value for money report -...

Value for Money Report2016/17

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Chief Executive’s Overview

Our Value for Money approach

Financial performance and benchmarking

Appendix 1 – Performance against 2016/17 Value for Money initiatives

Appendix 2 – 2017/18 Value for Money priorities

Delivering Value for Money through our strategic priorities

Providing more homes

The quality of our properties

The quality and responsiveness of our services

Our people and potential

Systems and technology

Innovation and influence

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In terms of driving efficiencies and improving quality and performance, we have continued to make progress during 2016/17 but there is still more we plan to achieve. Our ambitious strategic plan sets out where we are seeking to invest in and improve our services and deliver even greater Value for Money up to 2021 and beyond.

In June 2016, we seriously considered the option of merging with another Housing Association but ultimately we decided not to proceed. VFM considerations were core to this decision. We concluded that we could deliver more, be more effective and efficient, maintain higher quality standards and have a greater impact by remaining independent.

In November 2016, we took an important decision to sell our Home Care business as a going concern to another provider and this was achieved by March 2017. It had become increasingly challenging to deliver financially viable Home Care services while maintaining our high standards of service quality and, as a result, a disproportionate amount of senior management time was required to support this. Having rationalised our activities, we believe we are now in a better position to focus on fulfilling our core purpose and deliver value through our two core service areas, Retirement Housing and Extra Care.

We are pleased to have reported a strong financial performance for 2016/17, our operating surplus of £32.3m exceeded target and reflects a number of efficiency and performance improvements particularly in how we re-let our vacated properties. In the year we reduced our corporate overheads by £2.4m to £18.5m. We are also continuing to meet the expectations of our customers; 97% of our care customers and 87% of our housing customers told us that they are satisfied with the service they receive.

We are encouraged that, at £5,790 per unit, our headline social housing costs for 2016/17 have remained broadly in line with the £5,760 sector average for equivalent types of older people’s housing. Our headline cost would be £350 per unit lower if it weren’t for the additional £7m we invested in our properties in the year to improve quality. We will continue our work to better understand how our costs compare to similar providers’ and we have joined a one year pilot to develop a sector wide efficiency ‘Scorecard’ which we anticipate will be launched fully in 2018.

As we look to the future, the need for us to make the most of our limited resources and drive VFM improvements to deliver quality and sustainable outcomes has never been more apparent. The Board of Housing & Care 21 has agreed an ambitious strategic plan to take us to 2021 and beyond that has VFM at its core. This report explains how we will aim to deliver VFM through our strategic objectives.

In last year’s VFM report we committed to a number of targets and initiatives to improve our VFM performance. We report on our progress in delivering those commitments in this year’s report and also set out our priorities for 2017/18.

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Housing & Care 21 continues to see Value for Money (VFM) as a key strategic priority and we have committed to challenging ourselves to make the most of our limited resources. As we strive to improve performance, raise standards and achieve greater return from our assets, VFM remains at the heart of our decision-making and performance review processes.

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o u r v a l u e f o r M o n e y a p p r o a c h

To achieve our VFM objectives, we must be clear about what VFM means as we seek to further embed a culture of continuous improvement throughout the organisation.

At Housing & Care 21 VFM is about cost effectiveness, which is getting the right balance between cost, quality and performance. As well as taking a strategic approach to VFM, we aim to embed VFM within our day to day decision making and performance review processes. We recognise that VFM can be achieved at all levels and in all areas of the organisation.

VFM is core to our three strategic principles of ‘21’, ‘Better’ and ‘Experience’.

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Value forMoney

ExperienceBetter

Achieving the right balance between cost, quality and performance

Investing in our assets and service

delivery models

Continuous drive for improvement and innovation

Tailored, good quality services that meet customers’ needs

figure 1: housing & care 21’s strategic principles

21

We are committed to providing a modern, forward-thinking 21st century service. This includes updating and modernising our existing housing, as well as developing new and innovative property designs and service models for the future.

Better

We will strive for continuous improvement and innovation in all that we do. We will never become complacent and will constantly challenge ourselves to do better and achieve greater VFM.

experience

Our aim is to provide a consistently good service and a great customer experience for all the people we serve. We will seek to engage and empower residents to make choices, and devolve decisions to local staff whenever possible and practicable.

improving value for Money

To improve our VFM performance, we will strive to do more with our money and assets while delivering better outcomes in line with our core purpose and strategic priorities.

VFM is sometimes about identifying ways to reduce costs and spend less when delivering our services. This may also be demonstrated by reducing waste or spending more carefully. For example, in 2016 our Procurement Team re-tendered our contract for printed stationery which resulted in a change in supplier, on-going annual cost savings of circa £100k and a significant improvement in the quality of service we receive.

Improving VFM is also about delivering a better quality service or increased outputs without the need for additional cost. This could be achieved through changing the way we work, adopting more efficient processes or improving our customer service approach. For example, we have reviewed the role of the court manager service, incorporating feedback from residents, and have started to take steps to devolve more responsibility to this important frontline service. This will allow more flexibility and decision-making at a local level, and will enhance the service we deliver to our residents while reducing central overhead costs.

VFM can also be improved by spending more money and investing more time and effort in order to achieve better outcomes or reduced costs in the future.

This could be about investing in new technology or additional staff training, for example. We have taken the decision to invest £27m in our existing properties each year to improve their quality and appeal and to bring them up to a more modern standard. As well as providing residents with a better place to live which is fit for the future, we invest in order to safeguard demand for our housing and to limit the requirement for the increased maintenance that is associated with ageing properties.

‘Investing to improve’ underpins Housing & Care 21’s approach to VFM and is the overarching theme of our key strategic priorities. The following pages set out how we will achieve our objectives and measure progress.

The quality of our exisitng properties

innovation and influence

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1Our key priorities for investment and improvement are:

Providing more homes

our people and potential

value for Money

The quality and responsiveness of our services

systems and technology

Ultimately the success of Housing & Care 21 is dependent upon providing satisfaction to our residents.


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As a Registered Social Landlord that has had the benefit of past and future access to public funding, it is important that we play our part in helping to meet the demand for new provision of affordable housing for older people of modest means. VFM is, in part, about using our financial strength and capacity to its maximum potential.

We have ambitious targets to build 2,100 new Extra Care and 210 Retirement Housing properties by 2021. Beyond 2021, we aim to build 800 new properties each year. We will also pursue opportunities to acquire properties from other providers. As our core purpose is to provide services for older people of modest means, we are committed to ensuring that at least 70% of our newly built properties will be classed as affordable housing for either rent or shared ownership. We will also offer some properties for outright purchase.

In 2016/17, we successfully completed the construction of 113 new Extra Care properties as planned, with 97 affordable rent and 16 shared ownership properties at two courts: Quarry House and Laurel Gardens. In the year we sold an equity stake in 76 Extra Care properties (including 16 shared ownership staircasing sales) and received sales proceeds of £6m. We generated £1.4m profit from the sale of these properties and this will be reinvested to support our future development plans. The sales margin achieved from the properties that were sold averaged 18.3% in the year compared to a target of 15.8%. We continue to achieve sales values at or above the levels we expected when initially approving the new investments.

In early 2017, we successfully renegotiated our gearing covenant terms with our financial lenders in order to maximise our financial capacity to deliver even more new homes. As a result we significantly enhanced our borrowing headroom - from £165m to £380m -

which will allow us to borrow more over the coming years to fund an increased pipeline of new property development or property acquisitions.

In January 2017, Housing & Care 21 received confirmation from the Homes and Communities Agency (HCA) that we have been allocated £20.45m of grant funding under the Shared Ownership Affordable Homes Programme (SOAHP) 2016-21. This financial support, alongside the planned investment from our surpluses, sales proceeds and increased borrowing, will contribute to us building 16 courts comprising around 1,050 new properties for older people of modest means. We will also continue to seek additional grant funding through the Continuing Market Engagement programme to ensure we can deliver our development target of 2,310 new properties by 2021.

Before making decisions to invest in the construction or acquisition of new properties, our Investment and

Resources Group (IRG) reviews a range of financial and non-financial information to ensure we will achieve VFM, and that we are investing in the best opportunities available to us. This includes considering whether opportunities are financially viable and consistent with our appetite for risk, have a strategic fit and sufficient local demand. The Group also looks back at previous investment decisions and considers whether outcomes have been as expected and if there is anything we can improve on in future, such as changes to the communal spaces and heating designs.

Providing more homes requires significant investment and it is important that we make the most of the resources available to us. When deciding who to spend our money with, Housing & Care 21 uses the Delivery Partner Panel framework developed by the HCA which allows us to procure contractors as efficiently as possible through the use of a mini competition process. The framework provides prequalified and competent

contractors whose costs have been benchmarked through the framework procurement competition. We also use external cost consultants who advise us on the validity and cost structure of the bids we receive for our new development contracts, providing us with additional comfort that we are achieving VFM.

Our specialist Property Development Team is committed to continuously improving the design and quality of our new buildings so that we can achieve more from our investments and continue to meet the needs of older people. In 2016, we revised our design brief to reflect feedback from both residents and staff on how we could improve. We also incorporated best practice within the sector, including aspects of dementia-friendly design. We are dedicated to reducing the level of problems we have experienced at newly built courts in the past and we aim to incorporate lessons learned into new designs. During 2016, for example, we engaged specialist mechanical and electrical consultants to simplify our heating designs to minimise potential issues and to reduce our dependency

on complex communal systems. We also altered our lighting specification to reduce energy consumption and issues with over heating. We reduced the amount of communal space incorporated in new courts, as well as removing the centralised opening of windows and underfloor heating. These changes will be more cost effective in terms of both initial construction and ongoing upkeep and maintenance.

Another important aspect of improving our VFM performance is the way in which we embrace innovation in design and construction, to ensure that we continue to develop cost effective and efficient homes which are suitable and affordable for older people of modest means. This may include, for example, the use of off-site manufacture, the use of modular design to address site access challenges and speed of construction, incorporating more flexible communal spaces and new technologies, providing more attractive bathrooms and kitchens as well as undertaking continuous specification improvement in order to improve the energy efficiency levels of our properties.

We are proud that during 2016 some of our newly built Extra Care courts were recognised for awards which are prestigious within our sector and we believe that this recognition shows we deliver value through our design and development process:

• Meadowfields was shortlisted nationally in the ‘Older People’s’ category of Inside Housing’s Top 60 Affordable Developments Awards, which celebrate success and innovation in housing development

• Limestone View won ‘Best Inclusive Building’ and Meadowfields was highly commended in the same category, at the Local Authority Building Control Yorkshire Awards

• Chamberlain Manor was named ‘Best Housing Development’ in Ashford Borough Council’s Construction Awards.

figure 2: Historic housing development

Source: Housing & Care 21 business plan

providing more homes

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Investing in our properties allows us to provide homes which are suitable for the next generation of older people and leads to better outcomes for residents. In turn, we are able to protect our long-term income streams by creating a more sustainable demand. We also deliver social value, since our provision of housing reduces the burden on higher cost services and provides an opportunity for downsizing and the release of family housing.

We will invest more of our resources than ever before in order to improve the quality of our properties for the benefit of our residents. We have introduced new enhanced property standards and are committed to invest £27m each year up to April 2021 to bring all of our properties to the modern standard that our residents expect of their home. All courts have published to residents a five year investment plan setting out plans for maintenance and improvement works.

Our enhanced property standards:• All kitchens and bathrooms in our

properties will be no more than 20 years old

• All courts will have every 7 years a design-led communal makeover

• Courts will have an EPC energy efficiency rating of at least C

In 2016/17, we invested £27.3m in our properties and successfully completed 328 jobs as part of our Stock Improvement Programme (SIP), compared to a target of 350. 9,500 residents benefitted from improvement works to their court or property.

In the majority of cases, we carry out improvement projects for an entire court within a single period of works and, where practicable, we combine the elements of the court’s investment plan so that they are completed at the same time. We believe

that this is the most efficient approach in terms of delivery and it also ensures minimal disruption for our residents.

Kitchens and bathrooms

The £27m investment in the year included £10.1m on new kitchens and bathrooms across 71 of our courts. Currently 72% of our kitchens and 84% of our bathrooms are under 20 years old.

We have consulted nationally with our residents over the products we install and we have incorporated our residents’ views into our kitchen and bathroom designs. This has included introducing, where possible and appropriate, an eye-level and side-opening oven, carousel units and drop down baskets in kitchens, a range of tap options and LED lighting. Our new bathrooms consist of easy access step in showers to replace the old baths, as well as appropriate aids

and adaptations (for example grab rails), dependent on the needs of the specific resident concerned. Where possible, we work with the resident of each property to prepare an individual design for their new kitchen and bathroom. We believe that this approach allows the best possible outcomes from the investment we are making in meeting the needs of older people.

The replacement of kitchens and bathrooms is a major aspect of our investment plans and will contribute to us maintaining a contemporary offering for our residents. In early 2017, we completed a procurement process to establish six regional supplier frameworks to support us in delivering these planned works. VFM was the most important consideration when deciding which suppliers would be selected to work with us for the next five years. We allocated up to 30% of our scoring based on

the unit price that the supplier quoted, relative to the cheapest. A greater emphasis was placed upon quality, which was allocated up to 70% of the scoring. Quality was assessed based on project and service delivery, the approach to health and safety, performance and information management and the proposed partnering arrangements. Having conducted this procurement process we can invest with confidence that we will achieve Value for Money from this major element of our Stock Improvement Programme (SIP). Over the coming year we will work to better understand our replacement costs including conducting benchmarking exercises with other organisations.

communal makeovers

In the year, we spent £1.7m on the redecoration of the communal spaces at 49 of our Retirement Housing and 19 of our Extra Care courts, in order to make them more appealing and pleasing to our current and potential residents so that living at one of our courts is a positive choice. We believe the value from this investment will be derived from improved demand and resident satisfaction. 74% of our courts have had a communal makeover within the last seven years. We know that our residents value the opportunity to contribute to the design

process and we ensure we take their views into account when planning a makeover. We do this by conducting a resident consultation meeting where we present a variety of design options and take a vote on preferences. In this way we can be confident that our investment will lead to meeting the needs and requirements of our residents.

Energy efficiency

We have committed to ensuring all of our properties have an Energy Performance Certificate (EPC) rating of at least C by April 2021. We know that the EPC rating of our properties is important to our residents both in terms of comfort in their homes and affordability of their energy bills. Improving energy efficiency will therefore achieve greater resident satisfaction. In 2016/17, we invested £2.4m in heating and energy efficiency projects across 40 of our courts.

Quality

Our SIP is planned, managed and delivered by a team of experienced technical surveyors who aim to coordinate efficient delivery of projects and scrutinise works to make sure that our suppliers consistently meet the standards of quality that we and our residents expect. We speak to our

residents before, during and after project works take place and we take steps to get their feedback so that we can learn for the future.

While our stock improvement investment commitments have increased by 35% per annum in terms of sums invested, we have managed to deliver this without requiring a proportionate increase in the surveying team. An additional surveyor per region has been recruited, increasing our costs by only 17%.

Resident satisfaction is an important measure of our success. We acknowledge that it may take some time before we see the benefit of our planned investments but by 2021 it is our aim that overall residents’ satisfaction with their home will be at least 95%. Our most recent resident survey results reported an overall satisfaction level of 87% in Retirement Housing and 86% in Extra Care and so there is further work to be done to achieve our target.

figure 3: Historic stock investment

Source: Housing & Care 21 business planning


the quality of our properties

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responsiveness in housing management

In September 2016 our Board set out a vision for us to transition further towards a devolved operating model which will allow us to improve the way we work with our residents and to enhance the much valued court manager service. We believe that this service provides significant benefits to the wider economy, such as fewer NHS interventions. We will invest significantly to ensure that our court managers have the systems, tools and skills that they need to deliver this vision so that they can focus on providing a tailored and responsive service to meet the needs of our residents. Our court manager service is what sets us apart from our peers and while this comes at a cost, our plans for change will allow us to deliver even greater value to our residents through local engagement and decision making. The major transformation project is now under way and has the following objectives:

• Establish a fully devolved mobile customer service approach

• Ensure all staff are properly trained and equipped to adopt the new ways of working

• Make all processes intuitive and user-friendly to action

• Provide an accurate and robust single source of data for performance and compliance reporting

• Provide a self-serve portal for residents to access the information they need, when they need it.

The project has been split into two phases, the first of which will be delivered in 2018. This transformation will create the opportunity to work far more efficiently and effectively, make faster decisions locally and therefore provide greater value throughout the customer experience.

It is our aspiration to give residents as much choice as possible over their homes and the services we provide. Our ‘Choices and Consensus’ policy has clearly established where individual residents have a choice, where a consensus of all residents is required or where we, as the landlord, will make a

decision. Based on this approach, we have worked with residents at each of our Retirement Housing courts during 2016 to understand what is important to them, to allow them as much choice and flexibility as possible and to put in place a Court Service Agreement (CSA) which reflects their decisions.

During 2016, we continued to engage with our residents about their service charges, and we held a consultation meeting at every court to discuss and decide on the type and level of service to be received. This approach was welcomed and has provided greater explanation and understanding of the costs which form the service charges, as well as an opportunity to influence this.

We use resident surveys to understand how well we are performing in the delivery of our services. During 2016/17, 100% of our new residents (in both Retirement Housing and Extra Care) reported that they were satisfied with their experience during the lettings process. We were pleased with this result, having set ourselves a target of 95% satisfaction. We believe we can maintain this performance and continue to improve our service as we devolve more responsibility to local managers and remove the need for inefficient passing of documentation to and from the central support teams.

It is important to our residents to receive an efficient and effective response when they tell us that repairs are needed in their properties. We aimed to achieve 90% satisfaction with the repairs service during 2016/17. For Retirement Housing, we exceeded this target and achieved 92%. However, in Extra Care we fell slightly short at 87%. During 2017/18, we will focus on improving further and aim to achieve 95% satisfaction.

Having introduced a ‘one-step’ complaint handling process and placed the emphasis on local responsibility for responding to complaints in 2015, we have continued to see improvements in the timeliness of our responses. During 2016/17, the average time taken to respond to a complaint fell to 10.5 days, compared to a target of 15 days.

care quality

Our care regulator, the Care Quality Commission (CQC), inspects our care services to assess whether they meet the necessary minimum standards. During 2016, the CQC changed their approach to assessing social care services and made it more challenging to attain their higher rating standards. We welcome the more thorough and comprehensive approach and strive to continuously improve the quality of the services we provide. In March 2016, under the previous rating regime, 95% of our care services were compliant. A year later, in March 2017, 85% of our care services were assessed as at least ‘good’ by the CQC and the remaining 15% were compliant but ‘require improvement’. Over the coming year we will continue to focus our attention on improving in this area and we will maintain our robust internal audit approach to inspections. We are committed to ensuring that all of our care services are assessed as at least ‘good’ by the CQC.

The quality of care delivered by our frontline teams is dependent on us recruiting, training and retaining a skilled and confident frontline workforce. In terms of retention, we believe that maintaining stable care teams at each court allows us to deliver a consistent level of service quality and to improve our residents’ experience through familiarity with those who care for them. Retaining a stable care team also avoids the time and costs required to repeatedly recruit and train replacement care workers. Over the past year we wanted to reduce the number of court managers and care staff that leave our services, and we challenged ourselves to reduce care staff turnover to 22% by the end of the 2016/17. We did not manage to achieve this target; our average turnover of care staff as of 31 March 2017 was 29.3%, so we will also continue to focus our efforts on further improvements in this area, including further investment where required.

We continue to invest in the training and development of our staff. During 2016/17, we launched formal training pathways for our care workers and senior care workers and we were encouraged that our internal training provision received endorsement from Skills for Care. We also announced during the year that we intend to support all of our care managers to achieve a Level 5 Care Apprenticeship. This will commence during 2017/18.

Throughout each year we survey our care customers to get their views on the services they receive from us. In our latest quarterly results (June 2017), the overall satisfaction level with our care services was 97%, compared to 95% in the previous year. We are extremely pleased to have achieved this result and to see that our efforts are having such a positive impact for the older people we care for.

An important aspect of our drive to improve VFM is our focus on providing an assured quality service which achieves high resident satisfaction and meets professional standards. Quality and responsiveness remain at the heart of everything we do and commitment to these aspects is critical to maintaining a strong and positive culture and reputation as well as the best possible outcome for our residents. This approach extends to our central support functions and we continually focus on improving the efficiency and effectiveness of the services that are provided inside our own organisation.


the quality and responsiveness of our services

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resident engagement

Understanding what people think about us remains a priority and this is key to measuring the quality and outcomes of our services. During 2016/17, we have continued to build upon engagement with our residents and customers so that they can better shape and influence the services we provide.

• Feedback Surveys We undertake a number of resident

and care customer surveys in order to understand the customer experience from their perspective. The results of these surveys are included within the relevant sections of this report and are an important way for us to understand and benchmark the quality and performance of our services and target areas for improvement.

• Resident Conferences Following the success of our ‘Resident

Conferences on Tour’ initiative in 2015, we repeated these events during 2016. Nine Retirement Housing and seven Extra Care events took place across England, and these were made accessible to any resident who wanted to attend. We successfully attracted over 600 residents who told us how we are performing and how we can improve, and gave their views on the future direction of the organisation.

This feedback included discussions on the quality and scope of the court manager service, how often residents would like a visit from the area’s Housing Manager and how they would like to receive communications from Housing & Care 21. Wherever practical, we have taken steps to act on the comments and requests that were made.

We also held a conference for leaseholders in March 2017, which reached over 40 of our leaseholder residents and allowed us to talk with them about their specific areas of concern and interest. One positive outcome, for example, was that we agreed to remove the requirement to conduct a valuation survey when a leaseholder chooses to sell their property, thereby reducing their costs.

• Service improvement groups We have found that inviting interested

residents to improvement groups has been a very effective way of engaging on specific topics and gaining residents’ ideas and insight. By taking this approach we have been able to get useful feedback which has been used to inform decision-making. For example, we facilitated three group discussions, comprising 33 residents in total, to understand how well the service charge budgeting consultation meetings had worked and how we might improve on this process in the coming year. The feedback and suggestions from these groups were incorporated into the subsequent annual budget setting process.

• Resident magazines In 2016 our resident publication,

My Time, won a prestigious award for the second year in a row. The magazine, which is now a bi-annual publication, was named the Best News Magazine in the Institute of Internal Communications Awards 2016. Following resident feedback, we will in future issue two separate My Time publications; one for Retirement Housing and one for Extra Care. We also publish a magazine targeted at our leaseholders, called Leasehold Living. This new approach will ensure articles are more relevant to the audience and will reduce the costs of producing the magazines.

• Financial wellbeing In early 2017, we rolled out The Lisson

Grove benefits calculator across the organisation, supported by training for all court managers. This software allows court managers to work with residents to identify those income related benefits which they are eligible to apply for. It is also available for all staff to use. The software is supported by an internally produced handbook which is updated regularly.




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We recognise that our people are the face of Housing & Care 21 and that our success depends on their work in turning our potential into reality. The quality and effectiveness of our services is only as good as our workforce, and so it is vital that we invest in and engage with our staff. This includes making sure we recruit and retain talented people, provide them with the right training and development opportunities, listen to their ideas and empower them to make the right decisions about our services. We have made some good progress in these areas over the past year and continue to set ourselves targets to improve.

investors in people

We are proud to be accredited at Silver Standard by Investors in People (IIP). We value the Standard as an important framework to plan and measure our success. We continue to focus on developing our leadership and management practises, and on becoming even better at supporting our people. Our senior managers are committed to achieving at least Gold Standard accreditation in the coming years.

Staff engagement

We employ over 3,000 members of staff across England and, given the nature of our services, most tend to be geographically dispersed. It is important that we engage with our staff effectively in order that they remain committed to delivering our objectives and, most importantly, providing excellent service to our residents.

We update and communicate with our staff regularly through our management structures and at regular team meetings. In 2016 we launched a refreshed intranet which is actively used to communicate with our staff and keep them up to date. It includes, for example, frequent news articles from around the organisation, blogs from senior management and forums which provide the opportunity to connect and discuss issues.

We also engage with our staff through a number of representative groups such as the Court Manager Group, Extra Care Manager Group and other more specific focus groups which are arranged ad hoc to address particular issues.

We acknowledge the need to engage when planning for organisational change and, where appropriate, we appoint champions from across the organisation to consider our plans, to give us their thoughts and to help us get important messages to local colleagues.

In 2016, our Executive and Senior Management teams delivered eight staff conferences (called Stepping Ahead) to around 600 staff. These events focused on the priorities of our business streams and the role that all staff play in contributing to our success. We also held a two day conference in October 2016 for our top managers from across the organisation, with around 100 attendees. The focus of this event was to create a vision for improving both resident and staff satisfaction and to plan for improvements. In spring 2017, a further 14 staff engagement events (called This Way Up) were held in six locations. The increase in the number of events compared with previous years was because separate events were held for staff from Extra Care, Retirement Housing and Head Office Support Teams so that specific focus and attention could be given to their particular issues and perspectives. The events were attended by over 900 staff members - a 52% increase in the level of attendance from the previous year.

During the year we also conducted an employee opinion survey and were encouraged by the headline improvements shown. We have recently introduced a shorter staff survey which will be conducted quarterly and supported by focus group discussions. The latest results from this survey came from 740 members of staff, representing a response rate of over 60%, and show that 88% of staff feel committed to Housing & Care 21, 86% feel the organisation has a plan to ensure continued success and 88% feel achieving Value For Money is an important priority for Housing & Care 21.




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learning and development

If VFM is about achieving more from our resources, we are clear that there is huge potential to be delivered through our workforce if we can provide them with the right skills and support.

In 2016/17 we launched new learner plans, called ‘pathways’, for a number of operational roles within the organisation. These formally set out, from commencement of employment, the induction and training that each employee will receive. Each job role has a corresponding learner toolkit to support progress. During 2017/18 we will continue to embed these pathways as well as launching further versions for other roles, including for corporate support staff.

We are very proud to have received external recognition for some of our training courses in the past year as this confirms we have been successful in developing a quality training provision for our staff and that we are able to meet and exceed national benchmarks for quality.

• In November 2016, we were awarded direct claim status by the Institute of Leadership and Management (ILM) for our ‘Leading to Excellence’ training programme for line managers. This is confirmation that ILM has assessed our programme as being delivered well and that it is providing quality outcomes for learners

• In early 2017, we also gained endorsement from Skills for Care for the training we provide to our front line care staff. Over the coming year we aim to improve further so that we can become recognised as a ‘centre of excellence’

• In July 2017, we became the second organisation nationally to receive full validation by the Chartered Institute of Housing (CIH) for our housing related learning and development.

During 2016/17 we continued to enhance our learning management system, allowing staff to efficiently book training requirements and complete e-learning assessments online. During the year we focused on improving the quality of our e-learning material by improving the design and functionality of the modules so that we can demonstrate better outcomes. Where appropriate, we also worked with subject matter experts from within the organisation to ensure the content of training is suitable and relevant. However, there is still far more room for improvement and we want to do more to improve the VFM derived from our investment in learning and development. In the year ahead, we will introduce more formal methods of demonstrating that our learning and development team is achieving VFM through the introduction of performance efficiency measures and the collation of satisfaction feedback from learners.

We have started to plan for the introduction of the Government’s new Apprenticeship Levy. We have taken the decision to support our court managers to achieve at least Level 3 and care managers to achieve a Level 5 apprenticeship qualification, and we believe this will give them a good framework of training and development in their important role of delivering our frontline services. As a levy-paying employer we will target 100% recovery of the levy so that we can demonstrate maximum value from our contributions.

reward and recognition

Motivating and retaining our staff is an important aspect of our efforts to improve the quality of the services we provide. So, we have made it a priority during 2016 to develop a reward and recognition strategy along with an action plan to implement this during 2017. In order to understand what our staff value in terms of reward and recognition we held a number of workshops which reached out to almost 200 members of staff from every area and level of the organisation. Their feedback was used in the formation of the resulting strategy. We will continue to listen to our staff and consider where we should invest and enhance our offering.

During 2016/17, we introduced a number of new optional employee benefits which, while not expensive to implement, have a high perceived value among our staff. These include:

• The introduction of a holiday purchase scheme in which employees can sacrifice a proportion of their salary in order to benefit from additional annual leave entitlement. In the majority of cases, we can accommodate this additional leave without the need for additional staffing resource and so this new benefit provides a modest saving in salary costs for Housing & Care 21.

• Two days of paid volunteer leave entitlement, which comes at no additional cost to Housing & Care 21. In the majority of volunteering cases to date, our residents have also benefitted because staff have chosen to volunteer at our courts in order to engage with residents and to support with projects in the communal areas, such as gardening.

• A salary sacrifice cycle to work scheme which has allowed staff the opportunity to purchase a bicycle and accessories and to pay for these over the course of a year, while at the same time benefitting from tax savings. We also hope that by encouraging staff to cycle to work, we might make a positive contribution to their wellbeing.



1 9


2 12 0

Previously in this report, we discussed our major transformation project and the introduction of a new way of working which will devolve responsibility to court managers and allow greater flexibility and decision making at a local level. A significant element of this project is around improvements in how we use systems and technology. In Phase 1 of the project, which will be delivered in 2018, we will:

• Refresh and upgrade the functionality and utilisation of our core housing management system

• Introduce tablet devices and touchscreens to allow court managers and surveyors to interact with the core systems remotely and on the move

• Launch a self-service portal to provide our residents with the option of interacting with us via the internet

• Establish WiFi at all of our courts

The planned investment in our core operating systems over the coming years will have a number of benefits with regards to VFM. These will include:

• Efficiencies in support centre and local processing times

• Improved transactional accuracy and therefore reduced requirement for problem solving and investigation

• More robust process controls• Ability to gain simplified and more

useful management information to support decision-making

• More flexible working arrangements for employees

• Improved access to resident information

• Optional self-service functionality for our residents

• Greater value being delivered through our court manager service.

During 2016/17, we invested in enhancements to our people system, ResourceLink, and introduced self-service aspects called MyView. New functionality included an expenses module and an absence management module, which allowed us to remove the need for spreadsheets and manual processing, thereby creating greater accuracy and more efficient processes within our corporate service centre. We also introduced online payslips for our corporate staff which removed the cost of printing and posting. Further enhancements will bring a new and improved recruitment module and website, additional tools to create more efficient processing of pay related data and greater capacity to report and analyse data from the ResourceLink system.

We have also invested in systems and technology in order to improve how we connect and communicate across the organisation, and we believe that this will allow us to become more joined up, more efficient and ultimately provide better customer service as a result. In 2016, we introduced a new telephony system and communication tool called Jabber. We also refreshed and enhanced our intranet as mentioned previously, which has enabled improvements in how we engage and communicate with our staff as well as providing greater accessibility to information, policies and procedures and discussion forums.

We are also focusing our efforts on the use of technology to improve our residents’ experience in accessing services. In early 2017, we started working in partnership with Appello to be the first and leading housing provider of a digital end-to-end emergency call

system which will replace our analogue systems. The digital solution provides for: almost instant access, multiple calling, clear two way speech, video functionality and significant opportunities to add and improve services through new functionality (including home automation) and use of data. To date we have installed 30 digital call systems and have committed to a further 40 installations in 2017/18.

In partnership with Virgin Media we are working to provide residents in 8,500 of our properties access to Virgin Media’s superfast broadband and media packages during 2017/18. This improved outcome for our residents will be achieved with no additional cost to Housing & Care 21 or our residents and so demonstrates great VFM.

It is important that we make careful and considered investment in systems and technology so that our staff members have the tools they need to do their jobs in an efficient and effective manner. Increasingly, there are new opportunities to use technology to enhance the service and experience we provide to our residents and where appropriate we will pursue these. We have committed to invest £5m in new systems and technology up to 2021.




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impact of extra care services

We set out to undertake two major research projects to develop robust data which demonstrates the impact of Extra Care services on individual wellbeing. During 2016, we completed a project at Laurel Gardens, our new Extra Care court in Mancetter, Warwickshire. Data was collected from residents before they moved to the court and then again after three months of residency. The majority of residents involved stated that their mobility had improved since moving into the court, that they felt less isolated and they hoped for increased social opportunities. Residents were reassured that if they needed urgent assistance they could access this. Overall, residents were extremely positive about their experiences and most felt their health and wellbeing had improved since moving in. Residents were very happy and felt they had made the right move.

Secondly, we continued our work with the University of Birmingham looking at the costs and benefits of Extra Care compared to alternative options such as residential care or home care. We are currently developing a toolkit which could be used by commissioners in local authorities to better understand Extra Care, the variants within it and most importantly to start to better understand, calculate and demonstrate the positive impact on wellbeing as well as the savings realised by public services.

the challenge of dementia

Our proactive work continues in addressing the challenge of providing housing and services for those living with dementia. In 2016/17, we worked in partnership with the Alzheimer’s Society to develop and launch the Dementia friendly housing charter. The charter, available on our website, is targeted at all organisations in housing to play their part in planning, developing and maintaining housing which helps promote the wellbeing of people affected by dementia and their carers.

We continue our own efforts to extend our position as a Dementia Friendly organisation. We have established a steering group from across our organisation to develop our commitments to the charter around the three pillars of people, places and processes.

Our Make a Friend initiative has been in place for just over a year. This involves enabling half of our residents and a proportion of our staff to become dementia friends by 2021. At the time of writing, we have delivered sessions to nearly 900 residents, who have signed up as dementia friends. All new staff are extended the opportunity to become a dementia friend during their induction training, and care staff receive more extensive training to meet the specific needs of their roles.

Influencing the wider housing and care agenda

Our aim is to be a thought leader within the fields of housing and care. Following the success of our inaugural conference in June 2016, which we delivered in conjunction with University of Birmingham, we are currently planning a second conference in October 2017. Again, we will bring together practitioners and academics to debate the future of older people’s housing.

Last year we sponsored and contributed to the production of the third HAPPI report (Housing our Ageing Population - Positive Ideas) by the All Party Parliamentary Group on Housing and Care for Older People (APPG). We have now taken on the role of providing the modest funding required for the ongoing running costs of this important APPG. Over the past year

the APPG has held a series of business sessions which included a chance to question and discuss with the former Housing Minister the implications of the provisions contained in the Housing White Paper for Older People (Fixing Our Broken Housing Market).

Housing & Care 21 is a member of a number of networks within the housing and care sectors to ensure that we identify developments and good practice in the sector, and also to actively disseminate our good practice and experience. Groups include:

• The Housing and Dementia Research Consortium (HDRC), of which we were a founding member. This is now hosted at the University of Worcester

• The Housing and Dementia Working Group which is chaired by Homeless Link

• Dementia Action Alliance• International Longevity Centre• Association of Retirement Communities

(ARCO), of which we were a founding member

• The Voluntary Right to Buy Task Group which is chaired by the National Housing Federation

• The Housing Learning and Improvement Network, (LIN). We regularly contribute case studies to add to their resources and speak at their events. We also provide sponsorship for their annual conference

In response to the Government’s proposals to change the funding model for supported and sheltered housing and to introduce a Local Housing Allowance (LHA) cap for residents in supported housing, we have proactively engaged in the consultation process to raise our concerns and to help work with the Government to find a solution which protects Retirement and Extra Care housing. We have also written to all MPs to highlight the potential impact on their locality and have undertaken joint work with other older people’s housing providers, all with the aim of ensuring that the future funding mechanism for supported housing is viable and sustainable. We have also produced evidence to recognise the positive preventative offer of supported housing on the wellbeing of older people of modest

means. To support this process, we engaged in a research project in February 2017, along with the Anchor Group and Hanover Housing Association, to explore and quantify the social value of sheltered housing. The findings demonstrated that Retirement and Extra Care housing plays a significant role in reducing financial strain on the NHS and social care.

tackling loneliness and social isolation

We are now in our third year of working with the Mental Health Foundation (MHF) on the Standing Together project. Funded by the Big Lottery fund. The project aims to improve the emotional wellbeing of people living in later life housing schemes across London and the South East, and to reduce isolation and loneliness for older people. With a focus on building relationships, the project’s model is based on self-help groups facilitated by project staff. Evaluation is being undertaken by the MHF and by the end of 2017, over 200 people will have benefited. Early evaluation evidence demonstrates the positive impact this project has had on wellbeing.

exploring new service models

We are keen to identify how we can innovate through the use of technology in order to meet changing expectations and funding arrangements within the sector, and we are currently working with Sheffield’s Centre for Assistive Technology and Connected Healthcare (CATCH) to explore the potential for new and emerging technology. In particular, we are setting up pilot projects to evaluate automated medication administration and prompts, as well as lifestyle monitoring and options to provide an intervention service only when needed.

We are committed to playing a leading role in the provision of housing, care and support services for older people of modest means. To do this we will speak up and advocate on issues which are of concern and importance, and ensure we challenge ourselves to think about what current and future generations of older people will want and expect. In this way, we will continue to ensure we are achieving the best possible outcomes for our residents while demonstrating our social value.


Innovation and influence


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f i n a n c i a l p e r f o r M a n c e a n D B e n c h M a r K i n g

financial performance

Financial performance is an indication of how well we are using our resources to generate returns and to create the capacity to deliver more in the future. To properly assess our VFM performance

it is therefore important to understand how we are managing our cost base, generating return from our assets and demonstrating improvements over time.

Our recently published Annual Report and Financial Statements include detailed

information on how Housing & Care 21 has performed financially during 2016/17. Below are some key metrics about the financial performance of our business streams and the financial returns we have generated from our asset base.

In 2017, we generated an operating profit of £44.8m from our Retirement Housing services (2016: £44.5m) which represents 55.4% of turnover (2016: 55.9%). We are satisfied with these positive results, which were in line with our targets, and maintained our operating margin. We expect our results for the forthcoming year to remain broadly consistent in terms of operating profit and margin. Our 2018 target reflects the fact that we were required by Government policy to reduce our rental charges by 1% in April 2017.

Rent and service charge income lost from vacant properties was £0.3m lower than expected during the year and £0.4m better than the previous year. As a percentage of total potential income the void loss was 1.6%, compared to a target of 2.2%. This success was achieved by improving the time it takes us to re-let our properties when they are vacated. During the year, we managed to reduce our average re-let days per property from 43 days to 31 days. We expect void losses to further reduce as a result of our ongoing efforts to 1.5% in 2018 and then to 1% by 2021.

The average cost of responsive repairs per property has decreased over recent years from £482 in 2015 to £404 in 2017. This has been achieved through a devolved repairs management process, supported by a new repairs system that has allowed court managers greater influence in ordering works and performance-managing contractors. While costs per unit were lower in 2016, we believe that this first year of operating under the new service model included some over vigilant cost control by court managers which was not sustainable over a longer period and the more recent results represent a more realistic run rate. Our target for 2018 includes an allowance for a 3% inflationary increase.

Our properties have previously been assessed using four key measures – void performance, repair costs, operating profit and the number of bedsit flats. They were then categorised as either ‘red’, ‘amber’, or ‘green’. We believe that, with suitable investment, courts with a green or amber status will provide good financial returns and outcomes for older people over the longer term. Courts rated as being of concern (red) were prioritised for detailed business plans so that we could consider the most appropriate action to be taken to maximise the return from these assets.

We currently have three red courts available for sale and a further three remain, which we are monitoring closely. We will not invest significantly in these three courts on the basis that we cannot be sure that we will receive sufficient financial return. Instead, we will continue to monitor performance on an annual basis and will commit, where appropriate, to short term investment in them in order to achieve the right balance between financial return and meeting customer expectations. Within the next ten years we will either decommission and redevelop these courts or sell them. Where a decision is taken to decommission a court, we will support residents to move to alternative accommodation.

During 2017, we disposed of Sharratt Court in Nottingham (a red court) due to concerns that this court was unable to achieve the outcomes, financial or otherwise, that we would expect and so was unable to deliver sufficient Value for Money. We also took the opportunity to dispose of some other non-core assets, including some land in Guernsey and some individual properties from our small stock of family housing. In total we achieved proceeds of £1.5m from these disposals and a surplus of £0.25m, which we will reinvest into our services.

In 2017, we generated an operating profit of £23.5m from our Extra Care housing services (2016: £20.2m) which represents 54.1% of turnover (2016: 52.0%) and is broadly in line with targets. The majority of this growth in operating profit was contributed by the addition of newly developed Extra Care properties. We expect our results for the forthcoming year to remain broadly consistent in terms of operating profit and margin. Our 2018 target reflects the fact that we have been required by Government policy to reduce the rented properties by 1% in April 2017.

Rent and service charge income lost from vacant properties was £0.2m better than expected in the year and £1.8m better than the previous year. £1.7m of this improvement compared to the previous year was the result of having fewer newer properties becoming available to let for the first time. As a percentage of total potential income the void loss was 2.4%, compared to a target of 2.5% (excluding newly built properties). This success was achieved by improving the time it takes us to re-let our properties when they are vacated. In the year we managed

to reduce our average re-let days per property from 50 days to 32 days. We expect void losses to drop further as a result of our ongoing efforts to 2.0% in 2018 and then to 1.5% by 2021.

The average cost of responsive repairs per property has decreased over recent years from £533 in 2015 to £491 in 2017. The reasons for this movement in costs are the same as described previously for Retirement Housing.

In 2017, our Extra Care care services reported an operating profit of £2.1m (2016: £2.6m) and an operating margin of 7.8% (2016: 9.8%) and exceeded our targets for the year. The operating margin percentage fell, in comparison to 2016, primarily due to the increase in staff-related costs resulting from National Living Wage (NLW) legislation.

We were disappointed that we had 12 care services which reported financial

losses totalling £0.5m during 2017. The majority of these losses came from eight locations where we provide care into extra care courts which we do not own. In some cases we have experienced difficulties with recruiting and retaining care workers, particularly in the South East, and have had to resort to the use of agency workers at additional expense. We have decided that three of these services, which contributed £0.4m of the losses, will be decommissioned in the first quarter

of 2018 and we have taken a decision that, in future, we will not deliver care into courts where we are not the landlord as we are not satisfied with the returns that these services can generate. For any remaining services which fail to generate profits, we will look for opportunities to improve performance, attempt to negotiate additional income from the Extra Care Commissioners and ultimately, take a decision to exit these services if our efforts are unsuccessful.

performance indicator 2015Actual

2016Actual

2017Target

2017Actual

2018Target

Operating profit* £44.0m £44.5m £44.8m** £44.8m £44.4m

Operating margin 56.0% 55.9% 55.2%** 55.4% 55.1%

Vacant (void) percentage 2.2% 2.5% 2.2% 1.6% 1.5%

Average re-let days 43 days 43 days 35 days 31 days 31 days

Average responsive repair cost per property £482 £353 £378 £404 £411


2015Actual

2017Target

2017Actual

2018Target

Operating profit* £15.9m £20.2m £23.0m** £23.5m £23.2m

Operating margin* 51.3% 52.0% 53.3%** 54.1% 51.0%

Vacant (void) percentage 2.8% 2.5% 2.5% 2.4% 2.0%

Average re-let days 56 days 50 days 50 days 32 days 32 days

Average responsive repair cost per property £533 £395 £448 £491 £494


2016Actual

2017Target

2017Actual

2018Target

Operating profit* £2.1m £2.6m £1.9m £2.1m £2.1m

Operating margin* 8.7% 9.8% 7.6% 7.8% 8.2%

Average weekly care hours 44,700 45,200 39,700 42,100 41,000

Loss making contracts 14 8 0 12 0

Losses generated from loss making contracts £0.3m £0.2m £0 £0.5m £0

table 1: Retirement Housing

table 2: Extra Care - Housing

table 3: Extra Care - Care

* After adjusting for depreciation, impairment and central overhead allocation

** The target for operating profit as stated in our 2016 VFM Report has been restated to ensure the treatment of capitalised repairs is consistent with actuals

* After adjusting for depreciation, impairment and central overhead allocation

** The target for operating profit as stated in our 2016 VFM Report has been restated to ensure the treatment of capitalised repairs is consistent with actuals

*After adjusting for central overhead allocation



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Benchmarking our cost base

Where practical, we compare our performance against other organisations to provide further assurance that we are moving in the right direction in terms of VFM. We continue to be a part of the M6 Group (a collaborative group of Midlands-based housing associations) which looks to compare costs and performance and share best practice.

Our focus in this year’s report is on the HCA’s measures of costs per unit. We also comment on the Sector Scorecard indicators which have been developed by the efficiency working group of housing associations.

social housing costs per unit

In June 2016 the HCA published ‘Delivering better value for money: understanding the differences in unit costs’ which included average unit costs for the sector

The above chart is taken from an HCA report on unit costs in the sector and shows the headline social housing cost per unit plotted by total social stock size. The horizontal red line indicates

the median cost level. The red markers identify providers who have either 10% of their stock for supported housing or more than 50% for older people’s housing. We believe that we are positioned within the

large cluster on the bottom left of the chart and that our average costs per unit are not significantly dissimilar to sector averages.

figure 4 Average social housing costs per unit

We have reviewed our costs in comparison to sector averages and have attempted to understand and explain why there are differences. It can be challenging to benchmark our costs in a meaningful way due to the diverse nature of the housing sector. We believe that we are particularly unique due to the nature of our services and so it can be difficult to ensure like-with-like comparisons.

For example, our service costs are significantly higher due to the nature of our older people’s services and our model of providing a court manager service. In addition, the running costs of our PFI activities disproportionately inflate our management costs, despite the fact we are reimbursed for these costs through a unitary charge, which is included in turnover.

Headline social housing costs consist of management, service charge, maintenance, major repairs and other social housing costs.

table 4: Unit costs of Housing & Care 21 compared to the sector average

units costs Housing & Care 21 (2017) Sector average (2016)

headline social housing costs £5,790 £3,960

total social stock

10,000 30,00020,000 40,000 60,00050,000 70,000

hea

dlin

e so

cial

hou

sing

cos

t per

uni

t (£0

00s)

5

15

10

25

20



2 8

Management costs per unit have reduced by circa £120 during the last year to £1,370. This reduction is primarily due to further restructures and efficiencies across a number of corporate overhead departments.

At £1,900 per unit, service charge costs make up around one third of our headline social housing costs and are broadly consistent year-on-year. Our service charge costs are higher than the wider sector, reflecting the additional needs of older people when compared to a typical general needs housing provider and include the costs associated with providing a dedicated court manager service. We would also expect our service charge costs to be higher than average due to the nature of our properties, which largely consist of blocks of flats with relatively extensive communal areas which incur gardening, utility and cleaning costs. These costs wouldn’t otherwise be incurred by most other general needs providers whose property portfolio may consist largely of houses.

Maintenance costs per property have increased by £150 during the year to £910. However, our maintenance costs remain lower than the sector average and we believe that this is because older people’s accommodation generally requires lower levels of repairs and maintenance. Our maintenance costs include the investment we have made to redecorate the extensive communal spaces at our courts, as discussed above. Excluding these additional costs which we have actively chosen to incur, our average maintenance costs per property would be even lower than the sector average.

Major repairs and capitalised improvement works have risen again during 2017, as planned. Costs per unit have reached £1,410 which is significantly higher than the sector average. This reflects our decision to increase our investment in improving the quality and standard of our properties over the next five years as explained previously in this report. Again, the nature of our properties also means that major repairs expenditure is likely to be higher

compared to the wider sector when associated with the blocks of flats that we predominantly have. This is because expenditure is required on items not otherwise associated with general needs houses such as lifts, emergency lighting and flat roofs.

Other social housing costs are £200 per unit and consist mainly of support charge costs. This includes the central alarm service and an element of the cost of providing a dedicated court manager service. As mentioned previously, the nature of our services for older people means that we would expect our costs to be higher than sector averages in this area.

We will continue to track our performance of costs per unit and will seek opportunities to gather more detailed information about how our costs compare to those of similar providers of specialist housing for older people and to understand differences with greater clarity.

table 5: Unit costs by year

unit costs 2015 2016 2017

Management costs £1,610 £1,490 £1,370

Service charge costs £1,800 £1,890 £1,900

Maintenance costs £870 £760 £910

Major repairs capitalised improvement works £870 £1,080 £1,410

Other social housing costs £150 £140 £200

Headline social housing costs £5,300 £5,360 £5,790

Closing social housing units managed 18,573 19,250 19,341


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In 2015, the HCA reported that the average headline cost of housing for older people was £1,800 greater per unit than a hypothetical ‘baseline’ provider with 100% general needs properties. Assuming this difference in costs remains, we conclude that the sector average headline cost for older people’s housing in 2016 was circa £5,760.

Housing & Care 21’s headline social housing costs for 2016 and 2017 are therefore broadly in line with sector averages. As we had expected, our year-on-year increase in headline social housing costs per unit is largely the result of our significantly increased major repairs and capitalised improvement works. Our headline social housing

cost per unit drops to £5,428 per unit if adjusted for the additional £7m we invested in our properties during the year to improve quality, (as discussed on page 10).



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sector scorecard

The Sector Scorecard is a set of indicators proposed by an Efficiencies Working Group, which will be used to measure and benchmark efficiency across the social housing sector. The aim is for these indicators to become the mainstream way that efficiency and effectiveness are measured and they include the HCA’s unit

cost measures that we have reported on above. Housing & Care 21 has committed to contribute to a one year pilot that is being run to test and refine the indicators. We understand that this initiative is widely supported, including by the HCA, and that a full launch is planned for 2018.

In the following table we include those relevant indicators which we are currently

able to measure and explain reasons for movements over the past two years. We expect that as the pilot initiative progresses during 2018, we will gain access to sector wide benchmarking data on a quarterly basis and that this will provide us with further opportunities to focus on how our VFM performance compares to that of our peers.

Business health

In general our operating profits from social housing and interest cover have increased each year due to additional revenue from the construction of new properties as well as the annual increase in our rental charges. This fact alone demonstrates the additional value being delivered from our resources each year. In 2017, the operating margin reduced to 18.2%, primarily due to the impact of accelerated depreciation of our property components (such as kitchens and bathrooms) to reflect that they will, in future, be renewed sooner and so now, they have a shorter lifespan than previously anticipated. Excluding this additional depreciation charge, our social housing operating margin for 2017 was 25.8%.

Development capacity and supply and outcomes delivered

Our previous focus on the HCA’s 2015 Affordable Homes Programme will result in us delivering a relatively low volume of new housing up to 2019 as we have a 24-36 month lead time to take a new development through the delivery pipeline. However, as previously reported in this report, we have ambitious growth targets to develop 2,310 new homes by 2021 and 800 properties per year thereafter. We have sufficient financial strength and capacity to deliver these plans. Our gearing levels have improved over the period reported due to our strong operational performance which has contributed to larger reserves and generated a strong cash position, allowing us in turn to reduce the level of loan finance we currently hold.

Effective asset management

Return on Capital Employed (ROCE) is an overall measure of how efficiently we are using our assets to generate returns. The movements in this ratio are explained in the same way as the movement in our operating margin. We expect that when we eventually have the opportunity to benchmark our metrics against those of our peers, we will find that our ROCE is lower than average due to the fact that our Financial Statements include our property assets at ‘deemed cost’ based on recent valuations rather than at the lower ‘historical cost’ value utilised by other housing associations.

Our occupancy rates have improved over recent years as we have taken steps to improve our approach to re-letting properties when they are vacated. Improved performance has been supported by our increased property investment and efficiencies in our letting process.

Over recent years we have seen a reduction in the percentage of our total maintenance spend (both revenue and capital investment) which has been done in reaction to a repair request. This reflects, as expected, the decision to significantly increase investment in improving the quality of our properties in a way which is proactively planned and controlled.

Operating efficiencies

We are pleased to report that we collected the equivalent of 100.3% of our annual rent and service charges in the last year and that this performance has improved from 99.4%. Our Central Collection Team has targeted its efforts on the prevention of arrears, working closely with local managers, encouraging payment by Direct Debit and more actively implementing our policy of collecting four weeks’ rent in advance from new residents.

Our corporate overheads as a percentage of turnover have fallen each year, down to 9% in 2017. These savings are primarily due to restructures and efficiencies across a number of corporate overhead departments and reflect our ongoing efforts to demonstrate greater VFM from a central cost base. In last year’s VFM report we set ourselves a target to reduce our corporate overheads to £19.6m during 2017 and we exceeded this goal with a total cost of £18.5m during the year. We aim to reduce this cost base further to £17.5m in 2018.

table 6: Sector scorecard indicators by year

housing & care 21 group 2015 2016 2017

Business health

Operating margin – overall* 17.0% 20.9% 18.2%

Operating margin – social housing* 19.2% 24.0% 21.5%

EBITDA MRI (as % of interest)* 179% 212% 183%

Development capacity and supply

Units developed 1,131 256 113

Units developed as % of units owned 6.5% 1.4% 0.6%

Gearing 45% 43% 42%

Outcomes delivered

£ invested in new housing supply from every £ generated from operations

£1.88 £0.54 £0.16

Effective asset management

Return on capital employed* 2.5% 3.4% 2.8%

Occupancy 95.9% 97.0% 98.4%

Ratio of responsive repairs to planned maintenance spend 46.4% 34.5% 34.0%

Operating efficiencies

Rent collected 99.4% 100.4% 100.3%

Overheads as % of adjusted turnover 11% 10% 9%

* Adjusted for a number of one-off charges/credits in order to better reflect the underlying performance and movements

Appendices



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a p p e n D i x 1 - p e r f o r M a n c e a g a i n s t 2 0 1 6 / 1 7 v a l u e f o r M o n e y i n i t i a t i v e s

Throughout this report we have discussed the VFM priorities and initiatives we set out ourselves for 2016/17 and have indicated how we have performed against these targets. The following table summarise this information for ease of reference.

priority initiative Key measure target 2017 status

Asset management

Ensure the updated Housing & Care 21 property standards are consistently applied across all our Retirement Housing and Extra Care properties

SIP jobs completed 310 jobs 285 jobs

Quality and customer service

Enhance and assure the quality of the local service offer to help improve customer satisfaction through, for example:• Embedding a framework (Court Service Agreement) for

housing managers to ensure residents are engaged in making choices for where they live so that services better meet local requirements

• Further refining the service charges policy, annual budget setting process and resident consultation

• Continuing to develop and invest in housing and court managers using the appropriate tools and training

Resident satisfaction: Retirement Housing renters

Resident satisfaction: Leaseholders

95%

85%

87%

83%

Efficiency and effectiveness

Improve service performance through a number of key financial and non-financial VFM performance indicators

Operating profit Operating marginOperational void percentageAverage re-let daysAverage responsive repair cost per propertyRepairs satisfactionLettings satisfaction

£44.8m55%2.2%

35 days£378

90%95%

£44.8m 55%1.6%

31 days £404

92%100%

retirement housing


Development Continue to develop new schemes where it is financially beneficial to do so, with the view of developing 2,100 new Extra Care properties by 2021

Extra Care property completions Extra Care property sales (excluding staircasing transactions)

113

67

11360

Asset management

Ensure the updated Housing & Care 21 property standards are consistently applied across all our Retirement Housing and Extra Care properties

SIP jobs completed 40 jobs 43 jobs

Quality and customer service

Enhance and assure the quality of the local service offer to help improve customer satisfaction, through for example:• Further refining the service charges policy, annual budget

setting process and resident consultation• Continuing to engage with residents and customers at a

local level to better understand service expectations• Continuing to develop and invest in housing and court

managers plus care staff, using the appropriate tools and training

Resident satisfaction: Extra Care rented Shared OwnershipCare customer satisfactionCare staff turnoverCare services rated at least ‘good’ by the Care Quality Commission (CQC)

95%85%95%22%97%

86%70%97%29%85%


Improve service performance through a number of key financial and non-financial VFM performance indicators

housing:Operating profit Operating marginVacant (void) percentageAverage re-let daysAverage repair cost per unitRepairs satisfactionLettings satisfaction

care:Operating profitOperating marginAverage weekly care hoursLoss making contracts

£23.0m53.0%2.5%

50 days£44890%95%

£1.9m7.6%

39,700nil

£23.4m54.1%2.4%

32 days£49187%100%

£2.1m7.8%

42,10012

extra care



Deliver a total reduction in corporate overhead costs of 20% by 2020 when compared to 2016.

Procure efficiencies to generate savings

Total corporate overheads cost

Target 5% VFM procurement savings on total contracts value of up to £57m

£19.6m

£2.85m

£18.5m

£1.20m

corporate services

3 73 6

a p p e n D i x 2 – 2 0 1 7 / 1 8 v a l u e f o r M o n e y p r i o r i t i e s

Our key VFM initiatives and targets for 2017/18, which will underpin the progress our strategic priorities, are set out in the following tables:

initiative Key measure target to 2021 target 2017/18

Invest our resources in the provision of additional homes for older people

New homes completed 2,100 Extra Care properties210 Retirement Housing properties

130 Extra Care properties

Provide homes for people of modest means

% of new supply which is available for affordable rent or shared ownership

At least 70% 83%

Consider opportunities to acquire additional quality housing from other providers

Number of homes purchased No specific target set No specific target set


Improve the quality of our regulated Extra Care services

% rated as at least ‘good’ by the CQC

100% 100%

Maintain stability within our care delivery teams

% of care staff turnover Less than 25% 25%

Improve customer satisfaction with our care services

% of care customers responding to our survey who tell us they are satisfied with the care services they receive

95% 95%

Transition towards a devolved operating model

Delivery of Project PebblesResident satisfaction with key processes:• Lettings• Repairs

Fully delivered

95%95%

Phase 1 delivered by April 2018

95%95%

Support residents to make choices about the services they receive

% of Retirement Housing courts with a Court Service Agreement in place

% of courts holding an annual service charge consultation with residents

100%

100%

100%

100%


Commit to the Investors in People (IIP) framework

Accreditation rating after formal assessment by IIP

Gold standard Gold standard

Improve staff satisfaction levels % of staff who would recommend us as an employer

95% 90%

Embrace the Government’s new apprenticeship arrangements

% of court managers trained to at least Level 3

% of care managers trained to Level 5

% of apprenticeship levy drawn down from our digital account before it expires

100%

100%

100%

100 managers to be enrolled

20 managers to be enrolled

n/a as funds do not expire in the first 24 months after levy


Investment in a digital emergency call system

Number of courts which have this new technology installed

As systems are due for replacement, all replacements will be digital

40 new installations, taking total to 70

Provide residents with access to superfast broadband and media packages

Number of residents who have access to superfast broadband

8,500 8,500


Apply Housing & Care 21 property standards across all of our properties

Investment in the stock investment programme

% of kitchens which are 20 years old or under

% of bathrooms which are 20 years old or under

% of courts with EPC rating of at least C

% of courts which have had a design-led decoration

£27m per annum

100%

100%

100%

100%

£27.3m to include:£7.0m on kitchens and bathrooms£6.1m on heating and energy efficiency

85%

85%

70%

78%

Improve residents’ satisfaction with their homes

Resident satisfaction survey result – overall % of customers who are satisfied with their home

95% 95%

providing more homes




the quality of our existing properties



3 8

a p p e n D i x 2 – 2 0 1 7 / 1 8 v a l u e f o r M o n e y p r i o r i t i e s


Financial performance of Retirement Housing business stream

Operating profit (before depreciation and allocation of central overheads)Operating marginVacant (void) percentageAverage re-let daysAverage responsive repair costs per property

£45.2m

51%1.0%No specific target set£443

£44.4m

55%1.5%31 days£411

Financial performance of Extra Care business stream

housing:Operating profit (before depreciation and allocation of central overheads)Operating marginVacant (void) percentageAverage re-let daysAverage responsive repair costs per property

care:Operating profit (before allocation of central overheads)Operating marginAverage weekly care hoursLoss-making contractsLosses generated from loss-making contracts

£26.8m

47%1.5%No specific target set£532

£2.0m

6.6%41,0000 £nil

£23.2m

51%2.0%32 days£494

£2.1m

8.2%41,0000£nil

Cost-efficiency of corporate services

Total corporate overheads cost £16.1m £17.5m

Understand our costs in relation to our peers and explain why there are differences

Ongoing benchmarking initiatives undertaken

Ongoing continual engagement Take part in one-year pilot of the Sector Scorecard

Identify opportunities to work with other housing associations of a similar nature to analyse and understand differences in our respective costs

financial performance and benchmarking


3 9



Develop research which demonstrates the impact of Extra Care services

Completion of research projects No specific target set 130 Extra Care properties

Meeting the challenge of dementia Formal recognition as a Dementia Friendly Organisation

Number of residents and staff who have become dementia friends or dementia champions

No specific target set

9,000

83%

2,100

Influencing the wider housing and care agenda

Annual conference to debate the future of older people’s housing

No specific target set Conference in October 2017

Innovation and Influence

Tricorn House | 51-53 Hagley Road | Birmingham | B16 8TP0370 192 4000 www.housingandcare21.co.uk

housingcare21 @HousingCare21 housingandcare21

Regulated by the Social Housing Regulator Reg. No. L0055Community Benefit Society FCA Reg. No. 16791R

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