collection and
tenancy management, performance levels are good, although we would note
that, broadly speaking, investment on core housing management and
maintenance activity is a little above average when compared to peers”.
The Association aims to provide good services to its tenants, preferably at low cost
providing the quality is not compromised, with particular attention given to those
services returning poor performance and high cost (see red quadrant below):
- Lettings (Poor performance, high cost - Cost per property (CPP) of £66.99 compared
to a peer group average of £46.19) - Mindful of a disappointing benchmarking
position this service was subject to a number of structural changes in 2013/2014. Staff
absences and changes required additional staff resource to be brought in on a
temporary basis which unfortunately increased costs. Re-let times are still below
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target, however 2014/15 has seen a significant improvement in performance with
average re-let times improving by 20 days. Satisfaction with this service is also high, at
95%. There is a clear plan in place to continue improving the performance which
includes developing more insight data, a new IT void management system and also a
new marketing strategy.
- Anti Social Behaviour (Poor performance, high cost - CPP of £59.57 compared to a
peer group average of £37.99) – Whilst employee costs per property have been going
down over the past three years, this is a high cost service, with more staff involved than
others. This is partly due to the number of new cases reported per thousand units being
one of the highest in the benchmarking group. It also reflects a reduction in the number
of other statutory and voluntary sector support agencies operating alongside housing in
neighbourhoods. Disappointingly, satisfaction with the service was also in the lower
quartile. Satisfaction with case handling was 78% despite the number of successfully
resolved cases per thousand units being in the top quartile. We are however pleased
that satisfaction with case handling went up to 84% in 2013/14.
Conscious of our current benchmarking position, decisive action has been taken in
2014/15 concentrating on improving performance in successfully resolving and closing
cases more promptly, improving satisfaction ratings and being clearer about the
definition of ASB to reduce the number of ASB reports that are not appropriate for
landlord intervention. Legal services have been reviewed and legal support has been
sourced from within the sector and also our LA partners. This has provided a more VFM
service, which includes legal advice and training to tackle the variety of cases that
Connect faces. We are also streamlining the ASB procedures to underpin the swifter and
more communicative ASB service.
The Association has one service area with poor performance, but low cost as noted
below:
- Estate Services (Poor performance, low cost – CPP of £74.03 compared to a peer
group average of £146.52) - Many estate services are currently outsourced meaning
tenants preference for low cost services can often conflict with service delivery
expectations. Performance in this area has been monitored by the Tenant-led Service
Improvement Forum and the Director of Regeneration. We have for the last two years
completed annual telephone surveys and the latest round of results have indicated an
improvement in resident satisfaction with the services provided. Alternative delivery
options are currently being investigated, such as establishing an in-house team to deliver
estate services (Cleaning and Gardening).
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Areas of high performance, but also high cost are also closely monitored as noted
below:
- Rent arrears and collection (Good performance, high cost - CPP of £145.41
compared to a peer group average of £86.13) - This is an area where we have invested
additional resources in recent years to help us counter the effects of welfare reform and
help our tenants cope with the changes, so we are aware that the service is high
cost. Our position as a good performer, however, reflects our investment. Nevertheless,
we are constantly reviewing our approach to ensure the costs of collecting our rental
income and helping our tenants negotiate the rapid changes in the benefit system, is
proportionate to the benefits achieved. For example, during 2015/16 we have invested
in new software which will deliver efficiencies and reduce the need in the foreseeable
future to increase staffing costs further, despite the increasingly challenging climate.
Over time we also hope to reap longer term returns on this investment. The service
currently also assists tenants with their personal finances and budgeting which is
expected to reduce our need to take tenancy action in the future and equip tenants to
cope better with Universal Credit due to start soon in the local authorities where we
operate.
- Responsive repairs and void works (Good performance, high cost - CPP of £821.47
compared to a peer group average of £800.79) - In 2013/14 the previous downward
trend in cost was reversed, whilst completion times increased. The pressure on costs
and quality was recognised prior to this time and led to a strategic review of
maintenance delivery, resulting in Responsive repairs being brought entirely in-house in
October 2014 (voids works remaining with external contractors). The associated staff
re-structure that accompanied this change will impact significantly on overhead and
employee costs, however the full impact of this in terms of benchmarking figures will
not be seen until the 2015/16 report is published.
- Major Works and cyclical maintenance (Good performance, high cost - CPP of
£1,319.58 compared to a peer group average of £1,107.67) The higher than average
costs for this area of work reflect the Board’s wish to invest in homes to maintain high
standards. It is noteworthy that Connect has maintained satisfaction with quality of
home, whilst the general trend amongst the peer group has been negative. The trend in
costs is however also upwards. This reflects not only the Board’s investment plan, and
the ageing nature of the stock. The association has been taking a long term view, trying
to keep future maintenance costs as low as possible by investing in the stock early as to
not put additional pressure on future responsive repairs budgets.
The updated dashboard 2014/15 is expected to be available from November 2015 and
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will be used to prioritise for future review any services which fall in the red quadrant of
the dashboard or where performance has dipped, as well as flagging for VFM challenge
those areas in the orange quadrant or areas returning lower quartile performance.
Housemark VFM/Efficiency Summary
Housemark also produce a VFM/Efficiency Summary for Connect that provides a high
level overview of the relationship between cost, performance and trend across the
main business activities for which they can benchmark. As with the Dashboard
Summary this is benchmarked against 50 other Northern and Midlands based
Registered Social Housing Providers for the latest widely available data (2013/14). The
analysis is consistent with the dashboard, showing a picture of relatively high costs
(mid-lower and bottom quartiles) coupled with a relatively high (mid-upper and top
quartile) level of quality. The key aim of the Association is to achieve high
quality services (exceeding the target to achieve at least mid-upper level
performance), Connect is always looking for ways to achieve this performance
at a lower cost.
Efficiency summary for Connect Housing
Business activity
Cost KPI
Cost KPI
quartile
Quality KPI
2013/14 2012/13
Overheads
Overhead costs as % adjusted
turnover
Major works & cyclical
maintenance
Total CPP of major works &
cyclical maintenance
2013/14
Overhead costs as % direct revenue
costs
% of tenants satisfied with the overall
quality of their home
% of dwellings that are non-decent
% of tenants satisfied with repairs and
maintenance
Responsive repairs &
void works
Total CPP of responsive repairs
& void works
Average number of calendar days taken
to complete repairs
Average re-let time in days (standard
re-lets)
% of tenants satisfied with the service
provided
Housing management
Total CPP of housing
management
% of anti-social behaviour cases
resolved successfully
Current tenant rent arrears as % of rent
due
Estate services
Total CPP of estate services
% of tenants satisfied with their
neighbourhood as a place to live
Quartile key
Upper
quartile
Middle
upper
Middle
lower
Quality KPI
quartile
Lower
quartile
Page 14 of 26
2012/13
Overheads – costs are bottom quartile, but present a mixed picture when looking at
the detail. Finance and office premises costs are better than median, with finance also
better than the year before. The picture is similar when comparing overheads against
turnover and per user. In contrast, the association has high overheads in IT and
communications reflecting Board decisions to invest in both areas. The rationale here is
to deliver a more efficient and effective internal and external communication, providing
alternative means of access to our services for customers 24/7 (including Facebook and
other social media options) , mobile working facilities for staff providing greater
efficiency and helping to maintain customer satisfaction even at a time of austerity. In
providing our customers more self-service options this allows us to allocate the more
expensive personal contact to those who need it.
Responsive repairs – as noted above, costs are still relatively high in comparison to
other providers, but it is pleasing to see that tenant satisfaction with repairs and
maintenance remains top quartile. The Board had previously approved a new
delivery strategy based on the delivery of voids maintenance as an integrated part of
Lettings, and bringing in house the delivery of reactive repairs to an expanded
maintenance team and this new approach came into play in mid-2014. In the short to
medium term this is expected to result in a reduction in direct maintenance costs,
alongside further improvement to quality and customer satisfaction.
Major Work and cyclical maintenance - it is pleasing to note that tenants’ satisfaction
with the overall quality of their homes remains upper quartile. Costs do however remain
relatively high in comparison to other providers reflecting the Board’s investment
commitment and the increasing age of stock. Plans are in hand to further benchmark
maintenance costs, both on the reactive and the planned side, with other internal Direct
Service Organisations (DSO) and purchasing organisations through the Direct Works
Forum and Efficiency North.
Housing Management - It is pleasing to see that the Association remains top
quartile in terms of tenants satisfied with the services provided and in terms of rent
arrears performance. The overall high housing management cost per property does
however reflect investment in key areas for the business (managing lettings,
supporting tenants through Welfare Reforms with the Money Matters Team (see
below), rent arrears, ASB) and plans are in hand to increase efficiencies and reduce
costs going forward.
Estate Services – Although top quartile in terms of cost, tenant satisfaction with this
area is below average and options are being considered which might improve
satisfaction at an affordable cost.
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Connect’s VFM achievements and plans for the future
Maximising VFM through better use of technology
One of the key ways Connect looks to maximise VFM gains is by investing heavily in
technology which helps both our staff and tenants. Some examples of key projects
are listed below:

Expanded use of the electronic document management (EDM) system – the
first phase provided much more immediate and secure access to our tenant
documents, and freed up significant office space. The next phase has been
implemented within the Finance department incorporating Work Flow for invoice
processing and has removed a paper driven process that impacted across the
whole organisation, improving payments to suppliers, traceability of invoices in
addition to tightening up on other related processes e.g. invoice matching with
orders.

Mobile working – the first phase of this project was completed in 2013/14
allowing a much larger number of staff to have immediate mobile access to
tenant information (through EDM). Following a re-negotiation of the mobile
phone contract all 140 mobile phone users (up from the previous 50 users) now
have increased capability with access to Corporate Email / Corporate Intranet
systems / Corporate Files / Customer Information in addition to access to the
world of Mobile Apps and Internet. The new contract showed a slight reduction
in on-going revenue costs despite the vastly increased capabilities. This also
enabled the newly created Direct Service Organisation (DSO) service to be
mobilised in October 2014 with job automation via QLx Task Centre / Reporting
Services replacing previously used job sheets for the Neighbourhood Ranger
Service. The planned introduction of an integrated IT package for the DSO,
including a mobile working facility, will reduce/eliminate duplicated data entry on
job orders and provide significantly enhanced performance data allowing the
more effective planning and deployment or resources.

IS infrastructure upgrades - a major phase of investment was completed
during 2013/14 and this has achieved a significantly expanded and updated
computer infrastructure so staff can work more effectively and the system can
deal better with current and future requirements. Following the purchase of a
new office in Dewsbury (21 Bond Street) further projects that hinged on this
office space are now moving forward. Replacement of the WIDE AREA
NETWORK has begun which will provide a significantly increased level of service
Page 16 of 26
to all end users despite office location. This will improve our business continuity
planning allowing for our Disaster Recovery in Brighton to be relocated to our
own offices in Dewsbury improving our Recovery Point and Recovery Time
objectives as well as a reduction in costs for the present colocation service.
Despite the improvements the Wide Area Network project will be completed on a
costs neutral basis.

The Wide Area Network completion will enable upgrades to our telephone
system which will increase capabilities to end users as well as providing new
technology to allow Connect Housing to take advantage of differing ways of
customer communication, providing the ability to channel shift away from the
traditional expensive forms of communication mail, telephone, face to face to
less expensive channels such as ‘live chat’.

Implementation of WIFI at office locations will reduce costs for mobile data usage
as well as providing tenants with internet access.

Planning and upgrades to our tenant database QLX – now upgraded regularly
and an audit of Connect’s use of the database confirmed there is a lot that we
can do to make much better use of our database and our ability to report from it.
A review of the IS team has identified 2 key new posts that will assist end users
and overall best practice use of IS – we now have a Software Support Analyst
post which has a particular focus on working with end users and QLX, plus a
Database Administrator post with a focus on reporting and the automation of
tasks currently carried out manually.
Further examples of Connect’s VFM achievements and reinvestment of
savings/gains
In addition to the savings/gains outlined above, Connect also maintains a wider register
of VFM savings and gains and encourages all staff and tenants to record details via the
‘Dear Prudence’ email address. VFM savings/gains of £235k (including prior year
recurring amounts) were recorded during 2013/14 (compared to £211k in 2012/13),
including the following:
o £50k estimated annual saving from Council Tax exemptions agreed by
local councils;
o £16k grant funding towards management development training;
o £12k saving (including £6k grant funding) relating to Neighbourhood
Enterprise and Skills activities;
o £10k saving related to utility procurement.
Page 17 of 26
The Board remains committed to providing a significant level of Social Investment
which is supported through sound fiscal stewardship and part funded by VFM
savings/gains, and examples of this are noted below:

Economic Inclusion – the Association continues to invest heavily in this area
with £208k invested in the Economic Inclusion team (known as Money
Matters) to help minimise the adverse impacts of Welfare Reform on tenants.
The team helped almost 238 people, with at least 4 evictions, 40 court
applications and 21 notices avoided. The table below lists the savings achieved
for clients of this service and it is pleasing to note that the amount saved has
more than doubled year-on-year from £164k to £345k.
Type of saving
Amount this year
Total annual amount from
DHP awards from Money
Matters team only
Total annual amount from
DHP awards from other staff
£26,849.01
Comparison to
2013/14
No available comparison
£26,927.05
No available comparison
Average weekly amount of
additional benefits tenants
received
Average annual amount of
additional benefits tenants
received
Total annual amount from
additional benefits tenants
received
Total received from Trust
Funds
Total other write offs and
savings – DRO’s, HB back
dates, bill reductions etc.
Total to date
*discount from total as savings from
wider team
£97.72
£102.53
*discount from total as included
already in total annual amount.
£5081.56
£5331.41
*discount from total as included
already in total annual amount.
£137,202.00
75,739.76
£18,836.69
£8372.40
(includes a single trust fund payment of
£8937)
£162,197.20
£38047.58
(includes a bankruptcy saving of
£80,200)
£345,084.90
£164,469.54
However, an almost as significant (if not greater) benefit is the reduction of stress, worry
and anxiety (caused by unmanageable debt, threat of loss of home and poverty-linked
issues) experienced by almost all clients of the service. The social impact (i.e. not actually
financial) is indicated by a rise in wellbeing by receiving help to deal with debt (and the
associated stress caused by door-knocking by lenders, phone calls demanding payment
and bill-related letters that often remain unopened). An indicative study using HACT’s
Wellbeing Valuation calculator showed that, for every £1 invested by Connect, £3.40 of
social value was generated for Connect’s customers (i.e. over £700k of social value for
Page 18 of 26
an investment of £204k). However, this is most likely an underestimate and more postservice surveys need to be done to gain a more accurate representation. But clients
themselves actually express the impact best:
Comments Given on Post-Service Satisfaction Surveys:

“I found the service a life-line. It really helped to have someone with excellent
knowledge of current systems and legislation. Less debt worry. Feel much better
for that! That’s a big help in reducing my stress.”

“I have schizophrenia and can’t think. Stressed at government policies I don’t
understand. Good to find someone who is sensitive and does understand.”

“The help I received from (staff name) was fantastic – there was not anything left
out. She was professional and also had heart to understand me. She made
everything simple so I could understand it…. there are not enough words to
express my gratitude.”

“I was at my wits end. I never had enough money to have the basics in life.
With (staff name)’s help I now manage my bills and still have enough to buy
healthy foods instead of anything for £1 just to fill myself up.”

Community services – in line with a commitment to strengthen investment in
People and Neighbourhoods, £402k has been committed to involving more
than 500 young people and families in challenging and creative activities,
enhancing health, well-being and life chances. This includes youth diversionary
activities and family support, the investment in becoming a dementia friendly
organisation and the Association’s investment in reducing social isolation. These
activities are targeted at some of the most vulnerable communities or groups of
people to provide early intervention. Connect invests a significant proportion of its
surplus in such activities and often works closely with statutory agencies such as

police, education, and health, providing value not only to service users and
Connect’s communities, but also to such statutory agencies.
Energy Advice – the Association has invested over £74K to tenants in minimising
their fuel bills. This work has also been supported by the Energy Efficiency Stock
Investment review. The SAP assessments for all low scoring properties have now
been reviewed, with the result that we are now just a handful of properties away
from meeting our EE Strategy floor target of SAP55, and our average across the
stock is now SAP69. Investment is now better targeted at the lower scoring
properties.
Page 19 of 26

Neighbourhood Enterprise and Skills (NESC) – the Association has invested a
further £52K in supporting tenants to access training, work experience and
jobs with Connect. A Value for Money review of the NESC service concluded it had
a positive impact both on Connect as a business and a social wellbeing impact on
customers. Connect mainly benefited by the NESC delivering employment resources,
training, partnership development and help for the recruitment and training of
apprentices. Clients who received training and 1:1 advice benefited by help and
encouragement towards building confidence, increasing skills and gaining workrelated training, self-employment and actual employment. Using the limited
information available, an indicative and approximate study using HACT’s Wellbeing
Valuation calculator shows that, for every £1 invested by Connect, £1.40 of social
value is generated for Connect’s customers – see service user summaries below.
Further work would be needed if a more accurate and evidenced assessment was
required, however it is sufficient to show that the service is generating benefit (even
if for a relatively small number of customers), given the limited resources that
Connect has and the intensity of the work required to move people towards and into
work.
Mr. C – Setting up and Building Businesses
The NESC assisted Mr. C to gain free elocution lessons from an ex-tenant who was
setting up a business as a voice coach. Mr. C had his own business but even his wife
said that she could not always understand him and was concerned that he was losing
potential business because of his lack of clear diction. After his first lesson, even Mr. C
noticed the difference, and so did his wife. Mr. C said he felt more confident about
vying for business over the phone following his sessions.
Mr. M – Securing Employment
Whilst Mr. M was at university, the NESC helped him to find part-time work at a local
pharmacy. He later returned to us for help to complete an in-depth application for an
internship with Roche, an international pharmaceutical company.
Mrs. P – Single Mum Skills Development
The NESC worked with Mrs. P, a Polish single mum who wanted to increase her parttime work to full-time hours. She attended our computer classes and a ‘Goals’
workshop. As a result, she gained more confidence to ask for help to reduce her
isolation and increase her English. We struggled to find an ESOL class to fit in with her
work, so the NESC suggested that, as Mrs. P liked singing, they could attend the
community choir together and Mrs. P would get a chance to meet people. Mrs. P has
blossomed, as has her English and her singing.
Page 20 of 26
VFM PLANS
The following section summarises a number of key VFM actions/projects planned for
2015/16:
Return on Assets
To progress with having a more robust and systematic understanding of our assets the
Association has invested in an asset evaluation/stock profiling model (4point2 ‘Insight’)
and the process of populating this from our internal data sources is well underway. In
August 2015 we had a first version of this software ready to review with initial data, and
the next stage is to refine and further populate the data with a view to having useable
outputs by the third quarter of 2015-2016. This software will allow us to analyse the
performance of our stock down to scheme and property level against a range of
indicators, providing us with Net Present Value (NPV) and Internal Rate of Return (IRR)
calculations. In addition to measuring financial performance Connect has included
neighbourhood indicators which will give a holistic picture of asset and neighbourhood
performance and contribution to organisational objectives.
Utilising this tool will allow us to further develop our understanding of how our stock is
performing in order to identify our better and poorer ‘performing’ schemes, assess how
they fit with our organisational objectives, make the operational decisions required
around maintenance and capital investment and the tougher strategic decisions around
retention (keep for existing use), conversion (develop for a different use) or disposal of
stock. We will include some of these findings in our Self-Assessment for 2016 when we
will also have another year of Return on Assets analysis at business income stream level
from which to draw further year-on-year comparatives.
Service costs and procurement
A key area of focus is the further rollout of the Direct Service Organisation to
maximise VFM on maintenance costs. A post implementation VFM assessment is also
planned for this area covering the 2015/16 financial year. The Association will also
continue to promote VFM and the greater use of benchmarking throughout the
organisation, with focus on integrating the use of this information into the
budgeting process in order to promote greater cost and performance challenge. The
Association has only recently been successful in recruiting a dedicated Procurement
Officer, and this post holder is expected to play an integral role in a number of VFM
reviews planned for the coming year including:
Page 21 of 26
-
Spend analysis review
-
Review of internal purchasing policies and procedures
Review current situation for outsourced garden and cleaning services and assess
alternative options such as bringing these services in house. Explore options
around apprenticeships, volunteering and offender rehabilitation programmes
which could support sustainability in local communities
Maintenance contractor reviews
Pension provision (straddling 2015 and 2016)
Insurance tender
Audit tenders
-
Maintenance VFM projects and plans
 Introduction of early evening and Saturday morning appointments and
emergency cover by the in-house team will mean greater flexibility for tenants,
along with reduced costs associated with works being undertaken by the outof-hours service provider.
 Introduction of recharges and paid for services will help improve the fairness of
repairs services further, providing staff with additional tools and promoting
appropriate tenant responsibilities.
 Earlier intervention in cases (properties/tenants) where the demand for repairs
services is excessive. Proactive action and tenant education should reduce


significantly the demand on the service from a significant minority of
properties.
Review of how out of hours emergency calls are handled and responded to, to
ensure we are only doing true emergencies.
The organisation and roles within the Customer Services team are being
reviewed to ensure efficient and effective service delivery to tenants, and
similarly efficient deployment of operatives. We also will continue to develop
the roles of the Repairs Technicians as multi-trade operatives, with the aim of
increasing the “first time fix” rates, operational efficiency and customer
satisfaction.
Other VFM projects and plans
 Treasury review of future financing to support additional housing development
(straddling 2015 and 2016).
 Office relocation from Huddersfield to Dewsbury (straddling 2015 and 2016).
 Independent VFM review of the Health & Well-being 12-month pilot project.
 Plans to expand volunteering in our support services to enhance services and the
support we are contracted to provide, enabling us to deliver a broad range of
activities that support skills and capacity building.
Page 22 of 26

Plans for a proactive drive to recruit more people into our pool of casual workers
– so we can fill gaps quickly and cost effectively and maintain a good quality
service.
HOW THE BOARD GAINS ASSURANCE ON VFM
Connect’s purpose and vision set the direction for the Value for Money Strategy,
which in turn helps to inform our business planning cycle. The objectives agreed in
the Business Plan annual update are used to inform how we allocate and prioritise
resources on new and existing activity. A strong VFM focus (including 2 Board
members designated as VFM Strategic Leads) helps to minimise the gap between
the objectives the Association wants to achieve and the limited resources available
to meet these aims.
Connect Housing has a Value for Money Strategy which was updated in
September 2015 and this is supported by other key strategies including Risk
Management, Asset Management, Development, Responsive Repairs Strategy,
Information Management Strategy and the Human Resources Strategy. The
Association also makes use of the Annual Tenants Report in addition to these
strategies to determine how we decide on investment and how we will increase
the VFM of services we provide.
Linking to the three overall corporate objectives, Connect’s Business Plan aims to
deliver affordable quality in homes and services, and Connect’s commitment to VFM
helps to ensure:
 resources are available to achieve the association’s Business Plan objectives and
key priorities;
 a balance between cost, quality and performance;
 A high level of customer satisfaction.
Connect remains committed to the delivery of affordable quality in homes and services
and keeping affordability center stage in all its decisions. The Board of Management is
confident that the various processes employed provide a robust framework to ensure
successful delivery of VFM – see Appendix A for more detail.
Page 23 of 26
FURTHER INFORMATION
Further information on VFM at Connect can be found on our website noted below.
Here you will find further VFM information including benchmarking information on
the cost of key services provided by the Association as well the Association’s Value
for Money Strategy and the ‘Dear Prudence’ feedback form so you can let us have
your feedback and thoughts on how we can continue to improve on VFM.
http://www.connecthousing.org.uk/VFM/ValueforMoney.aspx
Page 24 of 26
Appendix A
Approach
Governance
Delivery Vehicle


Championing affordable quality as integral to
the purpose of the organisation.
Stated in our Vision
Strategic Leads for VFM at Board and
Management Team
Tenant Scrutiny / Tenant inspections
Connect Residents Federation through the
Critical Friend Policy, Service Improvement Forum
and Board Representatives.
Tenant Board members


Championing strategic tenant involvement in
the Business Planning process and resource
allocation.

Return on Assets
Assessing the opportunity costs of decisions
about new supply, improved services and
housing stock, and neighbourhood
investment
Investment decisions are underpinned by a
sound business case.



Investment strategy;
Whole life costings;
Community Sustainability Index

Cost Benefit analysis with supporting business
case.
Service costs and performance
Budgets are aligned to objectives and priorities,
so that there is an effective use of resources.
A zero-increase principle to budgeting is used
to evaluate the basis of spending, rather than
simply uplifting budgets year on year.
Budget holders have clear accountability and
identify and act on excess spend
Costs and performance are understood and
benchmarked and service areas where high
costs are combined with average or poor
performance are targeted for service
improvement activity.
Income protection measures in place to ensure
income lost as a result of Welfare Reform
measures is minimised.



The Business Planning and budgeting cycle.
Staff and tenant involvement in cycle.
Budget pack requires evidence of how the
budget has been constructed.





Monthly and quarterly reports and Board of
Management and Management Team scrutiny.
Annual and quarterly benchmarking
VFM working group
VFM reviews
VFM register




Welfare Reform Action Plan
The Business Planning and budgeting cycle
Money Matters (Economic Inclusion) team
Robust rent accounting approach.


Involvement in rent policy
Involvement in procurement panels and
contract review meetings.
Tenant Inspection
Community Priority Fund
Housemark Dashboard on website
 Tenant Involvement and
information
Tenant involvement in service design and
scrutiny of cost and performance helps achieve
VFM because services reflect what tenants
want and being held to account ensures
continuous improvement.




Critical sources of intelligence include:
- Tenant consultation and feedback
- Tenant profiling
- Tenant scrutiny group




Get Connected
Annual ‘What Tenants Want’ report
Annual customer profile
Dear Prudence email
Service Improvement Forum (SIF)
Page 25 of 26
 Staff involvement


Optimising systems and processes to improve
productivity and free staff to add value by:
 using IT to streamline processes
 engaging staff in improving work
processes
 providing methods by which staff can
make suggestions for improving VFM
that are taken seriously



Information Management Strategy
Service Improvement Manager client-side lead
on corporate projects
Dear Prudence email
Catch-up Connect staff forum
Intranet VFM site
 Procurement
 Sound procurement practices are central to
securing VFM
 explicitly seeking to obtain best value,
assessing cost & quality in tendering
 embracing partnering and collective
procurement, including considering
shared services
 involving customers in procurement
and monitoring
 innovative contract packaging
 encouraging ‘whole-life’ costing in
procurement decisions looking at the
full, long-term impact on costs
 Acknowledging that in-sourcing (e.g.
bringing a service in-house that is
currently contracted out) and
outsourcing can both provide better
VFM.
 including the option to use
professional procurement advice as
appropriate




Connect has a robust Procurement Strategy
Procurement 4 Housing membership
Recruitment of a dedicated Senior Procurement
Officer

Involvement in a range of local and regional
partnerships.


Tendering pack on the intranet
costed services
addressing issues of probity and
equality
 Partnership working &
external funding


Collaborative working is increasingly
essential to achieve ‘more for less’ and
achieve greater impact in communities.
Attracting additional funding and
income can help sustain our ‘added
value’ services.
Page 26 of 26