Value for Money Self-Assessment 2014-2015

Delivering Value for Money for our customers.

Contents Our strategy and approach

3

Regulatory requirements

4

Value for Money – Improving affordability for residents

4

Managing our assets

5

Creating social value

9

Improving our costs and performance for residents

10

Conclusion - A solid platform

11

Registered under Companies House (Number 2205136) Registered with the Homes and Communities Agency (Number 4706) Registered Charity (Number 327816) Registered in England and Wales No. 2205136 Registered Office: 7 Harry Weston Road, Binley Business Park, Coventry, CV3 2SN

2 © 2015 The ExtraCare Charitable Trust - VFM Self Assessment

Value for Money Self-Assessment Our strategy and approach – how we achieve Value for Money in ExtraCare

1. Our strategy ExtraCare has a clear social purpose. We recognise the importance of running the organisation in a business-like way to maximise resources for services to our customers, who are at the centre of all we do. Providing Value for Money (VFM) is crucial to this: by doing the right things in the right way we can generate capacity, and create options for using this capacity to develop further services and support for residents. Our 5-Year strategy is therefore designed to ensure we have a robust approach and are able to support our own goals, while also meeting the requirements of our regulators and other stakeholders. Our 5-Year strategy has seven main objectives: • Developing and enhancing our Care and Wellbeing services. • Supporting residents with dementia. • Creating more ExtraCare villages to benefit more older people. • Investing in staff and volunteers. • Maintaining and improving our existing locations. • Developing more services and opportunities to benefit local communities.

This self-assessment sets out the progress we are making in achieving these objectives, and identifies the areas where we are committed to carrying out further work to ensure we meet our objectives for the future. Our approach – scrutiny, accountability and transparency Value for Money is at the heart of ExtraCare's business strategy, with a view to achieving our vision - ‘Better Lives for Older people’. The Board takes a leadership role on VFM and has clear ownership and accountability in this area. The Executive reports progress against the business plan and specific initiatives throughout the year, and these reports help inform the annual Value for Money self-assessment statement which is reviewed and approved by the Board.

allows us to examine costs and performance down to the level of each scheme. It is used for scrutiny and performance management purposes through the year. We continue to work on embedding a culture of challenge and accountability amongst budget holders, and this is producing clear improvements in core performance. We provide information to residents about their own village or scheme, and we encourage them to hold us to account at meetings where services are scrutinised, and future plans for maintenance investment are discussed and reviewed.

Monitoring of performance and financial targets is well established within the organisation and there is a robust reporting framework in place. Management information is published and reviewed by the Board and its Committees, and by the Executive, and regularly used throughout the organisation. This provides the granular detail which

• Ensuring that our services are affordable and provide value for money.

© 2015 The ExtraCare Charitable Trust - VFM Self Assessment 3

2. Regulatory requirements Our regulator, the Homes and Communities Agency, published its standard on Value for Money in March 2012. The requirements of the standard are consistent with our strategy and underpin our work on the delivery of Value for Money. The standard requires that we: 1. Have a robust approach to making decisions on the use of resources to deliver our objectives, including an understanding of the tradeoffs and opportunity costs of our decisions;

2.Understand the return on our assets, and have a strategy for optimising the future return on assets – including rigorous appraisal of all potential options for improving Value for Money, including the potential benefits in alternative delivery models – measured against our purpose and objectives; 3. Have performance management and scrutiny functions which are effective at driving and delivering improved Value for Money performance;

4. Understand the costs and outcomes of delivering specific services; and that we understand the underlying factors which influence these costs, and how they do so; 5. Demonstrate to stakeholders how we are meeting this standard, and as part of doing so, publish a robust self-assessment which is transparent and accessible.

3. Value for Money – Improving affordability for residents Improving affordability for residents is identified as an objective in our strategy. The Board has recognised the importance of this as central to ExtraCares core purposes, as well as to protect the future income stream. There are a number of practical approaches we have adopted to improve affordability. Welfare Benefits advice This year, we have continued to support our residents by continuing to offer support services around welfare benefit advice - an issue that residents have advised us they are concerned about.

With significant demands on day to day living, we felt we could offer that direct support which could help enhance shortfalls in income. Our Benefits Advisors will arrange one to one visits to ascertain whether they are claiming their full entitlement to benefits. The assessment often leads to additional payments being received, such as: •

Housing Benefit

•

Attendance allowance

•

Pension Credits

•

Council Tax support

•

Disability Living allowance

•

Carers Premium

•

Income Support

4 © 2015 The ExtraCare Charitable Trust - VFM Self Assessment

This year, our Benefits Advisors have added value and helped improve individual affordability to the value of just over £3million. In addition, our service means that we are making a positive contribution to help our customers maintain a secure and sustainable tenancy with access to services within the communities we work in.

4. Managing our assets Another of our objectives addresses the strategic choices to be made in terms of asset management: the way in which we can best meet the needs of current and future residents through development, and/or additional services. We are ensuring that investment in new and existing assets represents good value for money and offers a good return on investment. This is done by rigorously reviewing new development opportunities to ensure that they achieve 'board agreed' financial benchmarks. These benchmarks include: • • • •

Operational Return Return on cash invested Loan to Value Interest cover

The performance of new development opportunities will be reviewed after completion to ensure that the agreed benchmarks are achieved. Long term plans are agreed to ensure that appropriate repairs and cyclical maintenance is performed on all our assets. A large proportion of our schemes and villages are new, resulting in less of a need for proactive asset management although we do provide for the regular maintenance and cyclical works. This is an area the Board has been active in driving down the costs over the last three years.

Active asset management We operate across the Midlands and the North, providing housing for older people to meet local needs. With a presence in smaller towns and large metropolitan areas, we have 31 schemes and retirement villages of around 40 to 300 units in specific geographical locations. Each unit is made up of one and two bedroom apartments together with extensive communal space giving the opportunity of engagement in a variety of activities. ExtraCare operates a proactive system of asset management classification, keeping our assets under regular review. Our experience is that location and local demand are key factors in service provision and this never overrides the high quality of the properties themselves. All locations are regularly assessed against a range of criteria, including current and anticipated financial performance, social value and demand in relation to the local market.

Our unique approach The benefits of our tailored schemes can be summarised as follows: Firstly, they present an option for housing in later life for all members of a community, rather than simply those who are dependent in some way or defined by income. They offer an activity based healthy lifestyle – proven to have a positive impact on health and well-being. They offer a form of care that encourages continued independence. They present an aspirational option for older people to “downsize” into more appropriate accommodation, releasing larger homes for families and often releasing capital for those moving. They offer the opportunity of a community hub for local friends to enjoy.

© 2015 The ExtraCare Charitable Trust - VFM Self Assessment 5

Investment in the quality of existing stock Research shows that older people spend proportionately more of their time in their home than younger householders. This gives us a further very strong reason for placing considerable attention on the quality of our properties and the value they present for residents. ExtraCares Board took a decision to increase the investment in our existing stock, to improve overall condition and energy efficiency and to future-proof the income stream. Our expenditure for the past four years and budget for the current year is set out below: Investment in existing stock

Property spend

Planned maintenance

2011/12 £

2012/13 £

245,000

321,000

Responsive repairs

2013/14 £

2014/15 £

120,000

79,000

361,000

414,000

This deliberate decision by the Board to invest in the stock, for the ultimate benefit of current and future residents,

is reflected in our resident survey in 2015. Residents gave a satisfaction rating of 72% for the repairs and maintenance of their home.

Day-to-day repairs Day-to-day repairs contribute significantly to the quality of life for our residents. Following extensive resident consultation, we use local contractors to provide our repairs service. They offer a responsive and good quality service, as is shown by the survey: the 2014 resident survey found that

80% were very or fairly satisfied with the overall service. Resident feedback on individual repairs showed a satisfaction rate of 72% in 2015. Our approach of using local contractors also adds considerable social value by providing work to small and medium-sized businesses. The approach isalso

6 © 2015 The ExtraCare Charitable Trust - VFM Self Assessment

greatly valued by residents, who have the opportunity to select contractors to work on their estates. The average cost of day-to-day repairs per property was £123.03.

This is an improvement against last year's average cost of £126.16 so ExtraCare is shown to be achieving better Value for Money in terms of day-to-day repairs and quality of service. Developing and acquiring new homes: Using our assets to support growth In addition to active management and investment in our existing assets, our asset management approach also addresses the strategic choices to be made in terms of acquiring and developing new schemes and villages. In this way we aim to continue to meet our social purpose, and to meet the growing needs of the increasing older population. Financial capacity within our balance sheet, and a focus on being as effective and efficient as we can, allows us to support a growth strategy to further provide quality homes. As well as developing new homes, the Board is also open to growth via management agreements where this presents the right strategic fit and increases efficiency. During the recent consultation exercise, residents and staff did not all agree that developing large Villages should be the only approach. It was argued, for example, that ExtraCare’s model could be used to produce smaller developments that would be appropriate in smaller towns and rural areas. Recognising that ExtraCare cannot operate everywhere, but that more people ought to be able to have the lifestyle benefits that come with its model of housing with care, we will continue to offer consultancy services at commercial rates to other organisations keen to understand the various aspects of the model better. Where we do develop, all meet the Considerate Constructors

Scheme requirements. New software was implemented to record defects on an iPad based system, photographing defects and listing them in a checklist tick box software system; this means the can be communicated quickly and easily to all subcontractors; this is saving both time and confusion and replaces the previous paperwork system.

still strong and wishes to explore over the coming 18 months whether it is feasible to develop more Villages, more quickly. Return on assets: Social return The return on our assets can be assessed in both financial and social terms. We consider the social return on our assets by measuring the demand for our stock, and assessing how our housing is meeting local needs and the satisfaction of our customers.

We are following a 'fabric first' energy efficiency strategy on all new developments; this means we are reducing the energy demand of the building; we are also using Combined Heat and Power (CH) and LEDs where practicable as standard. This reduces energy costs for our residents.

We are committed to making use of our assets to deliver the best VFM, economic and social returns. Examples of how we do this include:

Our contractors have now moved toward individual subcontractors which are responsible for the handling and cost of their own waste materials and this is having a significant effect on wastage on site. The Board has decided, therefore, to continue to develop large Villages in the coming years and to review matters again for future plan periods. The Board is also clear, however, that this policy does not mean that ExtraCare’s commitment to its smaller Schemes is diminished; the majority of these are owned by our housing partners, but as long as they remain popular and viable, ExtraCare will work to retain them as attractive housing/care options in their local communities. The current programme is constrained to some extent by the available funding with the result that development is at the rate of about, on average, one new Village per year. The Board recognises that the demand for new housing with care of the type developed by ExtraCare is

•

Working with partners to acquire discounted land or by using our own land for development.

•

Using the increased value of our balance sheet to secure finance to develop new homes.

Whilst our operating costs reduced to £53.0m per annum, our total housing portfolio is currently valued at £101.0m, an increase of £2.8m compared to last year. We recognise that making the best use of our assets offers one of the greatest opportunities to achieve value for money. .

© 2015 The ExtraCare Charitable Trust - VFM Self Assessment 7

Return on assets at an organisational level At an organisational level, return on assets is measured by calculating operating surplus as a percentage of total assets, minus current liabilities. 2014/15 Operating surplus (£000)

2013/14

2012/13

2011/12

2,957

6,848

1,547

556

Total assets less current liabilities (£000)

97,337

97,287

71,620

63,181

Financial return on assets (%)

3.04%

7.64%

2.16%

0.88%

The full Financial Statements are available on request The Board’s strategy to increase investment in existing stock and to invest in a new development programme has resulted in increased returns from 0.88% in 2011/12 to 3.04% in 2014/15.

Asset management: Key activities in 2014/15 The following key activities took place in 2014/15 in relation to asset management: •

. .

A village in Birmingham (Longbridge) started on site in 2015.

We believe that we have a good overall position on the use of our assets and this has been a key area of focus for the Board. Our approach to measuring the overall return on assets to support our charitable purpose is something that will remain of paramount importance for us.

8

© 2015 The ExtraCare Charitable Trust - VFM Self Assessment

Asset management: Plans for 2015/16 Our specific plans for 2015/16 are: • In line with ExtraCare's ambitious plans to grow, we plan to open a fourth village in Birmingham (Bournville) during the Autumn of 2015 and our first village in Coventry in Summer 2016. • Our first villages in High Wycombe, Bedford and Stoke Gifford will start on site in the coming year. • Plans are in hand to agree further funding to support these plans in addition to the facility with Lloyds Banking Group for £120 million which is already in place

5. Creating social value The final element in our VFM strategy considers how we can meet our social purpose through community investment and support, and the delivery of services that add value to our residents. The Board takes our responsibility for creating social value very seriously, and one of our strategic goals also states ‘Developing and enhancing our Care and Wellbeing Services'. Our work goes beyond housing management to ensure our locations are dynamic, vibrant places where residents can lead the lives they want to. In the 2015 survey, 90% of residents were happy with the care provided to them. Adopting a creative approach to supporting health and well-being amongst our residents not only benefits the immediate communities we serve, but can bring positive financial benefits for public services more widely. Latest research, from Aston Research Centre for Healthy Ageing (ARCHA) in Birmingham, tests the impact of our unique care and wellbeing service on our residents and shows some significant cost savings for public services. Click here for the 10 key findings.

Social value: Key achievements in 2014/15 Through the Enriched Opportunities Programme ®, a pilot project was introduced to provide support to nonresidents with dementia who are just coming out from hospital. This programme was provided by referral from Coventry City Council and Social Services Team who refer customers to us. We have continued to develop partnerships with voluntary organisations to lever in resources to benefit residents. By making available our buildings for use by other organisations, we not only broaden the range of services and facilities available to our residents; we also attract funding from other sources and thus maximise benefits to residents (through reduced service charges) and to the wider community. We have developed a number of specific initiatives working with local adult social care and health professionals which have real benefits for our residents. We have further developed our 'Well Being Advisors' who provide support to residents in ensuring they are pro-active in managing their own health. In 2014, there were 1,710 residents who came in for annual assessments.

We believe we have a strong story to tell on the social value we create for our residents and our communities, and the consequent savings that are made to the wider public purse, including the health economy. However, there is more for us to do in quantifying the social value created. Social value: Plans for 2014/15 • We will continue to enhance our approach to health and well-being, and support for our current and future residents, as well as undertaking work to deepen our customer insight; • We will further develop our approach to measuring social value; • We will further promote our ARCHA research far and wide, through the press, to senior commissioners where we work in both health and care, to local MPs, government ministers and at a number of housing and care conferences including the high profile Chartered Institute of Housing Conference in Manchester and the NHS Five Year Plan Conference.

© 2015 The ExtraCare Charitable Trust - VFM Self Assessment

9

6. Improving our costs and performance for residents Underpinning all our activities within the Value for Money programme is the need f o r a rigorous and granular understanding of our cost base, and the ability to drive out any unnecessary expenditure. The Board has a clear strategy to improve our efficiency and effectiveness without reducing core services to our residents.

how we could achieve improved Value for Money in the 2014/15 budget while maintaining current service standards. The outcome of this exercise was the identification and delivery of £790,607 worth of savings that were secured in 2014/15. Performance and quality on key service areas have continued to be scrutinised closely against targets.

To achieve that strategy, we have been working on three key areas of activity:

Performance has held steady in most key areas.

•

Examining and challenging the costs, performance and quality of our services

•

Benchmarking our services both internally and externally

•

Undertaking service reviews and improvement initiatives

Costs, quality and performance We have a well-developed understanding of our overall costs, and our management accounting system provides detail at a granular level, which is used by managers throughout the organisation. ExtraCare is in good financial shape. Nevertheless there is no room for complacency, particularly as the economic and political environment remains difficult. As such, the Board challenged the operating cost base and during 2013/14 we focused on

Procurement and efficiency savings During 2014/15, a number of procurement activity savings were realised across multiple activities, for example the implementation of purchasing cards which saves costs and increases efficiencies, revising a managed print contract, reviewing energy contracts and negotiating new prices on food contracts, which led to total savings through procurement of £348,235. Further savings were achieved across the rest of the business in the same year of £442,372. This included renegotiating existing maintenance contracts, revising and checking telephone charges, reviewing bank charges, reducing training costs and reducing agency spend. Further significant notional savings of £2.3m equivalent was saved through the amount of volunteering provided in 2014/15. This continues to be a significant contribution to the success of ExtraCare's approach. Efficiency savings are now considered and challenged by the Cost Saving Initiative Group led by the Finance Director.

10

© 2015 The ExtraCare Charitable Trust - VFM Self Assessment

As part of our specific plans for 2015/16 we have prioritised that we will: •

Continue work on end-to-end efficiency reviews of our supporting services;

•

Improve our benchmarking capability and use of benchmarking data across the organisation;

•

Undertake more work to bring together our understanding of the costs of specific services, relating these to our performance and outcomes for residents;

“I got started by accident,” Shirley says. “I didn’t even know much about volunteering when I moved in, but I’ve a friend Josie who lives near us and was a volunteer at Lovat Fields Village. She suggested I try it. I couldn’t do the café or shop as I can’t stand for too long, so I started off on reception. I used to help the receptionist, and then Lauren asked me to do bits and pieces for her. “Now I do anything and everything!” Lauren & Shirley

7. Conclusion - A solid platform The Board believes that despite an uncertain economic and political year, the organisation has a great deal to be proud of in its continuing work on Value for Money, and that this provides a solid platform for us to build on. In this self-assessment we have set out a number of details of work that we plan to carryout during 2015/16. With a new Chief Executive forthcoming in 2015/16, the Board is more determined than ever to ensure that ExtraCare is well equipped to meet new challenges and priorities, and to deliver improved Value for Money for our residents. The Chancellors Budget 2015 raises further challenges. Obviously, we recognise the additional challenges the Government has now put on the sector and where possible, we will continue to deliver our plans with these in clear sight. Both the Board and the Executive Team have gained assurance from this year's Value for Money Self Assessment that the Trust is making continued, excellent progress in delivering its VFM objectives, and has robust plans in place to do so.

© 2015 The ExtraCare Charitable Trust - VFM Self Assessment 11

Our office 7 Harry Weston Road, Binley Business Park, Binley, Coventry, CV3 2SN

To find out more about ExtraCare, go to www.extracare.org.uk or call 02476 506011