Achieving Value for Money – our self-assessment 2013-2014

Contents 1.

Introduction to our VfM self-assessment

3

2.

Executive Summary

4

3.

Our VfM journey

7

4.

Our strategic approach to VfM

8

5.

Our key VfM achievements during 2013/14

11

6.

Planned 2014/15 improvements to VfM

17

7.

How we manage our financial and operating performance

20

8.

How we manage our assets to maximise return on investment

26

9.

Comparisons to other social housing providers

42

10.

Involving our residents in ensuring delivery of VfM

44

11.

The THG approach to ensuring delivery of VfM

46

12.

How our Board gains assurance regarding our VfM self-assessment

47

13.

Our overall assessment of VfM

48

Appendix A

50

Together Housing Group – Our value for money self-assessment 2013/14

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1.

Introduction to our VfM self-assessment

A comprehensive assessment of Value for Money (VfM) has been undertaken by Together Housing Group’s (THG) Board and Senior Leadership Team in order to provide our stakeholders with a rounded picture of VfM within the Group. This VfM self-assessment sets out the following:          

What we have achieved to date in relation to VfM since the creation of THG three years ago; Our strategic approach to VfM within THG; What we have achieved on VfM during 2013/14 against the plans that we had made; What we believe our key VfM challenges to focus on are; Our key priorities and targets for VfM in 2014/15; Benchmarking with peer groups to allow stakeholders to judge how well we perform in comparison with other similar sized organisations; How we manage our financial and operating performance to maximise VfM; How we manage our assets in order to deliver a return on the significant levels of investment that we make; How we involve our residents to ensure that the changes that we make do not negatively impact on service levels and that we continuously increase the quality and range of services we provide; Our overall assessment of VfM for THG.

In carrying out this assessment, where any weaknesses have been identified, we are feeding this information back into the strategic action plans across the Group to ensure that learning is captured and improvements made. This will enable our organisation to move confidently forwards and deliver an ongoing ability to invest both in the communities we serve and in new affordable housing.

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2.

Executive Summary

The Board and Senior Leadership Team of THG have completed a comprehensive VfM self-assessment and believe that it has complied with the Regulator’s VfM standard. This summary section of our self-assessment sets out our key VfM achievements to date, our key VfM challenges and our future VfM targets.

Since we created THG three years ago we have made significant gains in VfM:  £8 million of savings delivered to date from improved procurement, rationalising contractors and reducing overheads. We have also received £1.2 million in external matched funding to support our wider social objectives.  1,146 new homes built at a cost £115.7 million.  £357.7 million investment in maintaining and improving assets.  £7.2 million investment in supporting and regenerating communities. The savings that we have generated are being reinvested into: developing more social housing, investment in local economies, regeneration and into social value projects that include employment, training and community businesses.

Our key VfM achievements in 2013/14 have been as follows:  Against a target of £2.5 million, we have delivered £2.41 million of VfM savings (page 11 );  We have produced for the financial year, an overall surplus of £22.3 million against a target of £17.16 million and this has been achieved through business growth and cost reduction strategies (page 20);  As planned, we have brought into the Group the newly named Newground Together, which is pursuing our wider social objectives. We have invested £1.5 million of resources into this which has supported a variety of programmes and received a further £1.2 million in external matched funding for community regeneration activities (page 11);  Salford PFI, now named Pendleton Together, commenced in September 2013 which is a £430 million project to transform a part of Salford which will refurbish and manage 1,253 existing homes and through a second special purpose vehicle, will build 1,500 new homes for rent and sale (page 12);  We have designed and delivered an innovative cost sharing group with another Registered Provider. Northern Shared Services will now deliver the day to day repairs for a large number of our properties in hard to reach areas, focusing on increasing customer satisfaction and reducing operating costs, with a forecast saving of £590k per annum (pages 12,38);  We have acquired the controlling interest in Together Roof Energy to assist in the delivery of a strategy to reduce fuel poverty. Revenue receipts will now be fully utilised by the Group of circa.£1 million per annum (page 14);  We have had an independent social audit conducted on the first year of our community regeneration activities which has confirmed some excellent early results(page 13);  We have supported a project to provide energy advice and support to customers in fuel poverty, with 43 community based events undertaken, intervention action to nearly 1,200 vulnerable tenants and assisted 877 tenants to switch their current utilities provider to a cheaper one (page 15);  We have opened a furniture and recycling centre for customers in East Lancashire which enables tenants to reduce their housing start-up costs whilst also providing volunteering and training opportunities and local jobs for local people (page 14);

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 We have created Woodnook Joint Venture with specialist empty homes developer PlaceFirst, to create one of the largest empty homes projects in the UK. This £15 million regeneration scheme in Accrington will transform 131 empty terraced properties and deliver a range of environmental improvements across the neighbourhood(page 15);  We have employed 50 apprentices and trainees across the Group. Our apprenticeship programme has won a number of local and national awards. Our Skills and Enterprise Co-ordinator won the title of Inside Housing’s Inspirational Mentor of the Year Scheme (pages13,16);  We have established a group wide approach to tackling the effects of Welfare Reform which has helped reduce the number of tenants under-occupying by nearly 1,000. Due to our intensive efforts, the impact of Welfare Reform on our arrears has been lower than expected and we have assisted over 700 tenants to receive discretionary housing payments (page 14);  A new Asset Management Strategy has been developed to ensure that we make intelligent and informed business decisions which will maximise the return from the investment in our assets(pages 13,30);  We have spent £38.3 million reinvesting in our existing stock (pages 26,31);  We spent £30.5 million on the repairs and maintenance of our existing stock (pages 26,37);

 We have developed 193 homes (178 new build and 15 purchased and refurbished through the empty homes programme) and have spent £22.6 million with a further £39 million under construction (pages 26,39).

Our key VfM challenges to focus on are:  Our approach to performance management is to be developed further to ensure consistency in reporting across the Group. Our focus is on improving the performance culture to ensure that customers receive excellent services that offer value for money. We recognise the need to target specific areas of the business where our current performance is not as high as the Board requires. These areas are: voids and relets, repairs and maintenance and rent collection due to the impact of Welfare Reform(pages 24-25);  A scrutiny review is taking place to ensure that we are engaging with as many customers as we can and that our services meet the needs and aspirations of our customers (page 45);  We recognise the need to make better use of benchmarking information and other external data to challenge ourselves and improve our performance up to upper 25% peer group performance level and reduce costs when compared to our peers whilst striving to deliver best practice (pages 19,42,50);  We need to invest more in our wider social objectives and specifically three areas: - Financial inclusion including welfare reform; promoting health and wellbeing; and youth activity including employment and dealing with anti-social behaviour(pages 9,17);  In terms of Asset management, we have further work to do in order to understand our assets at a granular level i.e. at a scheme and property level. This is a complex piece of work which must also be linked with understanding the effects of Welfare Reform which is impacting on demand levels, particularly some of our 3 bedroom stock, which in turn affects the income streams and consequently the value of the assets to the business. We are implementing a new group wide asset management system which will assist us with this analysis. Progress to date has been to establish the key matrix that will inform and prioritise the neighbourhood assessments and populate the new system with our 2013/14 data. We have plans to complete this by the end of 2014/15 (page 40).

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Our key VfM priorities for 2014/15 are to:  Deliver a further £2.5 million in efficiency savings generated from procurement, ICT systems, insurance and employee vacancy and efficiency savings( pages 17,23);  Invest a further £1.5 million in Newground Together to continue our community engagement work and to attract further external matched funding (page 17);  Complete a full review of our tenant scrutiny activities and ensure that the voice of the customer is fed back into our future service improvement and investment plans (pages 17,44);  Implement a group wide asset management system which will help us to understand our assets at a detailed level and identify stock which does not add value to the business (page 32);  We had anticipated in last year’s VfM self-assessment that our Group Procurement Strategy would be completed in 2013/14. Work however is still ongoing and it will now be approved during 2014/15. This will ensure collaboration across the group in terms of sourcing goods and services and that we receive the financial benefits from our considerable economies of scale(page 19);  Review the results from our new Repairs and Maintenance cost sharing group against its objectives to produce cost savings and increased customer satisfaction, to ensure that actual VfM improvements are delivered (page 18);  Strengthen our performance management and use of benchmarking in order to enhance the level of business intelligence available to us and inform future performance target setting (pages19,24);  We will be creating links with Universities to assist in delivering new technology into our homes and solutions to improve housing options for older people (page 18);  We will develop partnerships and delivery vehicles with organisations which will assist in the delivery of our objectives, targeting the health sector (page 18);

 We will develop 409 new homes in 2014/15 (pages 18,39).

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3.

Our VfM journey

Our journey to date Created in April 2011, the THG collectively owns and manages approximately 38,000 homes located in areas surrounding the M62 motorway corridor. We provide service delivery to over 70,000 people and we employ over 1,200 staff. The HCA regulated members of the THG are: Chevin Housing Association, Green Vale Homes, Harewood Housing Society Ltd, Housing Pendle, Pennine Housing 2000 and Twin Valley Homes. Central to the decision to form as a new group were the drivers to increase business strength and improve VfM for our tenants. It was our firm belief that as a large group structure we could continue to improve customer satisfaction and service delivery whilst reducing the potential risks from the (then) difficult economic conditions. By creating the group structure we would be able to fully utilise the shared financial capacity thereby maximising economies of scale and reducing the costs of service delivery. With initial ambitions to realise £5 million savings within our first 5 years of existence through more effective procurement, rationalising of contractors and reductions in overheads, this would release capacity to increase the amount of funding we could contribute towards the building of new properties, would expand and improve the delivery of our regeneration activities in local communities and would enable diversification into new growth opportunities. Three years into the new group and we can already evidence substantial progress. Our key achievements are as follows:    

£8 million of savings delivered to date and received £1.2 million in external matched funding to support our wider social objectives. 1,146 new homes built at a cost of £115.7 million. £357.7 million investment in maintaining and improving assets. £7.2 million investment in supporting and regenerating communities.

Moving forwards to the future Now that the foundations for the Group have been put in place and momentum established, we are able to drive forwards on a wide range of VfM projects which will ultimately result in benefits being delivered back to our customers, our communities, the local economies in which we operate, as well as increasing the numbers of new affordable housing. Knowing that the market in which we operate is both complex and vulnerable to both economic influences and government policy changes means that our approach to VfM needs to be one that is fluid and adaptive, enabling us to respond in a timely manner to emerging issues that could significantly impact the lives of our customers. Our future journey will likely be more innovative including: developing relationships with external agencies, creating new PFI schemes, forming joint ventures, identifying and acquiring new partners to the group and creating new cost sharing arrangements. With a new savings target of £2.5 million per year for the group (with the ambition to achieve this through further operational efficiencies, procurement frameworks and smarter contracting) we also aim to achieve £1.5 million match funding from external sources into our charitable arm, Newground Together. We are proud of our achievements to date and acknowledge that this has been gained through joint hard work and efforts from staff, board members and our involved customers.

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4.

Our strategic approach to VfM

Group Board’s Responsibilities The Group Board recognises that it is responsible for ensuring the delivery of the HCA’s regulatory standard on Value for Money. It understands that it is required to take a comprehensive and strategic approach, which takes into account the performance of all of its assets and resources. In order to achieve this, THG has developed a medium term Group VfM strategy for 2013 to 2016 covering all of our workstreams and accompanied by a detailed SMART action plan which receives annual updates and reviews. Our progress towards strategic outcomes is monitored by both the Group and Member Boards, ensuring we reflect local priorities whilst continually working towards group wide requirements. Within the strategy, THG has defined VfM as ‘obtaining the maximum benefit from the goods and services we acquire and the services we provide, within our available resources’. The primary goal of the VfM strategy is to support the delivery of the Group’s Corporate Objectives in the most economic, efficient and effective way, thus ensuring that VfM is integral to the way we operate. We aim to ensure that our services are cost effective, the quality of service and performance is high in comparison to best performers within our peer group and that we are achieving effectiveness in terms of satisfying our customers and achieving our business objectives.

Our VfM priorities are:    

Ongoing maximisation of the economies of scale we can gain as a large organisation; Continually reviewing what we need to do to make our resources go further; Ensuring we use business intelligence and performance data to make decisions that benefit our tenants, our business, our communities and, ultimately, the local economies; Continuing to challenge ourselves to work collaboratively with external partners and to embrace new ways of working.

Business Strategy and link to VfM The Group has a shared vision: ‘To make a better future together’. Our overall business strategy is therefore to combine our existing considerable business strength as a large group, with our desire and drive for continuous improvement in VfM in order for us to generate the capacity to deliver more than just traditional social landlord functions. We set this out in the diagram below:

Existing Business Strength Drive for Continuous of Together Housing Group Improvement in Value for Money

Excellent Services to Customers

Decent Homes

New Homes for New Customers

Community Regeneration Projects

Together Housing Group – Our value for money self-assessment 2013/14

Wider Social Value Projects

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Delivering more from our resources As a large group, we can utilise our considerable combined financial and human capacity to deliver more than just services to existing tenants. We can release the gains from our VfM activities and invest these into: developing more social housing, investment in local economies, regeneration and into social value projects that include employment, training and community businesses. At THG we don’t just create homes where people choose and want to live, but we also assist further by working within our communities to create both the opportunities and the environment in which they can thrive.

Working in different ways to achieve greater outcomes THG will continue to look for different and innovative ways of working in order to achieve efficiencies and better services for customers. This will be achieved through continuous improvements internally from within the Group but also working with current and future potential partners through contracts, subsidiaries, joint ventures or cost sharing agreements.

Social Value We recognise as a social housing provider that we make a significant contribution to local employment and economic development but we have also decided to target additional resources into this area in pursuit of our wider social objectives. We have already made considerable progress through our charitable subsidiary, Newground Together, which in addition to investing £1.5 million of resources we have also achieved £1.2 million in external matched funding. There are two key themes and within these, six activities, as follows: (i) Economic Regeneration - employment training and skills, support for small businesses, creation and support of social businesses, and (ii) Health and Wellbeing – motivating and engaging young people, capacity and confidence building of communities and supporting a sustainable environment. We have also had an independent social audit conducted and this has confirmed some excellent early results but has also made recommendations for improvements in our approach and in how management information is collated in order to ensure consistent reporting. This information will be fed back into our future plans in order to improve what we do, the way in which we do it and the outcomes that are achieved from it.

Changing how we work to improve VfM Strategic programmes are in place to improve our: infrastructure, procurement approach, performance reporting, service delivery models and better engagement with tenants to understand what matters most to them. This will ensure that we can focus our resources on the right activities and deliver these as efficiently and cost effectively as possible. Changes to our culture are being made in order that we challenge our internal delivery mechanisms to ensure that they are delivering real improvements. We are now making benchmarking information available to teams in order that they can understand our gap to the best performers and implement strategies and plans to close them (please refer to section 9 of this assessment for benchmarking information). Our staff will become more involved in understanding how their day to day actions can create genuine savings or reductions in non-value adding expenditure that can then be translated into community regeneration activities, or maintaining valuable support services put under pressure by reducing Supporting People budgets.

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Our challenges in achieving VfM at THG We accept that our diversified stock type and wide geographical location of properties could potentially lead to challenges in applying consistent VfM approaches and it is definitely not a ‘one size fits all’ approach. Within the Group a large majority of stock is concentrated within local authority areas, as four of the member companies are stock transfers from Councils. However, Chevin and Harewood have stock which is located across 26 local authority areas, which creates a different operating environment when compared to the remainder of the Group. There are many challenges to managing dispersed stock, including higher than average management costs, but the Group will continue to look for ways to deliver these services cost effectively. We will also work more innovatively to reduce costs by considering, where appropriate, stock swaps with other registered providers and will look at other cost sharing agreements, as we have done with the new Northern Shared Services for repairs and maintenance.

Translating VfM strategy into action It is essential that we translate our VfM strategy into real actions across our Group in order to deliver the progress and the achievements that we are aiming for. We have set out within sections 7 to 11 of this assessment all the detailed work that THG undertakes in order to ensure that we continuously deliver improved VfM within the business.

VfM integrated into the organisation’s objectives To ensure that we continually challenge our commitment to VfM, we have made its achievement an essential part of the delivery of every other corporate objective within the Group, in addition to identifying it as a separate, key objective. Link to corporate plan. For instance:

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5.

Our key VfM achievements during 2013/14

During last year’s VfM self-assessment we set ourselves an ambitious range of VfM improvements to be delivered across the business during 2013/14. In order to ensure transparent reporting, we now set out within pages 11 to 13 the achievements that we have made against the specific aims of each of these planned improvements. Where we have not achieved our planned improvement we have outlined the reasons why and stated our new intentions for the relevant areas. During the year we have also made improvements in other areas which are above and beyond what we had originally planned to achieve and these are set out within pages 14 to 16. Delivering Efficiency Savings

Aim:

Achievements:

To identify and deliver efficiency savings of £2.5 million across the Group.

THG actually delivered £2.41 million of real cashable savings during 2013/14 from Procurement frameworks, insurance costs, audit fees, subscriptions and new contracts, plus received £1.2m of matched funding for community regeneration initiatives. This total of £2.41 million saving is slightly below our target of £2.5 million. To put this into context this represents 2.1% of the operating costs. Further details can be seen in Section 7 on how we manage financial and operational performance to maximise VfM. The organisation’s VfM efficiency savings register provides a full analysis showing the impact of the savings to ensure that the service to the customer either remains the same or is improved. Savings are being reinvested into building new affordable homes.

Acquiring Groundwork Pennine Lancashire (GPL)

Aim:

Achievements:

To bring GPL, the largest environmental charity in Lancashire, into Together’s Group structure. Already a Charity with extensive experience of community regeneration work it was felt that this would be a key strength to the Group in getting the best VfM in the area of social investment.

In July 2013, the newly named Newground Together joined the Group and brought with them reserves of £1.5m plus a medium term order book and an excellent reputation with blue chip companies. We have invested over £1.5m in community investment activity, plus a further £426k of resources has been provided by the Group to fund salary costs and a total of £1.2 million has been received in matched funding from external organisations. Projects are commissioned to support training and employment, small business enterprise and community activities. Our key achievements from all of the activities in this area have been explored further within the Social Value section below.

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Completion of the Salford PFI

Group Procurement Strategy

Repairs innovative shared services

Aim:

Achievements:

To achieve financial closure of the Salford PFI scheme and commence the project to transform a part of Salford.

The newly named, Pendleton Together commenced in September 2013. This £430 million, 30 year project is set to transform a part of Salford and will improve and maintain the housing stock and create new opportunities to improve peoples’ lives. Pendleton Together employs over 50 staff (through Chevin Housing Association) delivering housing management and repairs services to customers and plans to build over 1,500 new homes for rent and sale (over 30 years). Pendleton Together’s refurbishment partner, Keepmoat, is comprehensively refurbishing 1,253 existing homes over 3.5 years. Employment, skills and training initiatives feature prominently in their work. There will also be new parks, green spaces, sports pitches, improved paths and walkways, a city farm, and an extra care facility for elderly residents.

Aim:

Achievements:

To develop a Group Procurement Strategy aligned with the VfM strategy ensuring a consistent framework and collaborative working.

We have entered into a number of procurement frameworks such as Procure Plus in order to gain efficiencies. We aim to harmonise our approach to the procurement of asset management. A piece of work is still required to develop the Group Procurement Strategy, however, preparatory work, which will ultimately inform this strategy, is well underway. A small Procurement team was put in place in April 2013. This team commenced work on implementing a purchase order processing system across the Group along with a new contract management system. Initial activity has been to review contracts coming to an end to ensure that group deals were obtained. An audit has also been conducted in this area and the recommendations will be incorporated within the new strategy. The strategy will be approved in 2014/15. This will ensure collaboration across the group in terms of sourcing goods and services and that we receive the benefits from our considerable economies of scale.

Aim:

Achievements:

To form a Company with Wakefield and District Housing (WDH) (under a cost sharing agreement) to deliver an improved VfM repairs and maintenance services. The annual savings were forecasted to be in the region of £590k.

THG and WDH launched the newly named, Northern Shared Services (NSS) in April 2013. This is now the housing sector’s largest repairs cost-sharing group. The partnership not only offers customers an even better standard of service but generates greater VfM by creating economies of scale for materials and service, reducing property and maintenance costs, creating opportunities to expand services further. Phase 1 involved 1,400 Pennine Housing properties in Sheffield and a further 4,500 Chevin Housing properties across West and South Yorkshire were introduced in December 2013, further expansion saw 5,000 more properties across the Yorkshire region added in April 2014. Actual savings have not yet been formally calculated but are expected to be in the region of £590k and work is currently underway to properly quantify these and to capture customer satisfaction.

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Social Value Audit

Asset Management

Aim:

Achievements:

To conduct a social audit on the community regeneration activity of the business.

An independent Social Audit was carried out between March and May 2014 for our completed accounts 2012/13 by a panel from the Social Audit Network (SAN), TA Consulting and Procure Plus. Some excellent early results were reported as set out below :  66 Apprenticeships created for customers from THG communities (many progressing on to employment within THG, others to external contractors or companies);  273 Training places (73 people achieved a minimum of 226 qualifications);  63 Tenants were supported into work by a JCP Employment Adviser;  Economic regeneration activities have assisted at least 129 individuals into work;  More than 1,000 young people have been supported through Youth Engagement Activities;  14,526 hours of activities engaging young people were provided at over 207 different events;  7 young people participating in the GROW programme progressed into work or apprenticeships (24% of those registered on the programme);  91% of the 887 Growing and Gardening for Health participants surveyed feel fitter, healthier and happier as a direct result of the project;  External match funding attracted to Together Group projects to the sum of £1.2 million; and  We have also invested £1 million in fencing programmes through Newground Together CIC to support 73 people to gain work experience.

Aim:

Achievements:

To develop a new group wide standard for maintaining homes at Decent Homes levels and develop asset management plans to optimise the utilisation of assets in terms of service benefits and financial return.

A new Asset Management strategy has been developed and approved for the Group. This strategy outlined the stock condition requirements (based on recently conducted stock condition surveys) and long term financial requirements. The strategy covers a variety of elements including:  Achieving decent homes standards;  Energy efficiency;  Gas servicing;  Remodelling;  Major refurbishments; and  Procurement of components. This strategy will ensure that we make intelligent and informed business decisions which will maximise the VfM in all areas of our assets. Our specific achievements in relation to asset management during 2013/14 are set out within section 8 of this assessment.

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Additional achievements during 2013/14 We have also delivered a number of further VfM improvements and initiatives during the year in addition to those originally planned. Some examples of the outcomes that we are particularly proud of are included below: Plus..... plus.... plus..

Aim:

Achievements:

Secured outright ownership of Together Roof Energy Joint Venture vehicle.

Originally a joint venture created with an external partner to design and deliver a large scale solar panel installation programme, linked to high level feed in tariffs, to support our approach to VfM. Delivered outcomes of Together Roof Energy:  Energy savings to tenants £250k to £350k  £2.5m of FIT revenue YTD;  Equivalent of taking 72 cars off the road  2,952,476 KWh of renewable electricity generated; and  101.18 tonnes of carbon saved per year.

Establishment of group wide approach to tackling impact of welfare reform.

Establishment of an innovative furniture and recycling centre – enabling tenants to reduce housing startup costs and protect company income stream.

A decision was then made to buy out our partner and to bring this business into full ownership by THG. This will ensure the full benefits of this programme are totally realised into THG income streams, these are:  Existing finance paid off, therefore reduced finance cost and less restrictions on use of receipts;  Revenue receipts to be fully utilised within the Group – this will be circa £1 million per annum for the next 23 years; and  Reduced overhead costs – managed mainly within the THG. THG have developed a Welfare Reform steering group and their priorities have been:  Review of payment methods for customers;  Approach to arrears collection – ‘Rent First’ culture; and  Communication to customers. The result of this has been the recruitment of a Credit Union Development Worker and financial inclusion work undertaken with customers. The number of tenants now under-occupying has fallen by nearly 1,000 at the year end. Due to our intensive efforts, the impact of Welfare Reform on our arrears has been lower than expected with only a 0.13% increase in arrears being reported and 97% of tenants affected by under occupation paying in full or part at the year end. We have assisted over 700 tenants to receive discretionary housing payments. A key focus for our income teams has been at the pre tenancy stage to undertake work with new and potential tenants to understand their income and affordability and to assist them with sustaining their tenancy. During the year we opened a furniture and recycling centre for customers in the East Lancashire area. Re-use Together provides environmental, social and economic benefits – the cornerstone of a sustainable neighbourhood strategy. Tenants, particularly the more vulnerable new tenants living in the community, are better able to sustain their tenancies; neighbourhoods are made greener by provision of convenient doorstep collection services and reduced bulk waste going to landfill; Re-use Together creates a hub within the community where people participate in a highly visible, worthwhile activity. Through volunteering, training and donations, projects also provide local jobs for local people.

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Plus..... plus.... plus..

Aim:

Achievements:

The Re-Use Together Centre has received an award from the John Lewis Partnership. A John Lewis staff member will be working from the Textile Room in the Re-Use Centre two days a week for a six-month period to help us develop our training programme for volunteers and customers; and to increase their skills whilst re-using and recycling donated textiles. Woodnook Joint Venture Regeneration of hard to let properties.

Woodnook is a £15 million joint venture partnership between Twin Valley Homes Ltd and Place First, established in order to regenerate an area of Accrington that will transform 131 empty terraced properties and deliver environmental improvements. Within this project, three streets of terraced housing will be refurbished and remodelled to deliver 71 family homes. Existing, empty 2-up-2-down terraces will be transformed into spacious, energy efficient 2, 3 and 4 bedroom family homes. The completed homes will be available for private rent. This is already creating significant interest and demand for these properties in a highly deprived area. THG’s own investment to start this project has been £250k.

Fuel Switching Benefits & Energy Support to ensure tenants were able to limit expenditure on fuel and to protect company income streams.

During 2013/14, the Group supported a project to give energy advice and support to customers in fuel poverty. A small team have worked with the most vulnerable customers in PH2K to ensure they use the most appropriate energy tariff. Many have also benefitted from basic energy efficiency measures like draught proofing. The project also achieved match funding from DECC to support the Big Energy Network initiative (£5k). Highlights from 2013/14 include:  43 community-based events;  1,195 one-to-one interventions to vulnerable tenants;  61 tenants received a total of £8k in Warm Homes Discount;  £1,924 fuel debt written off/refunded and 16 cases referred to Money Talks;  150 emergency heating loans delivered to vulnerable households, generating £7.7k additional income to residents;  556 households received 893 low cost measures, e.g. powerdowns, draught proofing, radiator panels to the value of £7k with demonstrable household savings of £155 a year, or £127k overall; and  106 third-party referrals for additional support, e.g. Money Advisors, Welfare Benefit Officers, SOBS, Supported Housing Services & external agencies This project was a finalist in the 2013 Sustainable Housing Awards and has been shortlisted again for 2013/14. Working in partnership with Community Switch, we have enabled 877 residents across the Group to switch to alternative prepayment providers. It is anticipated that this will mean savings of approximately £53k for residents (when compared to the BIG 6). Energy Angels – to help customers get more for their money THG have now partnered with Energy Angels, a free, impartial one-stopshop which can help our tenants avoid paying too much for their energy. Energy Angels will:  Find out who supplies their energy (gas and electricity);

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Plus..... plus.... plus..

Aim:

Achievements:  

Let the energy supplier know that a new tenant has moved into the property and clear any debt on the meter; and Compare energy providers to make sure our tenants are not paying too much.

Inside Housing’s Inspirational Mentor of the Year 2014.... Alison Clews, Skills and Enterprise Co-ordinator (pictured below, far left with some of our apprentices at a team building event), was awarded the title of Inside Housing’s Inspirational Mentor of the Year 2014.

Apprentices ready to deliver....

Apprentices achieving national recognition for skill levels

Together Housing Group – Our value for money self-assessment 2013/14

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6.

Planned 2014/15 improvements to VfM

We have identified seven key VfM priorities for 2014/15. We have set out below what the specific aim of each priority is and then what we intend to do to achieve it. Delivering Efficiency Savings

Aim:

We intend to do the following:

£2.5 million efficiency savings.

The Group has set a target of efficiency savings for the year, which will be achieved from:  £1 million in improved procurement decision making from rolling out procurement frameworks across asset management and the rest of the Group;  £0.4 million from bringing in group wide systems to one central system for Housing, Finance, HR etc;  £0.6 million from annual savings in insurance and audit fees; and  £0.5 million from vacancy and efficiency savings on employee costs. We will also continue to embed further a VfM culture to ensure that staff consider how they contribute to the efficiency savings across the Group. In addition to this, the Group will undertake during 2014 a governance review to aim to reduce the resources needed to facilitate and support these meetings.

Social Investment and Value

Aim:

We intend to do the following:

To invest in our communities to enhance the lives of our customers and their families and to conduct a social audit on the community regeneration activity of the business. We will develop an approved method for assessing our return on social investment.

THG has ring-fenced £1.5 million of funding for Newground Together in order to continue with our Community Engagement work and attract external match funding. This is in addition to our funding for staff resources in this area of work. The Community engagement team have identified three areas for future activity commissions but other areas of activity will be considered subject to the outcomes identified:  Financial inclusion including welfare reform;  Promoting health and wellbeing;  Youth activity – including employment and dealing with anti-social behaviour; Social impact assessments will be carried out during the year and improvements identified from these will be timetabled within local action plans. Through the use of Newground Together’s Charitable status our aim is to match the THG community investment with match funding from external organisations/voluntary groups from resources (staff/volunteers) or cash contributions.

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Tenant Scrutiny

Asset Management

Aim:

We intend to do the following:

Effective tenant scrutiny to allow customers to contribute to the success of the Group.

To ensure that we engage with the maximum number of customers that are representative of our customer profiling and demographics, a full review of tenant scrutiny will be conducted to ensure that we have effective scrutiny of the services which we provide. This will assist us to understand the needs and aspirations of customers within our properties to inform the delivery of current services and shape future investment and growth opportunities.

Aim:

We intend to do the following:

To continue to develop the Group’s approach to a standard for maintaining homes at Decent Homes levels and develop asset management plans to optimise the utilisation of assets in terms of service benefits and financial return.

We will implement a group wide asset management system during 2014/15. This will enable us to manage our stock more effectively and evaluate the sustainability of our stock by identifying assets which do not add value. We can then deliver improved VfM by making more intelligent and informed business decisions about which assets to invest in and which to remodel or dispose of. We will also continue to test all our procurement processes to ensure that they are offering good VfM and we will roll out the Procure Plus framework to the remaining Group members, Pennine and Chevin. We will consider a mix of innovative and traditional methods to improve the fuel efficiency of our homes to help tenants deal with rising energy costs. We will review the outcomes from our new Repairs and Maintenance cost sharing group against its original objectives to produce cost savings and increased customer satisfaction, to ensure that it is generating the expected results.

Business Growth

Aim:

We intend to do the following:

To continue to develop the Group’s growth strategy to grow the Group’s asset base.

We have a partner agreement with the HCA to deliver 995 dwellings costing £104 million by March 2017, with 410 homes being delivered in 2014/15 We are also developing further joint venture arrangements with Rossendale Borough Council and a joint venture arrangement in Pendle. These were established to work in partnership with the Council and nominated developer to build new homes for rent and shared ownership. We will be investigating new opportunities for delivering grant free homes. We will achieve funding to be able to include the Government homebuy initiative as one of our sales options. We will be creating links with Universities to assist in delivering new technology into our homes and solutions to improve housing options for older people. We will develop partnerships and delivery vehicles with organisations which assist in the delivery of our objectives, targeting the health sector.

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Group Procurement Strategy

Aim:

We intend to do the following:

To develop a Group Procurement Strategy aligned with the VfM strategy, ensuring a consistent framework is in place to work collaboratively explore efficiencies.

One of the key reasons for forming the THG was to gain efficiencies through the procurement of goods and services. Our recent internal audit conducted by Mazars confirmed that we needed to conduct a proactive review of our overall strategic approach, in order to reduce the impact of changes in funding and regulation. We also acknowledge that we have further work to do within the procurement function, with a clear move towards effective category management arrangements, something that is not fully embedded within THG at present. In the year ahead the main area of work is ensuring that we record all contracts on our new centralised system that allows visibility of the contract, allows the contract to be monitored and formally reviewed and also builds in a warning system to either terminate the contract or start the re-tendering process again. This will allow the procurement team to ensure that contracts are being tendered in the most cost effective way given the geographical spread of the business. We will continue to work with procurement frameworks/clubs in order to ensure that we are getting the best price and quality possible. We will also use innovative ways to procure goods and services such as Cost Sharing Agreements (as we have with Northern Shared Services) and Joint Ventures.

Performance Management

Aim:

We intend to do the following:

For all staff to have a performance driven culture and understand the true cost and impact of all decisions on the business and customers.

To use performance dashboards internally to drive performance and assist us to better understand the key drivers of both cost and performance across our business. We will set future performance targets to close the gap where we are not currently performing in line with our ambitions.

To make better use of benchmarking information.

From our performance results to date we have identified the following areas where our performance is lower than the levels required by the Board:  Voids and relets  Repairs and Maintenance  Rent Collection

We will use HouseMark benchmarking and other external data to challenge ourselves to improve our performance and reduce costs when compared to our peers and strive to deliver best practice.

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7. How we manage our financial & operational performance to maximise VfM Financial Management The Board approve and monitor the 30 year financial plans and the annual budgets for the Group. The plans are developed within the constraints of the available funding facilities and with the aim of delivering value for money for customers and stakeholders. There are challenging targets set and full scenario testing is completed in order to understand the robustness of the plans to potential changes to the operating environment.

Our Financial achievements in 2013/14 – the headlines:      

Turnover of the group was £184.45 million against a target of £147.98 million.* Operating costs were £138.46 against a target of £109.56 million*. Operating margin increased from 19.9% in 2012/13 to 25.4% in 2013/14. Interest payable of £25.9 against a target of £23.4 million. Surplus was £22.3 million against a target of £17.16 million. Financial savings achieved of £2.41 million compared to target of £2.5 million and in addition we received £1.2 million in external matched funding for community regeneration activities.  Spent £38.27 million improving our assets against a target of £40.33 million.

 Spent £61.5 million on developing new homes and received £8 million in grant. *The increases in turnover and operating costs are due to Newground Together, Newground Together CIC, Pendleton Holding Ltd, Pendleton Operating Limited (PTOL), Together Roof Energy SPV and Together Roof Energy becoming part of the THG during 2013/14. Each of the members of the Group has challenging targets to improve their operating margins and reduce operating costs wherever possible without reducing quality. The results for 2013/14 for each member organisation are contained in the table below. Operating Margin Target Operating Margin Actual Group Company 2013/14 Performance 2013/14 Chevin Green Vale Housing Pendle Pennine Housing Twin Valley

26.11% 17.73% 21.80% 25.96% 31.66%*

30.46% 25.13% 30.82% 24.20% 24.44%

*Twin Valley Homes set the operating margin target in 2013/14 prior to the rollover of some of the operating cost underspends from 2012/13

Budgets are set based upon business requirements and therefore corporate priorities for the year, rather than being rolled forward with inflation. For example, management budgets are based upon establishment costs and business commitments for the year, asset management costs are based upon stock condition survey, development budgets are based upon growth committee decisions and funds available through business plans.

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Financial performance is monitored at the monthly leadership team meeting. The member boards and Group board meet a minimum of six times each year. The board review quarterly accounts to scrutinise actual performance to budget thus ensuring that financial performance is in line with budget, and if necessary, they ensure that early corrective action is taken. Our recent investment in the BRIXX business planning model enables us to review different scenarios for our business plans and to prepare for and react promptly to external policy development and economic influences.

We have provided a three year summary view of our financial performance below: Consolidated Income and Expenditure Account Turnover Operating costs and cost of sale Operating Surplus incl. share of joint venture Surplus on Disposal of assets Net Interest Payable & finance costs Taxation Surplus for year after tax

Key Financial Ratios Growth in Turnover Operating Margin Interest Cover

Sector Average 2013* 8.1% 25.9% 2.1

2013/14 £ million

2012/13 £ million

2011/12 £ million

184.45 (138.46)

148.779 (119.21)

152.51 (121.68)

46.1

29.6

30.26

1.995

1.263

1.523

(25.98)

(23.9)

(16.29)

0.13 22.3

0 6.97

0 15.5

21.89% 25% 7.44

-2.45% 19.9% 7.96

-3.85 19.8% 9.26

Our turnover has grown strongly over the year rising to £185 million from £148 million, an increase of 21.89% from the previous year. This is due to additional rental income as well as income generated from Newground Together, Newground Together CIC (£2.4m), Together Roof Energy (£0.5m) and the Salford PFI (£17.4m). We have also received in Chevin, a one off gain reimbursing the costs of the Salford PFI project. The Group’s operating surplus is £46 million, a rise from £29.6 million in the previous year. We continue with our efforts to control costs, promote financial efficiency, and obtain value for money throughout our operations. Our interest cover for the year has reduced slightly to 7.44 from 7.96 but this is still well within our business plan targets and is within sector averages. The Group’s surplus for the financial year stands at £22.3 million which is a considerable increase from the £6.97 million surplus in the previous year. The increase is primarily due to the additional rental income and additional group companies added to the structure. The operating margin has increased for each of the last three years and is now 25%, up from 19.9% in 2012/13. This is just below the sector average of 25.9%, although it should be noted that this sector average is for 2012/13 which is before the impact of Welfare Reform was experienced. For THG, the impact of Welfare Benefit has started to be felt in 2013/14 and the cost of this to the group is estimated to be £1.5 million. An analysis of the proportion of our costs by expenditure type for

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2013/14 is provided in the graph opposite.

Consolidated Balance Sheet Housing Properties at cost less depreciation Social Housing Grant + other grant Other fixed assets Net current assets Creditors: after more than one year Other long term liabilities Capital & reserves

Key Financial Ratios Liquidity Return on net assets (RONA)* Growth in total assets Gearing Development programme capital spend £ million Investment programme capital spend £ million Debt per unit £k Housing stock owned and managed at year end

Sector Average 2013 ** 1.52 2.4% 6.3% 86.8%

£19.91k

2013/14 £ million

2012/13 £ million

2011/12 £ million

929.51 (332.58) 18.09 113.3 728.3

872.29 (324.85) 16.38 20.4 584.2

827.3 (311.54) 15.40 13.1 544.3

600.88

482.97

451.18

28.09 99.42 728.3

50.1 51.16 584.2

43.19 49.9 544.3

4.05 3.1% 23.8% 82.49%

1.6 1.19% 8.4% 82.67%

1.5 2.85% 8.3% 82.9%

£61.5 million

£27.6 million

£26.5 million

£34.24 million

£46.99 million

£42.25 million

£14.6k

£13.3k

£12.8k

37,900

36,766

35,378

*Return on net assets = Surplus after tax/(Fixed assets + current assets –current liabilities) ** Based upon the Sector Average of the Global Accounts Analysis 2013 The properties are in the balance sheet at cost (after depreciation) of £930 million, an increase from £872 million in the previous year. Our total capital investment in housing properties during the year was £100 million compared to £74.6 million the previous year and was funded through a combination of capital grants, additional loan draw-downs and cash generated from operations. The Group has increased its borrowings from £482 million to £590 million mainly due to the funding for the Salford PFI scheme. The cash balances are also high, as the loan for the Salford PFI scheme had to be drawn in advance of capital expenditure, which is also the reason for the exceptionally high liquidity ratio. Return on net assets (RONA) has improved considerably to 3.1% from 1.19% last year and is now better than the sector average of 2.4%. The Group has worked hard to strengthen its asset base through investment in existing assets, new developments and the addition of the Salford PFI scheme. Development expenditure in 2013/14 has increased considerably compared to 2012/13, which is due to the increase in activity on the development programme. The investment programme is lower than last year, this is a reflection of the profile of stock condition requirements and that major investment programmes to meet decent homes standards have now been completed. Gearing and debt per unit are slightly lower than the sector average. This is largely driven by restrictions on our financial covenants with funders. link to Annual Report and Financial statements

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Our financial plans for 2014/15  Our financial target for 2014/15 is a £2.5 million VfM saving and a further £1.5 million to be received in external matched funding.  Targets for operating margin for each Group company is provided in the table below.

Group Company Chevin Green Vale Housing Pendle Pennine Housing Twin Valley

Operating Margin Target 2013/14 26.11% 17.73% 21.8% 25.96% 31.66%

Operating Margin Target 2014/15 20.79% 22.48% 24.36% 20.58% 26.89%

Chevin’s target for their operating margin has reduced this year, which is mainly due to the previous year including a one off revenue receipt for the reimbursement of PFI costs incurred in prior years. In addition to this, resources have also been allocated to areas such as void losses and repairs to provide for the potential impact of Welfare Reform. Green Vale Homes have an increased target for operating margin as they have improved their actual performance in 2013/14 and this is more in line with sector expectations. Housing Pendle has also been set an increase in target because as with Green Vale, they have increased their performance in 2013/14 beyond original expectations. The target for Pennine Housing has reduced when compared to last year, in order to provide for the impact of Welfare Reform on void losses, bad debt provisions and relets. Twin Valley Homes has also seen a reduction in target for their operating margin this year, as the actual performance last year was 24.44%, however, the new target is still in line with sector expectations and takes into account the impact of Welfare Reform.

How benchmarking information influences financial decision making The Group are members of the HouseMark benchmarking service which allows us to benchmark against other similar organisations in order for us to identify where we can improve. When compared to our peer group we aim to be in the top 25% for service performance and effectiveness, however we recognise that high quality services are very rarely cheap to provide. There are occasions where some of our services are more costly than others in the peer group. This is down to a number of factors and will include for example, policy decisions that the Group have made in connection with delivering wider social impact from the work we do. Our focus is now on ensuring that the outcomes from this investment justify these higher levels of expenditure. We also have higher than average costs in some of our Group companies and a key cost driver is the geographically dispersed nature of some of the stock. We will continue to seek innovative ways to contain costs whilst delivering high quality services in these areas. We have provided the results of our benchmarking against peers within section 9 and Appendix A of this assessment. We will continue to use these results to challenge our costs, understand what our cost drivers are (and the level of influence we have over them) and identify areas for cost improvement.

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Performance Management THG has a performance management framework that extends throughout the whole organisation. These robust arrangements ensure that progress against the objectives within the Corporate Plan is being continuously monitored and corrective action taken where necessary. The Group Board receives group level performance information against group targets in order that it has an overview of the whole business and also receives detailed performance information at subsidiary level in order that it can drill down into specific areas where problems are identified at the Group level. Subsidiary performance is scrutinised by the respective Boards who are responsible for ensuring that targets at subsidiary level are achieved.

2013/14 Key Performance Headlines Our key headlines are provided below. The complete set of performance results for 2013/14 is available to view at (link to THG’s website with performance information for 2013/14).

Rents Rent collected excluding arrears (%) Current tenant arrears (%) Former tenant arrears (%) Empty Homes Empty homes available to let (%) Empty homes unavailable for let (%) Rent loss to voids and bad debts (%) Property turnover (%) Asset management and Cyclical Number of homes meeting Decent Homes Standard (%) Average SAP rating Repairs Scheduled repairs completed within target (%) Average duration per responsive repair (days) Homes with gas safety certificate (%) Customer satisfaction with repairs (%) Customer Services Customer satisfaction rating (%) Staffing Absence Turnover

2013/14 Group Target

2013/14 Group Actual Performance

2012/13 Group Actual Performance

100%

98.17%

99.24%

4% 3%

4.52% 3.03%

3.46% 2.03%

1.5% 0.8%

1.69% 0.82%

1.27% 0.82%

4%

5.05%

2.83%

12%

12.09%

12.24%

100%

100%

100%

71%

70.21

70.59

98%

97.35%

94.77%

9

9.55

10.4

100%

99.79%

99.54%

88%

86.04%

87.87%

90%

84.50%

88.37%

3% 10%

3.72% 13.28%

3.26% 9.83%

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Our performance on rents has declined from 2012/13 which has been due to a number of factors. New systems and structures have been implemented to align across the Group, as there had been varying levels of performance in each of the member organisations. The first six months of 2013/14 were a particular challenge but the team started to see signs of improvement in the final six months of the year. In 2014, HQN, an external consultancy, are undertaking a piece of work to review the rent collection process and how we prioritise arrears. The challenges of Welfare Reform will continue, however, it is hoped that we will provide the best service to maximise income. This reflects the current economic climate, and we recognise that we will need to intensify our efforts to fulfil our commitment to constantly improve in this area. Managing our void levels has also been a particular challenge to both the housing management and repairs teams, due to tenants wishing to move due to the bedroom tax. We started to see an improvement towards the end of the financial year but this will remain a key focus for the Group for 2014/15. Overall customer satisfaction has also been below expectations, which is down to a combination of our new customer contact centres embedding their systems and ensuring that staffing levels are adequate for our demand and also a change in the method used to collect satisfaction.

Our 2014/15 priorities for improvement In order to address the performance challenges experienced in 2013/14, we have identified the following priority areas for improvement during 2014/15:  Voids and relets  Repairs and Maintenance  Rent Collection

Our future performance ambitions The Group’s ambition is to have its performance and service effectiveness indicators within the top 25% (i.e. upper quartile) of peer group performance. We acknowledge that we have some work to do in order to achieve these levels but we intend to realise them over a period of 2 to 3 years. In order to allow stakeholders an understanding of where we currently are, we have provided in section 9 of this assessment our current performance against the median level of our peer group. It is our intention that in future, we will replace this with a comparison against upper quartile performance. Encouragingly, we are already achieving this high level within some of our service areas and this can be seen within the tables in Appendix A. The upper quartile targets will now appear in our performance reports to Boards in order that these ultimate goals remain in full view. In order to assist us in this journey to excellence, we are implementing a new performance management system in 2014/15 following an independent review of our performance management arrangements by Musgrave Analytics in 2013/14. The Group Executive Director for Corporate Services is now heading a performance team which is setting annual performance stepped targets over the next 3 years across a range of quantitative and qualitative indicators, in order to map the route to upper quartile levels. Teams will be engaged in improving performance within their area of accountability. Our ambitions will therefore be realised as a result of being underpinned by real and comprehensive future plans for targeted action and improvement.

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8. How we manage our assets to maximise return on investment In this part of our VfM assessment, we outline our approach to managing our assets, both our existing assets and the development of new assets, to ensure that we achieve our objectives, don’t waste any of the organisation’s precious resources and receive a positive business return on the investments that we make. We also set out our asset management achievements in 2013/14 and our plans for the future.

Our objectives in this area are to:   

Provide and develop a range of excellent quality homes. Invest in our communities. Grow are organisation.

Key headlines of asset management achievement in 2013/14: We have made some impressive achievements during the year as follows:  We have spent £38.3 million reinvesting in our existing stock in terms of component replacements;  We spent £30.5 million on the repairs and maintenance of our existing stock;  We have developed 193 homes (178 new build and 15 purchased and refurbished through the empty homes programme);  We have spent £61.5 million on building new homes during 2013/14 (including empty homes programme);  We have sold 116 homes under the RTB and RTA sales generating £2 million;  We have achieved a surplus of £435k for the sale of shared ownership properties and outright sales;  We have converted 1,348 re-let properties to affordable rent generating additional income of £522k;  We have commenced the Salford PFI project, a £430 million, 30 years project to transform a part of Salford;  Woodnook, a £15 million joint venture, has been commenced to regenerate an area in Accrington;  We have developed a new Asset Management Strategy which will ensure that we make intelligent and informed business decisions to maximise VfM in all areas of our assets;  We launched Northern Shared Services which is the housing sector’s largest cost sharing group (working with Wakefield and District Housing) which will see a range of VfM improvements including improved standards of services for customers and cost savings expected to be over £500k per annum. We explore this further within our section on repairing and maintaining our assets below;  We have carried out options appraisal in order to consider the alternative use of assets. One of these appraisals has resulted in the closure of a tower block in Halifax which will lead to its demolition in 2014/15 (see page 35);  We have evaluated our worst performing schemes and have developed 5 neighbourhood action plans to address neighbourhood concerns around anti-social behaviour, lack of car parking and general poor condition of estates which had resulted in decreasing demand for properties in these areas. We have worked with neighbourhood teams and tenant representatives to address specific problems, for example on the Mixenden estate in Pennine (see page 36);  We secured outright ownership of Together Roof Energy which previously was a joint venture arrangement. This delivers our solar panel installation programme and by obtaining full ownership, we can deliver savings to the business and has revenue receipts of £1 million per annum for the next 23 years;

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



 





We have stock condition data across the group informed by a 25% sample stock condition survey and subsequent data cloning. We have a continuous programme of updating stock condition information supported by a dedicated team to ensure that data is kept up to date and accurate. We use this information to implement our just in time approach to component renewal, ensuring that we continually maintain decent homes standards. The surveys have informed our 30 year investment needs as contained within our long term financial business plans; We were successful in achieving grant funding from the Department of Climate Change for Big Energy Savings Network fund delivering behaviour change programmes to the most vulnerable residents. This contributed towards supporting the existing team to run community events, raising awareness of fuel poverty, options to reduce fuel consumption and how to access the best energy deals on the market. A further £8k was obtained to provide low level equipment to tenants in Pennine Housing, such as radiator reflector panels, energy efficient light bulbs, draught proofing etc; We achieved £175k of ECO grant for the external wall insulation upgrade to 29 properties in Halifax by working in partnership with Calderdale Borough Council; We started the 1st phase clearance and demolition project of Abby Park, Halifax following the assessment and Board decision to close the scheme and redevelop due to low demand issues due in part to another Registered Provider’s new development on adjoining land (see page 35); We are members of procurement framework, Procure Plus, from whom we procure labour and materials. We have achieved a £200K saving on material/labour costs compared with purchasing through local merchants and traditional tendering etc; We have successfully recruited and trained 6 apprentices as result of our Procure Plus membership saving the welfare purse £89K through education, crime reduction through employment and training.

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Business return on investment In achieving our asset management objectives, the business returns that we consider during our decision making process can involve any combination of the four categories of: financial, social, environmental and economic and are outlined within the table below. In order to demonstrate how we make the best possible decision for the business and our customers, we have also set out below the type of issues that we take into account.

Financial Returns   

 

  

Accounting ratios are used to demonstrate return on net assets and capital employed from investment in assets Options appraisals calculate the Net Present Value/ Internal Rate of Return of investments. Portfolio approach to investment – some investments we undertake may not, by themselves, make a positive return however we undertake them because they achieve other strategic priorities of THG. When taken as a portfolio of investments across a number of schemes, the portfolio as a whole makes a positive return. We ensure that decision making takes into account both up front capital expenditure and ongoing revenue expenditure in order that the full life costs of different options are considered. We recognise that financial benefits may be received directly by the business, or indirectly by tenants e.g. investment in insulation for energy efficiency might not necessarily increase the value of the asset but could reduce the financial costs of utilities for tenants. Intelligent procurement decision making is used to obtain the best price for the quality we seek. We actively seek out grant funding opportunities to make our resources go further e.g. ECO funding, Department of Energy and Climate Change and Big Energy Savings Network fund etc. We use mixed development schemes where sales income is used to offset capital costs of rented stock.

Environmental Returns      

Energy efficiency – insulation measures, solar panels and renewable technologies, Green Deal/ECO etc. Carbon reduction and reducing running costs for tenants. Reusing components where appropriate and reducing waste through accurate purchasing of materials and close site management. Environmental impact of materials and their delivery is considered during the specification process. Our investment work may include environmental works which improve the look and feel of an estate and thereby the confidence, self-esteem and wellbeing of tenants living on it. Tenant satisfaction with neighbourhoods.

Social Returns 

     

Increasing tenant satisfaction and impact on wellbeing – using tenant satisfaction from new developments and major asset management investments to inform future development and investment strategies that in turn achieve wider benefits for tenants. Improved neighbourhoods and communities resulting in lower tenancy turnover (thus improving financial return through reduced void costs i.e. lost rent and repairs). Increasing the level of sustainable tenancies. Community involvement on investment projects – empowering people both in influencing what happens and securing a sense of ownership of the finished product. Lower crime and ASB – improvement in tenants wellbeing and less costs to address the impact of crime and vandalism e.g. repair costs. Ensuring where possible that investment delivers local employment/training opportunities and where possible from our own tenant base. Securing apprenticeships through procurement, on both material and labour supply chains.

Economic Returns – wider economy    

By building or acquiring more properties, we may help tenants into social housing from more expensive temporary accommodation. By providing social housing where rents are considerably cheaper than the private sector we are able to make a positive impact on either the housing benefit bill, or the financial situation of low income families. Our investment in the local economy assists the local labour force and supply chains. By making properties ‘fit for life’ we may reduce the high future costs of elderly care.

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Business Performance of Assets In order to demonstrate how THG is continuously improving the return on its asset we set out below the performance of our assets and the business as a whole since the Group was formed three years ago.

Housing stock units owned and managed Net book value of assets st at 31 March Return on net assets (RONA) Growth in total assets Development programme spend Investment programme capital spend Debt per unit Gross operating margin Interest cover Gearing

2013/14

2012/13

2011/12

Sector Average *

37,900

36,766

36,378

£596 million

£547 million

£516 million

3.1%

1.19%

2.85%

2.4%

23.8%

8.4%

8.3%

6.3%

£61.5 million

£27.6 million

£26.5 million

£34.24 million

£46.99 million

£42.23 million

£14.6k 25% 7.44 82.49%

£13.3k 19.9% 7.96 82.67%

£12.8k 19.8% 9.26 82.9%

£19.91k 25.9% 2.1 86.8%

*Sector Average is taken from the HCA’s Global Accounts Analysis for 2013 As demonstrated in the table above, THG’s business has grown considerably since the group was formed. Our development programme expenditure has considerably increased as we focus on creating new homes for those who need them. Our investment programme expenditure has recently reduced due to all members of the Group now achieving the decent homes standard and our efforts are now being directed to delivering programmes of work based on the needs identified within our stock condition surveys. Business performance from these assets in terms of return on net assets, gross operating margin and interest cover shows a continuously improving position and the Group compares favourably against the sector averages. Gross operating margin has increased considerably as a result of business growth and cost reduction strategies and this has been achieved despite the adverse impacts from Welfare Reform. (It should be noted that the sector average figure is for 2012/13 and was measured before the Welfare Reforms commenced in April 2013). We have provided more in depth analysis of our financial performance and key ratios within section 7 of this assessment.

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Managing our existing assets The properties that we own and manage are THG’s biggest asset. The majority of our stock is rented at below market rent levels to tenants who cannot meet their housing need at an affordable price in the private sector. In 2013/14, we spent over 40% of the rent we received on investing in and maintaining our existing assets. Our Asset Management Strategy (insert link to Asset Management Strategy) has been developed to ensure that it meets the following corporate objectives:  Provide and develop a range of excellent quality homes.  Invest in our communities to improve their sustainability.  Create an economic, efficient and cost effective value for money business. The Asset Management Strategic Plan focused on five key strategic priorities which have been developed to ensure that the outcomes and objectives from the strategy are managed towards successful implementation. i. Ensure the long term viability and sustainability of the stock; ii. Maintain and manage the stock to meet the current and future needs of customers; iii. To ensure the Group targets investment initiatives to support local needs and maximise our social impact; iv. Reduce cost and demand of maintenance in the long term; v. Ensure our assets have a reducing impact on fuel bills and the environment.

Outcomes being derived from our investment in assets include:     

Meeting or exceeding the decent homes standard; Mitigating demand for reactive maintenance; Enhancing the energy efficiency of homes; Improving customer satisfaction; and Contributing to sustainable communities.

Since the formation of the Group three years ago we have spent £357.7 million on improving and maintaining our assets. Given this high level of expenditure, it is important that we invest wisely and manage our assets cost effectively and strategically. In order to achieve this we take a holistic approach which recognises the following:  The links between the Investment Programme and Repairs.  The links between tenancy management and the demand for repairs services.

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Investment plans are derived from stock condition data, which are independently validated and then reflected within member company financial business plans. For the period 2013/14 to 2015/16, £229 million will be spent on our assets for investment and repairs as shown below: Member Number 2013/14 2014/15 2015/16 Total Total of Units Per unit Organisation £m £m £m £m Chevin 8,631 17.7 18.5 19.2 55.4 £6,418 TVH 7,937 15.7 16.1 17.1 48.9 £6,161 HP 3,253 7.6 7.8 8.0 23.4 £7,193 GVH 3,691 8.6 8.6 8.9 26.1 £7,071 Pennine 12,174 25.3 24.7 25.4 75.4 £6,193 Total 74.9 75.7 78.6 229.2

2013/14 Investment Expenditure For 2013/14 we spent £38.27 million on investment programme works to our properties. The majority was spent on stock condition related works, which delivered the following:

In addition, the Group has carried out fire safety works to three tower blocks, replaced eight lifts within tower blocks, installed 5 air source heat pumps and 37 solar PV installations. Further works were provided to support vulnerable residents with adaptation improvements to properties.

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Stock Investment in existing stock This section explores our approach to investing resources in our existing stock in order to ensure that we maximise the return on that investment and maintain or increase the value of our assets, how we make decisions for disposing of any stock and we also provide some examples of our recent asset management decision making to demonstrate what all this really means ‘on the ground’. The focus for our current work is on demonstrating that we fully understand our assets in terms of:  Stock condition data, with an ever increasing picture of actual data as opposed to cloned data;  Income and expenditure profiles over the long term (30 years);  Market demand analysis; and  Performance data including void levels and tenant satisfaction. This business intelligence enables us to plan and adopt rational strategies ranging from continued investment, change of use e.g. affordable rent, replacement, and for poorly performing properties, disposal, as well as opportunities for new development where opportunities allow. To assist the assessment and appraisal of options and to support decision making on investment choices the following broad issues are considered:   

Suitability of the property to meeting the needs of the customer and their community; Ability of the property to meet the market requirements (i.e. demand), both today and into the future; Ability of the investment to meet corporate financial benchmarks.

By analysing a range of indicators we can understand how our assets perform financially through the calculation of Net Present Value (NPV) on future cashflows and how estates perform in terms of their popularity. This analysis and evaluation enables us to position each asset/estate relative to others and identify options for improving or maintaining viability. Over time, we can review the outcomes of any investment/intervention decisions. Understanding asset value and estate performance is a complex process drawing on a range of indicators for financial and nonfinancial data. In order to manage this data, the Group is implementing a tool to manage this – EVALUATOR. This will present data highlighting priorities for options appraisal and the creation of neighbourhood plans. The new system, as shown in the diagram, requires a highly integrated approach with our business planning process to ensure that all aspects of VfM are considered. The system has the sophistication to take account of changes in: physical conditions, funding opportunities and demand issues, in particular those arising from Welfare Reform (which we discuss further on page 34).

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These detailed indicators include: rents and service charges, investment need over 30 years, repair costs, tenancy length, void costs and void loss, current tenant arrears, under-occupation, energy efficiency, neighbourhood management assessment, anti-social behaviour cases and satisfaction with home and neighbourhood. We are currently populating the system with data to enable us to assess, in a systematic manner, the financial performance and neighbourhood health of properties, by neighbourhood, or by scheme. This is turn will assist us to manage our investment in stock more effectively, evaluate its sustainability and identify assets which do not add value. Our new system will produce a traffic light assessment for our stock as follows: Green All indicators are positive, scheme financially viable, high demand, low investment demands Amber Some indicators below target, at risk of decline. Red Scheme failing on most indicators Our ultimate aim is to have as many properties as possible in the green category, however we will need to continue to support communities with long term challenges and this may impact on the overall financial value of our assets. To make the best use of resources, we will first target the schemes which are in the red category. Options appraisals will be undertaken and different scenarios considered as follows:  Leaving the Scheme alone without any significant investment, other than that planned;  Full Refurbishment/enhanced investment;  Remodelling;  Neighbourhood scheme including amenity and environmental investment;  Disposal or part clearance. Comparisons of the Net Present Value of each scenario, based on 30 years cashflows of each option, will then drive the decision on the intervention thought to offer best VfM to the business. Although each member organisation has evaluated how its stock performs, using the systems in place in each locality, by early 2015/16 we will have run the majority of our estates through the new system, presenting our priorities for the new Group Asset Management Strategy.

Stock Rationalisation The Group will also continue to consider the disposal of assets where they no longer meet the needs of the business, or if the feasibility of maintaining/keeping the asset does not offer VfM. One of our actions for 2014/15 is to establish a stock rationalisation policy, considering the following: property disposal, stock swaps, stock transfers, refinancing, leasing, management agreements and improved partnership working (such as joint maintenance contracts). We have recently disposed of the following:  Oldgate, Huddersfield, sold on the open market;  Baghill Court, Pontefract, demolished and redeveloped mixed tenure family houses;  Manor House, Otley, Grade 2 listed flats relinquished lease with Diocese of Leeds.

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Welfare Reform Information obtained from the impact of Welfare Reform and under-occupation, informs priorities for investment and may in future lead to the release of existing homes to address unmet needs. We set out below how Welfare Reform is affecting our assets and ultimately, their values. The properties most affected are 2/3 bed flats but also 3 bed family homes. The biggest impact has been at Twin Valley Homes and Pennine Housing. Twin Valley Homes: Main estates and properties affected are:  Montague Street: 182 2 x bed flats and 31 3 x bed flats. Daisyfield Flats: 111 2 x bed flats in 3 multi storey blocks.  Demand for our 844 2 x bed flats has generally reduced, making letting more difficult.  Similarly with our 2,743 3 x bed houses we have found average demand - measured by bid levels at advert stage - have dropped significantly across the stock. Pennine Housing: Main estates and properties affected are:  Flats at Lower Mixenden and Brighouse/Raistrick with the main issue being the location with these being 4 miles outside the town centre and the cost of transport for people either unemployed, in training or at college. This is something we are trying to address i.e. incentive of a month’s bus pass etc.  In addition to the above, we have the same issues with 3 and 4 bed houses. In Mixenden at present we are struggling with the larger properties and some of this is contributed by the lack of provision of schools in the area. This results in high costs of getting children to different schools in North Halifax. We are currently working strategically with the council on school provision.

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Examples of THG ‘s asset management decision making We set out below some recent examples of our asset management decision making to address issues affecting the value of our stock:

High Rise Flats Following a recent options appraisal, a decision was taken to close a tower block in Halifax and this will be demolished in 2014/15. There was declining demand for these flats, compounded by anti-social behaviour issues, the flats required significant investment both in terms of decent homes and to improve their energy efficiency. In addition, existing area had an oversupply of this type of accommodation. We are now working closely with the Local Authority, as the site is part of a wider regeneration initiative.

Abby Park, Halifax As a result of low demand issues, due in part to another Registered Provider’s new development on adjoining land, the Board made a decision to close the Abby Park scheme. The scheme consists of 117 properties, with a mix of 3 and 4 bedroom houses and 1 bedroom low rise flats, located on the outskirts of Halifax, about 3 miles from the centre. Demand for the properties had been variable but at its worst has suffered 38% voids across the different property types. Despite previous investment to bring the homes up to decency standards and projects as part of a multi-agency approach to tackle nuisance and anti-social behaviour, the scheme had continued to be difficult to manage and suffered losses. The site will be cleared fully by 2015 and will be landscaped pending discussions with the local authority involving a joint approach to the redevelopment of multiple sites in North Halifax and the formation of a Joint Partnership with Calderdale Council.

Older People’s Accommodation As a result of learning from our recent development of new extra care accommodation, a revised specification for older people’s accommodation is being piloted during 2014/15. This enhanced standard will mainly focus on bathroom improvements, future proofing properties designed for older people to sustain tenancies in the longer term. In addition, communal area’s in flats and blocks will enhanced to an improved standard to move the look away from an institutional feel which many tenants have told us, deters them from taking a tenancy in some of our flats. Our intention is a brighter and more welcoming entrance to entice new tenants to view otherwise well maintained and efficient flats.

Affordable Warmth A key focus of investment in properties has been on affordable warmth and ensuring that our homes are affordable to heat. This includes new heating systems, fuel switching from expensive electric to gas, as well as structural enhancements like external wall insulation. During 2013/14 we successfully worked in partnership to achieve £175k of ECO funding for an external Wall insulation programme. We ran a successful programme of community based events and one to one interventions which have helped residents with fuel poverty issues and further details can be found on page 15.

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Addressing Complex Multiple Issues The Mixenden estate in Pennine had major investment works carried out to the property fabric which was mostly fully funded from CESP and CERT monies. These non-traditional properties were hard to heat and looked unattractive because of their construction type. Two high rise blocks plus the surrounding housing received energy efficiency works however the neighbourhood generally still looked tired and still suffered from anti-social behaviour. We identified the need to invest in estate environmental improvements to give residents secure gardens and improved amenity space and a £250k fencing programme was then completed. Not only did the works improve the look and feel of the community, the initiative provided an invaluable training programme for 16 local residents. 5,000 voluntary hours were contributed to the scheme, 3 apprentices were employed by Pennine Housing and 7 people progressed into full time employment as a result of the scheme. The HACT wellbeing calculator for the scheme estimated the value at £76k and that for every £1 invested, £1.76 was returned in social value. At Twin Valley Homes a cause for concern was an under used garage block behind the Daisy Field flats that was attracting anti-social behaviour and proving difficult to let as garages. In consultation with residents who helped shape and design the improvements, £83k was invested in the demolition of the garages, the creation of new secure parking, and the desired outside garden space for residents to use.

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Repairing and maintaining existing assets Repairs and maintenance is the number one driver of satisfaction for all of our customers and the demand often stretches the resources available. This requires us to tightly manage our service and budgets and continuously challenge the way we deliver our service in order that we can achieve good levels of VfM to the business and a service that customers value, as evidenced by their feedback on satisfaction. For 2013/14, we experienced higher demand than in previous years on responsive and void repairs. The number of properties in management also increased, which impacted on the numbers of repair requests we received and the number of gas servicings we needed to complete. Despite this, we managed to reduce the total expenditure on repairs by over £1.3 million. This can be seen in the table below:

Together Number Housing Group of repairs 2013/14 R&M

Reactive Repairs No. Responsive Voids No. Cyclical(Gas Servicing) No. Expenditure £ Scheduled repairs completed within target (%) Average duration per responsive repair (days)

Spend 2013/14 £’000

2013/14 KPI

Number of repairs 2012/13

Spend 2012/13 £’000

2012/13 KPI

Movement from 2012/13 to 2013/14

148,027

133,313

+ 14,714 jobs

4,102

4,037

+ 65 jobs

30,521

29,426

+1,095 jobs

£28,624k

£30,007k

-£1,383k

97.35%

94.77%

2.58%

9.55

10.4

-0.85 days

Our focus on improving the efficiency of the service and introducing modern ways of working was instrumental in achieving the financial saving. Customers were surveyed using an external agency from July 2013 to March 2014 to ask the question ‘does Together Housing provide value for money on repairs?’. The overall response is very positive that 8.8 out of 10 customers say that we do. In order to enhance the VfM of our repairs service we have introduced mobile working and dynamic scheduling of gas and responsive repairs and this has contributed to the increased number of repairs completed within target time and their average duration reducing. Initial signs are also positive for customer satisfaction.

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How our repairs and maintenance service compares to our peers At Appendix A, we have provided an analysis of the results of our repairs and maintenance benchmarking at individual company level and in comparison with our peer group. This information, based on HouseMark’s latest 2012/13 results, shows high levels of customer satisfaction across all our group members. Two of our member organisations were however not achieving the median level of performance of our peer group for the % of repairs completed on time but it should be noted that this was measured before the service modernisation programme, as outlined in the previous section, was implemented. We also acknowledge that we have considerable variances in cost levels being achieved within different members of our Group. We anticipate that the changes we have made in modernising the business may have improved our 2013/14 benchmarking results. Once these latest results are available to us from HouseMark in autumn 2014, we will focus our attention on any remaining areas of low performance or high cost. Two companies, Housing Pennine and Twin Valley, have void costs well above the average peer group level and above the costs of the remainder of the Group’s companies. We will be exploring the cost drivers behind the cost indicators and the level of influence we have over them. Cost reduction strategies will then be applied where possible, whilst ensuring that performance levels and customer satisfaction does not fall in the process. Stepped targets for improvements in service performance quality and effectiveness (i.e. satisfaction) will then be introduced within each member organisation to drive the key indicators up to the upper 25% peer group performance levels in line with the Group’s ambitions. Our further aim is that costs for repairs will achieve the level of median performers, or better.

New Cost Sharing Group to deliver Repairs and Maintenance in partnership with Wakefield and District Housing During 2013/14 THG launched its new cost sharing group, Northern Shared Services which is the largest of its type in the country. This has been set up with our partner, Wakefield and District Housing (WDH) and has been authorised as VAT exempt by the HMRC. Northern Shared Services operates throughout Yorkshire and delivers repairs to the value of £5.5m (2014/15 budget). A number of operatives have been transferred in from the previous arrangement and in addition, some further operatives have been recruited from the local area. Materials are procured through existing frameworks and providers. The company provides services to both THG and WDH’s stock and the overall intention is to produce cost savings to both partner social landlords whilst also increasing the level of customer satisfaction. An overall saving to THG of £590k per year is forecasted through the savings on VAT and through other efficiencies through the Cost Sharing Agreement.

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Developing New Assets In the northern regions of England in which we operate, our priorities are focused upon helping people to access the housing market within their means:      

Increasing the supply of affordable homes; Offering choice of tenure to meet individual aspirations; Facilitating progression along the housing ladder; Reducing the number of unfit or empty dwellings; Encouraging independent living for an ageing population; and Improving the environmental impact of our housing stock.

Investment plans are a reflection of the financial and delivery capacity of the Group. The Group’s Growth Strategy (insert link to Growth Strategy) aspires to continued development in vast areas across the north of England. Through its reputation and array of networks and strategic relationships the Group and its members are able to identify a wide range and variety of development opportunities. To achieve the biggest impact and make the most effective use of its assets the Group aim is to demonstrate the flexibility to target its financial resources in pursuit of the most desirable opportunities. A balance is therefore sought to enable impact in localities whilst maximising business development. The financial resources available across the Group for growth activities within partner Boards business plans totals £137 million to meet existing commitments and deliver 1,500 new homes. This investment is broken down as follows and will secure the completion of the following contracts:    

The AHP 2011-15 contract to deliver 783 units at a cost of £81 million, with grant subsidy of £15 million; The AHGP 2013-17 contract to deliver 212 units at a cost of £23 million, with grant subsidy of £5 million; The Empty Homes Programme commitment to refurbish 300 empty dwellings at a cost of £10.6 million with grant subsidy of £3.7 million; The Derbyshire development contract to deliver 197 units without grant at a cost of £22.6 million.

All financial assumptions are agreed by board and used for appraising new development. Comprehensive financial appraisals are carried out which take into account the capital costs of the proposed scheme and future revenue income and expenditure including ongoing maintenance and management costs, producing a measure of the long term financial return of the scheme over 30 years. All new developments are built to the highest standards, offering energy efficiency. Only once developments provide a positive NPV, internal rate of return over 6% and a known demand for new properties in that area will the development be approved by the Growth Committee and Boards. In terms of procurement, all schemes are procured via two routes using OJEU compliant frameworks through mini-tendering or direct call-off. The process enables us to continually test the market with contractors. With regards to Affordable Rents on relets, the Group has converted 1,348 properties creating an additional annual income of £522k, which is to be used on new build developments. The Group will continue to monitor the affordable rents for customers to ensure that these tenancies are affordable and can be sustained.

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In addition, the Group has sufficient unencumbered assets, which will be supplemented with new assets developed during this strategy period, to secure new finance and support an extension of this scale of development programme over future phases. The Group’s medium term financial plan has established a capacity of £143 million to support the next 3 year development cycle. The Group will continue to develop & explore other schemes through various initiatives e.g. non grant funded, PFI, section 106, Joint Venture agreements and mergers.

Social Impact from Investment in assets THG works closely with contractors to provide apprenticeships to achieve social impact within and around our estates. For 2013/14 we were successful in supporting 6 trainees who were all educated to a NVQ level 2 minimum over a variety of trades including plumbing, decorating and joinery. Through the use of a procurement framework, members of the Group have made savings of £204k with an additional £89k of social return on investment.

Key Priorities for asset management for 2014/15:  We will implement a new group wide asset management system which will assist us to understand our assets at a granular level i.e. at a scheme and property level which requires a deeper and more detailed understanding of the value of each of our assets. A series of indicators have already been developed to assess: - The financial contribution the asset makes to the business (NPV) , - How the property performs in terms of its popularity, - The investment and repair costs, and - What our management costs are in holding a property as an asset.  Welfare Reform – in developing further our understanding of the value of our assets we recognise that this also involves understanding the impacts of Welfare Reform on the demand for our properties and therefore their income streams. This is a complex piece of work and the effects of the government policy, whilst still in the relatively early stages, are already being experienced in some areas of the Group, with some of our 3 bedroom stock being affected by low demand where historically this had not been an issue. This will impact on the values of some of our stock. In order to properly understand this, the effects of Welfare Reform need to settle down into a pattern of predictability in order that we can model this with any degree of certainty and draw any conclusions over the future of some of our stock;  We will test our procurement approach to ensure that best possible VfM is being obtained for asset management contracts;  We will manage our partnership agreement with the HCA to deliver 995 homes costing £104 million (by March 2017) with 410 of these homes being delivered in 2014/15;  We will roll out the use of the Procure Plus Framework across the Group as part of programme seeing all THG’s investment programme procured in this way by 2015/16. This will allow workstreams and packages of work to be managed more effectively, working towards to the overall annual efficiencies target;  We will introduce a common specification across the group for voids and repairs, investment and development across all major components to achieve further efficiencies through a single material supply

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    



chain and volume; Maximise ECO funding opportunities for cavity wall , loft and external wall insulation ; Review the Aids and Adaptations process to maximise Disabled Facilities Grant funding to assist tenants in remaining independent but ensuring appropriate works are suitable in house types; Develop a stock rationalisation programme, to consider disposals, stock swaps, acquisitions etc. resulting from the viability assessments that will be produced from the new asset system; To reduce our overheads, we will undertake an accommodation review of our office accommodation; To complete financial viability assessments on estates and schemes where assets are not contributing positively to the business, e.g. Pendle Court, a sheltered scheme within Housing Pendle, which is suffering from low demand, needs considerable investment and is now suffering the effects of newly developed properties across the road; We will reduce the impact on reactive maintenance by targeting behaviour/education programmes with tenants.

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9. Comparisons to other social housing providers This section of our VfM self-assessment aims to set out the absolute and comparative costs of delivering specific services, understanding the underlying factors influencing our costs and why. We make comparisons with others by using benchmarking which is a useful exercise to identify how well the organisation is performing compared to others of a similar size and providing similar types of services. On its own, benchmarking will not tell us everything about the business, but it enables us to ask the right questions and, importantly, gives stakeholders a yardstick by which to judge how well THG performs compared to its peers. The members of the THG regularly benchmarks performance using the HouseMark benchmarking service which enables members to compare against each other and against other ‘best in class’ performers within the peer group. THG has used two peer groups in order to obtain a regional comparison and also a national comparison against organisations of a considerable size. Our regional peer group is a collection of 113 registered providers across the North East, North West and Yorkshire & Humberside areas. Our national peer group is a group of 16 English registered providers outside of London with stock in excess of 20,000 properties in management. VfM Indicators

THG Group 2013/14 Target

THG Group 2013/14 Actual

THG Group 2012/13 Actual

Direction of Travel

Comparison to regional peer group for the North – Median levels*

Comparison to

National peer group > 20,000 properties Median levels*

Cost Indicators Total cost per property of Housing Management £ Average cost of a responsive repair £

£350

£345

£361

Up

£418

£381

£100

£98.01

£110.72

Up

£107.27

£110.36

£1,800

£1,854

£1,608

Down

£1,986

£1,917

4.5%

5.27%

3.46%

Down

3.49%

3.21%

Rent void loss %

2.25%

2.56%

1.68%

Down

1.15%

1.45%

Average re-let time (days)

35 days

51 days

32.53 days

Down

36.8 days

41.4 days

All repairs completed on time % Effectiveness

97%

97.6%

96.6%

Up

97.6%

96%

88%

86%

87.87%

Down

84.23%

82%

88%

84.5%

88.37%

Down

88.35%

85.2%

Average cost of a void repair £ Quality (of Performance) Indicators Current tenant rent arrears %

indicators Resident satisfaction – repairs % Resident satisfaction with overall service provided %

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*Note: Comparison figures are based on HouseMark benchmarking figures for 2012/2013 and no figures are yet available for 2013/14. The effects of Welfare Reform will have taken place during 2013/14 and therefore these previous year comparisons may not be representative of the sector’s performance in this latest year. As can be seen within the table, a comprehensive range of both financial and non-financial measures is used by THG in order to provide a complete picture of performance and competitiveness. The data is then used throughout the Group to understand how our qualitative and quantitative statistics look and to understand how we compare to others. This information is then used to focus on service improvements to ensure that we offer good value for money. We have currently benchmarked against median levels within our peer groups, however it is our intention in future to benchmark against the upper 25% peer group performance levels, as this is where the Group Board’s ambition for THG lies. We have also provided a further level of benchmarking analysis at both service level and individual company level within Appendix A to this assessment. Resident satisfaction with repairs has dropped slightly in 2013/14, however this was a year in which we have made a number of changes in modernising the service. We expect the full benefits of this to be felt in 2014/15. Our satisfaction level is however still strong in comparison with the peer group average.

Resident satisfaction with the overall service provided has fallen. A key contributor to this has been the introduction of the new customer contact centres. In the initial few months of the year, new staff were recruited to the team whilst existing staff had to adapt to the new system. The majority of our customers contact us via the telephone and this resulted in longer call waiting times than expected, resulting in an adverse effect to our customer satisfaction. These initial teething problems have now been resolved and performance is steadily improving. The average cost of a void repair has increased and we explore this further within Appendix A where we provide a breakdown by individual company. Two companies, Housing Pennine and Twin Valley, have void costs well above the average peer group level and above the costs of the remainder of the Group’s companies. We will be exploring the reasons for this during 2014/15 and we will be putting in place plans to reduce costs where possible.

How this data informs our decision making process We focus our attention on those areas which are both business priorities and that show the largest gap to our peer group upper 25% performance levels. This determines where we may need to invest further resources in order to tackle the root causes of problems, or to change our approach to service delivery in order to achieve wider outcomes, ideally for no long term increase in cost. This influences our performance target setting and our budgeting process. Once changes have been made, we monitor the results throughout the year against the new targets that we have set. We also review the subsequent year’s benchmarking information to assess whether the changes that we have made have resulted in tangible differences in our VfM indicators.

Link to THG’s website with latest benchmarking information

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10. Involving our residents in ensuring delivery of VfM Resident Involvement Strategy The latest regulatory framework puts an increased emphasis on tenant scrutiny. In recognising the importance of this we have created a dedicated key objective to ‘Place excellence in customer service and engagement at the heart of what we do’. A resident involvement strategy for the Group has been developed with Customers which should ensure that we have continuous improvement in the services received by our customers.

The key themes of the strategy include:  Gaining greater customer representation on scrutiny;  Training opportunities to empower Customers to be more involved; and

 Embedding a culture of resident-led scrutiny.

Measurable Outcomes THG believes that better and sustainable outcomes for local people will be achieved and evidenced through the following measurable outcomes:  Increased levels of tenant and stakeholder satisfaction with the services delivered and we have set a target for 2014/15 to achieve a 2% improvement in overall satisfaction with services, which will improve our performance to 86.5% which would place us in the upper quartile (i.e. top 25%) when compared to the national peer group;.  Extent to which resources are directed towards the priorities identified by tenants;  Quality of the homes that are provided and the alternative forms of tenure available to suit individual requirements;  Tenant involvement in VfM decision making;  Improved confidence of tenants in the communities and the environment in which they live;  Satisfaction with the level of rents and service charges levied;  Quality of the home environment including the standard of accommodation offered;  Effectiveness and efficiency of the repairs and maintenance service;  Increased demand for the services of THG;  Benchmarked service delivery against the best performing organizations.

Housing Academies Housing Academies are being run across THG. These offer tenants that are actively involved within THG an opportunity to learn about topics relating to their scrutiny role, such as Governance, Equality and Diversity and Value for Money.

Customer Satisfaction A wide range of customer satisfaction feedback is gathered from across the Group and this information is fed back into service improvement plans.

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Resident Involvement during 2013/14:  Tenants have been involved in scrutinising a number of the Group’s services during the year and this has been through a variety of methods such as formal reviews, mystery shopping and survey reviews. One of the main areas identified for scrutiny was the introduction of the new Customer Service Centres and the impact on customers. As well as a new customer relationship management system, phone system and new staffing structures, the teams had a new housing management system to use from April 2014. There was a dip in performance initially for customers and so this became a focus for the scrutiny team. The tenants completed a number of mystery shop calls to test the speed of answer and if the query could be dealt with. As a result of this work the Customer Care Service Standard is being rewritten to reflect new working practices and staff will continue to work after normal office hours to return any outstanding customer call back requests so that the customer is not left waiting until the following day.  Tenants scrutinised the area of communications with customers when their property was undergoing improvement works. This involved shadowing the front line teams and following the process through from beginning to end. The results and recommendations of this review were presented to Board by the customer scrutiny group and should make a big difference to the customer experience and satisfaction.  Local standards were set for environmental services for the Retirement Living Schemes which resulted in an improved service within current budget. The group also checked costings via HouseMark for the grass cutting service to ensure that the service provided in-house offered value for money, which it did.  A local standard was also set for multi-storey complexes which set standards for cleanliness and environmental service standards, this is currently monitored via tenants against the agreed standards. There was no increase in budget for the improved service.  Customers have been involved in the development and refresh of both the Procure Plus and THG Frameworks, being involved in the assessment of contractors and material supply chain.

Planned Resident Involvement for 2014/15  Tenants will be involved in a full review of tenant scrutiny to ensure effectiveness for the future this will be undertaken by an independent advisor who has many years of experience reviewing tenant scrutiny.  VfM performance will form part of the Customer’s Annual Report.  Tenants’ scrutiny groups will receive information on community projects approved by Newground Together and will assess the impact being achieved from the investment made.  Customers will be involved in working through the VfM self-assessment and action plan to scrutinise its effectiveness .

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11. The THG approach to ensuring delivery of VfM THG has an integrated approach to the delivery of VfM within the business and we set out below the ways in which we ensure that improved VfM is achieved.

Board Responsibility The Board is committed to ensuring that VfM is embedded in both the culture and the decision making processes of the Group. The Board achieve this by:  Setting and overseeing the VfM Strategy;  Reviewing and ensuring progress against its VfM SMART action plans;  Having Board VfM champions to assist the management team in embedding a VfM culture;  Ensuring that all reports taken to the board for information or decision must have a value for money statement on the covering sheet which considers what the costs are and how it will be funded;  Scrutinising and approving major business proposals including cost/benefit/risk analysis arising from the proposal and what the VfM and social value is (e.g. how what is being proposed could improve economic, social and environmental wellbeing and how that improvement could be secured);  Reviewing and approval of group member’s business plans to ensure that they are consistent with corporate priorities and that sufficient financial resources are in place to realise all of its ambitions;  Agreeing VfM efficiency targets within the budget setting process;  Setting stretching performance targets and monitoring business performance closely. This is informed by benchmarking information of our peer group which in turn enables our Boards to challenge THG to do more;  Reviewing progress against the Corporate Plan to ensure that the business is continuously moving forwards.

VfM Training and Awareness The plan was for VfM training and awareness to take place with the Boards during 2013/14. Unfortunately, this has not happened but has been arranged for the Boards in November 2014 to be completed by HQN, an external consultant. We have had many board development training sessions taking place within the year for finance, growth strategy, governance and many others.

Robust Risk Management With the Group’s entry into areas such as PFI, joint ventures and cost sharing agreements, it is essential that our risk management approach is both sophisticated and robust. The Group ensures that it has comprehensive risk maps in place which align to the Corporate Plan and other key strategies. These ensure that we properly evaluate all the risks, their likelihood and potential impact and that we have in place appropriate controls to mitigate these risks wherever possible. These risks are then monitored at both Board and Risk Management & Audit Committee through individual targeted reports e.g. Welfare Reform, and general business reports e.g. quarterly finance reports. Regular updates are made to the risk maps to reflect any changes in the risk environment of the business.

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12. How our Board gains assurance regarding our VfM self-assessment Under the HCA’s VfM standard, THG is required to:  Have a robust approach to making decisions on the use of resources to deliver its objectives;  Understand the return on its assets and have a strategy for optimising the future returns on assets – including rigorous appraisal of all potential options for improving VfM including the potential benefits of alternate delivery models – measured against the organisation’s purpose and objectives;  Have performance management and scrutiny functions which are effective at driving and delivering improved VfM performance;  Understand the costs and outcomes of delivering specific services and which underlying factors influence these costs and how they do so;  Demonstrate to stakeholders (including tenants and the HCA) how the organisation is meeting this standard. As part of this process, the Group is required, on an annual basis, to publish a robust selfassessment which sets out in a way that is transparent and accessible to shareholders, how it is achieving VfM in delivering its purpose and objectives.

The regulator expects that the Group has a strategy for optimising VfM and systems to ensure that the strategy is delivered. The Board believes that it has obtained sufficient evidence to gain assurance that it has achieved the VfM standard. It has ensured that the Group has conducted a robust and comprehensive VfM self-assessment as required by the regulatory standard. The Board confirms that a balanced approach has been taken and that where we have identified any areas which are below the high standards that we aspire to, then we have addressed these within the self-assessment forward plan for 2014/15. In order to ensure a thorough approach to the assessment we have used the VfM toolkit developed by the Housing Quality Network. This has provided an evidence based approach to evaluating areas for improvement in the VfM framework. It has therefore enabled us to prioritise the points to be included on the SMART action plan for 2014/15. We have also received support in the way of an independent expert to critically appraise the work completed on VfM and provide advice on where improvements could be made. The Board has ensured that the information contained within the VfM self-assessment is consistent with other key documents that have been presented to the Board including:  Scrutinising the detailed findings from the VfM self-assessment;  Group Financial Statements for 2013/14;  Group performance information for 2013/14;  Group performance targets for 2014/15;  Benchmarking information; and  Results of service reviews.

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13. Our overall assessment of VfM at THG The Board of THG believe that, in completing this comprehensive VfM self-assessment, it has complied with the Regulator’s VfM standard. i.

We consider that we have a robust approach to VfM decision making, from our VfM strategic approach (outlined in section 4) right through to our operational decision making which continues to identify more opportunities for greater VfM. From using this approach, we have demonstrated within this assessment that:  We have made significant VfM gains to date over the three years since operating as a Group;  We have achieved most of the improvements for 2013/14 that we set in last year’s VfM selfassessment;  We have acknowledged the areas which we need to strengthen and we have put in place plans to address these areas in 2014/15 and beyond; and  We have identified a range of further VfM improvements for 2014/15. The savings we have made to date are contributing towards delivering our objectives of building new properties, expanding and improving the delivery of our regeneration activities in local communities and pursuing further new growth opportunities.

ii.

Our approach to asset management demonstrates that we have a good understanding of our assets (section 8). The group is implementing new asset management systems in order to provide an even greater level of sophistication in the business intelligence of the assets we hold. Business performance from our assets in terms of return on net assets, gross operating margin and interest cover has shown a continuously improving position since THG was created and the Group compares favourably against sector averages. We are targeting investment in our existing assets based on information derived from recent stock condition surveys and only where we can demonstrate that this makes a positive return to the business. We have a substantial programme of new developments and this is being supported by reinvesting our VfM savings that we have achieved into further growth opportunities. We have demonstrated our innovative approach to asset management including our new cost sharing group for repairs and maintenance, Northern Shared Services, which is anticipated to produce substantial cost savings whilst improving customer satisfaction. Our attention is now focused on understanding the impacts of Welfare Reform on the demand for our stock, the effect on projected long term cash flows and therefore on the values of these assets to the business. We will then be able to make informed decisions regarding the future of these assets.

iii.

We believe that we have performance and scrutiny functions in place which actively contribute to our business effectiveness (section 7). We have a comprehensive suite of KPI indicators which is reviewed monthly by Senior Leadership Team and the relevant accountable managers and scrutinised quarterly by Boards. New business growth opportunities are subject to rigorous review, risk analysis and stress testing. We recognise the importance of comparing ourselves to our peers and we are now making more use of this benchmarking information to help us challenge whether the services we provide could be improved in terms of quality, cost and/or scope. We have identified within this assessment areas of the business which are currently not as strong as the Board requires, namely: Voids and relets, repairs and maintenance and rent collection. We have developed plans to address these and Boards will review progress during the year.

iv.

We have a good understanding of our costs at a Group level, individual Company level and service level and the details are contained within this assessment at section 9 and Appendix A. Understanding our costs at service level, the cost drivers behind them and then comparing them to other organisation’s both in our

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region, and nationally for those of a similar size, is a priority for the business. We use the HouseMark benchmarking service to provide this information. This information is being used to inform budgets, financial planning and service improvements. v.

In evidencing the VfM gains that we have made to date, we have achieved £8 million of savings since the Group was created 3 years ago (section 3). Continued VfM improvement remains a key priority for the Group even though we recognise that we are now faced with the added challenges of Welfare Reform and its negative impact on both our business and our customers. We have identified a further range of savings of £2.5 million for 2014/15, action plans are in place with senior managers accountable for achieving them and the Board will oversee their delivery.

Looking Ahead In terms of being able to continuously deliver VfM improvements into the future, THG is aware that difficult strategic choices have to be made in order to, as per our definition of VfM , ‘obtain the maximum benefit from the goods and services we acquire and the services we provide, within our available resources’. As a social housing provider we are prepared to challenge the what, who and how of service delivery in order to preserve and enhance the value and quality of the services we offer. Our pursuit of improved VfM has led us into many new areas such as: the outright purchase of the Together Roof Energy Company, developing PFI schemes, entering into the largest cost sharing agreement in social housing for repairs and maintenance and our joint venture with Place First for the Woodnook development which will see us transform 131 empty homes for market rent. The Board and Executive will be overseeing progress of these projects to ensure that they fully deliver real VfM outcomes for our tenants and wider stakeholders. We continue to develop much needed new affordable housing with current investment of £137 million to deliver 1,500 new homes. The Group’s medium term financial plan has established a further capacity of £143 million to support the next 3 year development cycle. Our ambitions for the future are clear and simple; to deliver consistently excellent customer services and to ensure we place social value at the heart of everything we do. At THG we know that effective strategies and activities are a significant way of improving people’s lives, opportunities, aspirations and expectations. We also know that our customers expect a great deal from us as a landlord and we are committed to ensuring that we consider the social outcomes of our work when commissioning, designing or delivering our day to day services.

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Appendix A – Benchmarking at service level The analysis provided below shows how we compare to our regional peer group of 113 registered providers across the north of England at a service level using available data from the HouseMark benchmarking service (latest information available is for the 2012/13 year). In order that we provide a transparent picture of results and trends within the Group we have provided a detailed analysis of our individual group member’s performance. We have also displayed this in a three dimensional view of VfM in terms of cost, quality and effectiveness in order that stakeholders can properly make the linkage between the three strands of VfM. We have provided the median position of the peer group and we have compared our performance against this median level, showing a green indicator where we have achieved this level and a red indicator where the median level has not been achieved. We have provided commentary underneath each table in order to explain the benchmarking results further. The Group’s aspirations are to move towards being the level of a top 25% performer in the peer group and therefore we have also provided the performance level of those service providers currently achieving this level in the right hand column. This enables the Group to understand its current gap to those ‘best in class’ performers. It should be noted that, as can be seen within the tables below, there are a number of our current indicators which are already achieving this level.

(a) Housing Management Chevin 2013 2012

Green Vale 2013 2012

Housing Pendle 2013 2012

£539

£521

£296

£368

£290

£316

£330

£317

£314

98

98.1

98.8

99.9

99.2

99.8

98.4

99.4

% Current Tenant Arrears

4.36

2.1

1.99

1.54

1.43

1.16

4.84

% Former Tenant Arrears

0.77

0

1.78

1.56

0.82

0.51

% Void loss

0.85

1.4

0.99

0.76

1.48

% Rent written off %

0.59

1.05

0.41

0.51

% tenants evicted for rent arrears

0.32

0.33

0.22

% Available empty homes

1.03

0.81

% Unavailable empty homes

0.25

Ave Re-let times days % tenants satisfied with neighbourhood

KPI Service Cost Indicator Total cost per property of Housing Management £

Pennine Housing 2013 2012

Twin Valley 2013 2012

Median 2013

Upper 25% 2013

£338

£418

£335

99.3

99.8

99.20

99.60

4.66

2.18

2.00

3.49

2.31

3.38

3.54

2.59

2.92

1.68

0.96

1.54

2.07

2.42

1.85

1.6

1.15

0.87

0.34

0.23

1.85

1.13

0.55

0.70

0.59

0.26

0.47

0.19

0

0.64

0.49

0.37

0.44

0.34

0.22

0.68

0.44

1.27

0.94

1.95

1.2

1.23

0.88

0.88

0.50

0.44

0.19

0.19

0.43

1.18

1.49

1.00

0.89

0.39

0.45

0.19

25.9

28.4

24.54

19.7

31.4

30.82

43.19

41.78

26.51

29.3

26.89

22.36

86.3

86.3

89.3

89.3

86.8

86.8

83.9

83.9

81.8

81.8

86.00

88.90

Service Quality Performance Indicators % Rent Collected

Service Effectiveness Performance Indicators

In terms of cost, we perform well with the exception of Chevin, whose stock is located across 26 local authority areas rather than being former stock transfers from Councils and which have stock much closer together in geographical location. This is a cost driver and we will be doing further work during 2014/15 to drill down under this level to understand it further and to identify, where we can, costs which may be able to be reduced.

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Positively, it should be noted that four of our companies actually achieve not only the median level, but also the performance of the upper 25% of our peer group. In terms of service quality, performance indicators are mixed across the group. This is an area where context is key to understanding why performance varies so widely across the Group, as some of the members of the Group have very challenging estates to manage with high levels of vulnerability. Both Chevin and Pennine Housing’s current arrears % are not achieving the level of median peer group performance. Chevin’s has worsened since the previous year, however, the main reason is that from 2012/13 a consistent method of calculation was applied across the Group to calculate the arrears. This resulted in a 2% increase in the arrears percentage but was purely down to the calculation and not an increased loss of cash. Pennine’s current arrears, although at a high level, have improved since the previous year. A variety of actions are being taken across the Group to address the high level of arrears, such as piloting evening working (at Chevin) and mobile working (at Green Vale and Pennine). We are also trialling specialist software from Mobysoft in order to assist the team at Pennine to prioritise the arrears cases to maximise collection. These pilots will be assessed to understand the impact on arrears and customer behaviours when paying their arrears. In addition to this, HQN experts are undertaking a review of the arrears work to identify areas for improvement and understand the differential in arrears performance in the Group. For voids, a full lean review is now underway of the voids process and the impact of changes will be assessed in a post implementation review once sufficient time has passed for the results to be properly evaluated. In terms of service effectiveness, Pennine Housing is the lowest performer of the Group across the range of indicators in this section and is an area of focus for the Group’s attention going forwards. Green Vale however has produced a full set of green indicators for latest year of results. Twin Valley and Pennine Housing have the least satisfied tenants with their neighbourhoods, a key contributing factor is the type of stock held with both large estates and multi storey blocks.

(b) Repairs and Maintenance KPI Service Cost Indicator Repairs - Total cost per property of responsive and void works £

Chevin 2013 2012

Green Vale 2013 2012

Housing Pendle 2013 2012

Pennine Housing 2013 2012

Twin Valley 2013 2012

Median 2013

Upper 25% 2013

£714

£731

£1,262

£990

£836

£683

£827

£739

£845

£768

£770

£681

Average cost per responsive repair £

£114

£98

£212

£182

£105

N/A

£117

£91

£118

N/A

£107

£89

Average cost per void repair £

£937

£981

£1,609

£1,664

£2,306

N/A

£1,703

£1,344

£2,836

N/A

£1,986

£1,512

99.90

99.60

98.60

98.40

96.30

95.90

95.40

95.10

97.60

96.50

97.60

99.00

85.00

85.00

92.10

92.10

93.50

93.50

88.10

88.10

87.80

87.80

84.23

87.00

Service Quality Performance Indicators % of all responsive repairs completed on time Service Effectiveness Performance Indicators % satisfaction with repairs

* N/A – benchmarking results were not available. In terms of costs, with the exception of Chevin, all companies within the group have seen an increase in the cost of responsive repairs when compared to the previous year. This result should however be linked with the high

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level of satisfaction we are achieving with repairs. Average cost of a responsive repair is particularly high in Green Vale due to a high number of subcontractor costs. Further work is underway to review the use of subcontractors as well as recruiting to bring more work into the repairs team in order to reduce costs. The average cost of voids is high in Housing Pendle and Pennine Housing which is also due to the use of a large number of subcontractors. To address this, Pennine Housing has started to use our new cost sharing group, Northern Shared Services to deliver their repairs in the Sheffield area. Housing Pendle are looking to recruit additional staff to work in the repairs team rather than using contractors. In terms of service quality, the performance is mixed across the group. Housing Pendle and Pennine Housing are our lowest performers and we have identified that this was down to a number of processing issues and also for Pennine it was due to the increased volume in repairs. Action has been taken from April 2014 to align processes and train the customer contact team to ensure that they assign the jobs appropriately to the correct trade person. The system no longer allows the customer services advisor to provide the customer with an appointment that is beyond the target date. In terms of service effectiveness, we have all companies within the group achieving the median level and four companies are actually achieving the upper 25% peer group performance level. This positive set of results is due to the involvement in customers in shaping the service. Customers are involved in the design and quality of the service, as well as the scrutiny which we believe has been key to the satisfaction from customers.

(c) Major Repairs and Cyclical Maintenance KPI Service Cost Indicator Major repairs and cyclical maintenance - total cost per property major works & cyclical maintenance £ Service Quality Performance Indicators % properties meeting Decent Homes Service Effectiveness Performance Indicators % satisfaction with quality of home

Chevin 2013 2012

Green Vale 2013 2012

Housing Pendle 2013 2012

Pennine Housing 2013 2012

Twin Valley 2013 2012

Median 2013

Upper 25% 2013

£1,777

£1,651

£2,302

£2,695

£1,881

£3,916

£2,112

£1,850

£1,567

£1,491

£1,415

£1,087

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

90.00

100.00

89.4

89.4

90.2

90.2

91.8

91.8

86.8

86.8

92.9

92.9

87.00

89.40

In terms of costs, our figures indicate the high level of investment that we place in our properties in order to keep customers satisfied with the quality of their homes, as is borne out within the satisfaction figures. We have set out our approach to the investment in our properties within section 8 of this assessment. We are increasing our focus on the procurement of contracts and therefore potentially there will be future possible cost savings in this area. We will also seek to understand how the upper 25% performance group are achieving their cost levels and whether THG’s required level of quality is the key cost driver. In terms of service quality, all our properties meet the decent homes standard. In terms of service effectiveness, the satisfaction levels of customers with the quality of their home is high across the group. Only one company slightly misses the median level, whilst the other four companies are actually achieving the upper 25% peer group performance level.

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