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VALUE FOR MONEY Annual Report 2015/2016

‘Making a positive difference to people’s lives and our communities’

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caring

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Contents Section 1

Page No.

Introduction from the Chair: Hilary Lindsay

3

Our Value for Money priorities for 2016/17

4

2

Self-Assessment Summary

5-7

3

Value for Money Service Reviews

8-27

Responsive Repairs & Void Works

9-10

Rent Arrears & Collection

11-12

Anti-Social Behaviour

13-14

Major Works & Cyclical Maintenance

15-16

Lettings

17-18

Tenancy Management

19-20

Resident Involvement

21-22

Estate Services

23

Care & Support Services

24-27

4

Overhead Costs & Operating Efficiency

28-33

5

Delivering & Measuring Social Value

34-40

Section AA—Leaving care Section BB—Huntingdonshire Floating Support—case study

34-39 40

6

Return on Assets

41-44

7

Acquisitions & Development of New Homes

45

8

Our Embedded Approach to Value for Money Improvements

46

Appendix 1—cost and efficiencies analysis

‘making a positive difference to people’s lives and our communities’ 2

47-48


Introduction from the Chair :

Section 1

Introduction from the Chair Hilary Lindsay

Hilary Lindsay Chair

“This is Axiom’s fifth annual Value for Money report. Every year brings its new challenges and this year has not been an exception. The introduction of the 1% cut in rents for general needs housing, allied to the introduction of the new FRS 102 accounts, have presented new challenges across the sector and the need for us to deliver high performance and effective cost management has never been greater. Axiom’s strategic response to these challenges has been to focus on sustaining service delivery and performance and to introduce savings in overhead costs wherever possible. As a result of our efficiency review we have reduced our annual pension expenditure by £80,000 and reduced staff overheads by £100,000. At the same time we have continued our investment in our housing assets, such as the major refurbishment of Beech Court, underlining our commitment to high quality accommodation for older people enabling them to access flexible, person centred care in a safe, secure and warm home. We continue to improve our treasury performance, undertaking refinancing to exit from higher rate loan facilities and fixed rate hedges, where it is costeffective to do so, in order to reduce interest costs. This year we reduced our overall percentage interest charge from 5.20% to 4.85%, which will save in the region of £100,000 next year. We have continued to invest in technologies to support our housing management during ongoing times of change and produce high quartile performance whilst our repairs and maintenance performance remains amongst the best in sector with high resident satisfaction (90%) and the lowest benchmarked unit repair costs in our peer group. We are aware that our relatively high level of older persons and supported accommodation compared to total stock, allied to being a direct provider of care services, mean that comparatively Axiom’s operating costs are high when 3

compared to associations with fewer such schemes. However, the Board strongly considers these activities to be essential to ensuring our residents are able to have happy, comfortable lives, which are major determinants for long term health, thereby contributing to a reduction in health care costs for the wider community. You will find within this report new evidence of the social value returns our services deliver to the public purse. For instance a case study on our new care leaver service in Peterborough illustrating a net gain of over £48,500 and a five year study of the outcomes from our outreach support activities in Huntingdonshire which we estimate has returned in excess of £175,000 a year over and above the cost of our provision. During 2015/16, in addition to the efficiency review, we also undertook a comprehensive review of our care and support services and brought these together as a single team. There have been some tough decisions to make, including some that involved a controlled withdrawal from services that were not viable. However management integration has led to further operational cost savings and an improvement in the quality of services, through standardisation of practice, and we are now better placed to continue to grow and deliver high quality services. In summary, Axiom has continued to make real improvements in service quality, performance and in the quality of our assets through real efficiency gains. We shall continue on our VFM journey in 2017, ensuring all that we do is aligned to our mission, purpose and values. I hope that you enjoy reading this year’s report.”


Section 1

Our Value for Money Priorities :

Our Value for Money priorities for 2016/17 In March 2016 we embarked on a major review of how to best ensure the delivery of our strategic objectives. The review includes the potential for deeper partnerships and collaborations, including merger, with other organisations to create synergies, in line with our business needs and cultural fit.

Providing social value We will continue to generate social value for our commissioners and stakeholders through our wide array of services to vulnerable people. We will continue to contribute to stakeholder priorities in delivering service that offer social value and make the best possible return on the investment of scarce public resources.

We will deliver our programme of cost saving measures that will preserve the long term financial viability of the association in response to income reductions.

We will continue our work in analysing and monitoring the social return on investment we create, particularly in the work we do with care leavers and with frail older people.

We will analyse the contribution of our non-asset based services and set clear targets for these services. We will review if providing such a service is commercially sustainable and if it is not strategically important, develop an exit plan.

We will continue to develop our approach of looking at the social value return generated over the long term and how our interventions can elicit real and sustained change in behaviour and aspirations.

We shall monitor and report annually upon the financial returns achieved from each of our housing assets, set targets to improve the return on those assets and undertake cost/ benefit appraisals for underperforming assets or those which do not fit within our asset management strategy, taking into account their social value and strategic fit to the core activities of the association.

We will report annually on our social value achievements as part of our value for money report.

Creating sustainable new homes One of our strategic priorities is to complete our 2015–2018 Homes & Communities Agency (HCA) funded programme, subject to the continued viability of two older persons/ supported schemes that may be impacted by the potential imposition of Local Housing Allowance cap over rents and services (explained in Section 7).

We will reinvest savings, surpluses and efficiency gains to provide more and improved homes and services. We will review where we work and the services we provide to ensure value for money is clear and measurable.

Our 2016/17 business plan has built in assumptions for the proceeds of property sales from the Voluntary Right to Buy scheme. Sales proceeds will enhance our ability to create new homes through the use of re-cycled capital grant and capital receipts as part of the continuing utilisation of our assets.

We will maintain our culture of continuous improvement and value for money. We will benchmark our value for money (performance and cost) with peer associations.

We will submit a bid for additional HCA capital funding as part of the new 2016-2021 bid round. This will include a mix of Help-to-Buy and Rent-to-Buy general needs properties to meet the needs for affordable homes to buy or rent through shared ownership.

We will continue to produce an annual report on our value for money performance. 4


Self-Assessment Summary :

Section 2

Self-Assessment Summary In accordance with the regulatory standard on Value for Money (VFM) which came into effect on 1 April 2012, this report is the fifth annual self-assessment of how the association is achieving value for money in delivering its purpose and objectives.

Alan Lewin Chief Executive

It sets out the range of evidence that the Board have considered in support of their assessment of compliance with the standard requirements, including independent benchmarking, internal performance reports and management accounts, tenant feedback surveys, complaints analysis and internal audit. Following this robust assessment of our performance the Board conclude that the association has good evidence to support compliance with the expected outcomes of the VFM standard.

Louise Platt Executive Director Corporate Services

Areas requiring additional investigation and analysis have progressed satisfactorily and as a consequence the assurance that we can provide in this report is considered to have improved once again. We have presented a summary of the self-assessment assurance rating arising against each section of the VFM standard according to the following criteria:

STRONG GOOD REASONABLE LOW

Stuart Fort Executive Director Operations

Strong evidence Good evidence—some improvements needed to meet best practice and/or top quartile corporate improvement objectives Reasonable evidence – some weaknesses to be addressed or further evidence of outcomes required Low evidence – weaknesses requiring identified action

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Continued on page 6


Self-Assessment Summary continued Self assessment area (extract of VFM standard requirement)

A definition of VFM in the context of the organisations purpose and objectives 

Registered providers shall articulate and deliver a comprehensive approach to achieving value for money in meeting their objectives, taking into account the interests of and commitments to stakeholders.

The association’s strategic approach to VFM and use of resources  

How they are achieving value for money in delivering their purpose and objectives A robust approach to making decisions on the use of resources to deliver the provider’s objectives, including an understanding of the trade-offs and opportunity costs of its decisions.

Understanding and optimizing returns from our assets 

An understanding of the return on its assets, and a strategy for maximising the future returns on assets, measured against the organisation’s purpose and objectives.

The association’s arrangements to ensure delivery of VFM 

That its performance management and scrutiny functions are effective at driving and delivering improved performance with outcomes and outputs clearly demonstrated.

 We have provided a comprehensive and transparent report upon the range of our value for money activities and outcomes.

An understanding of the cost of delivering specific services, which underlying factors influence these costs and how they do so, and how costs relate to appropriate benchmarks.

STRONG

 We have revised and updated our VFM Policy clearly setting out commitment and approach.  In particular we have investigated the relatively high cost of some of our services compared to peer organisations, explained the basis of our central costs relative to non-diversified and diversified organisations. Identifying those areas where improvements shall be made and those where we choose to continue investment in high social value areas in line with our strategic objectives.  All board decisions require presentation of VFM issues for consideration. All members and staff have received training.

STRONG

 In light of the rent cuts introduced from April 2016, we have undertaken a wide review of the business plan and reprioritised the use of our more limited resources in order to continue to meet our key strategic goals.  The Finance & Audit Committee regularly monitor the delivery of identified cost reductions and efficiency gains.  We have expanded upon our financial analysis of return on assets across all of our housing stock into areas of energy efficiency, tenant satisfaction, stock turnover and expanded our analysis of relative social value.

GOOD

 We have examined our findings and reported to the Development & Assets Committee regularly undertaking option appraisals for properties with below average returns which may/may not lead to sale on the open market.  We have established a new target financial return (average 4% rental yield) to ensure that new developments provide an appropriate balance of financial and social value return. 

We have reported upon the outcomes of our VFM service reviews and programme of procurement and impact assessment reviews.

We have embedded VFM into our corporate strategy and staff competencies.

Through performance monitoring and delivery of targets.

We have reported efficiency gains of 1.1% (target 1.0%) and cash savings of 5.3%(target 5.9%) of group operating expenditure for 2015/16. A total of circa £700,000 gains which was £53,000 ahead of our target performance.

We have reviewed the performance of 9 different service areas over time and how trends have improved or deteriorated.

All deteriorating or Q3/4 benchmarks have been challenged and plans to improve (where appropriate to our corporate objectives) agreed.

What the organisation has achieved 

Assurance Rating

Compliance

GOOD

STRONG

Continued on page 7 6


Self-Assessment summary continued Self assessment area (extract of VFM standard requirement)

Compliance 

Measuring and knowing the social value of our outputs  

How they are achieving value for money in delivering their purpose and objectives A measurement of social returns arising from the association’s activities.

We have reported upon our second social value report on our work with care leavers within our young person foyers, illustrating with case studies how the service delivers significant social returns.

We shall produce a further report in July 2017.

The organisation responded rapidly to news of the introduction of rent cuts from 2016. We have identified target cashable savings of circa £310,000 to be delivered in 2016/17 which are monitored quarterly by the Finance & Audit Committee.

Procurement activities in the area of internal audit, data services and disaster recovery are planned. There will also be a actions taken to reduce the cost of debt, taking advantage of continuing low borrowing rates.

The Board will be undertaking an evaluation of a potential merger

Through a detailed self-assessment containing year on year trends and projections within the annual VFM report

The organisations plans for next year 

A rigorous approach to assessing options for value for money improvement, including where there are potential benefits in alternative delivery models that may involve partnerships, mergers and/or contracting with third parties.

How the board has gained assurance in respect of the VFM self-assessment. 

How they have gained assurance in reaching their view on value for money.

We have analysed the outcomes from our Huntingdon Outreach service over the last five years and illustrated the potential net gains to the public purse of £875,725.

Through benchmarking comparisons

Via peer assessments within internal audit reports and from published sector accounts

Via analysis and comparison with the 2016 HCA Unit Costs report.

Assurance Rating

STRONG

STRONG

STRONG

Following this robust assessment of the association’s performance, the Board conclude that the association has good evidence to support compliance with the expected outcomes of the VFM standard.

7


Section 3

Value for Money Service Review :

Value for Money Service Reviews Key to VFM Charts

We have used the Southern Traditional HouseMark benchmarking analysis since 2008/09 to challenge costs and performance outcomes compared to peers and to analyse trends over time in order to shape targets for improvement in the future.

Actual Performance Quartile 4 Actual Performance Quartile 3 Actual Performance Quartile 2 Actual Performance Quartile 1

As part of the benchmarking process we are able to compare the cost and performance of our services against a peer group of housing associations ranging in size from 1,000 housing units to almost 30,000 units.

P

Projected/Target Quartile 4

P

Projected/Target Quartile 3

P

Projected/Target Quartile 1 or 2

Key to VFM Dashboards

We can plot progress each year using a VFM dashboard which you will see illustrated in the examples below. Our objective is to bring all services into the green ‘Good Performance and Low Cost’ section of the dashboard.

1

2012-13 actual benchmarks

2

2013-14 actual benchmarks

3

2014-15 actual benchmarks

4

Each of these areas are reported on and monitored internally in our annual VFM Service Reviews.

5

A summary of the actual and projected findings from this exercise is given throughout Section 3.

8

2015-16 projected benchmarks based on actual results subject to HouseMark benchmarking exercise in autumn/winter 2016 2016-17 projected benchmarks based upon target performance and planned investments, subject to HouseMark benchmarking exercise in autumn/winter 2016


Section 3

Value for Money Service Review :

Responsive Repairs & Voids Works Performance We have had another excellent year in our responsive repairs service. This is a top performing area with low costs and very good performance. In the last three years we have delivered year on year improvements and continue to work closely with our partner contractors to work smarter, uncover more efficient ways of working, whilst maintaining the high satisfaction levels we achieve with residents.

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Over the course of the last year we have continued the themes that have led to this low cost/high performance service. We have operated to clear service standards and we have met with our contractors and service users jointly each month to overview performance and work together to rectify any issues that have arisen over the previous month. We have also invested in the quality of our properties which helps keep responsive repairs low. We have an efficient planned and programmed approach that is reflected by our low costs and strong performance. Our contractors also continue to perform well in our bi-annual STAR survey with 58% expressing ‘very satisfied’ with the service they receive and 86% overall being satisfied.

Continued on page 10 9


Section 3

Value for Money Service Review :

Responsive Repairs & Void Works continued Value for Money Appraisal

‘making a positive difference to people’s lives and our communities’

The direction of travel is for a continuation of past results and maintaining the current top performance. This service is our best performer in comparison with the sector as a whole. There are limited further steps we can take without invoking the ‘law of diminishing returns’ where it will be disproportional to put more effort and resources to secure minor improvements.

Performance Improvements In the forthcoming year residents will be undertaking a scrutiny review of first time fixes and looking at how we can improve upon the current performance of 80%. We shall be looking at van stocks, the diagnosis of a repair and a range of other contributory factors. We shall also continue to monitor the number of repairs we undertake and consider at how that can be reduced and how jobs can be bulked together. This is a continuous piece of work and we already have good insight data into volumes, types and geography. We will also review the work of our inhouse teams to test whether we are optimising the use of our resources or whether an expansion of our capabilities or outsourcing will offer potential to deliver additional value for money.

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Section 3

Value for Money Service Review :

Rent Arrears & Collection Performance Rent arrears and collection remains one of our strongest performing areas with current arrears for general needs and older persons services in 2015/16 closing at 2.43% and rent collection for the year reaching 100.2%. For the last four years we have expected a deterioration in this key performance area due to the significant number of welfare reforms being introduced impacting on benefit-dependent residents. We have undertaken a review of how we manage our rent arrears and collection service: maximising the use of our housing management system to ensure that it can support and trigger early intervention. We have developed and extended our payment channels to ensure more efficient transactional activity and invested in mobile working technology to improve the efficiency of our staff. The outcome has been improved efficiency and returned real value for money in improved collection rates and reduced officer handling time. This has enabled us to provide a more intensive and proactive service to those most in need while maintaining our low costs compared to sector benchmark levels. We have also made a significant improvement in our former tenant arrears performance following a systems review in 2013/14. Focus is now on early intervention work within in the current arrears process to prevent arrears from accruing in the first place and procedural improvements when terminating tenancies. In November 2015, our Board approved our Welfare Reform Strategy. The strategy is supported by an implementation plan which is overseen by our Universal Credit Operations Group, which promotes a whole systems approach to Universal Credit and direct payments.

11

The effectiveness of our preparations has now been assessed by our internal auditors Mazars in November 2015, who returned a Substantial Assurance Rating.

Continued on page 12


Section 3

Value for Money Service Review :

Rent Arrears & Collection continued

Value for Money Appraisal A central aspect of our approach includes looking at how we can target and support those most vulnerable to increased rent arrears and potential eviction, through effective customer profiling. In December 2015, we launched our revised Residents’ Census to ensure that we have the most up to date information about our tenants. At present our customer insight data has shown that just under 30% of our general needs tenants are benefit-dependent, of working age and would therefore potentially be affected by some of the reforms introduced through recent legislative and Housing benefit changes.

This work has seen a significant programme of improvements to our housing management system which has resulted in more efficient transactional activity and improved customer experience. Theses measures have included: 

Going forward we will ensure that we maximise efficiency by proactively targeting those individuals for increased support, guidance and information.

Throughout 2015/16 we have continued to invest in the development of our network of preventative partnerships and community partners including:       

Registered Social Landlord Forums Financial Inclusion Clubs Making Money Count - Fenland Step Change - national debt charity Rainbow Credit Savers Union Citizens Advice Bureau Axiom Academy - Axiom’s in-house training provider

Mobile working. Allowing staff to take the office out on the road and into customer’s homes and a reduction in paper trails. The extension of payment methods. Including ‘CallPay’, internet payment management and paperless direct debits A new survey package. Ensuring efficient and effective use of census data from customers. A customer relations module. Allowing more effective monitoring of customer transactions and communications. A doorstep payments facility. Creating improved rent collection opportunities.

Planned Improvements

Our in-house income management advisor has continued to play a pivotal role in developing these partnerships which in turn has directly benefited our more vulnerable residents. In 2015/16 the income management advisor assisted 73 residents to access £196,488 in financial support. Of this figure £74,000 was attributable to housing benefit and therefore directly contributed to tenancy sustainment. A key feature of our value for money programme in 2015/16 has been the continuation of our back office transformation process. 12

2016/17 will see us continuing to develop the use of the improvements cited above as we extend our activities towards a broader Channel Shift initiative. In the next 12 months we are planning to implement and develop a series of improvements that will include:    

Extended use of our text messaging facility. Expanding the use self-service payment platforms. Increased use of customer insight information. Undertake a feasibility assessment on the introduction of a self-service tenant portal.


Section 3

Value for Money Service Review :

Anti-Social Behaviour In May 2015 we implemented our new anti-social behaviour (ASB) case management procedures. Our new approach was informed by a large scale review following an internal audit, undertaken in 2015, that returned an inadequate assurance rating and identified a series of required improvements. Twelve months after the introduction of the new procedures being implemented, a follow up audit was commissioned and we are happy to report that March 2016 recorded a substantial assurance rating in this key service area. To support the introduction of our new policy and procedures, all customer-facing staff undertook training and we implemented a robust schedule of compliance checks that are reported on a monthly and quarterly basis to the Executive Team and to the Residents’ Services Committee. Key managers attended regular round table sessions throughout 2015/16 to share best practice and this continues in 2016/17. Any areas of poor performance are fed back to service managers for remedial action and to promote continuous improvement.

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Our revised approach has been well received, from transactional surveys throughout 2015/16; we have recorded our customers returning improved satisfaction results in terms of both case handling and outcomes. As we move into 2016/17 we aim to exceed our set targets as shown below:

ASB satisfaction

Target 2016/17

Handling

80%

Outcome

75%

Continued on page 13 13


Section 3

Value for Money Service Review :

Anti-Social Behaviour continued Performance p

To support the new procedures, we invested in a contact management module within our housing management system to deliver efficient processing of ASB cases via the automation of procedures. Essential investment in learning and staff training has taken place throughout the last 12 months, causing an increase in unit costs per property during 2015/16, however additional expenditure will not be required in 2016/17 and we thus expect unit costs to decline.

Value for Money Appraisal Our historic unit costs per property for ASB have been low. Following a restructure in June 2014, we retained a dedicated ASB officer to inform our improvement activities and implement our new approach. As we entered 2016/17 the new procedures have been systemised and embedded across all teams and we have now been able to remove this dedicated role. During 2015/16 we have:   

 

  

Planned Improvements We are committed to ensuring that there are continued improvements in this key service area and we will continue with the following planned activities: 

Staff have undertaken HATE Crime Training with a specialist police unit. Upgraded our housing management system. Revived our membership on local multi-agency partnerships and networking forums to best practice and liaise with key professionals who can support and advise on the resolution of complex cases. Resourced free training. All Housing Officers undertook multi-agency estate walks on a quarterly basis where local councillors and PCSOs are invited to attend. Attended HouseMark best practice ASB club have accessed resources. Embarked upon an awareness campaign entitled ‘Put yourself in their shoes’. Launched a national training course ‘ASB in sheltered housing’ in partnership with an ASB consultant. 14

Quarterly compliance checks via our retained internal auditors and will implement any recommendations accordingly. Monthly compliance checks undertaken by our internal safeguarding and quality assurance officer. Weekly case monitoring with immediate management teams. Weekly publication of performance against target across the wider organisation. Retain membership at the ASB HouseMark Club.


Section 3

Value for Money Service Review :

Major Works & Cyclical Maintenance Performance

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We have had a successful 12 months achieving improved performance alongside a significant reduction in unit costs. Our asset management strategy has continued to be refined over the last six years and provides us with a clear, structured approach. This allied with monitoring systems that ensure we operate with live rather than past data, has helped deliver the reported improvements and maintain them.

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As part of our Strategy, we survey 20% of our properties every year and ensure continued 100% decent homes compliance. We have systems in place to enable flexibility within our programme that ensures we can respond quickly to change and tackle areas where components are starting to deteriorate.

to ensure the schemes are fit for purpose, offer high standards of accommodation and narrow the gap between the exceptional standards in our extra care and our older persons’ housing provision, making them attractive to those who may be looking to move on from general needs accommodation.

We have a good balance between the investment choices we make and ensuring we make the best use of the resources we have at our disposal.

Beech Court housing and care scheme

In 2015 we commenced a programme of refurbishments on our older persons’ housing schemes and we undertook major works at our largest scheme, Beech Court, investing over £1 million in a comprehensive overhaul of living accommodation and communal facilities. This project is now established as a flagship ‘housing with care’ scheme, complementing our other business stream for delivering care, and we now have a permanent care team based on site. This approach will be replicated at other older persons’ schemes in future years 15

Continued on page 16


Section 3

Value for Money Service Review :

Major Works & Cyclical Maintenance continued Value for Money Appraisal There have been demonstrable improvements in cost control and operating performance. Our costs have reduced as a result of targeted investment. Performance has improved as a result of our work with our new partner contractor. After two years we are seeing the benefits of that partnership approach with better working relationships and a shared focus on costs and quality.

Planned Improvements This continues to be an area where we already have low costs and high performance. We have invested in Capita ‘Scenario Planner’ to model the scale and nature of our investment in components and ensuring we continuously monitor decent homes compliance.

Caring Committed Creative

A further refurbishment of an older persons’ scheme is underway at Moorside Court in Lincolnshire during 2016/17. As part of our continuing reinvestment in older persons’ accommodation the completed project will provide a combined care, support and housing offer to be implemented across our schemes to meet the aspirations and standards of residents for the 21st century. We shall again re-evaluate our approach to investing in and improving our older persons housing schemes whilst also keeping a close eye on our supported housing projects to ensure that accommodation is also maintained at the appropriate standard. 16

‘making a positive difference to people’s lives and our communities’


Section 3

Value for Money Service Review :

Lettings Performance A Choice Based Lettings (CBL) service operates in Peterborough and across the Cambridgeshire sub-region (via the Homelink service) covering East Cambridgeshire, Huntingdonshire and Fenland. CBL is also operating in West Lindsey. The only area in which we operate where there is a traditional allocation system is in South Kesteven. We also have dedicated allocation panels managing and prioritising allocations into our extra care schemes. Following our 2014/15 voids simplicity review we have seen an improved performance across our general needs and housing for older person’s performance in 2015/16. The review, which concluded in May 2015, initially agreed the following success factors:    

To reduce the volume of empty properties. To reduce void loss. To reduce re-let times. To identify and prevent the return of voids that require extensive work.

(Archive photo—Asset Management Team)

The key actions arising from the review and implemented throughout 2015/16 were as follows: 

   

 

Introduction of a new compliment of performance key performance indicators for contractors. Meetings with commissioners to review eligibility criteria and allocation panels in extra care. Tighter communications between inhouse teams. A review of the tenancy termination procedure. Undertaking new tenant satisfaction questionnaires. Restriction of internal transfers which were more common place in our sheltered housing under one roof schemes. Re-introduction of pre–void inspections (in-house). Bringing void inspections in-house.

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The results have been extremely positive as the charts (right) portray. Continued on page 18 17


Section 3

Value for Money Service Review :

Lettings

continued

Value for Money Whilst the benchmarked total cost per property position in this area of activity has been relatively unchanged for the last three years, we can clearly see the positive impact the implementation of our review has had on performance, particularly with regards to reduced void loss 2012/13 and re-let times. Cost per property Median Benchmark

£87 £75 Q3

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ACTUAL

BUDGET

2013/14 2014/15 2015/16 2016/17 £75 £78 £78 £79 £77 £81 £81 £81 Q2 Q2 Q2* Q2* * Estimated

Specifically; the ratcheting up of pre-termination measures has assisted us to improve communication across teams, reduce former tenant arrears and improve the condition of returned properties, thus reducing the re-let times and the amount of void work necessary.

In addition to this, our new tenant satisfaction questionnaire responses have informed our thinking around void standards and have helped formulate a new set of performance indicators to be applied against our contracted services and to help manage the work streams within our in-house teams more effectively.

Planned Improvements During 2016/17 we have embarked upon our third and final phase of the voids simplicity review. We are now focussed on maximising the efficiency of our housing management systems to ensure that we can automate and streamline our processes and enable us to better integrate and analyse our data.

We recognise that there are a number of imminent welfare reforms that may also impact on our void performance going forward. Specifically these include proposals, contained within the November 2015 autumn Spending Review, in relation to the Local Housing Allowance shared accommodation rate and particularly its impact to those under 35 years of age.

This work is due to be completed by the end of quarter two in 2016/17. To summarise our key improvement actions for 2016/17 are as follows:   

Activate the voids module within our housing management system. Assess the potential benefits of introducing mid-week tenancy lettings. Continue to review our new tenant satisfaction questionnaires to inform void standards, sign up procedures, former tenant arrears collection. Continue to review refusal reasons.

We are therefore working with our local authority partners to review our allocations policies, considering the potential of introducing affordability assessments to identify all those new tenants who may be affected by such changes. In addition to identifying families and individuals who could have affordability issues either due to reducing benefit caps or insecure or low paid work.

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Section 3

Value for Money Service Review :

Tenancy Management Performance Benchmarked performance for tenancy management services is assessed by HouseMark using the annual percentage of tenancy turnover, the percentage of evictions and overall satisfaction percentage. Following our third STAR survey (Survey of Tenants and Residents) undertaken in June 2016, we can report that taking everything into consideration 88% of residents are satisfied with the service provided by Axiom. This maintains the standard achieved in our 2014 survey. We have a high tenancy turnover in comparison with our peer group (average of 11.8% turnover per year over the last three years). We attribute this to the mix of our property portfolio, which has a relatively high ratio of flats and smaller properties.

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As expected, following a series of announcements within the emergency budget 2015 and the autumn statement of the same year, we have seen a slightly higher turnover of tenancies than that of 2014/15. In May 2015 we established our Universal Credit Operations Group which looked at a number of measures to support tenancy sustainment, prevent evictions, reduce turnover and crucially respond to the ongoing welfare and social housing reforms. Amongst the outcomes arising from this group’s activities we have revised the role of our Income Management Advisor. This role plays a pivotal part in supporting new and existing tenants who may be experiencing financial hardship and there is a clear focus upon delivering income maximisation, support and guidance. Further to this we have introduced a revised sign up process that includes an affordability assessment that can alert us to potential problems or vulnerabilities. As a result of organisational changes, patch officers have now been in place for 12 months and this approach is working well.

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Our investment in mobile working technology has been part of this change and is generating greater visibility amongst tenants out on our estates and enabling more effective, targeted visits to tenants on a prioritised basis specifically where we have identified those in need of additional support.

Continued on page 20


Section 3

Value for Money Service Review :

Tenancy Management continued

Value for Money p

Total costs per property for tenancy management have remained in the second quartile of performance relative to our peers for the last three years.

ACTUAL

BUDGET

2012/13 2013/14 2014/15 2015/16 2016/17 Cost per property As part of our continuous Upper Quartile improvement programme, we Benchmark have during the past two years introduced a series of programmes that are transforming the way in which we work and deliver services to our customers.

Throughout 2015/16 this has included the following: Mobile working: We launched this approach in November 2015 across Housing and Income Team and staff time is already improved, reducing the need for duplication/double entry, and reducing paper based work load. Upgrades to our Housing Management system: During 2015/16 we embarked upon a series of housing management upgrades to support more efficient working practices and our ‘One Team’ ethos, these have included procuring a customer relations module, developing our contact management module and our new survey module. Tenancy Fraud: Our gas contractors are now undertaking ID checks on our behalf when undertaking gas servicing or smoke alarm checks, which ensure that each of our properties are entered annually. Every Contact Counts initiative: All front line staff will ensure that series of key details are updated on our housing system, utilising every contact as an opportunity for positive intervention. Concern cards: In line with our Every Contact Counts initiative, contractors are able to advise us of any concerns when visiting an address in terms of welfare or hardship, that officers are then able to follow up. 20

£160 £109 Q3

£155 £115 Q2

£147 £106 Q2

£154 £150 £106 £106 Q2* Q2* * estimated

Planned Improvements For the year ahead we are continuing our back office transformation process by looking to implement:   

Work flow modules. Continuing to develop our use of mobile working tools and systems. Optimising the use of our Electronic Document Management system.

In addition, in May 2016 we launched our Channel Shift Project—looking at optimising the use of emerging and existing technologies to provide a more cost effective and accessible customer service offer to our digitally engaged tenants. In 2016/17 we are planning to: 

Assess the benefits of procuring a tenant portal which will allow tenants to undertake a series of transactions at a time and a place that fits in with their lifestyle.

Expand our payment methods.

Employ a dedicated home ownership officer to oversee the management of all our leaseholders and shareholders who have traditionally been less satisfied than their general needs, older persons housing and supported housing counterparts. We envisage that the home ownership officer will transform the customer service offer currently available to this group of customers and will manage all potential voluntary right to buy applications and enquiries.


Section 3

Value for Money Service Review :

Resident Involvement Performance At Axiom we believe in the value for money and social value returns that true resident involvement can achieve. In our STAR survey 2016, 75% of our tenants reported that they believe that Axiom listens to their views and acts upon them. We are typically able to engage around 15% of tenants. Throughout 2015/16 we revised the way we conducted a number of activities within this area to ensure that we operate efficiently, provide added value to as many as possible and crucially capture those returns. In October 2015 we achieved the Tenant Participation Advisory Service (TPAS) landlord accreditation for our services in this area and have now started to implement some of the arising best practise recommendations from this audit. In addition to this, in November 2015 key staff and involved residents from Axiom Residents’ Forum (ARF) attended a TPAS training event on Value for Money. Our resident involvement costs slightly increased throughout 2015/16 due to the extensive consultation undertaken during Axiom’s largest redevelopment project. The £1.2m refurbishment of our 60 unit older persons’ scheme at Beech Court saw residents at the heart of the design plans, working on procurement of interior designers, planning days out to help with the disruption, agreeing various fixtures, fittings, front doors etc. Axiom highly values engagement with our customers and the level of service, support and engagement that Axiom offers impacts positively on vulnerable tenants’ sense of well-being.

‘making a positive difference to people’s lives and our communities’

Celebrating with residents, stakeholders and contractors at the re-opening of Beech Court following the £1.2m refurbishment project

21

Continued on page 22


Value for Money Service Review:

Section 3

Resident Involvement continued

Value for Money The Association employs a dedicated Resident Involvement Manager to oversee the implementation of the annual Resident Involvement service plan in line with our strategy. Whilst this approach places our comparable costs in the lower quartile of peer benchmarks, we Cost per property view our ability to involve and Median Benchmark engage residents in a meaningful Benchmark way across a broad range of activities as a genuine strength and believe that this also provides a platform from which to provide value from money services by reducing waste and complaints, supporting our approach to ‘getting things right the first time’. Central to our approach are our customer service panels. Our service panels are comprised of key staff and involved residents, who typically review and scrutinise relevant performance information, policies and procedures on a quarterly basis. The panels are as follows: Community Improvement Panel, Housing Management Panel, Maintenance Advisory Panel, Gas Servicing & Responsive Repairs, Equality & Diversity, Disability Users Group and Compliments & Compliant Group. Estate Improvements: Our Community Improvement Panel preside over a pot of money which is distributed largely in response to applications from the wider tenant population for general estate improvements to communal areas, including: lighting, car parking, garden areas, benches etc. The Disability Users Group also serves a similar function, but is specifically focused on improving the accessibility of communal areas. The fund again is presided over by a group of tenants and key managers. Throughout 2015/16 both groups have worked alongside tenants to improve the appearance and accessibility of over 50 sites benefited the physical and social community of over 900 tenants across our portfolio. Axiom Residents’ Forum (ARF): In 2015/16 ARF were nominated for an award for their charity work. ARF have worked with some of our contractors and received donations totalling £500 from each of our three major contractors. With this money they prepared starter packs filled with bedding, underwear and toiletries for homeless young people moving into our Foyer accommodation. This wonderful project continues throughout 2016/17. 22

p

ACTUAL

BUDGET

2012/13 2013/14 2014/15 2015/16 2016/17 £100 £108 £101 £105 £97 £79 Q4

£69 Q4

£78 Q4

£78 £78 Q4* Q4* * estimated

Planned Improvements In July 2016, the Board agreed our new Resident Involvement & Service User Inclusion Strategy which commits to the following key changes: Community Engagement. We have embarked upon an exciting project within our largest estate at the heart of Peterborough. The Bretton Residents’ Association represents just under 400 tenants and leaseholders and are in the throes of promoting a series of community events, including: fence painting, litter picking, gardening projects and applying for funding for a variety of resources and infrastructure projects. Developing our approach to resident involvement through social media and digital inclusion. Reducing the need for formal meetings and meeting people at a time that suits their requirements thereby increasing those numbers currently involved whilst reducing mileage costs. Reviewing our approach to our quarterly satisfaction surveys undertaken by our resident armchair auditors, entitled Volume Controllers. We have launched our new embedded approach to scrutiny, and will be utilising the expertise within the operational service panels, where staff and residents work alongside one another, to fulfil this important function going forward. Assessing the potential to merge a number of the service panels.


Section 3

Value for Money Service Review:

Estate Services Performance Over the last three years we have steadily reduced costs in the area of service delivery and are reducing units costs gradually towards the second performance quartile which we target to achieve in 2016/17. Our Estate Services Officers, complemented by our in house grounds maintenance team and our cleaning contractors, work hard to deliver good performance whilst maintaining value for money.

Value for Money While we have reduced costs, we have maintained satisfaction levels over the course of the last year. The recent results of the STAR survey has given us further intelligence on where to target resources and how resident satisfaction can be improved. We have seen a 3% increase in the satisfaction levels on the appearance of our neighbourhoods.

Planned Improvements Our STAR survey action plan will include looking at contacting residents who do not feel that estate services are of the right standard. We shall use their feedback to shape services.

ACTUAL

BUDGET

2012/13 2013/14 2014/15 2015/16 2016/17 Cost per property £236 £245 £241 £239 £200 Median Benchmark £208 £227 £202 £202 £202 Benchmark Q3 Q3 Q3 Q3* Q2* * estimated

Our Grounds Maintenance team are also part way through implementing the results of a Scrutiny review undertaken by our Scrutiny Panel in 2015. There are a series of recommendations which we seeking to implement in 2016/17.

23

‘making a positive difference to people’s lives and our communities’


Value for Money Service Review:

Section 3

Care & Support Services Supported Housing Our supported services continued to achieve positive outcomes in an ongoing challenging cost environment in 2015/16. We have now embedded delivery in our revised operating model with end of year positive outcomes for clients standing at 84%, a real value for money achievement both in cost per client and social value outcomes. The performance was notable during the year for the following specific achievements: 

Retaining all our support contracts in Lincolnshire, with new contracts commencing on 1 July 2015.

The commissioning of a new move on accommodation facility in Peterborough, which opened in May 2015.

New mental health accommodation in Peterborough, linked with our existing services in offering added value for money.

The building of a new young persons foyer in Gainsborough and negotiating funding for support for 6 of the 12 beds from West Lindsey District Council.

The transition of services at Market Rasen Foyer, to providing emergency and non-emergency accommodation for homeless adults. A new service meeting identified need within Lincolnshire.

The commencement of development planning for a new foyer in Melton Mowbray (a new area of operation).

The delivery of a Crisis-funded, private rented sector service based within our homeless hostel in Peterborough providing additional £25,000 income.

The completion of the Healthy Conversations initiative in our foyers to improve the health and wellbeing of young people. This brought in an additional £75,000 to the organisation for opportunities for young people accessing our services.

Providing a severe weather emergency provision for rough sleepers to ensure they didn’t spend nights outside in adverse weather risking their lives.

Working with a local faith based group to provide meeting facilities for a winter weather service provided by churches within the Peterborough diocese. 24

Gainsborough Foyer December 2014 and June 2016

Healthy Conversations Programme

Continued on page 25


Section 3

Value for Money Service Review:

Care & Support Services continued

Supported Housing continued Our Mental Health Outreach Service continues to offer a high quality, responsive mental health service to the community in Peterborough and Huntingdonshire.

Our response to the re-tendering of support contracts in Lincolnshire provide an excellent example of the value for money principles we adopt in supported housing. As a smaller provider, we would not have had sufficient resources to compete across the county so we joined a partnership that meant we were able to bid competitively for our whole range of services. We retained all of our existing services and won additional contracts.

At the end of the year this service was supporting over 70 mental health clients to retain their independence and live with support in the local community. The support from the service reduces the number of long stay hospital admissions for clients who are enabled to effectively manage their mental health, reducing crisis admissions. It also ensures that clients can manage their tenancies, reduce the likelihood of anti-social behaviour either perpetrated unwittingly by clients, but also working with the local community to understand their neighbours’ needs.

Following an internal review, we quickly assessed that the start up and management resources required for a small number of the new contracts awarded would not deliver value for money and we therefore elected to transfer these contracts to other members of the partnership.

The service can also support clients with accommodation move to more suitable accommodation and reduce the risk of evictions.

To improve our evidencing of social value returns and record service user outcomes, during 2015-16 we invested in ‘Outcomes Star’ an online monitoring tool that records support planning goals and achievements for service users enabling us to report more tangibly the outcomes achieved for our service users.

The service is well regarded by commissioners and offers real value for money with good examples of cost savings to the public purse.

Planned Improvements Supported Housing services will continue to build on the quality and evidence bank of the added value provided by our services. We have provided a social value case study on our Huntingdonshire Floating Support Service on page 40 which provides an example of the work that we are undertaking. The social value provided from supported housing and outreach services far outweighs the input of grant and/or revenue funding received and we shall ensure that we continue to evidence this work to support our activities. Supported Housing services will continue to build on the quality and evidence bank of the added value provided by our services. Continued on page 26 25


Value for Money Service Review:

Section 3

Care & Support Services

continued

Older Persons Accommodation Services Performance within our older persons’ accommodation (formally referred to as sheltered housing) continues to remain strong and stable despite considerable changes both internally and within the wider sector over the last 12 months. Following a full scale review in 2014 of the support service provided to our older residents, a further review of the management and administration of this department started in October 2015 to consider the opportunities to make efficiencies between our extra care support service and Axiom Care. There are now fewer Service Managers under direct line management control as a result, and so we have also been able to make further savings through the withdrawal of a part time Sheltered Housing Manager post generating direct cost savings of £31,720 per annum. In terms of accommodation, Beech Court in Littleport was the first scheme to undergo a full refurbishment of the individual flats and the communal areas and grounds at a cost of £1.2m.

Beech Court Littleport

Planned Improvements Our second full refurbishment is underway at Moorside Court in North Hykeham, Lincolnshire. The 24 bedsit style flats are having new kitchens, bathrooms, doors and a full electrical upgrade. The communal areas are receiving a facelift with the creation of two small buggy stores and a dedicated games room, computer room and guest facilities. This refurbishment will provide attractive accommodation that will assist with void issues, reduce running costs, improve facilities and improve accessibility. Planning for our third sheltered scheme refurbishment is due to start in the Autumn 2016. In term of our service, we are looking to create an additional hybrid post whose primary role is to provide relief cover to our Service Manager’s, but to also further strengthen the administration team for Older Person’s Services. This will enable the Head of Service to spend their time more effectively with a strategic focus to further drive the service forward. Service Improvement reviews are currently underway involving the following areas of operation: 

The much improved accommodation and general environment is planned to alleviate the historic issue we have experienced with voids by reducing both the number of weeks vacant and the associated loss of rental income, as well as lowering ongoing maintenance costs. The rear garden has been landscaped into a courtyard style, much of it as hardstanding resulting in a cost reduction for grounds maintenance services to residents as a result.

     

Void Management Health & Safety (including fire safety) Managing the Building Tenancy Management (arrears) Providing Support Resident Involvement Service Continuity

The resulting recommendations, if implemented, will not only enhance current service provision but will create further value for money improvement opportunities saving time and resource. It is also envisaged that our Extra Care Schemes will also benefit from these reviews as they will also able to implement a number of the recommendations. 26

Continued on page 27


continued

Axiom Care (previously Axiom Crossroads Care) The highlight of the year was successfully tendering to deliver care on our extra care schemes in Peterborough. This was the result of an extensive tendering exercise and when the results were announced at the end of June it then led to an intensive period of work as the contracts were mobilised at Friary Court and The Spinney on Monday 27 July with The Pavilions following closely behind on Monday 10 August.

The care team at Friary Court extra care scheme, Peterborough

Value for Money Service Review:

Section 3

Care & Support Services

The contracts have run well over their first eight months with a real focus on settling the transferred care teams into our ways of working and ensuring that the schemes are CQC compliant.

Planned Improvements

The extra care schemes have all made a surplus in their first financial year and we will be looking to develop and strengthen the services in their second year. The hub and spoke approach on our sheltered schemes in Peterborough and Godmanchester struggled throughout the year and in the last quarter of year we decided to withdraw from the hub and spoke services in Peterborough and Godmanchester, enabling management to focus entirely on the six remaining service locations comprising of our five extra care scheme locations and the remaining hub and spoke service in Beech Court (our newly refurbished scheme in Littleport).

We have been notified that Cambridgeshire County Council will be increasing their hourly rate to care providers. This is welcome news for our Beech Court service. Our extra care contracts at Bircham House and Willowbank reach the end of their initial three year terms in September 2016. They have the option of two year extensions and we will be looking to extend the contracts. During 2016/17 Axiom Care will continue to develop its services and to achieve value for money, we will: 

 

At the close of 2015/16 Axiom Care were delivering in the region of 2,400 hours per week (2014-15: 900 hours per week), the increase was due to the addition of the Peterborough extra care contracts from the second quarter of the year.

 

Although Axiom Care recorded a trading deficit for the financial year of over £70,000, it achieved a trading surplus in the final quarter of the year as the service reached a critical mass of contracts sufficient to cover its restructured and leaner infrastructure. 27

Continue to review the use of our rostering system, making the best use of employee time and improve utilisation rates. Manage the challenge of increases in the national living wage rates. Continue to work in partnership with our commissioners to optimise returns on our contracts. Review employee training to ensure we are achieving the best value possible. Ensure we maximise training opportunities from skills for care. Grow the hub and spoke service at Beech Court.

We are targeting each of our services to deliver a surplus in 2016/17 and this is particularly important with the impact of the increased minimum wage in the forthcoming years.


Section 4

Overheads & Operating Efficiency:

Overhead Costs & Operating Efficiency As a smaller diversified association, we have regularly reported upon the issues of comparison to the housing sector as a whole.

It is only when a comparison is made with peer group associations delivering similar ‘upper quartile’ levels of older persons and supported housing activity that we can begin to identify valuable corporate benchmarks.

The association’s operating margin efficiency compares relatively poorly with the broader sector, even when limiting benchmark comparators on the basis of region and scale.

The table below, extracted from the HouseMark Southern Traditional peer group report for 2014/15, reveals an operating margin efficiency that is amongst the strongest of our direct peers, taking into account our diversity and organisational size.

HouseMark 2014-15

Operating margin %

Rank

Quartile

6.3%

7

Q4

% Supported & Housing for Older Persons

% Supported Housing

Total Units Owned / Managed

46.7%

42.9%

2,030

Bournemouth Churches Housing Association* Croydon Churches Housing Association

14.5%

4

Q4

40.1%

18.4%

1,331

Axiom Housing Association

24.4%

2

Q3

32.9%

10.4%

2,250

Christian Action Housing

21.2%

3

Q4

27.7%

11.8%

1,446

Orwell Housing Association

12.4%

5

Q4

21.2%

7.9%

3,429

Cambridge Housing Society

25.5%

1

Q3

14.3%

6.7%

2,669

8.6%

6

Q4

13.6%

5.8%

3,424

Salvation Army Housing Association

*operating margin calculated from 2014/15 annual report

Table 1

The impact of housing diversity on operating costs has also been independently reported by the Homes & Communities Agency (HCA) in its recent report ‘Delivering Better Value for Money: Understanding Differences in Unit Costs’ which was published in June 2016. This report built upon analysis previously reported in 2012. Within it the HCA defined a ‘headline social housing cost per unit’ measure to analyse Global Accounts cost data across the sector. This is a deliberately broad measure which brings together management, service charge, maintenance, major repair and social housing costs in order to minimise the impact of different approaches to apportioning costs in financial statements which limit the value of accounts data as a tool for comparison. The report identified that in 2015 the mean average headline social housing cost per unit across the sector was £3,950 per year, and the median cost was £3,550 per unit. However there was a significant cost variation across the sector. Axiom’s base comparison with the data is presented in the table below:

Table 2

Continued on page 29 28


Section 4

Overheads & Operating Efficiency:

Overhead Costs & Operating Efficiency The HCA carried out statistical analysis to identify the extent to which variation in unit costs between providers might be explained by differences in measured factors. The analysis identified six key factors which together could explain around 50% of the cost variation between providers. These factors are:      

Supported Housing Housing for Older Persons Regional Wage Levels Neighbourhood Deprivation Stock Transfers Decent Homes

continued

Using the data provided we are able to calculate an adjusted headline social housing cost per unit for Axiom in 2015 by removing notional additional costs for the delivery of supported and older persons’ accommodation and by increasing the notional wage costs. The adjustments give rise to an average cost per unit of £3,200 which would place performance at the lower quartile for the sector. The report from the HCA explains that the sector is planning to make cost reductions on all key measures between 2016 and 2020 and included data on sector forecasts of headline social housing costs per unit.

For Axiom, three of these factors are relevant; the level of supported and older persons housing and regional wages. The HCA analysis quantified the average additional costs associated with Supported Housing to be £10,800 per unit per annum and £1,800 per unit per annum for housing for older persons.

Figure 1

The chart below illustrates how, after bearing the costs of restructuring and SHPS past deficit provisions in 2015-16, the adjusted unit costs for Axiom remain below the sector average position and are projected to reduce more steeply than others during 2016-17 as a result of planned efficiency measures.

Continued on page 30 29


Section 4

Overheads & Operating Efficiency:

Overhead Costs & Operating Efficiency

continued

Management of overheads and improving the efficiency of back-office services is a key area of improvement during the next four years as the sector delivers 1% rent cuts. The trends in Axiom’s overhead expenditure are monitored against growth and rising activities across the whole group. As a provider of care and support activities, housing unit growth is not the most significant driver for overhead increases, and so, as Figure 2 reveals, over time the ratio of overheads per unit of housing have increased.

Figure 2

Figure 3

As Figure 3 indicates, overhead expenditure has risen during 2014/15 and 2015/16. Each year we set targets to control the growth of overhead expenditure and for 2016/17 plans have been drawn up to reduce costs in response to rent cuts. During 2015/16 central expenditure was increased under the authority of the Board to permit the delivery of the following key strategic actions:      

Completion of a Governance Review involving a restructure of Board and Committees. Independent advice regarding the Board Member recruitment and pay. Introduction of the assets and liabilities register. A review of SHPS pension arrangements leading to a reduction in future pension benefits to staff. A restructure of back office teams. Support for Axiom Care in bid for care contracts in Peterborough and restructure of operations.

Excluding the above activities, overhead departments controlled expenditure to 1% below budget (2014/15: 2.7% below) which represented a £23,000 saving, that was however, insufficient to meet the target for payment of a corporate bonus to staff. The success of Axiom Care in its acquisition of three new care contracts during 2015/16 means that the ratio of central overhead costs compared to group turnover and direct costs have decreased and are projected to continue to fall in the current financial year as activity from Axiom Care becomes a more significant part of the overall group’s operations as illustrated in Table 3 below.

Table 3: Profile of overhead cot ratios over time 30

Continued on page 31


Section 4

Overheads and Operating Efficiency:

Overhead Costs & Operating Efficiency

continued

Operating margin performance is tracked as an overall measure of financial business improvement. In 2015/16 a drop in operating margin occurred for the first time in five years as the association undertook changes to improve future efficiency and to meet added regulatory requirements. The successful addition of three new contracts to Axiom Care in 2015/16 added valuable income to the group, albeit at a lower operating margin than traditional housing and support services leading to a dilution of group operating margins of circa 1%. During the 2015/16 financial year, care in the community activities continued to fall short of growth and surplus targets. The Board therefore responded by acting to withdraw from community care contracts in order to focus management efforts on the delivery of contracts within five extra care locations and one sheltered scheme.

Table 4: Profile of historic operating margin trends using pre-FRS102 accounting

The association’s business plan projections have been modified to respond to the imposition of 1% rent cuts over the four years from 2016-17 to 2019-20. The table below indicates that we anticipate a strong recovery in operating margin during 2016-17 as a result of the accounting changes under FRS102 following the provision for SHPS pension deficits in 2015-16. Excluding the impact of pension accounting, the trend of reducing operating margin performance caused by rent cuts is more visible:

Table 5: Profile of actual and projected operating margin trends using FRS102 accounting

The operating margin continues to be the focus for overall corporate efficiency within Axiom, and employees participate in a self-funding bonus scheme that is subject to delivery of a stretch target. Operating margin projections are published in the employee newsletter on a monthly basis.

Continued on page 32 31


Section 4

Overheads and Operating Efficiency:

Overhead Costs & Operating Efficiency

continued

Actions from last year The Association has continued with its comprehensive programme of VFM initiatives during the year realising actual gains and cash savings in 2015/16 of 6.4% of the Association’s annual operating costs (net of depreciation) which is £52,800 higher than anticipated in last year’s report.

Procurement In 2014/15 we completed planned procurement tasks in respect of asbestos inspections, gas servicing and replacement, mobile phone services and commercial banking facilities. The anticipated annualised savings derived from these activities has now been measured and is delivering approximately £86,000 of annualised savings.

Organisational Change During the last three years the Association has undertaken a significant programme of organisational change involving employee reorganisations across supported housing, older persons and general needs housing, finance, and performance management. Specifically in 2015/16 the transfer of care activities into the Association has further facilitated an integration of management across older persons’ services.

New Technology The investments our virtualised server environment and new voice over internet protocol (VOIP) telephony system continue to pay dividends. We added over 10 servers to our network in 2015/16 which would have previously cost in excess of £40,000 in new server hardware in a non-virtualised environment. The VOIP system has also reduced Axiom House telephone costs by more than £5,000 per year. Finally, the investment in paperless storage technology has enabled the reduction of off-site storage costs from £12,000 per year to £4,000 per year.

New Ways of Working Axiom Academy continues to coordinate and deliver training across the association which has resulted in savings for several courses. The facilities at Axiom House have also enabled various events to take place on site, saving the costs of booking externally. Finally, the rationalisation of surveys sent to our tenants has also enabled savings in employee time, postage and stationery.

Asset Management Strategy The voluntary disposal of older housing units has continued to provide sources of funds for re-investment in new properties, and has avoided uneconomic improvement expenditure in assets nearing their useful economic life. As at March 2016 the association had accumulated a balance of £399,000 of recyclable grant that will be reinvested in future development. Continued on page 33 32


Section 4

Overheads and Operating Efficiency:

Overhead Costs & Operating Efficiency

continued

Cumulative Gains:

Cumulatively the Association has now reported over £2 m of cost and efficiency gains representing 7% of the operating costs (net of depreciation) over the 3 year period . 2013-14

Capital Investment / Up front Efficiency Cost Gain VFM Intervention £'000 £'000

Actual Cash Saving £'000

2014-15 Efficiency Gain Cash Saving £'000 £'000

Total Gain £'000

Impact Assessment £

12.0

£

13.7

£

37.1

£

50.8

£

New Technology £

139.5

£

26.5

£

17.3

£

43.8

£

-

£

12.0

£

6.8

£

18.8

£

252.0

£

145.3

£

208.6

£

353.9

-

£

54.5

£

31.3

£

85.8

New Ways of Working £ Organisational Change Programme £ Re-tendering £ Re-financing £ Asset Management Strategy £ Simplicity Review £

£

70.7

£

-

£

-

-

£

4.7

£ 256.6

£

-

£ 301.2

Annual / Cumulative Operating Costs (net of depreciation) Gain /Operating Costs

£

-

-

474.2

2.9%

3.4%

2015-16

Actual

13.7

Actual Cash Saving £'000

Efficiency Total Gain Gain £'000 £'000

Cumulative since 2013-14 Actual & Anticipated* Efficiency Cash Total Gain Gain Saving Total Gain £'000 £'000 £'000 £'000

£

44.0

£

57.7

£

3.7

£

23.2

£

26.8

£

31.0

£

127.5

£

158.5

£

19.8

£

19.8

£

-

£

23.4

£

23.4

£

26.5

£

104.7

£

131.2

24.6

£

14.4

£

39.0

£

2.1

£

11.3

£

13.5

£

38.7

£

42.7

£

81.5

£

43.1

£

238.8

£

281.9

£

43.1

£

264.4

£

307.5

£

260.9

£

743.6

£ 1,004.5

£

43.1

£

175.4

£

218.5

£

70.0

£

213.7

£

283.7

£

167.6

£

420.5

-

£

588.1

£

-

£

3.8

£

3.8

£

-

£

35.1

£

35.1

£

-

£

38.9

£

38.9

£

1.7

£

-

£

1.7

£

-

£

5.7

£

5.7

£

1.7

£

5.7

£

7.4

£

4.7

£

-

£

14.1

£

-

£

14.1

£

4.7

£

4.7

£

-

£

4.7

£

557.8

£

130.8

£

496.2

£

627.0

£

8,956

£

9,274

6.3%

1.4%

5.3%

6.7%

£ 123.6

£ 576.9

£

4.7

£

700.5

£ 540.6

£1,483.6

£ 10,783 1.1%

5.4%

6.4%

£2,024.2 £ 29,013

1.9%

5.1%

7.0%

*=includes a minimum period of gains assumed over the lift of the contract or until next review (ignoring contract extension periods) Table 6 : Reported historic cost and efficiency gains 2013-14 to 2015-16 and their cumulative impact

From 2016/17 onwards we shall re-base our cost and efficiency performance upon the group position at the end of March 2016. This will permit us to measure the effectiveness of our VFM response to the rent cuts and other sector-related changes, now that the care activities have been integrated into the Association. Full details of the cost and efficiency gains are given in Appendix 1.

Planned Improvements During 2015/16 we undertook a detailed review of options to identify increased saving potential to mitigate the impact upon group performance of the reductions in rent income from 2016/20, which we estimated would have a cumulative impact of £3.7m. This review included several significant cost saving and efficiency initiatives which form the basis of our cost and efficiency agenda over the next four years, starting from a base cashable reduction in expenditure of circa £310,000. The key initiatives are as follows:

Treasury Management. As a result of a revised profile of development expenditure, the association took the opportunity to prepay a loan at the end of 2015/16 using cash and cheaper finance. This resulted in a predicted interest saving for 2016/17 of £66,000. Opportunities to lock into prevailing low interest rates as fixed borrowings mature have, and will continue to be, taken facilitating an anticipated reduction in interest costs of £100,000 for 2016/17. Reduction of discretionary expenditure across all overhead areas. This includes a revised approach to the annual resident conference, an increased shift to digital format of reports and newsletters, reduced expenditure on selective accreditations and savings in training and travel in some areas. This has resulted in budget cuts of around £30,000.

A review of our current pension commitments. In April 2016 the final salary DB schemes for existing members was replaced with a career average related earnings scheme. This will save c.£80,000 from 2016/17 (£60,000 of which is for overhead departments).

In addition to a re-phasing of capital works, the Asset Management team has planned for cost savings in revenue expenditure. There is a planned year-on-year saving, absorbing increased property numbers into existing responsive repairs costs and reducing void repair costs.

A review of organisational structure. This led to a redundancy programme which will save £100,000 in overhead staff cost from 2016/17 (after the introduction of a new Assistant Director of Care & Support). Various efficiency reviews and the introduction of new mobile working technology support the reapportionment of tasks.

Further efficiency initiatives and procurement exercises are also planned for 2016/17. This includes procurement of internal audit and data services to Axiom House and the disaster recovery site. Employees are encouraged to bring business cases for new initiatives to the monthly business review meeting for presentation and approval of expenditure if a payback can be achieved within agreed parameters. 33


Section 5

Delivering & Measuring Social Value:

Delivering & Measuring Social Value We have continued to make progress in our approach to social value building on the successful work already completed and embarking on the analysis of new areas where our services provide real social value for our commissioners, stakeholders and the recipients of our services.

value information: The Global Value exchange and HACT well-being calculations as both are well known and respected sources of data. The social value we generate falls into three main areas:

Social Value is now a core part of our work and sits alongside Value for Money as one of our corporate objectives; we have a diverse range of services that positively impact on the lives of residents or service users. The journey we started in 2014 had the ultimate aim of being able to tangibly demonstrate both the value we provide and how we generate that value to commissioners, individuals and the public purse. We first did this in Axiom Academy focusing on the value generated by the delivery of our learning services; we were able to show that for every £1 spent by Axiom Academy it generated £8 of social value. We used two main sources of social

the fiscal value the value to the individual and  the well-being value to the individual  

The work we have done in 2015/16 (Section AA) has focused on young people and care leavers whilst we have also started the work to look at the impact our holistic housing and care service has on the residents of our extra care schemes in Peterborough. In Section BB (see page 40) we report on the social value delivered by our Huntingdonshire Floating Support contract and outreach services which far outweighs the input of grant and/or revenue funding received and we shall ensure that we continue to evidence this work to support our activities.

Section AA —Leaving Care Social Value Report Background We have over 20 years experience of working with young people. We have four Foyers all geared towards providing good quality accommodation supplemented by the contractual arrangements for education, employment and training. Our services have evolved over time to reflect changing priorities with commissioners, reductions in public funding whilst pursuing our continued aim to make a positive difference to people’s lives and particularly those who are often on the fringes of society.

Paines Mill Foyer St Neots

As client groups change, our approach to support and coaching has also had to change; Foyers have been criticised for cherry-picking the best young people and then being able to demonstrate more obvious outcomes. We have always worked with young people with complex needs but our work now with care leavers has provided some fresh challenges. This report sets out the progress so far in our work with care leavers. 34

Continued on page 35


Section 5

Delivering & Measuring Social Value:

Delivering & Measuring Social Value

continued

Leaving care social value report continued

Peterborough Foyer/ Changemaker House Peterborough Foyer offers accommodation for 49 young people between the ages of 16 and 25. The needs of residents vary according to background, education, social skills, life skills and no two residents are the same. There is a staff team comprised of a Service Manager, Case Workers and Project Workers based on site that provide support; 14 of the 49 bed-spaces are for those young people who are progressing towards moveon accommodation and independent living in the local community. In 2014, following discussions with Peterborough City Council, we designed an accommodation pathway for care leavers. Young people leaving care have limited choices and the Foyer was envisaged as a pathway that could provide much needed support and stability as care leavers make that transition to adulthood. The approach would realise costs savings for the City Council and the proposal was in

parallel with the development of 15 selfcontained flats at Changemaker House (Axiom’s former offices) that would enable greater levels of move-on accommodation, (accessible to all at the Foyer) and create capacity for care leavers to access the Foyer. Changemaker House opened its doors in July 2015 and is managed as a satellite project from Peterborough Foyer and young people live independently with support when required. There are night staff based on site (ensuring a stable and safe environment at night time was considered vital to the overall success of the project), support from staff based at Peterborough Foyer, and residents are expected to live there for a maximum of two years before making that final step of moving to independence in the local community.

Leaving Care Nationally over 10,000 young people aged 16 or over leave Local Authority care each year. They have often experienced difficult lives and 62% were in care because of abuse or neglect.     

41% of 19 year old care leavers were not in employment education or training compared with 15% of all 19 year olds. 13.2% of care leavers attain five GSCEs compared to 57.9% of all 16 year olds. 23% of the adult prison population has been in care and almost 40% of prisoners under 21 were in care as children (only 2% of the general population spend time in prison). 25% of young women leaving care are pregnant or already mothers and nearly 50% become mothers by the age of 24. 33% of care leavers will end up being homeless

The Government has the strategic objective of wanting care leavers to receive the same care and support that their peers would expect from a reasonable parent. The Care Leaver Strategy, published in 2013, sets out how eight government departments would work together to improve support for care leavers including housing, health, employment and education – all aimed at improving the life chances for care leavers. Continued on page 36 35


Section 5

Delivering & Measuring Social Value:

Delivering & Measuring Social Value Leaving care social value report continued

Well-being:

The cost of leaving care

The Social Impact Bond Unit Cost sets out the average costs (updated in 2015) of some aspects of work with care leavers as does HACT (Housing Association Charitable Trust) data.

Accommodation:   

Education:    

Average costs of being NEET* – £4,637. Numeracy and Literacy - £446 (HACT) Level 2 qualification (benefit to treasury) - £641. Level 2 qualification (benefit to individual) - £1,059.

Crime:      

Relief from depression/anxiety – £11,189 (one off cost HACT). Relief from drug/alcohol problems £25,616 (one off cost HACT). Feel in control of life—£10,975 (one off cost HACT).

Our costs: A year in the Foyer for a young person has a number of costs: 

Child taken into care - £52,676 per year. Child in Local Authority foster care £722 per week (£37,544 per year). Child in Local Authority residential care home - £3,089 per week (£160,628 per year). Average cost of child protection £1,151 each.

the accommodation costs are made up of a weekly rent and service charge that is often covered by Housing Benefit. The rent is £78.61 and the service charge is £119.21 per week: a total of £197.82. An annual figure of £10,286. the support costs are funded by Peterborough City Council: an annual payment of £200,000. care leavers tend to attract a greater level of support requirements – 60/40 compared with other young people at the Foyer. With 49 young people, the average cost of support is £200,000 divided by 49 = equalling £4,081 per year. Applying the 60/40 approach to support, a care leaver has an annual support cost of £4,897.

In summary: Accommodation costs Support costs  Total annual cost 

Anti-social behaviour - £673 per incident Imprisonment - £34,840 per year. Youth Offender – £3,620 per year. Unit cost of a court event - £14,603 per incident. Criminal proceedings/arrest detained £719 per incident. Never arrested - £2,210 (HACT).

continued

£10,286 £4,897 £15,183

Clearly some of the outcomes are based on what may have happened to individuals if the interventions had not taken place; by definition this is a very subjective area based on probabilities and possibilities rather than concrete facts. This is an important area though as the prevention value can often outweigh the supplementary value obtained by the activities of the individual. For instance, being stable, in education and not in trouble may not generate some supplementary social value, but very high preventative value.

(*This cost has been calculated from data in the source report on the total cost of 18-24 year old NEETs. The cost comprises benefit payments (worklessness and housing benefits) falling to the DWP & foregone tax and national insurance receipts falling to HM Revenue and Customs (also relevant here is a negative value associated with payment of working tax credits resulting from NEETs moving into low salaried work, and payment of child tax credits).

Continued on page 38 36


Section 5

Delivering & Measuring Social Value:

Delivering & Measuring Social Value Leaving care social value report continued

continued

Our experience has revealed a number of themes around providing stability, providing structure to lives, young people lacking identity, living in the here and now with little aspiration for the future, little consistency in relationships and working with people in perceived authority can be difficult; all relevant and presenting different challenges.

Our experience, services and outcomes

Our approach and services focus on giving people choices, helping people to understand the impact of their behaviour on others, enabling aspiration, coaching people in a variety of life skills.

Care leavers present a different challenge than working with a traditional cohort of young people in a Foyer.

A further aspect of our work has been levels of mental health issues being apparent in young people. Many have struggled to access support elsewhere and it has only been once they have arrived at the Foyer that their particular issues have started to be tackled. The Foyer and Changemaker House have become key components in the leaving care strategy of Peterborough City Council for young people in crisis.

When new care leavers first arrive at the Foyer the journey towards independence starts some way behind other service users and so the initial priority is simply to stabilise the young care leaver in the accommodation; due to the increased complexity and need, the outcomes and impact of our service have to be measured differently.

Outcomes to date Case Study 1 MB3 entered the Foyer in May 2015. In the words of the staff the individual broke ‘every rule in the book’ in the first two weeks – he also had a history of self harming and had a history of involvement with the police and of substance abuse with both drink and drugs. Drinking solidly for a week was a common occurrence. Our staff team worked hard to engage with the individual, investing time in seeking to gain his trust and confidence. He engaged with Axiom Academy and achieved entry level 3 in maths and entry level 2 in English. He started to attend a breakfast club and prepared a CV. He applied to start a college course in performing arts. His involvement with the police stopped and he started to engage well for long periods. There remained occasions where we would fall off the wagon and go drinking, but these incidents reduced and became less frequent. His self harming reduced dramatically and he has now moved into his own tenancy with a local housing association.

37

Stock photo

On page 40 we have identified the cost savings associated with this case study 1

Continued on page 38


Section 5

Delivering & Measuring Social Value:

Delivering & Measuring Social Value

continued

Leaving care social value report outcomes to date continued

Case Study 2 JL12 entered the Foyer in December 2015. A prolific high offender who moved to the Foyer from Cambridge as it was no longer safe for him to live there. He was heavily involved in the drugs scene and was tagged by police. Initially quiet, he kept himself to himself. Gradually he started to engage with staff and set himself some goals. He started an apprenticeship. After a few months his tag was removed and he has not re-offended since. He is no longer involved with the police and is gaining confidence as an individual. He is still a resident at the Foyer and continues to make progress.

Case Study 3 TO13 entered the Foyer in January 2016. She had previously lived in supported lodgings. She experienced real swings in emotions and had difficulty containing her anger. Gradually over time she engaged with staff and started to express her feelings and is becoming more engaged in services and more emotionally stable.

Stock photo

Case Study 4 LR3 moved into the Foyer in September 13. She had very limited contact with family and regularly needed attention and wanted to seek the attention of others; often making false claims about pregnancy. She struggled with confidence, however over time has started to engage with staff. She attended the learning centre and achieved a level 2 in maths and level 2 in customer service. She has completed a regional college course on animal care and wants to progress further. She moved out of the Foyer in June 2015 and is now living at Changemaker House. She is not currently in employment as she is looking to move to Germany.

She still exhibits some erratic behaviour and is looking to enrol on a college course, but needs regular reminders and misses appointments. She is starting to mature as an individual and now wants to improve her life and move on. She is thinking about her next steps and that is a sure sign of the start of some aspiration and insight that there is a different path she could now take. She is still a resident at the Foyer.

Stock photo

Continued on page 39 38


Section 5

Delivering & Measuring Social Value:

Delivering & Measuring Social Value Leaving care social value report continued

Social Value/Social Return on Investment

At this early stage in our work exact cost savings are difficult to quantify although we have been able to demonstrate savings to the public purse in a number of areas: 

    

Some care leavers are attaining qualifications level 2—benefit of £1,059 and a benefit to the treasury of £641. The potential for crime is being significantly reduced: one prolific offender has not reoffended since entering the Foyer; a potential saving of up to £14,000 plus the costs of his ‘tag’ are no longer necessary. Psychological benefits – developing trust, confidence, self esteem, stability, purpose in life, access to GPs/specialist services, contributing to society – a wide range of wellbeing costs.

Taking Case Study 1 on page 37, we have prepared an indicative calculation of the cost savings achieved and matched this against the cost of our service showing a net social return of £48,521. Cost savings are always difficult to establish precisely as much depends on what route the young person would have taken if they had not moved to Peterborough Foyer.

The costs of £15,183 per care leaver to live at the Foyer represents a considerable saving on the costs of other types of accommodation for care leavers – foster care is over £37,000 a year. Many care leavers are now accessing education, employment or training – saving the NEET cost of £4,637.

Savings

continued

(based on Case Study 1 on page 37)

Child in Local Authority foster care - £722 per week (£37,544 per year) Level 2 Qualification (benefit to treasury) - £641 Level 2 Qualification (benefit to individual) - £1,059 Relief from drug/alcohol problems - £25,616 (one off cost HACT) Feel in control of life—£10,975 (one off cost HACT)

Total Cost saving:

Cost Saving Cost of accommodation and support: Social Return on Investment:

£75,835 £15,183 £60,652

With any evaluation of cost savings we should always take into account the impact of other agencies. Inevitably there will be others who are part of the social value process and will have made a contribution to the value obtained. There is a multi agency approach that surrounds care leavers involving children services, adult social care and often many other agencies. We have applied a 20% reduction to the social value obtained – leaving a net figure of £48,521. In summary, the Foyer service delivers significant social returns. Simply in accommodation and support terms our work with care leavers represents a real invest to save approach and as our case studies highlight, successes with individuals can make proportionally significant savings for local commissioners and the public purse.

Our work with care leavers is in its relatively early stages, but is starting to deliver positive results.

to further improve our work. We shall complete further work in this area over the course of the coming year. Now we have an established cohort of young people leaving care we shall now look follow these individuals over time to see the longer term impact of our work.

The majority of care leavers show improvements in behaviour, gradual willingness to engage in employment education or training and are addressing some of the negative issues that have accumulated during their younger years. We are clearly making an impact with people and a number of the outcomes are very encouraging but the journey can be a long one due to the nature of the issues being addressed. There are also some key learning points emerging that we shall use

This will not be easy, but it is an important aspect of our work to ensure that positive change becomes embedded and does not just lead to short term improvement that is subsequently followed by a reversal. We shall produce a further report in July 2017.

Continued on page 40 39


Section 5

Delivering & Measuring Social Value:

Delivering & Measuring Social Value Leaving care social value report

Section BB

continued

continued

— Huntingdonshire Floating Support

Our Huntingdonshire Floating Support team provide a quarterly contract monitoring report that cumulatively evidences the social return on investment achieved by the service over the last five years. Our floating support team are often a last resort for clients who have hit rock bottom and most of their work is focussed on maintaining people in tenancies, money management and prevention of anti-social behaviour. Most of this activity is carried out without input from other agencies, which is a real strength of the service. We evidence below our fifth case study which highlights three of the areas where we make an impact; housing, finances and substance abuse.

Case Study 5 Housing 221 clients secured their accommodation and avoided eviction. Average cost of eviction:  Rent arrears – write-off  Cost of eviction from LA property  Cost of re-letting property post eviction  Total

Local Authority costs £1,900 £1,119 £2,787 £5,806

Indicative saving for 221 clients over 5 years = £1,283,126 * (These figures were obtained from the Revenues Dept. at the Local Council and reviewed in March 2016 and deemed to be the correct average cost of an eviction, without taking into account the additional costs.)

Finances

Substance Misuse

37 clients have obtained paid employment and stopped claiming state benefits. The maximum weekly rate for JSA benefit for single people aged 25 or over is £73.10.

87 Clients accessed treatment and are now managing their substance misuse. Average cost for an individual to have this service for a year ranges from £7,000 for low support needs to £46,000 for high support. These costs include:

(Figure obtained www.gov.uk and reviewed on 20/4/16)

£73.10 x 52 weeks = £3,801.20 Plus additional costs for housing benefit and free health care. (Figure obtained from www.gov.uk and reviewed on 20/4/16)

Indicative saving for 37 clients over 5 years £140,644

 GP Specialist  Psychiatrist

£150.00 a session of 4 hours once a week £300.00 a session of 3 hours once a

week  Counselling  Prescribing Nurse

£30.00 an hour £25.00 an hour

* (These figures were obtained from Inclusion; Local Drug & Alcohol Services May 2015)

Indicative saving for 87 clients @ £7,000 = £609,000 There are also the additional costs of premises, medication and Pharmacist fees plus the costs of criminality that are additional to the figures above. There has been an increase in individuals retention in or access to treatment; resulting in a decrease in substance misuse.

This small snapshot alone in just these three areas of housing, financials and substance abuse indicates the social return on investment to be in the region of £2,032,770. The annual contract value is £231,409 (over 5 years is £1,157,045) implying a value added gain of £875,725 over the life of the contract to date; an average of £175,145 per year. 40


Return on Assets Each year the Board considers the capacity of the business plan to fund growth and development by reinvesting surpluses into new services and housing stock.

Return on Assets:

Section 6

The Association reviewed its objectives to increase the supply of affordable housing, and meet its three year target to build or acquire 132 new homes by March 2018. The level of investment allocated to housing and new business development is established through a process of rigorous financial planning after allotting appropriate resources to resident led improvements, core service improvements and maintenance commitments. The Association remains committed to its objectives to deliver housing across the full spectrum of social housing need, including accommodation for clients requiring specialised support and older persons, where social value returns are considered to be particularly strong. In recognition of the relatively higher investment needed to develop specialised accommodation, the Board introduced a policy requiring that the mix of approved developments should be balanced in order to deliver a combined minimum average yield of at least 4%. Following the Government’s announcement on 8 July 2015 of its intention to change the rent indexing model from CPI +1% to a reduction in existing rents by 1% per annum from 2016 to 2020, the Board reassessed the capacity of the Association’s finances to support new housing development growth and to balance this with its ongoing management and maintenance priorities. Individual development projects were each reappraised and were found to meet the minimum decision criteria and, in combination, the programme continued to meet the average yield target of 4% per annum. The table of approved developments, below, demonstrates how this target has been applied.

Scheme Name

Rental type

267 Eastfield Road Gainsborough Foyer Millport Drive (Thorney Rd 2) Changemaker House Globe Lane, Alconbury Flaxland, Bretton Crowland 1 Crowland 2 Total/ Weighted Average

Affordable Affordable Affordable Affordable Affordable Affordable Intermediate Intermediate

Rented Sale Units Units

26 12 9 15 1 10 5 7 85

3 10 5 5 23

Weekly Weekly Service Rent /Unit Income /Unit £ 88.48 £ 78.05 £ 124.42 £ 75.00 £ 126.00 £ 110.41 £ 85.80 £ 107.78 £ 95.75

£ 37.13 £ 169.61 £ 7.00 £ 7.00 £ 5.00 £ 5.00 £ £ £ 30.51

Routine Repairs per Annum per Unit £ £ 145.99 £ 437.74 £ 250.00 £ 250.00 £ 250.00 £ 250.00 £ 250.00 £ 250.00 £ 245.82

Net Income per Annum per Unit £ £ 5,473.29 £ 3,717.53 £ 6,104.23 £ 3,598.64 £ 6,171.16 £ 5,380.64 £ 4,211.60 £ 5,354.63 £ 4,947.24

Net Gross Income Investment FY of YIELD per per Unit completion rental unit £000 % £ £ £ £ £ £ £ £ £

110.88 114.42 113.08 85.07 151.01 119.70 95.10 101.05 111.29

4.94% 3.25% 5.40% 4.23% 4.09% 4.50% 4.43% 5.30% 4.56%

2014-15 2014-15 2015-16 2015-16 2016-17 2017-18 2017-18 2017-18

Table 7: completed and in progress development yield

The threat of a Local Housing Allowance cap on Housing Benefit eligibility for older persons and supported accommodation continues to present a material financial risk to the association and for this reason it was decided to temporarily suspend ongoing development activity on two funded projects: 

A 27 unit young persons’ foyer in Melton Mowbray and

A 60 unit extra care scheme in Whittlesey. Continued on page 42 41


Return on Assets

continued

Return on Assets:

Section 6

The Asset Management Strategy, included plans to accelerate the existing programme of disposal of older and uneconomic stock. This strategy continues to avoid uneconomic future maintenance liabilities and to increase the overall thermal efficiency of the stock (by replacing older stock with new, energy efficient properties). Sales proceeds from disposals are applied to supporting new development and to funding improvements to sheltered and supported schemes and estates infrastructure. During 2015/16, seven units were voluntarily disposed, generating ÂŁ0.6m of additional proceeds for reinvestment. During 2015/16 the Asset Management Strategy has been modified to reflect the need to reduce costs in preparation for the introduction of rent cuts, and prepare for the voluntary right to buy (VRTB) scheme. In response to proposed rent cuts, the total investment in planned maintenance has been reduced as a result of the deferral of scheduled replacements of components to general needs housing estates that will remain in satisfactory condition during the deferral period, in order to ensure that capacity remains to deliver improvements to existing older persons accommodation to preserve their attractiveness and suitability for client groups in the future. Key ratios for the operating and net returns on assets are measured and projected to ensure that asset growth is achieved in a sustainable way generating income streams for reinvestment in the future. Due to the size of the Association, the phasing of new developments may lead to a short-term deterioration in performance that recovers once assets are fully commissioned.

Table 8: Operating and net return on assets with adjustments for FRS102, including and excluding VRTB assumptions 42

Table 8 below illustrates the actual and anticipated profile arising from completed and in-progress. In our previous report, planned and projected performance was reported using the previous 2010 SORP. The impact of applying the new accounting standard FRS102 is to lower the ratio calculations; the ratios have therefore been adjusted to permit comparability of results to target. The possibility of housing assets being sold under VRTB may have a significant impact upon the age and profile of our housing stock. A preliminary assessment has been made to identify those assets that would be considered unsuitable for disposal under the terms of the VRTB proposals and the board have received reports on the potential eligibility of tenants under the scheme and on the profile of housing stock that is at risk of disposal. Our business plans now include impact assessments on possible housing disposals. Whilst initially the impact of VRTB on the net return on assets is a positive one, over time, the loss of rental income will reduce operating returns, unless replaced by new assets. The table below illustrates how from 2016 onwards operating return is initially impacted by the rent cut, and the introduction of a modest number of VRTB disposals. In contrast the net return on assets is more significantly impacted by surpluses that might be generated from housing stock disposals in the short term. During 2016/17 the Development & Assets Committee will be monitoring the delivery of the Asset Management Strategy and appraising the implications to asset management arising from VRTB once launched.

Continued on page 43


Return on Assets

continued

In 2013/14 we reported upon our approach for monitoring the returns delivered across our housing stock by asset type and location. During 2015/16 we have seen an improvement in overall returns increasing from 10.6% to 10.9%.

Return on Assets:

Section 6

The table below shows the summary of net rental returns on capital employed by accommodation type for the last two financial years. To enable comparison across years, the prior year capital employed has been restated under FRS102 and the additional pension valuation charge for 2015/16 has been excluded.

Table 9: Return on capital employed for each major asset category

Table 9 reveals the marked reduction in return for supported accommodation. This effect is driven by two new investments. Firstly, the addition of two new supported developments: Gainsborough Foyer and Changemaker House. These schemes were both developed closely with the respective local authority to meet the needs of young people and were authorised by the board in line with investment appraisal policy (see also Table 7 on page 41). Secondly, a refurbishment at Paines Mill Foyer has added to the capital employed, reducing the return on the scheme to 16%. The revenue cost element of the refurbishment incurred in 2015/16 reduced the return for that scheme. If both new schemes and the refurbishment costs for Paines Mill Foyer were excluded from the above analysis, the return for Young Persons Foyers would be in line with the prior year. As set out in last year’s report, in 2014/15 we undertook a detailed analysis of internal benchmarks of asset performance which we then mapped against net rental returns by housing scheme/estate.

Continued on page 44 43


Return on Assets

continued

Further work has been completed on the approach to measuring return on assets (ROA). A further category has been added to the weighted calculation used to generate the ROA percentage for each scheme/estate. There are now five1 measures considered in the measurement of ROA as follows: Resident satisfaction (updated from 2016 STAR survey) Financial return  Thermal efficiency (SAP rating)  Stock turnover  Social value (added 2015/16)

Return on Assets:

Section 6

 

Financial return carries a weighting of 50% in all calculations, with the remaining 50% being spread over the other applicable measures equally. The social value measure is based on a system where accommodation is scored for its impact in the following areas:       

homelessness prevention support for care leavers educational achievement support for employment crime prevention use of hospital beds falls prevention and the provision of support or care service.

Some measures are scored based on management assessment of relative impact at different accommodation types and some are based on data from the relevant accommodation type. This provides a method by which the relative social value across accommodation types is reflected within the ROA outcome. The analysis confirmed that 74 of the housing properties identified for potential disposal had quality indicators meeting target whereas nine fell below target during the year. Within the retained stock classification, 74 units fell below target performance across six areas. These have been analysed and reported to the Development & Assets Committee with detail of the relevant changes in performance. Only one scheme remained below target from the previous year. In keeping with ongoing work around social value, this approach will be refined over the coming months. Social value reports have been completed on training provision and care leavers and we plan to continue this work. One possible result is that the outcomes could be measured at each individual project in order to calculate social value at a more localised level in future.

________________ 1

Not all are relevant for every type of accommodation. For example, void turnover is not used for supported accommodation where residents are on shorter licences and resident turnover is not an indicator of demand for the property.

44


Acquisition and development of new homes: Section 7

Acquisitions & Development of New Homes One of our strategic priorities is to complete our 2015/18 HCA funded programme. Our two key developments are our proposed Foyer in Melton Mowbray of 27 units and a 60 unit extra care scheme in Whittlesey. Both of these schemes have been carefully put together combining private finance, HCA and RCGF grant with subsidised public land, to maximise VFM in both capital and revenue. Both schemes have a high social value in that they provide on-site support for vulnerable young people in the case of the Foyer, and frail older people in the case of the extra care scheme, to enable them to lead independent lives. The on-site support prevents public demand and expenditure downstream on health, police and community services at a time of intense pressure on public service expenditure. The Social Value section in this report demonstrates the Value for Money of such schemes to both local communities and the national budget. Following a full review of the viability of each scheme following the July 2015 budget, we remained committed to these schemes and a shared ownership and affordable rent portfolio with an average yield of 4% per annum. However, the announcement of the cap of housing benefit to Local Housing Allowance rates for all housing schemes, irrespectively of whether they are supported or not, has required the board to defer our two key developments until the outcome of the review. The board is fully committed to both schemes proceeding, subject to a financial reappraisal when the outcome of the review is known. The remainder of our 2015/18 programme consists of 20 general

45

affordable housing units in central Peterborough and 22 mixed tenure properties in South Holland, Lincolnshire in addition to a specialist bungalow in Alconbury, Huntingdonshire. These schemes remain fully funded and on target for completion in 2017/18. The association is bidding for grant for 85 new properties as part of the 2016/21 programme. These properties will be a combination of Rent to Buy and Shared Ownership housing. The strategy behind the bid is to provide a diverse range of homes to rent/purchase and to leverage scale into sites which will provide potential capacity for additional affordable rented housing through the use of RCGF from the VRTB programme. The association will review its position regarding bidding for additional accommodation for vulnerable people when the outcome of the review of the LHA cap and future funding of supported housing is completed later this year. All new developments are considered on the basis of the return on investment model set out in this report. No new development is allowed without consideration and approval by the Development and Assets Committee.


Our embedded approach to Value for Money improvements: Section 8

Our Embedded Approach to Value for Money Improvements Our approach to Value for Money is embedded in a culture of seeking efficiencies (both cost and process) and continuous improvement throughout all our activities. This is demonstrated in our 2015/20 Corporate Strategy, our business plan, service plans and staff members’ individual appraisals. The involvement of all staff in contributing ideas through their own teams is essential to our business and staff’s performance is monitored through regular 1 -2-1’s as well as their annual appraisal. VFM Assessments show the relationship between cost and the level of service provided. These are monitored by the wider executive team to monitor performance. Costs are monitored, reviewed and adjusted in the light of potential over or under spends or efficiency objectives and there is an audit trail on the costs and adjustments. There is a VFM and Social Value section on all papers that go to the Board that provides evidence of our approach in action. All internal audit reports include a specific section referring to the VFM implications of services reviewed. In addition Axiom now has seven years of independently benchmarked performance data through membership of HouseMark. Our resident armchair auditors, which we call our Volume Controllers, are routinely questioned on their assessment of VFM for core services (rents and service charges). Results from STAR survey at June 2016 showed that at 85% of residents were satisfied that their rent provided value for money and 76% of residents were satisfied that their service charges provided value for money. The scrutiny panel completed their fifth detailed review of services during the year (2015/16) examining the ground maintenance service, in particular reviewing service level agreements, expectations and service charges, making a series of recommendations which they reported directly to the Resident Services Committee. Following the review we revised our approach to scrutiny in general, informed by the best practice recommendations arising from our rigorous, but successful, TPAS Landlords accreditation audit. The process of scrutiny is now embedded within our wider resident involvement framework and will continue by utilising the expertise of the various service panels which are customer service focused groups comprised of key staff and members of Axiom Residents’ Forum.

46


Appendix 1: cost and efficiencies analysis

Expenditure Description

VFM Intervention

2015-16

Capital Investment First / Up front Efficiency Quality Controls year of Cost Period of Gain & Outcomes Impact £'000 Gains £'000

Cumulative

β

Actual Actual & Anticipated* Cash Efficiency Cash Saving Total Gain Gain Saving Total Gain £'000 £'000 £'000 £'000 £'000

Quality Assurance Surveys

Impact Assessment

Achievement of desired outcomes with 2012-13 £ reduced time and cost

-

3 yrs £

3.7

£

6.9

£

10.5

£

11.0

£

20.6

£

31.6

Out of Hours Services

Service quality good. Contract costs are Impact demonstrably below market rates, & likely to 2012-13 £ Assessment increase if retendered.

-

2 yrs £

-

£

-

£

-

£

20.0

£

7.7

£

27.7

Gas Servicing

Impact Assessment

Streamlined processes resulting in reduced 2012-13 £ legal interventions and staff time

-

2 yrs £

-

£

-

£

-

£

£

39.0

£

39.0

Commercial Combined Insurance

Re-tendering

Improved training support & new 'single event excess', avoidance of premium 2012-13 £ increases

-

3 yrs £ (+2 yrs)

£

-

£

34.8

£ 104.4 £

-

£

104.4

Extra Care Catering Contract

Re-tendering

Procurement and quality improvements from 2012-13 £ combining contracts across 3 sites

-

3 yrs £ (+2 yrs)

-

£

29.8

£

29.8

£

£

89.3

£

89.3

Simplicity Saving in staff administrative time & efficient 2012-13 £ Review access to information for managers & staff

-

2 yrs# £

4.7

£

-

£

4.7

£

£

-

£

14.1

12.0

4 yrs £

-

£

16.3

£

16.3

£

-

£

60.2

£

60.2

33.0

5 yrs £

-

£

5.7

£

5.7

£

-

£

29.1

£

29.1

82.5

5 yrs £

-

£

9.8

£

9.8

£

£

40.0

£

66.5

24.0

5 yrs £

-

£

7.9

£

7.9

£

-

£

35.6

£

35.6

Computerised HR System

Reduction in printers from 20 to 4. Solid Ink waste reduction of 347 Kg over 4 years or 2013-14 £ 87 Kg per year & reduced energy consumption Reduced call costs in Axiom House. Roll-out to remote office locations to take place in 2013-14 £ 2014-15 resulting in increased savingson call charges. A change to virtualised server technology, reducing the number of physical server 2013-14 £ units, improving flexibility, resilience and reducing energy consumption

34.8

-

-

14.1

Network Print Solution

Impact Assessment

Voice Over Internet Protocol Phone System

New Technology

Server Virtualisation

New Technology

Paperless storage

New Technology

Reduction in paper storage 2013-14 £

Office Premises

New Ways of Working

Use of larger in-house meeting rooms 2013-14 £ avoiding hire charges

-

5 yrs £

-

£

4.3

£

4.3

£

-

£

14.8

£

14.8

Postage

New Ways of Working

Alternative distribution methods, 2nd class 2013-14 £ standard post

-

3 yrs £

-

£

-

£

-

£

-

£

15.0

£

15.0

Axiom Academy

New Ways of Working

Training co-ordinated across larger groups, in-house where possible using qualified 2013-14 £ professionals

-

1yr £

-

£

-

£

-

£

34.5

£

-

£

34.5

£

25.6

£

35.7

£

32.4

£

64.0

£

96.3

44.6

£

44.6

£

£

95.0

£

95.0

98.6 -£

19.8

£

78.8

£

624.0

£

624.0

36.0 -£

27.0

£

9.0

Staff Terms & Conditions

New terms provide financial incentives more Organisational directly linked to performance of Change business.Reduced annual leave entitlement 2013-14 £ Programme for new joiners. Phasing out of essential car user allowance

2.0

3 yrs £

Business Mileage

Organisational Encouragement to car share, introduction of Change 2013-14 £ pool cars Programme

41.0

5 yrs £

-

£

Employee Wellbeing & Absence

Organisational Change Programme

Introduction of new health cash plan and 2013-14 £ revised sickness absence policies

-

3 yrs £

-

Supported Housing

Organisational Change Programme

Revised service delivery in order to effect local authority savings targets in supporting people funding of £200k. New ways of 2013-14 £ working has maintained service outcomes. A project with PCC looking at social returns of Foyers is underway.

137.0

3 yrs £

-

£

Finance

Organisational A change in roles & responsibilities in order Change to absorb additional work for new care 2013-14 £ Programme subsidiaty

13.0

3 yrs £

12.0 -£

£

43.2 £

Subtotal

10.1

7.3 -£

208.0

7.3 £

£

208.0

£

9.0 £

3.0

£

76.4

£ 119.5

26.5

-

-

£ 176.0 £ 321.6

£ 497.5

Continued on page 48 47


Appendix 1: cost and efficiencies analysis Expenditure Description

2015-16

Capital Investment First / Up front Efficiency Quality Controls year of Cost Period of Gain & Outcomes Impact £'000 Gains £'000

VFM Intervention

Staff Sickness Absence

Organisational Change Programme

A change in sickness absence procedures 2013-14 £ & benefits to improve days lost

-

1 yr £

External Audit Services

Re-tendering

Improved service & sector knowledge. 2013-14 £ Quicker audit with added value advice.

-

Gas & Electricity Supply Contracts

Re-tendering

Annual re-procurement to avoid 2013-14 £ unnecessary cost increases

Corporate Support

Re-tendering

Cumulative

β

Actual Actual & Anticipated* Cash Efficiency Cash Saving Total Gain Gain Saving Total Gain £'000 £'000 £'000 £'000 £'000

-

£

-

£

-

£

28.0

£

-

£

28.0

3 yrs £ (+2 yrs)

2.0

£

1.6

£

3.6

£

8.0

£

4.7

£

12.7

-

1yr £

33.2

£

-

£

33.2

£

43.8

£

-

£

43.8

Basic negotiating on everyday orders and 2013-14 £ purchasing

-

1 yr £

-

£

3.4

£

3.4

£

5.1

£

41.3

£

46.4

Disposal programme

Asset The net present value of inefficienct housing Management assets disposed of during the financial year 2014/15 £ Strategy and recognised over 40 years

-

40 yrs £

-

£

5.7

£

5.7

£

1.7

£

5.7

£

7.4

New operational produres PDQ EFT payment processing

New Ways of Working

Verbal confirmation provided in place of 2014/15 £ written details.

-

2 yrs £

-

£

2.1

£

2.1

£

-

£

3.2

£

3.2

Purchase of new mail franking software

New Ways of Working

Lower postage tariff 2014/15 £

-

3 yrs £

-

£

0.8

£

0.8

£

-

£

1.6

£

1.6

Reduction in number of surveys

New Ways of Working

Less paper, postage, staff time. 2014-15 £

-

3 yrs £

2.1

£

3.2

£

5.4

£

4.3

£

6.4

£

10.7

Digital comms (Annual Reports)

New Ways of Working

Digital report produced in place of hard 2015-16 £ copy

-

3 yrs £

-

£

-

£

-

£

-

£

1.8

£

1.8

Sheltered Housing

Organisational Change Programme

Withdrawal of SP funding from sheltered schemes in Peterborough. Restruring 2014-15 £ service using a twinning approach

-

3 yrs £

-

£

2.5

£

2.5

£

-

£

7.4

£

7.4

General Housing

Organisational Change Programme

2014-15 £

59.0

3 yrs £

£

-

£

21.0

£

£

-

£

66.0

21.0

66.0

Responsive Repairs & Voids Works,Kitchens & Bathrooms

Reduced unit prices on replacement units Re-tendering and on labour charges based on an average 2014-15 £ over 5 years

-

5 yrs £ (+5 yrs)

-

£

61.3

£

61.3

£

-

£

156.7

£

156.7

Cyclical Painting

Re-tendering

2014-15 £

-

5 yrs £ (+5 yrs)

-

£

10.8

£

10.8

£

-

£

21.6

£

21.6

Treasury services reprocurement

Re-tendering

Reduction in tendered price for year 1 of 3+2 contract plus increase in quality 2014-15 £ outcomes including mark to market reporting and online information tools

-

1 yr £

-

£

-

£

-

£

6.3

£

-

£

6.3

Treasury management

Re-financing

Lloyds loan arrangement and refinancing of 2014-15 £ Triodos Debt and prepayment of N&P loan

70.7

2 yrs £

-

£

35.1

£

35.1

£

-

£

38.9

£

38.9

Asbestos Inspections

Re-tendering

3 yrs £

-

£

4.6

£

4.6

£

-

£

4.6

£

4.6

Gas Servicing reprocurement

Re-tendering

Based upon estimated volumes of work c.3,400 servicing and maintenance and 2015-16 £ c.150 upgrades and replacements

-

5 yrs £ (+5 yrs)

-

£

80.9

£

80.9

£

-

£

80.9

£

80.9

Mobile phone reprocurement

Re-tendering

Projected saving is £19,697 per year (based 2015/16 £ on what we spent in 2014-15 v new costs).

-

3 yrs £

-

£

19.3

£

19.3

£

-

£

19.3

£

19.3

Banking facilities reprocurement

Re-tendering

Negotiation of 6 months’ free banking from 2015-16 £ the start of the contract

-

1 yr £

-

£

2.0

£

2.0

£

-

£

2.0

£

2.0

Change of provider 2015-16

£ 474.2

£ 123.6 £ 576.0

Annual Operating Costs (net of depreciation)

£ 699.6

£ 540.6 £1,483.6

£ 10,783

% age saving

1.1%

* = minimum period of gains assumed over the life of the contract or until next review (ignoring potential contract extension periods) # = period that system has been in use β = Association Only ‡ = Group

48

5.3%

6.5%

£2,024.2 £ 29,013

1.9%

5.1%

7.0%


Our Mission Our vision is to make a positive difference to people’s lives and our communities

Our Vision To provide distinctive, integrated housing, care and support services. To inspire and empower our staff, residents and communities

Our Values To be committed, caring and creative in all we do

49


Value for Money

Annual Report 2015/16

www.axiomha.org.uk www.axiomcare.org.uk www.axiomacademy.org.uk

Axiom Housing Association Limited Axiom House, Cottesmore Close, Netherton, Peterborough PE3 9TP  01733 347135

 www.axiomha.org.uk

 enquiries@axiomha.org.uk

For large print please call  01733 347135 50

Value for money annual report 2015 2016  
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