Value for Money Self Assessment 2014•2015
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Introduction to Midland Heart Midland Heart is one of the leading mixed housing and care organisations in the UK. Our work involves supporting those who need help to live independently, assisting in regenerating communities and helping individuals to discover their own abilities just as much as it involves providing and maintaining homes for more than 70,000 people.
Our vision
We own and manage more than 32,000 homes across 55 local authority areas and invest in excess of £100 million each year in our neighbourhoods.
During 2014 – 2020 we are concentrating on 6 key areas to deliver our vision. These are:
Our mission Our mission is to be the best national housing and care business working with those in the greatest need.
At Midland Heart we believe that every customer should be able to live in an environment they can afford; where they feel safe; are empowered; can shape services; and in which, where appropriate, their care and support needs are met.
• Transformational Services • Lean and Streamlined Processes • Motivating Staff and Developing Talent • Growth and Business Development • Financial Strength and Capacity • Social Value We have provided a summary of the VFM report below within our Financial Annual Report. Go to www.midlandheart.org.uk/publications click on Annual Report and then click to view Financial Statements.
social gain financially sound environment 04
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Value for Money in Midland Heart Value for Money (VFM) is about delivering what we have promised by making the most of the increasing resources we invest in our housing and care services. This leading principle from our evolving Value for Money Strategies remains true and drives each of the annual VFM action plans which underpin how the Strategy will be delivered year on year. We recently updated our VFM Strategy (20142020) which reflects, and acts as a vehicle to delivering, our new Corporate Strategy. We strive to clearly and concisely demonstrate to stakeholders how we balance our decision making process. The following statement remains a key principle of VFM for Midland Heart, hence why we reiterate its importance in each annual Self Assessment publication: “As a not-for-profit organisation our mission is to deliver social gain to our customers and their communities. In order to deliver social value we need to be financially sound to maximise our delivery capacity and to provide assurance to our lenders and funders. We also take responsibility for our impact on the environment in which we operate. We recognise how important it is to get the balance right between these three drivers (social, financial and environmental) so that we have the means to deliver our Corporate Strategy as efficiently as possible”
Midland Heart continues to possess strong governance surrounding VFM which is driven by Midland Heart Board which also approves the VFM strategy and the annual VFM Self Assessment Report. We consult with customer panels and those forums that have been specifically created to monitor the delivery of annual VFM action plans (such as the Value for Money Steering Group). All of these forums continue to provide input into the direction of our VFM activity and specifically our annual separate self assessment document. The purpose of this document is to show our stakeholders: a) how we can evidence VFM has been provided, by illustrating: • What changes we have made • What VFM gains we have delivered • What next b) how we can evidence VFM will continue to be provided, by illustrating: • What changes we are making • What VFM gains we will deliver In furtherance of transparency and conciseness, we will continue the same format of our previous Self Assessments to evidence activities which have / will deliver VFM in order to achieve each of our Corporate Objectives.
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1. Transformational Services Our customers are our priority. As such, our first objective is about providing transformational services for our customers.
Allocations and Lettings Review What changes have we made? During 2014-15 we completed a review of how we managed our void properties. Benchmarking of our performance with peer organisations highlighted that there was potential for improvement in this area. The review involved examining management processes from when notification of a void property is received until it is re-let. The review involved front line officers who deliver the service and explored areas of inefficiency and considered recommendations for improving. Benchmarking and best practice sharing was also undertaken with high performing landlords. We have put in place a programme for delivering change and this is overseen by a steering group to ensure any barriers to success are removed. A number of quick wins have been implemented that include:
What VFM gains have we delivered? The impact to date of the review has been positive with void loss and re-let days reducing. Social gain:
The average number of days it takes to re-let a property to our customers has reduced from 29 days to 25 This has benefited customers on the waiting list who can now access decent, affordable housing on average 4 days faster. We can report 92.2% customer satisfaction with new lettings in March 2015. Financial gain: Void losses for 2014-15 reduced by £50k within the Customer and Communities directorate. What next? We forecast to further reduce the void loss by £240k during 2015-16. The re-let days are also forecast to improve to 23.3.
• Restructuring the Lettings Team to: o Reduce the number of hand-offs during the process. o Increase end to end accountability for the void management process. o Increase frontline void management resource within the existing financial envelope. • Commencing a pilot to trial pre-void activity based on best practice shown by other organisations. • Automating void surveys to eliminate double entry on systems. 14
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Review of our Business Models For General Needs Properties What changes have we made? As reported in our 2014 Self Assessment, there are a number of different business models within which Midland Heart operates in order to deliver services to those in need. These varying models have been developed over time to accommodate changes in the external environment and to proactively seek the most efficient sustainable models given the information and political horizon at that time. Last year we published how, from reviewing and reshaping a particular business model within our Care and Support Directorate, we had delivered VFM gains. Similarly, we can now report those gains derived from a review carried out within our Customer and Communities Directorate.
In 2012, there were 106 Midland Heart properties being managed by 19 different organisations across both Midlands & Birmingham management areas. By reviewing these properties we found that for the majority, there was a much more viable option than the current arrangement. The outcome of the review for these properties is demonstrated below: The graph demonstrates that 57 properties have returned to Midland Heart management (either as handed back or brought back in-house) and 39 have been sold or awaiting sale. Only 6 have remained as the existing operating model.
Outcome of C&C Agency Managed Properties Review 60 50 40 30 20 10 0 Handed back
New Lease
Returned to Midland Heart Management
Sale Re-categorised waiting to as non-agency complete
Sold
Awaiting further review
Transferred to care & support
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What VFM gains have we delivered? During the course of this project, we have generated additional income through sales, brought in extra income by returning properties to our management and collected sizeable lease arrears. In total, we have generated over £1.6m for the organisation as follows: (£’000) Income from sales
1,000
Income from arrears paid
595
Additional rental income
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reducing service charges and increasing customer disposable income. For these vulnerable customers who may have fled their homes, this can be a material advantage to their finances • Through our large infrastructure within the area we are able to supply services at a lower cost • We are able to move the service charge from variable to fixed, thereby reducing volatility of the charge in what is temporary accommodation and is not suited to non fixed charges. This also provides stability to the charges for the service in the future. What VFM gains have we delivered? Financial gains:
£1,630 What next? We will continue to review our business models within the Customer and Communities directorate and put in place action plans where we believe there is a more efficient and effective approach. For Care and Support What changes have we made? We have continued to review our business models within our Care and Support directorate. For example, in a scheme within Care and Support which provides refuge accommodation for women fleeing domestic violence, we have identified advantages to a change in operations. For this particular scheme, an external specialist agent provided support services to customers in addition to housing management (HM) and service chargeable (SC) services. By reviewing this scheme we identified that by bringing the HM and SC services in-house VFM gains could be delivered for the following reasons: • We are able to pass on to customers the advantageous rates in utility derived from our major procurement contracts, thereby
• Lower housing management and service charge costs, consequently reducing the cost to local authorities who provide benefits to these residents by approximately £20k or 16% per annum. • Additional rental income to Midland Heart derived from receiving rent direct from customers or local authority, rather than receiving a lease charge via the managing agent estimated at £10k per annum. Social gains: • Helping customers’ wellbeing by reducing financial pressure due to lower accommodation costs What next? We will deliver our recently approved Agency Strategy which sets out how we will approach management relationships with other organisations who provide services on our behalf. We will continue to review our business models to ensure ongoing viability and to reflect changes in both our internal and external environments.
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Customer Access Strategy What changes are we making? Midland Heart has recently created a new customer access strategy. The main objectives of this strategy over the next 3 years are to: • deliver an excellent customer experience. • identify opportunities to add value to what we do and improve efficiency when delivering our customer services. • enable the above by having effective IT solutions in place. Delivering the strategy will provide our customers with flexible options to access services that are more cost effective for Midland Heart to deliver. Increasing levels of first contact resolution and reducing the need for customers to have to contact Midland Heart is a priority and this will include improving the quality and volume of self help information available. The strategy will lead to alternative operating models being considered to ensure services are effective and the volumes of customer complaints are reducing.
One project within this programme is the Customer Services (CS) project. Currently Midland Heart operates a CS solution which was designed and implemented prior to significant changes to Midland Heart’s operating model. Therefore, there is a need to revisit the solution and the operating model in which it resides. The principle of the project is to ensure that the organisation has a customer services system which is fit for purpose and any inefficiencies are removed from the current operating model. What VFM gains will we deliver? Currently the project is in its infancy and the first stage is “discovery and scoping”. The objectives are clear and measurable targets will be assigned to these once all options have been robustly appraised. Progress on this area will be reported within next year’s VFM Self assessment.
The cost of delivering our services and supporting systems will be reviewed and we have recently launched the Customer Services Programme to examine this.
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Aids and Adaptations What changes have we made? We carry out numerous modifications to our properties on behalf of our customers who need their homes to be adapted to their physical needs. As at 31st March 2014 over £550k had been spent on aids and adaptations with £330k of additional work already commissioned. The Midland Heart Board ringfenced this spend category for an investigation into where potential VFM savings could be made. What VFM gains have we delivered? With significant customer involvement our working processes have now been revised with plans for £250k of works to be remodelled or amended with more cost effective solutions. For some of our customers, receiving additional support for moving around the home has proven a more sustainable solution,
while for others we have managed to secure funding from other sources such as local authorities and charities. We are carrying out more work for our customers, for a lot less money, managing customer expectations, whilst drastically reducing waiting times. What next? We forecast to spend £400,000 in 2015-16 which is significantly less than expenditure during previous years. Furthermore, we are continuing to pursue further efficiencies by seeking to achieve lower costs on labour and materials without compromising quality and service delivery..
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2. Lean and Streamlined Processes order to deliver transformational services In we need to ensure our core front line and back office processes are lean, streamlined and focused on efficiency
VFM Improvement Programme for Planned Maintenance and Gas Contracts What changes have we made? During 2014, we introduced a programme of works to streamline and improve processes within the planned maintenance service of the Asset Management Directorate. In undertaking this work, we challenged existing processes to identify waste and inefficiencies1. We considered a variety of potential delivery models for the service which we provide and applied VFM principles to arrive at the most efficient and effective. By focusing on the highest areas of expenditure and applying this rounded decision making process we identified significant opportunities to improve VFM as follows:
What VFM gains have we delivered? We can report savings of £1,265k generated from the re-procurement of kitchens and bathrooms, windows and doors, gas servicing 3 star, gas installations and roofing contracts. £1,187k of this saving was generated in the last two quarters of 2014-15 upon contract award, reflecting that a full year’s savings based on these contracts would exceed the projected £1,421k. What next? We will continue to apply our VFM principles to improve the efficiency and effectiveness of our planned maintenance works. We will report actual savings made in 2015-16 in the 2016 Self Assessment publication compared to the forecasted £1,421k.
• Changes to our supply base in certain core service areas e.g. sole supply • Re-procurement of key maintenance contracts • Review and tightening of existing work specifications, reducing the need for contractors to perform “variances” to work which is costly to Midland Heart and our customers • Improved contract management of maintenance contracts which places more emphasis on financial and operational outcomes.
1In
conjunction with our partners Vantage Business Solutions
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Project Delivery
assurance that the methodology is acting as an efficient vehicle for effective project delivery.
In 2013, Midland Heart Board created a new department to design, implement and embed Project Methodology. This Methodology underpins how major projects within Midland Heart shall be managed, governed, tracked and delivered. It also ensures that a robust business case is produced where investment is required. This articulates what the costs, timescales, risks, scope, quality and, most importantly of all, benefits are for each project or programme. Benefits must be clearly demonstrated and underpinned by measures. These may be financial, social or environmental; however, they must be measurable.
Outbound Dialler
The fully established Programme Board (sub committee of Executive Board) assesses all aspects of the business cases and considers feasibility by taking into account key considerations including the following: • Alignment to Corporate Strategy and specific contribution to corporate objectives • Merits of proposed project against alternative delivery models • Organisational wide resource capacity • Likelihood and accuracy of realisation of identified benefits From 2014-15 all our major projects have been implemented following the new project methodology and as such benefits have been articulated and are being monitored for delivery. Furthermore, as we now have an embedded “centre of excellence” for delivery of projects, we are evolving our methodology to integrate a more sophisticated benefits realisation approach. This will ensure undiluted focus on the delivery of benefits throughout the project life cycle and facilitate our journey for continuous improvement. We are now in a position to illustrate an example of a major project to provide
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What changes have we made? The introduction of Universal Credit (UC) means that the direct payment of housing benefit will be made to all working-age tenants. The rollout of UC has now commenced and is expected to be fully implemented across the UK for all households with a working age adult by 2019. The Department for Work and Pensions (DWP) set up six direct payment demonstration projects across the UK involving both housing associations and local authorities. The demonstration projects took place from June 2012 to December 2013 and reached the following conclusions: • Level of payments made varied from 91% to 97%, with the average collection rate standing at 94% • Of the original 7,426 tenants that took part in the project, 6,168 (83%) are still in receipt of direct payment and the remaining 1,258 (17%) have switched back • To mitigate the risk of increased arrears, customer contact has to increase by between 300 to 400% Increasing resource by 300% is cost-prohibitive (£1.44m p.a. to Midland Heart), conversely, using technology to increase the number of contacts made to customers and eliminating set-up time of non-answered calls will increase contact and mitigate the need to increase staff resource. The overall aim of this project is the maximisation of income collection following the rollout of Universal Credit by using a combination of process analysis, re-engineering and technological solutions to free staff resource and increase contact with customers. This will be achieved by two main activities: 2Previously
named Project Support
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• Implementation of an outbound dialler system to contact tenants and direct “live” calls (where a person answers) to an income officer for discussion concerning arrears. This system also has a SMS functionality that allows us to remind tenants when a payment is due, or when a payment is overdue • Restructuring the Income Team to optimise customer contact and income collection without increasing overall payroll budget What VFM gains have been delivered? Financial: Cashable benefit of £28,000 in staff recruitment costs during 2014-15. What next? Further cashable benefits : • £584k saving on forecast additional staffing requirements (from 5 year Income Plan 2015-19) • Protection of £4.17m income Non-cashable benefits: • Potential to use dialler and text functionality across the business to improve customer contact, likely leading to greater satisfaction levels.
Income Management What changes have we made?
One Big Team Historically our income management officers have operated the geographical area for which their responsibility lies. Unavoidably this structure bred silo working and acted as a hindrance to team working and synergies. For example, on a weekly basis, our housing management system generates pending actions for each officer. These actions are typically driven by escalation, for instance, if a customer account has entered arrears. On average an income officer would receive
approximately 80-100 of these pending actions weekly and it would be their responsibility to process these. If officers were out of the office these would simply accumulate for their return or a temporary member of staff would be sourced at a cost to Midland Heart. In 2014, the “One Big Team” initiative was launched. The principle behind the initiative is to instil a team culture into income management. One enabler for this is to more evenly distribute workload such as pending actions, dependent on measures such as the time each officer is office based. This simple change has resulted in an overall reduction in staff costs, both permanent and temporary and a more streamlined approach to managing escalation policies. Improvements to Technology We operate a housing management system named Northgate which is used widely in the social housing sector. This system captures all the rent accounts for our customers and holds customer information relevant to income management. It is important that we look to advance the ways in which we can access this intelligence, to drive improvements. • Learning from Best Practice At Midland Heart, we look to form close alliances with peer organisations, both formally through benchmarking groups, but also informally through networking at social housing events. From the latter, we have acquired system knowledge and best practice for handling Universal Credit customers and arrears in general. This learning has driven us to review our collection processes and activities including the procurement of the dialler system.
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• Increasing automation We are always looking for ways to improve our systems to automate those processes which do not require staff intervention. Through intelligent automation, staff can be released to deploy their time to value adding activities. In 2014, we invested £3.2k in the advancement of our Northgate system. The system now identifies automatically how a payment has been received and updates this payment method on the individual customer rent account, which in turn drives the correct actions to be delivered to the officer at the right time. This trigger also automatically updates the required escalation process, should the account fall into arrears. If customer contact is required, again, the Outbound Dialler can be utilised. These scripts have removed the necessity for manually updating and cleansing of Northgate which frees officer time to spend with customers.
What VFM gains have been delivered? • The above activities combined; staff costs for the teams have significantly reduced and the staff budget for 2014-15 closed the year reporting an underspend of £134k as a saving to Midland Heart. • Current Tenant Arrears (including Housing benefit payments) has significantly fallen to 4.75% as a direct result of the remodelling and restructuring of our income management workforce and processes. This is despite the fact that our tenants face additional pressure on their household budgets due to welfare reforms and the current wider financial climate.
Midland Heart Top Level Comparison to Previous Financial Years
12.50% 11.50% 12.50% 9.50%
2009-2010 2010-2011
8.50%
2011-2012 2012-2013
7.50%
2013-2014 2014-2015
6.50% 5.50% 4.50% 3.50% Week 1
53
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Money Advice
What changes have we made? Also within the Income Management department, our money advice team has undergone a number of transformational changes which we have put in place to proactively adapt to Welfare Reform. This ensures that the 3000 customers affected are able to receive debt and money advice. In addition, we have a Money Advice offering within our Care and Support directorate which provided advice to 412 customers during the last year. We can now also report for this specialist Money Advice activity. What VFM gains have been delivered? Between 1 April 2014 and 31 March 2015: Financial gains: • £1.6m in benefit gains for customers of which 43% was housing benefit (2013-14: £1.6m, 43%), £388k in benefit gains for Care and Support directorate • £101k of Discretionary Housing Payments (DHP) from Birmingham City Council for tenants living with WR impacts (2013-14: £159k) • £3,518.00 of backdated benefits awarded to a Midland Heart customer at an Independent Appeal Tribunal • £2,929 for the clearance of electricity and gas arrears for a customer Social gains: • Sustained tenancies of 98% for those customers who took money advice • Money advice to 741 customers • £1,780 Tesco vouchers to support vulnerable customers purchase food items • Budget training to 12 customers
“I was getting letters all the time from companies saying I owed them money from years and years ago. I got in touch with Mandy (Midland Heart money advisor) and she has really helped. She has helped me to sort the debts out - I can sleep at night now – Mandy has given me a new life. I was too worried to open my post before but now I can see daylight.” Customer residing in Midland Heart’s homeless hostel. “I contacted Midland Heart because I needed to do my applications for disability benefit and housing benefit as they had run out after three years and I wanted to renew them. I have trouble reading and writing and Midland Heart were very helpful – they were great. I could not have asked for anything better. They keep following up to check everything is ok with me.” General Needs tenant. What next? We will continue to gather and evidence VFM gains which we deliver from our money advice team, given the important role we believe it plays in sustaining tenancies for those in greatest need. We target to deliver £1.6m in benefit gains for customers during 2015-16.
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3. Motivated Staff and Developing Talent We want to involve our staff, both front line and managers, in the decisions we make to motivate and empower them to help us collectively improve. Recruitment What changes will we make? In 2014, we identified recruitment as one of our core back office processes where we understood there to be scope to streamline processes to streamline processes for both candidates and the business. We underpinned the purpose of this review as follows:
“To get the right person with the right skills, values and behaviours ready for work as quickly and efficiently as possible”. The review has led to the procurement and implementation of a new web based recruitment system to be the core enabler in delivering the above objective. The system will be utilised for the complete end to end recruitment process and be fully operational by the summer of 2015. Initial outlay to procure the system was £19.5k. Licence fees are £1.5k per annum.
What will we deliver? This system is anticipated to provide the following benefits: Non cashable: • A reduction in the time and resource taken to recruit Cashable: • A reduction in the “cost per recruitment campaign”. This is derived from reduced administration time for Midland Heart staff and our ability to assess which mode of advertisements are most successful in attracting good quality candidates, enabling more targeted recruitment campaigns. We spent £258k on recruitment in 2014-15 and forecast to spend £144k in 2015-16. Total Reward Strategy Our employees are central to our business and our most valuable resource, so the way they are rewarded is key. It is important to us that they feel valued and are recognised for the work which they deliver. Subsequently, we have created a Total Reward Strategy to ensure transparency and fairness in the benefits that our staff receive. Our strategy supports our corporate goals and is designed to reflect the increasing complexity of the organisation whilst retaining the consistency of our core values. The strategy recognises that rewards are more than simply salary. The Strategy specifically sets out how we will recognise excellence, achievement and our unsung heroes
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Recognition Scheme What changes will we make? Recognition to Midland Heart is about recognising excellence, staff achievements and those colleagues whose ongoing efforts underpin our service we do; and ensuring these are praised. It is a way to acknowledge or give special attention to a high level of accomplishment or performance which is not dependent on a target or objective. It can be informal (such as a simple ‘thank you’) or take the form of a recognition nomination or award. The new recognition scheme will involve a simple way of publicly recognising actions as well as providing the facility for more formal recognition.
Furthermore, we are simplifying and streamlining our performance management / appraisal process. We want staff to feel motivated and engaged in their work lives at Midland Heart and as such have committed to support them in how they decide to further develop or maintain their careers. What will we deliver? We will create a fair and transparent recognition scheme which recognises achievement by our valued staff. We will increase the morale and motivation of our staff and support them in the career development of their choice. This will be measured and monitored through six monthly staff engagement surveys.
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4. Resourcing Growth and Business Development By making our core processes more efficient, we will have the ability and capacity to deliver more and be the first choice for growth opportunities. As reported in our 2014 Value for Money Self Assessment, the Midland Heart Board recently established the Business Development Directorate. The purpose of the Business Development Directorate is to translate the corporate strategy for growth into specific target markets, target clients and a foreseeable pipeline of business activity which will help to generate growth in both Customer and Communities and Care and Support services. Below is Midland Heart’s Integrated Care Model which is one example of this type of anticipated growth, which we introduced in our 2014 Self Assessment:
Integrated Care
Reablement Service for Older Persons
Homeless Hospital Discharge
Integrated and supported accomodation for Mental Health and Learning Disabilities Persons
Re-ablement Service for Older Persons What changes are we making? In 2013, Midland Heart commenced a partnership with an NHS Trust to launch our first on-site re-ablement scheme at a Midlands hospital. The scheme accepts older persons who are deemed medically fit for discharge, but are not quite ready to go back into the community. The scheme offers customers en-suite facilities and provides non-clinical care and support in preparation for leaving the hospital and returning home.
What VFM gains will we deliver? The scheme has now been in operation for over 18 months and during this time we have undertaken periodic evaluations. We can report that 98% of those who have resided in the re-ablement scheme were satisfied with the service. A full financial evaluation will take place over the coming year to assess the accuracy of forecasted VFM gains. What next? We now have a scalable model of integrated care to deploy to other NHS Trusts when they deem fit. Homeless Hospital Discharge Our second offering within integrated care is Homeless Hospital Discharge. What changes did we make? Local authorities have a range of duties to people who are homeless including the provision of advice and assistance and often temporary accommodation. The main housing duty is to accommodate those who are vulnerable, unintentionally homeless and in priority need. Homeless people can face great inequalities in accessing health services, yet their health can often suffer from being homeless or living in poor quality temporary accommodation. Homeless people may often leave health problems untreated until they reach a crisis point and then present inappropriately at A & E. It is essential that local authorities, health services and social housing providers work together to provide accessible and appropriate services if we are to tackle health inequalities and homelessness. This principle is the foundation to our offering.
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In October 2013, Midland Heart commenced a partnership with Coventry Cyrenians and Valley House, both of which are registered charities who provide specialist support to individuals in need such as those without a home. Collectively our 3 organisations secured funding from the Department of Health to deliver a project, now named Homeless Hospital Discharge Project (HHDP) for a 6 month period (October 2013-March 2014). Following delivery of this pilot, the HHDP also secured funding for a further 6 months. The overarching aim of the project was to provide health and housing assistance to homeless individuals who are admitted to hospital, to minimise the risk of re-admittance and improve their overall well being.
What VFM gains did we deliver?
169 patients were referred into the service and 152 met the criteria and received support from the HHDP. The evaluation results below are derived from the actual number of emergency in-patient (IP) spells, actual number of A & E attendances (and corresponding costs) in the year prior to referral of all patients that were successfully referred to the HHDP service between 18 October 2013 and 30 June 2014. Due to the short-term nature of the funding, a cohort consisting of 35 individuals successfully referred to the HHD service between 18 October 2013 and 30 December 2013 were investigated to produce proportions that underpin these estimates. Among these 35 individuals, it was determined that:
• There were 48% fewer emergency IP admissions in the 6 months following the HHD referral date than in the preceding 6 months • The total cost of the emergency IP admissions in the 6 months following the HHD referral date was 36% lower than in the preceding 6 months • There were 38% fewer A & E attendances in the 6 months following the HHD referral date than in the preceding 6 months • The total cost of the A & E attendances in the 6 months following the HHD referral date was 37% lower than in the preceding 6 months Compounding these proportions to all 152 individuals, the total expected reduction in overall total cost to the NHS of emergency IP admissions and A & E attendances over the year ahead assuming the HHDP continued in the current form is £267k. Moreover, feedback received from patients which was collected by means of a questionnaire, is as follows: • All respondents stated that they were “very low” or “low” when they came into the service. • All respondents stated that they were now feeling “significantly better” or “slightly better” compared to before using the service. As part of the evaluations that took place during the 12 months, a number of case studies were gathered for real life demonstration of the added value that our interventions had on individual lives:
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Case Study H is a 50-year old male and has been sleeping rough. He is unemployed and was not claiming benefits. H presents with co-morbid health complaints: He has a long-term history of depression, anxiety and substance misuse. He had attempted suicide on one known previous occasion. He states that he has never engaged with any professional support with regards to his substance misuse issues.
not been involved with him and said that he ‘shuddered to think how he would have ended up without it’.
H was admitted to hospital with head injuries, following a fall while under the influence of alcohol. H was adamant that he did not want to return to drinking when he was discharged from hospital. He was medically fit for discharge at the time of his assessment and he underwent a full alcohol detoxification programme while admitted in hospital.
The service has been able to demonstrate: • A high demand within hospital settings; • Positive outcomes for patients, who would have otherwise been discharged back into homelessness and without appropriate support increasing the likelihood of them re-presenting at hospital; • Positive feedback from hospital staff; • Financial savings for the NHS
Over a period of four days, H remained on-ward and was assisted and supported in several ways. He received face-to-face, telephone and background support. The service coordinated a multi-agency response across the housing, medical, probation, civil service and other support services to provide a holistic approach to meeting H’s needs. To prevent ‘bed-blocking’ he was discharged to local hotel accommodation paid for from the HHDP brokerage fund. In addition, H was given practical advice with regards to welfare benefits. Midland Heart provided substance misuse supported rehabilitation accommodation to H and he was able to move into a scheme imminently. H has established himself well in his new accommodation. H reports that he now feels significantly better than when he first accessed our service. He states that he is abstinent from alcohol, is getting help for his depression, has a better outlook on life and feels that things are more stable for him now. He directly attributes this to the ‘tremendous’ support that he received from the HHDP service. He felt that he would have ‘sunk lower’ and been ‘hospitalised again’ had the service
H’s collective support needs have all been respectively addressed and any deterioration in health and subsequent further hospital admissions have been prevented from reoccurring.
What next? Midland Heart will pursue securing more funding to provide this service and strive to ensure its sustainability. etaining Contracts (see graph following) R What changes have we made? We have maintained our reputable approach to delivery of Care and Support contracts. Year on year we demonstrate to our stakeholders how we have not only pursued growth, but also retained our existing contracts. Our Care and Support services continue to be market tested by commissioners periodically to validate value for money (every 3-5 years on average). What VFM gains have we delivered? Over the last 3 years, we can report contract retention as follows, demonstrating the delivery of on-going VFM:
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% of Retained Care Support Contracts 95% 90% 85% 80% 75% 70% 2012/13
2013/14
Seeking Partnerships What changes have we made? We believe an important enabler to growth is to seek partnerships. We can deliver so much more and make a significant positive impact on our customers’ lives by combining resources and working together with other like-minded organisations. One example of how we take every opportunity to source new partners, is our celebration of 90 years of making a difference to people in greatest need. What VFM gains have we delivered? From hosting a celebratory event and inviting potential partners to whom we presented what we do and why, we secured £14k. We have specifically ring-fenced these funds to support the Calvert Trust (see below) and Frost and Snow (Midland Heart’s social enterprise established to assist with the transition for tenants into work). Furthermore, we have formed alliances and are currently pursuing how interested organisations can provide social value in partnership with ourselves, through means such as offering apprenticeships or employment opportunities. Stakeholder Relationship Management (SRM) To facilitate sustainable growth we need to manage our relationships effectively with all stakeholders. Hence, the upcoming introduction of the new SRM system.
2014/15
What changes will we make? The system will drive Midland Heart’s stakeholder relationship activity and allow Midland Heart to proactively and strategically manage existing and new relationships. What VFM gains will we deliver? The SRM system has a number of VFM gains as set out below: Non Cashable benefits: • Provide clear visibility to Midland Heart Board and Executive Board on the business development and public affairs activities of Midland Heart. • Provide greater transparency and exchange of information between directorates on interactions with current and prospective clients and other influential stakeholders. • Provide a contact repository of information so these can be effectively managed. This should mitigate against the risk of losing contacts and records should key staff leave Midland Heart. • Ensure that the value of each client account is understood and activities can be coordinated against milestones and intelligence gathered. • Reduction in staff time to administer manually stakeholder relationship management. This equates to approximately 24 days a year resource saving which shall be re-deployed elsewhere. • We will capture both cashable and non cashable benefits derived from the implementation of the SRM system.
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5. Financial Strength and Capacity To fulfil our growth ambitions, we need to be financially strong so that we can continue to attract funding and investment. Procurement What changes have we made? We spend over £100m a year on a wide range of goods, works and services which enables us to build new homes and maintain those we currently provide to tenants. Year on year we demonstrate how we spend this money as wisely as possible by re-procuring existing contracts and procuring new ones where required to support our evolving organisation.
• Social gains derived from numerous employment and training opportunities to both our own residents and those within the local communities in which we operate. Typically, these are related to the volume of the contract and a commitment by the successful supplier to either donate to Midland Heart for social work we will deliver, or in the form of offering directly work opportunities to our tenants or those in the local community. We measure and monitor this social value as per our commitment to the Birmingham Charter to Social Responsibility (See Supporting People section).
What VFM gains have we delivered? • Financial Savings of £2.5m (£1.4m: 201314) £176,000 non cashable savings have also been achieved through re-procurement of a large contract. In this instance, the budget was re-deployed to purchase mobile technology to aid efficiency.
• Environmental gains derived from Procurement activity include: o cleaning contractors adopt water and energy saving processes o locally employed grounds maintenance contractors who minimise CO2 emissions by reducing travelling requirements
A Key Performance Indicator which we use to measure financial performance from our Procurement activity is Return on Investment.
What next? We will commence delivery of our 2015-2018 Procurement Strategy. A core element of this is to review the efficiency and effectiveness of our Procurement processes and, where applicable, implement more streamlined processes. Furthermore, we will build on our recent improvements in contract management to consistently ensure our contracts perform well and provide value for money.
The graph below illustrates a 1377% return of investment (savings of total £2.5m compared to £182k costs). Return On Investment (ROI) 1400%
We anticipate delivering annualised savings of £471k for 2014-15. Moreover, we have identified 12 contracts where we will seek customer involvement throughout the procurement process.
1200% 1000% 800% 600% 400% 200% 0% 2013-14
2014-15
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Legal Recoveries What changes have we made? We are proactively seeking ways to recover monies rightfully owed to Midland Heart through legal expertise and revisiting historic contracts. What VFM gains have we delivered? Financial gains: • £130k of unpaid rents has been recovered (2014-15) • £830k increase in asset value on our balance sheet during 2014-15 by taking possession of 8 properties which were on a long term lease. Furthermore, £305k of security for future loans has been created. Our central legal team record the time spent on legal matters which are sourced internally rather than within the external marketplace. From this information we know that we saved £400k during 2014-15 by utilising our own in-house legal expertise. What next? During 2015-16, we forecast an increase in asset value of approximately £417k, whilst providing an additional £175k of security for future borrowings by leasehold enfranchisement (purchasing of the freehold interest for those properties which we hold on long leases). Stock Portfolio Management In April 2015, Midland Heart Board approved our updated Strategic Asset Management Strategy. In simple terms Asset Management is concerned with managing the homes and other physical assets Midland Heart owns (our housing stock has a gross cost of £1.6 billion). This goes beyond investing in repairs and improvements but also covers reviewing and where necessary, changing the homes we own to ensure we have the right homes in the right place.
The purpose of this strategy is to meet the vision set out for asset management in our 2014-2020 Corporate Strategy which is to:
“Ensure that Midland Heart has a portfolio of properties where people truly want to live, and which maximises our financial capacity to deliver new products and services” Our strategy is based around a flexible and holistic approach to asset management going forward, which focuses on actively managing homes in addition to the delivery of works programmes. The challenging financial environment facing both Midland Heart and our customers means it is more imperative than ever that the investment we make in our homes is targeted effectively. The strategy is the framework for guiding investment and informing annual planning. A key enabler to this strategy is our own in-house Strategic Asset Management System (SAMS) which we use for those properties provided to our general needs tenants. SAMS tells us how well our stock is performing and is designed to support informed decision making. SAMS takes into account information including financial performance and stock condition data from analysing around 4 million data items across a number of source systems. SAMS provides a 30 year discounted cash flow (Net Present Value or NPV) for each property, by projecting expected income costs associated with each property over 30 years. Therefore, we can monitor and identity in our portfolio any loss making properties for potential disposal or reinvestment.
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We then take into account information such as strategic importance in operating in certain geographic areas, planned and reactive maintenance works completed or due to be carried out and combine this with the quantitive data produced by SAMS. Collectively we can then make a balanced decision regarding the ongoing viability of a property owned by Midland Heart. During 2014-15 the following VFM gains have been delivered as a result of robust property intelligence and balanced decision making:
• £790k cash generated from disposals (201314: £1.13m) • £856k grant released from disposal of properties (2013-14: £717k) • £1m cash generated from staircasing disposals (2013-14: £743k) In addition to the modelling above we also carry out a simple Return on Assets calculation year bedroom houses. Year on year our return on assets has improved. We have continued to increase our operating surplus to provide improved capacity to cover our increased borrowings, whilst also maintaining an improved return on assets.
2014-15 2013-14 2012-13
Property Net Book Value
£000’s
699,482
646,085
608,486
Operating Surplus (including surplus on disposals) £000’s
55,799
50,859
46,342
7.98
7.88
7.62
Return on Assets %
%
Developing New Homes In addition to our existing stock we also develop new homes. During 2014-15, we developed 790 compared to 561 new homes in 2013-14. This is our biggest ever development programme.
The new homes built within this programme represent a variety of accommodation types, tenures and locations all of which have been built in accordance with the requirements of our wider Growth Strategy, which supports Midland Heart’s new Corporate Strategy through to 2020.
We have now completed our Affordable Homes Programme (2011-15) delivering 2237 properties over the four year period. This programme was jointly funded by the Homes and Communities Agency (HCA) and Midland Heart’s own funds and we have invested around £217m during this period of which £23m was from sales receipts and £54m from grant. In accordance with our financial plan, our forecast for 2015-16 is smaller with a further 279 properties to be completed by 31st March 2016.
What changes have we made? Midland Heart has already secured an additional Affordable Homes Guarantee Programme (also HCA) covering the extended period from April 2013 to March 2017. This new funding programme overlaps the previous HCA 20112015 programme and the new HCA programme which runs from April 2015 to March 2020. Midland Heart will bid for funding under the new programme to build on that already achieved with a view to delivering a further 1900 homes in the period 2015-20.
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In order to support this significant build programme, we need to procure both consultants and contractors whilst striving to obtain the optimum value for money. We currently source the majority of our new homes through our own EU compliant Contract Framework which we set up in April 2013. One of the advantages of Midland Heart’s contractor framework is that it is fully EU procurement regulations-compliant which means we do not need to issue a tender through the Official Journal of the European Union each time we procure housing with a value that exceeds EU thresholds (currently £4.32m). The framework affords us the ability to either award work on a single call-off basis or host a mini tender. With the facility to make a single call off, this allows our framework partners to bring us opportunities that they can negotiate with us on a one to one basis. These opportunities can then be delivered on a turnkey basis. The benefits
of working this way are numerous. Firstly, this outsources site finding from the development department. All of the risks associated with buying land, such as contamination, load bearing capacity and so on lie with the contractor minimising the potential for future disputes on site and the work involved in securing a suitable planning permission is also outsourced. This enables the development team to be much leaner than it would otherwise need to be. The price paid for the land still has to be at or below an independent RICS valuation and the build element of the package price has to be signed off as value for money, with comparisons made with the wider market, by one of our framework cost consultants. Across a programme of developments, depending on scale this could save two to three full time equivalents (circa £150,000).
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Case Study: With two large supported schemes being delivered at the back end of the four year programme we believed we could achieve increased value for money for specialist clerk of works (COW) services. In order to improve the finished quality and reduce defects, clerk of works services were tendered directly, with the procurement evaluation being based on a named individual’s experience to carry out this work. This individual worked as part of the client team and had a regular attendance on site, on-site office accommodation and information to hand in that office. Midland Heart then had control over the amount of time the COW spent on our sites rather than the single weekly visit service achievable ordinarily. On-site time via this arrangement was between 16 and 26 hours each week. Based on these two schemes there is an overall cost saving in excess of £12,000. In summary, the appointment provided much more extensive supervision on site than we could gain through our traditional COW’s appointments which resulted in cost savings, improved contractor performance, reduced defects and improved customer care as there is minimal disruption of repairing defects. By obtaining expert independent advice and carrying out a rigorous internal examination of all proposed schemes this ensures that Midland Heart achieves value for money from its new development programmes. What VFM gains have we delivered? During 2014-15, we delivered the following social and environment gains from our Development activity:
Social gains: • 24 new employment apprentice opportunities (created during 2013/14). • Direct work experience opportunities offered to individuals who have completed a construction related diploma and are currently unemployed to help them back into work. Environmental gains: • All schemes included in the Affordable Homes Programme have consistently met the HCA’s Code for Sustainable Homes Level 3 standard which stipulates environmental requirements for all grant funded homes. • For supported housing schemes (where the Code For Sustainable Homes does not apply) we have achieved the “very good” Breeam rating (a recognised worldwide environmental assessment method and rating system for buildings). As a result of our HCA programme containing nil grant units, we have achieved Code Level 3 on these units that would otherwise only have achieved building regulations standard. Our customer satisfaction ratings for customers who had received a new build home are as follows: • 2011-12: • 2012-13: • 2013-14: • 2014-15:
95.7% 97.3% 97.5% 96.7%
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Treasury Management We have a comprehensive Treasury Management Strategy which underpins how we will ensure that the funds required for development builds are in the right place at the right time and that we are getting the most out of our cash resources.
• Refinanced and increased our market rent subsidiary’s facility availability by £1.5m and reduced whole life interest and fees costs by c£500k. Thus enabling us to position ourselves favourably for future growth in this area.
What changes have we made? We have reviewed our banking facilities to seek financial gains from the cost of borrowing (as per our Treasury Management Strategy).
• Extended an unsecured facility for a further five years and in doing so reduced the financing costs by 0.3%(equating to £15k annual savings)..
What VFM gains have we delivered?
What next? We will continue to look for flexible, value for money finance in the coming periods and prepare unencumbered property security for charging against future loans.
During 2014-15 we have delivered the following VFM gains: • Reduced the cost of our on-going banking charges by 50% as a part of renegotiating our banking arrangements. • Negotiated special deposit rates that have improved interest received by 20 basis points (£20k a year minimum saving). • Taken advantage of low interest rates to issue £50m of retained bond in the year. One tranche in the retained bond sale was sold at the time of issue at the lowest known yield for an own bond issue. Overall the weighted average sale price of 3.92% allowed us to make £582k savings per annum against the actual coupon rate of 5.087% on our bonds.
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6. Demonstrating Social Value From the above activity we have demonstrated our strong financial performance which we intend to build upon further by driving efficiencies. This allows us to continue to invest in the people and communities we exist to support and create social value.
Supporting People What changes are we making? Midland Heart is committed to providing social value and as such has adopted the Birmingham Business Charter for Social Responsibility (BBC4SR). The BBC4SR is a set of guiding principles to which Birmingham City Council (BCC) will adhere and which it invites others to adopt
The principles of the charter are: • Local Employment • Buy Birmingham First • Partners in Communities • Good Employer • Green and Sustainable • Ethical Procurement Derived from our existing social value programmes we can evidence full alignment to the principles above. Consequently, in December 2014 we were awarded a £4m per annum contract for the delivery of supporting people services within Birmingham.
Securing this contract has led to extending partnerships with other organisations to achieve VFM gains by pooling our resources and areas of expertise. Two examples of this are as follows. • We have utilised our long established relationship with the YMCA in Birmingham. From securing the contract we are able to access the specialist accommodation resources which the YMCA provides. • We have entered into a Partnership with Birmingham and Solihull Women’s Aid (BSWA) to bring together the specialist work of BSWA with women facing domestic violence and our capacity to provide support and accommodation to this group of customers. What VFM gains will we deliver? Our contract offering provides quantifiable social value that we commit to carry out during the contract life, as follows: Social gains: • 59 jobs locally either within Midland Heart or by Midland Heart (through our in-house agency, Pathways) • 667 places for events, volunteer placements and money advice • 6 micro enterprises • Property SAP rating of an average 75 by 2020 • 40 customers involved in environmental improvements
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Myth Breaker at Calvert Trust Since 2010, our Care & Support’s Customer Involvement team has taken groups of customers to a Calvert Trust activity centre in Exmoor. Once there, customers enjoy a week of activities and team building exercises which aim to break down myths and barriers between different customer groups and give individuals added confidence and motivation. These activities are highly inclusive, but emotionally and physically demanding. Customers engage in archery, canoeing, abseiling, an assault course, horse riding and rope climbing amongst many other games and activities – which most have not had the chance or the required support to enable them to experience before. What changes have we made? Due to the continued interest, popularity and perceived positive results of the Myth Breaker at Calvert Trust it was decided in early 2013 for this event to be held twice yearly – once in early spring, and once in early autumn. The cost of each event is either £14,800 or £17,300 dependant on which season the event is run. Funding for the first event was sourced externally with the £15k target fully achieved within approximately two months from mainly Midland Heart’s contracted suppliers. After the success of the first visit it was agreed to turn the “Myth Breaker at Calvert Trust”, as it became known, into a bi-annual customer event, mainly funded by Midland Heart. Based on the number of attendees, we can report a cost per head of £389 and £455, season respective (excluding Midland Heart staffing requirements for the duration of the event).
What VFM gains have we delivered? Social gains: During 2014-15 we carried out a full evaluation of the November 2013 event. Analysis of customers’ comments has shown that while on site, the Calvert experience has a direct affect on the confidence levels of customers, along with their awareness of other customer groups, their social skills and ability to work in groups to overcome physically demanding challenges. Those customers who were interviewed ten months following the event stated that, for them, this affect was long-lasting as they were still feeling the positive effects after nearly a year. For two customers who were interviewed ten months following Calvert, the Myth Breaker experience led to opportunities for paying work through Midland Heart.
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Alongside this, from the November 2013 cohort: • two customers are part of the Midland Heart Venture Programme - where customers gain work experience and mentoring over a 12 week period with Midland Heart • ten customers took part in the Incredibles Project – a drama initiative between the Birmingham REP Theatre and Midland Heart • three customers are regular volunteers for the company • eight have been involved in Magic Moments a Midland Heart programme offering activity based events for our Care and Support customers • six are part of our Midland Heart customer forums
“I am much closer to my family - they are happier. They are not treading on egg shells anymore, like before. Everybody is more outgoing around me, because I am more outgoing. I have got a spring in my step now”. Myth Breaker Customer Attendee “I feel I’ve changed a lot and I am pleased I am where I am now. I never would have imagined I would be working in a Midland Heart scheme, being a customer in another scheme. It’s amazing and Calvert is the best thing I ever did… one of the best weeks of my life”. Myth Breaker Customer Attendee What next? We will continue to run the Myth Breaker Calvert Trust events during 2015-16 and measure the social value which these events deliver.
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Social Enterprise Value (SEV) Our aims as a social landlord differ from those of a commercial enterprise. A commercial enterprise’s focus is on maximising its own value (its Enterprise Value), and in turn shareholder value, and therefore commercial decisions are made with this in mind. Unlike a commercial enterprise, Midland Heart distributes surpluses to customers in the form of rent subsidies, higher standards of maintenance, community regeneration and more investment in new homes. These distributions as referred to as social dividends. Social dividend is measured by the difference between the rents we charge to our customers and the equivalent market rate. In 2014-15 our average social rents were 72% of market rents (2013-14: 71%) across our 22,888 socially rented properties (2013-14: 21,839), demonstrating a proportional retained performance since 2013-14. By translating this into an annual saving to our customers, we can report £42m savings (2013-14: £43m). We fund this saving to our customers from grants received from the UK Government combined with the operating surpluses that we have generated during the previous years. As grant funding is diminishing, we are aiming to increase the ratio of rental social dividend to accumulated grant. We refer to this as the return on grant. In 2014-15 the return on grant was 7.2% (2013-14: 7.6%). This short term dip is due to the timing of grants received. Over a 5 year period we anticipate a trend increase in the return on grant that we deliver.
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Environmental Value Of equal importance to demonstrating financial and social gains that we generate, we also strive to quantify the environmental value that we deliver. Measuring our Environmental Impact What changes have we made? One indicator of our environmental performance is derived from a recognised benchmarking forum in which we are members. This is called SHIFT (Sustainable Homes Index for Tomorrow). Being a SHIFT member means striving to continually reduce environmental impacts. It also demonstrates commitment to evidence assessed benchmarking against a set of externally developed criteria.
In 2012, Midland Heart achieved a Bronze rating for our environmental performance compared to that of other participating housing providers. Since then we have continued to make improvements to the impact we have on customers’ homes, offices, travel, business transport and waste management. What VFM gains have been delivered? In 2014, we were awarded a Silver SHIFT rating recognising the positive effect our initiatives have had on the environment. An example of this is our energy efficiency programme.
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Energy Efficiency Programme What changes have we made? The availability of ECO (Energy Company Obligation) funding towards Solid Wall Insulation was at a low and on balance, considered not a financially viable option to Midland Heart. However, we have been proactive in negotiating a new programme of works focusing instead on Loft and Cavity Insulation installations. We have entered into a partnership to undertake environmental works to over 800 homes from October 2014 to March 2015.
“This helps to lower energy bills for our customers” What VFM gains have we delivered? Environmental gains: • CO2 savings of an estimated 12k tonnes of carbon, over the life time of the installation. • Improved SAP ratings of our property portfolio
Financial gains: • Funding of £600k obtained to carry out works • Reduced damp related repair costs. This is derived from the recognition of the correlation between damp and poorly insulated homes. • Improved SAP ratings of our property portfolio and therefore, increasing the overall net present value. • Contribution by the contractor of £10 per property. This equates to £8k to spend on energy efficiency education material for our customers and staff. What next? • We are now expanding this programme to cover all our stock and will continue to monitor the environmental, social and financial gains that this work delivers.
Social gains: • Increased customer ability to tackle fuel poverty and thereby helping to lesson the likelihood of customers being affected by cold related illnesses • Increased financial wellbeing for our customers, increasing disposable income, enabling them to spend more on essentials such as rent, food and clothing.
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Customer Engagement What changes have we made? We have been working in partnership with Coventry City Council on the Keeping Coventry Warm Group. This group provides energy saving surgeries for customers in Coventry. Educating our tenants on ways that they can help keep their bills low through their own behaviours and from being savvy with who they chose to supply their energy can make material differences to their bills. What VFM gains have we delivered? Customer savings on energy bills. One tenant switched energy providers to save £320 a year, whilst another tenant found they could switch and save £180 a year. There are many more examples of this from those who have attended the surgeries. What next? We are now looking at ways to bring this service to other geographical regions over the next 12 months.
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Midland Heart’s Performance As our VFM examples, case studies and operating models demonstrate above, we make sure that we measure our performance in a clear and transparent way. For VFM purposes, we measure our VFM performance using a set of core comparison indicators which are shown in the table below. These measure our relative performance year on year.
2014-15 2013-14
Cost per unit (£)4 Management Cost as % of Turnover Operating Cost as % of Turnover Operating Margin % Current Tenant Arrears % (including Housing Benefit payments) Average re-let time (days) for year ending 31 March. % of Routine Repairs Completed on Time Customer Satisfaction %
Each year we continue to report on the above eight core measures which we strive to improve year on year. We continue to monitor these indicators to ensure that we consistently forecast and understand any movements and can explain these clearly and concisely to our stakeholders (Appendix 1). Moreover, on an annual basis we also compare ourselves to those organisations who we consider comparable to ourselves, specifically medium to large RP’s with a significant Care & Support focus. In partnership with Baker Tilly this year, we have benchmarked ourselves to these organisations to enrich our understanding of the performance of our indicators and to focus areas for improvement.
4
2,492 2,635 21.3 22.9 72.0 72.6 28.0 27.4 4.75 5.03 25.0 89.4 84.7
29.0 95.9 87.0
We consider the customer satisfaction KPI of significant importance as this is integrally linked to the delivery of value for money. We have invested time and effort to ensure the surveys which we conduct are both relevant and reflect contractual commitments and operational need. As such, there will be some changes to the programme of gathering this information for 2015-16. An example of this will be to change our approach to customer involvement, from surveys to more of a qualitative focus group approach.
General Needs only
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We are also currently participating in a scoping programme with Housing Associations’ Charitable Trust (HACT). The programme aims to establish how other partner organisations approach their customer satisfaction programmes in order to introduce a consistent approach across RP’s. It will also consider a drive to measure customer aspirations and how this is balanced with managing customer expectations as well as considering customer well being. Initial scoping for this project is currently underway. Annually, we participate in Housemark’s Benchmarking Club for corporate benchmarking. We are also members of Baker Tilly’s Benchmarking Club, which specifically compares overhead costs for Finance, HR and IT functions. For another year running, in 2014-15 Midland Heart features in the upper quartile for back office cost performance, as we have since the group formed in 2009.
Furthermore, we have joined appropriate local benchmarking clubs and as a result our comparison activity has matured and become more meaningful, leading to ring fenced areas for improvement which are already underway and demonstrating the delivery of VFM gains. An example of this is within our Income Management directorate where comparison intelligence has led to a notable improvement in arrears performance. We will continue to grow our comparison intelligence and capture and measure the VFM gains which this derives.
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Midland Heart’s VFM Plans for 2015-16 This self assessment illustrates to stakeholders how we are continuing to provide VFM year on year. This is the 3rd year we have published our VFM achievements and we are confident that each year we are demonstrating a controlled improvement in how well we utilise our assets and resources. In pursuance of continuous improvement we are striving to carry out the following in 2015-16:
We will continue our unwavering focus on the efficient delivery of our corporate objectives which we will achieve by building on the foundations of our longstanding VFM culture and utilising the benefits we are beginning to realise from putting in place VFM principles over recent years. These enablers combine to equip us with the capacity and ability to deliver what we have promised to our customers.
• continue to build on the comparison data we currently have. Specifically continue to establish a network of comparable peers who appear to exceed our performance for those indicators we strive to improve • embed the significant changes which our Assets Directorate has undergone in the last 2 years and track the benefits of these • improve our contract management arrangements to ensure compliance and delivery of all contracts • capture upcoming benefits for major projects following the establishment of the Midland Heart Project Management Methodology • seek customer involvement in selecting suppliers who deliver the services that affect them most • research opportunities for further joint procurement arrangements with peer registered providers.
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Appendix 1 VFM Core Comparison Indications
KPI
Additional Information
Cost per unit (£) This KPI represents the cost per unit for general needs properties only. This is more meaningful than calculating our overall cost per unit as our care and support activity provides a distorted view of performance (as increased care and support activity increases revenue but also operating costs in the absence of an increase in units). The 5% reduction in cost per unit can be partly attributable to sustaining our management costs of £41m whilst increasing the number of properties which we own and manage.
Management Cost as % of Turnover During the first year of delivery of our 20142020 Corporate Strategy, we have instigated a number of lean reviews within our central service departments. The benefits of these are beginning to come to fruition as management costs are remaining constant alongside organisational growth. This is reaffirmed by a favourable reduction in this measure. Operating Cost as % of Turnover Once again, we report a year on year improvement for this measure. From participation within Baker Tilly’s Back Office Benchmarking Club we know that our overhead costs compare favourably to our peers and this combined with an improvement in management costs equates to the reported improvement of 0.6%. Current Tenant Arrears % Midland Heart’s Current Tenant Arrears has demonstrated continued improvement over the (including Housing Benefit payments) last 3 years. During 2015, further VFM activity such as reviewing of business processes has enabled us to report 4.75% at the end of the year. The implementation of a newly procured outbound dialler system will also facilitate further improvement despite the upcoming impacts of Universal Credit.
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KPI
Additional Information
Average re-let time (days) Last year we reported the beginning of a notable improvement in the average number of days to for year ending 31 March re-let our properties, due to recently implemented performance management interventions. We have built on this further during 2015 by carrying out a review of the end to end allocations and letting process. Initial “quick win” activity including restructuring, commencing a pilot to trial pre-void activity based on best practice and automating void surveys has led to a 14% reduction in the average time it takes to re-let properties and a £50k reduction in void loss with a further £240k reduction expected in 2015-16. For 2015-16 we are forecasting a further reduction to 23.5 average re-let days. % of Routine Repairs completed on time The Assets Directorate has undergone significant change during the two years, including a management re-structure and changes to the delivery model for repair services. The Customer Services Project and embedding of re-procured repairs contracts are anticipated to recover performance of this indicator over the coming 1-2 year period. Customer Satisfaction % In 2014 we reported a 1.5% increase in overall customer satisfaction. During 2014-15 our survey intelligence demonstrates a decline attributable to the satisfaction figures specific to the completion of repairs. Communal services customer satisfaction (grounds maintenance, cleaning and window cleaning) was broadly on par with last year and satisfaction with new lettings is reported at 92.2%. Aligned to repairs satisfaction, we anticipate an upcoming improvement.
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Midland Heart, 20 Bath Row, Birmingham, B15 1LZ Tel: 0870 60 70 300 Web: www.midlandheart.org.uk
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