Value for Money Statement 31 March 2015
Achieving value for money
Hyde was established in 1967 with one aim: to help people excluded from the mainstream housing market by providing decent, affordable homes and managing them properly. Since then, we have grown and adapted to meet the unprecedented challenges of housing in the UK, but our social purpose remains firmly at the heart of everything we do. Hyde’s 2014-17 Corporate Plan objectives are to deliver quality services, increase capacity and build more homes.
Residents from the Hydewide Residents’ Voice have helped us put this year’s VFM statement together. They ensured it is accessible, easy to read and understand and have helped in the choice of case studies. Hyde Residents Voice VFM Sub Group (left to right): Estella Magloire (Chair of HRV), Anita Baldock, Jackie Puddifoot, Jan Durbridge and Stella Young.
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Hyde’s VFM Statement 31 March 2015
Although value for money (VFM) is a part of everything we do, ‘increasing capacity’ helps us to focus on improving efficiency and maximising income and asset value to allow us to produce the greatest social value. Social value is delivered by providing new housing to meet chronic shortages, setting rents below market levels and providing added value services such as helping residents sustain their tenancies.
“Getting involved in this statement has helped us see the bigger picture on VFM and has given us a real insight into Hyde’s finances.“ Hyde Residents Voice VFM Sub Group.
Staying true to our values
Affordable housing remains at the core of Hyde’s business: we provided more than 1,100 new homes for people who desperately needed them in 2014/15 and stayed true to our vision of making a lasting difference to people’s lives. Looking to the future, the Government has made it clear that it expects housing associations to do more to help people into home ownership. It is right that we respond to this challenge. Over the past five years, we have invested the cash equivalent of 2.6 times our annual surplus in building and acquiring homes. We remain committed to this approach and pledge to build thousands of new homes over the next three years. During the last financial year, we built over 1000 new homes, improved the quality of our repairs and maintenance services, delivered life changing support to 1000s of residents through our Hyde Plus services, and maintained strong finances. We can be proud that the £81m surplus made last year can now be re-invested in services and more new homes. At the same time we recovered our repairs and maintenance service levels to previous levels, while saving money and implementing a continuous improvement programme to ensure that tenants receive an even better service going forward. We are also implementing our ICT strategy to ensure we operate effectively and efficiently and our Hyde on Demand programme which will improve our customer service experience by enabling residents to access our services when, where and how they want to. We know the next 12 months will bring many challenges, not least those arising from rent reductions, Right to Buy and Welfare Reform. But we will rise to those challenges; we will deliver what is expected of us – increasing the number of homes in the UK and providing landlord services in an efficient and effective manner. Mark Sebba, Hyde Group Board Chair
Hyde’s VFM Statement 31 March 2015
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How we achieve value for money The Group Board is responsible for ensuring Hyde establishes and maintains a comprehensive and strategic approach to achieving value for money in meeting our corporate objectives. This approach is designed to ensure a robust assessment of the performance of our assets and resources (including, for example, financial, social and environmental returns) and takes into account the interests of, and our commitment to, our stakeholders. The VFM Strategy is designed to help Hyde manage its resources economically, efficiently and effectively, to provide quality services and homes and to plan for and deliver on-going improvements. The key elements in delivering our VFM approach include: Group Board approval of the corporate plan which includes VFM objectives and an annual review of the VFM Strategy, supported by detailed budgets and team targets. Decision making supported by robust strategies and business planning. This seeks to optimise the use of resources to deliver our objectives and obligations, taking into account residents’ priorities (through Hydewide Residents’ Voice, resident assurance committees and customer feedback). Our asset management strategy ensures we understand the return on our housing and commercial assets, and provides the tools to assess how best to optimise future returns – in both social and financial terms. This may include additional investment, redevelopment, change in tenure type or disposal.
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Hyde’s VFM Statement 31 March 2015
Our performance monitoring framework is overseen by the Group Housing Services Board for housing service delivery, the Group Investment Committee for investment and development delivery, and the Group Board for treasury management. This is supported by resident scrutiny of local performance through resident assurance committees and for service experience by Hydewide Residents’ Eye. In addition, we carry out an annual self-assessment against each of the HCA National Standards, ensuring we are compliant and to identify plans for continuous improvement. A strategic approach to service enhancement. This is supported by a business case approach to change delivery and investment proposals, with clear cost-benefit measures reflected in budgets and service KPIs. Our approach makes use of well-established tools such as best value reviews, benchmarking within the G15 peer group (the 15 largest housing associations in London) and comparison with service models outside of the sector. Establishing centres of expertise to support group activities, such as Hyde Plus (getting residents into employment and training and online; supporting them in managing debt and sustaining their tenancies); our in-house legal team (facilitating early intervention and mediation on tenancy matters and supporting housing officers with tenancy enforcement) and our centralised procurement team (allowing us to take a strategic approach to procurement, helping to shape internal service delivery and benchmark to market).
Group Board VFM Strategy – Corporate Plan milestones – annual targets Annual VFM review of ‘added value’ services
Group Investment Committee Development, growth and capital spend. New build schemes, regeneration programme, land banking, mergers, acquisitions and significant non-development
Review of VFM and opportunity cost for every proposal. Annual review of delegated parameters for VFM
Group Housing Services Board
HRV and HRE
Operational delivery – regulatory, statutory (legal, H&S), service standards, organisational change programme
HRE Review compliance with service promise standards and recommend improvements
Review HCA National Standards self assessment on VFM, agree service standards and monitor delivery, consider business case for service delivery
HRV Review performance KPIs, satisfaction levels and trends in complaints. Influence service priorities and help determine service VFM criteria
Executive Management Team (EMT) Deliver VFM initiatives, increase provision for added value services, part fund new development, provide a pot of money for resident determined values.
*HRV is supported in its role by the local Resident Assurance Committees which scrutinise local service delivery.
Hyde’s VFM Statement 31 March 2015
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Progress against last year’s plans
Efficiency Last year we set ourselves a £13m efficiency target, calculated from the 2012/13 budget. The aim is to ensure that within three years, our day-to-day running costs, together with the interest payments on loans used to develop new housing, will be fully covered by income from our core business, ie rent and service charges. Sales of assets and new homes are not included, as the aim is to ensure the core business is as efficient as possible. We have gone some way to meeting this target in 2014/15, beating the break-even target and generating an underlying surplus of £3.9m (although this includes a one-off benefit from investment income of £4.9m). This has been achieved principally through increased rental income, a reduction in maintenance and management costs and a number of initiatives outlined in this year’s statement. Looking ahead, our financial plan anticipates further savings of £25m by 2020 from future initiatives.
Asset management We hit our ambitious 2014/15 target to deliver £10m of gross proceeds from the disposal of stock that was either uneconomical to repair or unsustainable for us to manage in the long term. We are continuing to develop our active asset management approach and our Asset Intelligence Model (AIM). AIM looks at the financial and social performance of individual and groups of properties to enable us to make the best use of our stock. Using this model, we expect to identify more uneconomic voids in 2015/16 and make more informed strategic decisions about future investment, redevelopment or disposal, which together with our streamlined “empty homes” process, will consistently improve the return on our assets.
Increasing capacity During the year, we have been working hard to embed our new repair contracts and new ways of working, including system and process improvements. Following a sustained decline in
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Hyde’s VFM Statement 31 March 2015
performance for much of the year, we worked through our recovery plan and are starting to see an upward trend and performance close to the levels achieved prior to the change. By February 2015 we achieved 81% satisfaction for new repairs (the highest level for 18 months) and cleared the repairs and voids backlog which arose in the transition to new contractors. We carried out process reviews of key areas of service – repairs, voids and complaints – which have led to more efficient ways of working and will achieve future cost savings. For example, from 2016 onwards we expect to make £380k of savings per annum from the changes to the ways in which we handle empty homes. Throughout this challenging period we received continued support as well as constructive challenges from our involved residents – many of whom had been closely involved with the initial design and procurement of the new contracts We will save a projected £5.2m over the life of the contracts we re-procured last year and, as reported in the 2013/14 Value For Money Statement, we have started the procurement of our estate gardening and cleaning contracts. We are also designing a new service charge software system and have set up our new development consultant framework. We also laid the foundations for Hyde on Demand, which aims to develop more agile and flexible services through new technology. This is projected to save £2m in efficiency improvements over the next three years. The Hyde App was launched in November 2014 and is being used by more than 1,000 residents. We will be exploring our strategic self-service solution during 2015/16 and this will allow residents to fully complete key service transactions online or via a mobile device. This programme includes our Smarter Working project, being rolled out in 2015 for income officers, housing officers and surveyors. The aim is to allow staff to work more flexibly and enable them to provide a more responsive service to residents.
During the year, we worked hard to embed our new repairs contracts and customer satisfaction climbed to 81% by February.” Elaine Bailey, Group Chief Executive
Insulation of 725 properties in Stockwell is directly benefitting residents by making homes easier and more affordable to heat.
Hyde’s VFM Statement 31 March 2015
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What we achieved in 2014/15
Hyde’s financial position
Operating margin
Hyde’s financial performance and position are strong. Our underlying surplus was £81.9m in 2014/15, an increase of £40.3m from 2013/14 (£41.6m), of which a significant proportion was generated by sales activities (helped by the buoyant housing market).
Hyde’s operating margin was 30% in 2014/15, an improvement on the 28% in 2013/14 (the average for the G15 was 31%). The increase in Hyde’s margin was mainly because we had a lower impairment charge in 2014/15 than we did in 2013/14. This added £5m to our surplus. The higher impairment charge in 2013/14 arose because the valuation review that we carried out on our stock found that the value of some properties had dropped below their carrying value on the balance sheet. We reduced the values of these properties on the balance sheet as a result and recognised the reduction as an expense in our income statement.
All of our surplus is reinvested in our core business of providing affordable homes and services for current and future residents. In fact, in each of the last five years, the amount Hyde has invested in improving existing and delivering new homes has exceeded the amount of surplus the organisation has made significantly. When we discount sales and look at our traditional business activities (building and renting homes) we generated a small surplus in 2014/15. We have worked hard to deliver efficiencies in recent years to reach the position where we can cover our dayto-day running costs and interest payments on our borrowing, without relying on sales of any kind. Hyde uses a variety of measures to compare its VFM performance with peer organisations in the G15 (the 15 largest housing associations operating in London, of which Hyde is a member). These include participating in an annual Housemark benchmarking round, along with in-house analysis based on the accounts of our peers and on the HCA’s global accounts. How Hyde generated its income in 2014/15
There are a number of VFM initiatives in progress to improve Hyde’s operating margin further in future years. With VFM in mind, we introduced a three year target (running from 2014 to 2017) to reduce our cash costs by £13m. This was achieved in 2014/15 by, for example, focusing on the costs that we incur on our central functions (such as finance, human resources, information technology, communications etc), on our stock spend, on our interest and by divesting from areas of our operations that are deemed to be noncore and which result in relative inefficiency.
...and what surplus was left after deducting costs
Tenancy services Rented property income
Housing assets
Financing costs
Sales income (net) Investment returns
Accounting surplus £81.9m
The chart shows the size of Hyde’s income from rent compared to sales, how much was spent on tenancy services, housing assets (repairs and maintenance), financing costs (interest payments ) and how much surplus was left. 8
Hyde’s VFM Statement 31 March 2015
“In each of the last five years, Hyde has invested significantly more than the surplus generated in building new homes and improving existing ones.” Simon Peacock, Hyde Group Finance Director
Return on assets
Overall cost per social unit
Hyde’s return on assets (with the return measured as surplus before interest and tax) rose to 4.4% in 2014/15 from 3.3% in the previous year. This return is higher than the peer group average of 3.3%. Clearly, a company with a high return on assets is a company whose investments are generating a high return and proving profitable.
Hyde’s overall cost per social housing unit was £3,117 in 2014/15, an increase of £2 from the previous year. Lower impairment charges and the reduction in maintenance costs offset general cost inflation and the increased investment needed to deliver OHOV3 in 2014/15, meaning that the difference in overall cost between the two years was negligible.
Housing management costs
Future plans 2015/16
Housing management costs increased to £864 per home in 2014/15, from £759 in the previous year. This was due mainly to investment in additional staff to help to deliver and embed the third phase of the One Hyde One Vision transformation project (OHOV3), which saw the re-procurement of Hyde’s repairs and maintenance contracts.
Hyde’s 2015/16 budget includes more than £3.5m of savings from VFM. Around £2.5m of these are budgeted to come from a more value-driven approach to delivering repairs and maintenance services, by carrying out repairs to empty homes more efficiently for example. The rest of the savings will come from initiatives to reduce our office, communication and recruitment costs.
Maintenance costs Hyde’s maintenance costs per social housing unit reduced to £953 in 2014/15 from £976 in the in previous year. This was due in part to the lower pricing achieved through the re-procurement of repairs and maintenance contracts as a result of OHOV3.
Our longer term financial plan includes further efficiency savings targets that will challenge the business to reduce the cost of the back office and control staff costs. These savings will be realised through better use of digital technology, better management of service charges and improving our operating processes to cut out duplication and waste. These projects are already underway. Including the budget initiatives, these plans should save Hyde around £25m by 2020. Hyde 2014/15
Hyde 2013/14
Hyde 2012/13
Peer Group 2013/14
Operating margin
30%
28%
29%
31%
Operating margin on social housing lettings
44%
42%
46%
33%
Return on assets – Net operating surplus/Housing properties at cost
3.2%
2.7%
2.6%
2.2%
Return on assets – Surplus before interest and tax/ Housing properties at cost
4.4%
3.3%
2.8%
3.3%
Management costs per social housing lettings unit
£864
£759
£729
£1,031
Total maintenance costs charged to income and expenditure statement per social housing lettings unit
£953
£976
£927
£1177
£3,117
£3,115
£2,809
£4,647
Total costs of social housing lettings unit
A comparison of Hyde’s 2014/15 performance across a selection of key financial performance ratios with its performance in the previous two years and against the G15 peer group average results, based on their 2013/14 accounts. Hyde’sVFM VFMStatement Statement31for 2013-2014 Hyde’s March 2015
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“We are committed to helping staff meet their career aspirations and to ensure we retain and attract the best people.” Neville Hounsome, Hyde Human Resources Director
Deliver quality services Deliver services to agreed standards, and deliver services which make a lasting difference to the wellbeing of residents and the wider community. Nurture a high performing, engaged workforce. Building a high-performing workforce Our staff are at the heart of what we do. We are committed to helping them meet their career aspirations and to ensure that we retain and attract the best people. During 2014/15 we invested £690k in training and developing our people. This equated to more than two days of training per person, around a third of this delivered in-house. As a result, about 150 staff were sponsored to undertake an accredited or professional qualification and improved their management, leadership and commercial skills. At the beginning of 2015, we launched MYCareer (Managing Your Career) – a tool to help staff identify potential career paths. MYCareer will help staff understand what competencies, qualifications, skills and knowledge are needed for different roles, plus what training and experience is needed. It will be a key tool for retaining staff. In 2014, we continued our commitment to the London Living Wage. We also recruited our second cohort of ten apprentices, using government funding for training and creating entry-level roles in a number of departments. Our flexible benefits scheme, “iFlex”, saw its second outing in 2014 and continued to be well received, with more staff taking the opportunity to ‘flex’ their benefits, resulting in additional employer National
Insurance savings. We also continued to develop our online human resources services, making more processes available via self-service, and also introduced a recruitment module. We measure a number of key performance indicators (for example, leavers and absence rates) which are reflected in our Balanced Scorecard which is reported to the Executive Management Team. We compare well with sector and national benchmarks. We are also in the process of retendering our pension advisor services, which we anticipate will result in savings and an improved service from mid-2015 onwards.
Repair services We worked closely with our contractors during the year, to embed the new repairs contracts and improve performance. To respond to a decline in performance during this transition we increased levels of resources in customer-facing roles; improved appointment booking systems and carried out process reviews to drive out inefficiencies. We also introduced a second tier of contractors to provide back-up during the recovery period. As a result, we have seen improvements in all our repairs’ key performance indicators. As of April 2014, customer satisfaction with repairs was 71%, by February 2015 it had increased to 81% (its highest level for 18 months) and was at 78% by the end of the year.
Resident training opportunities Lee Keeley, 16, began work as a multi-skill apprentice with Hyde responsive repair and maintenance contractor Keepmoat Property Services, just two days after finishing his last GSCE exam. Lee’s grandmother and Hyde tenant Glenis Hayes found out about the work experience opportunity that led to the apprenticeship, during a ‘Meet the contractor’ event. Lee said: “I’m looking forward to learning lots of new skills that should keep me in work for the rest of my life.”
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Hyde’s VFM Statement 31 March 2015
Despite this upward trend, we are not meeting all of our internal targets. We know there is more work to do to improve services and fully realise the service enhancements we set out to achieve with the support of our involved residents. The drop in repairs performance also had an impact on how quickly we could re-let properties and our voids rent loss. We have made some progress, however, with void rent loss (as a percentage of the annual rent income) falling from 1.9% in April 2014 to 1.1% in March 2015. We have since carried out a full review of void property management, introduced lean processes and removed unnecessary tasks and actions that caused delay to the process. We expect to make £380k of savings per year as a result of these changes. We have brought the management of gas servicing in-house which has simplified processes. All our properties have a valid gas service certificate (or we are in court process to obtain access).
Estate services We are retendering our cleaning and grounds maintenance contracts, involving our Resident Procurement Panel at every stage. There are more than 100 separate contracts across Hyde, worth £5.3m. There will be 12 new contracts, phased in across the group between summer 2015 and summer 2016, saving residents an estimated £500k every year from 2016/17. We will be developing a Hyde minimum standard for estates (with flexibility and choice reflecting tenure types and local needs) and robust contracts with transparent costs and greater clarity for residents. We will also be seeking social value from these new contracts, in terms of training or apprenticeship opportunities for our residents.
We have worked closely with contractors to ensure our repairs service is meeting residents’ needs.
Hyde’s VFM Statement 31 March 2015
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Hyde on Demand We are working towards a fully integrated online service (Self-Serve) using Hyde’s website and smart devices. We have been upgrading our core database to allow for this new service and will be consulting with residents to agree the top interactions which should be offered digitally. We launched the Hyde App: Looking Local last year to test residents’ appetite for online services. This enables residents to report repairs, estate issues and send photos direct to Hyde. It also provides access to other services including: Universal Jobmatch, Universal Credit guidance and a range of financial, benefit and budgeting advice from the Money Advice Service. One thousand residents have signed up to date and we expect this to increase further. We have continued to prepare for the implementation of our Smarter Working project. During 2015 we will be providing staff with new mobile devices enabled to access Hyde systems from any location. Two hundred staff, including income officers, housing officers and surveyors, will benefit and residents will receive a more efficient and responsive service.
Supporting residents to sustain their tenancies
introduced several initiatives to help residents sustain their tenancies, reduce costs to the business and understand the triggers and causes of tenancy failure. As a response to the challenges of Welfare Reform, Hyde Plus introduced a Gateway (triage) service for all residents seeking support. This has enabled a consistent approach to assessing needs and effective signposting to the most appropriate specialist – employment, debt advice etc. As a result Hyde Plus has been able to reach more residents and increase the efficiency of specialist services. In 2014, we revised our systems for measuring the impact of our work and the social value generated from Hyde Plus. Using the newly developed Housing Associations’ Charitable Trust (HACT) calculator, we have been able to ascribe social value metrics to some of the achievements noted below for 2014/15. The Employment and Enterprise team helped 228 residents into employment, equating to £1.9m in social value*. The team also helped 764 people into training; provided 874 residents with advice and support and secured 21 apprenticeship opportunities through Hyde’s supply chain. We awarded 104 bursaries to residents worth £21,612, enabling them to pursue their career goals.
Hyde invested £2,498,000 in Hyde Plus, the Group’s specialist social and economic investment team, enabling residents to fulfil their potential and sustain their tenancies. Each eviction costs Hyde around £10k and through our new Innovation and Insight Unit we
Providing practical help and support Carol was referred to a Hyde Plus Money and Debt Advisor when she was unable to get support from a local charity. She was working part-time, receiving child benefit payments and had some financial assistance from her ex-partner. Two family bereavements had a profound impact on Carol’s mental health and she defaulted on a suspended possession order. Owing rent, a warrant for eviction was imminent. Bailiffs had also been instructed to collect outstanding Council Tax and she owed money to her gas supplier. A Hyde Plus Money and Debt advisor helped Carol to secure a higher housing benefit award and for it to be backdated. He also arranged for her to set up a manageable rent payment arrangement and for the Council to halt the bailiff action in light of her poor health. An application to a utility company trust fund was submitted to reduce the utility debt. Carol’s priority debts are now under control, and her rent payments are being sustained. 12
Hyde’s VFM Statement 31 March 2015
Debt and Money Advice services supported 2,617 residents to reduce their debt, improve their financial skills and pay their rent. This resulted in financial gains to residents of £1,653,169 and £1,334,997 of business gains. The Digital Inclusion programme has helped 494 residents to get online and feel confident using the internet. This has created £750k in social value**. We also trained 65 resident Digital Champions and provided support to other residents, including the 155 residents receiving one-to-one training at home from social enterprise ‘Student@Home’.
The Lottery-funded Money House provided financial capability and tenancy management training to 127 young tenants – those at greatest risk. Our evaluation demonstrates that Money House graduates are (on average) only £78 in arrears, compared with an average £650 for most tenants under 24. A further £411,619 of external funding was leveraged by the team and £312k income earned from the rental of community centres. Residents and other volunteers invested their time to support Hyde residents and communities equivalent to £137,517. *social values are based on the HACT social value calculator, where Full Time Employment is given a social value of £10,767 per person, minus the cost of the programme and deadweight (what might be presumed to have happened anyway). ** social values are based on the HACT social value calculator, where Access to the Internet is given a social value of £1,875 per person, minus the cost of the programme and deadweight (what might be presumed to have happened anyway).
The Money House provided financial capability and tenancy management training to 127 young tenants last year.
Hyde’s VFM Statement 31 March 2015
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Value for money and resident engagement Throughout the year, our residents played an important role in ensuring value for money services across Hyde, through the scrutiny of existing services and influencing the development of new services. ■ Residents on Hydewide Residents’ Voice (HRV) and local Residents’ Assurance Committees (RACs) scrutinised quarterly performance information and reviewed service improvement plans. Hydewide Residents’ Eye (HRE) carried out four service inspections to test the resident experience and resident contract scrutineers attended contract meetings to monitor and challenge repairs performance. ■ The Resident Procurement Panel ensured that new contracts were resident focused and met resident needs. It also helped to procure market research services, gas and electrical contract renewal and furniture and white goods. ■ Online engagement through the OAK website has reduced the number of meetings and will save £10k per year. ■ Engaged residents are also working with Hyde to develop a digital resident news platform, saving £240k a year on printing and postage. ■ The Resident Training Hub is an initiative developed in partnership with other G15 housing associations and TPAS. This has pooled resources and costs to provide a greater range of training opportunities for residents. ■ Finally, residents took a leading role in writing and designing the Resident Annual Report, which won TPAS’ Excellence in annual reports award for 2014-15.
Future Plans 2015/16 ■ Responsive repairs. When the responsive repairs
contracts were tendered, we included the option to move to Price Per Property (PPP) and Price Per Void (PPV) models. We will explore these, and the benefits they can offer, including simplified budget management; less administration around low value orders; development of partnering relationships and a greater focus on the quality of work and customer experience.
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Hyde’s VFM Statement 31 March 2015
■ Hyde on Demand. By the end of 2015, we will
have completed the preparatory work for SelfServe and will be ready to launch our digital service offer, with the aim of having the top five requested transactions online. During 2015/16, we will also implement Smarter Working. We estimate that over a five year period both projects will save £2m and will deliver improvements in resident satisfaction and staff engagement. ■ Service charges. We will implement the new service charge system, resulting in streamlined data handling, improved clarity and accuracy on service charges estimates and statements and greater resident satisfaction. We estimate the £1.5m investment costs will be recovered within five years. ■ Estate services. Following the re-procurement of cleaning and gardening contracts, from 2016/17 we will expect to achieve annual cash savings of £500k, which will be passed onto residents through their service charges. ■ Voids and lettings. This service will be centralised and we will introduce more efficient processes which will help us reduce void loss. For 2015/16 we have a target of 1.06% for void loss with the aim to reach top quartile by 2017/18.We will also reduce our spend on works to empty properties by the consistent application of a revised lettable standard and using our stock investment contractors to carry out major works. ■ Hyde Property Services. We will be investing in our in house contractor Hyde Property Services (formerly Martlet Build), to deliver greater efficiencies and improved customer satisfaction. The team delivers repairs to a third of our stock and we aim to achieve £1.4m savings in operating costs each year, with customer satisfaction targeted at over 85%. ■ Hyde Plus. We will provide one-to-one advice and support to 3,000 residents, help 240 residents into work, 250 into training and 70 into work placements, while delivering £1.6m in financial gains to residents and £1.3m to the business.
Increase capacity To reduce waste and inefficiency in our service, while maximising income and asset value; re-invest additional financial capacity in services and building homes.
Asset management All our homes comply with the Decent Homes Standard. We invested £27.9m in our stock in 2014/15, completing improvements to 1,080 kitchens, 870 bathrooms, 200 roofs, 200 electrical upgrades, 940 windows and doors, plus insulation works to more than 200 homes. As well as re-procurement savings achieved in 2013/14, we made further savings of £2.1m through component replacement unit cost savings, providing a higher quality product (for kitchens, bathrooms and windows) at the same or lower cost.
We have continued to develop our Asset Intelligence Model (AIM), which looks at the financial and social performance of individual and groups of properties. AIM will enable us to make the best use of our stock. This could involve investing or re-modelling to meet demand; disposal of stock that is costly to maintain and disposal or divesting any specialist housing outside our core activities. The table below shows the criteria that make up the social scoring for the AIM model which takes into account factors such as local demand, current stock condition and energy efficiency.
Asset Intelligence Model – Social scoring criteria Criteria
Criteria weighting*
Location
25
Property performance
Demand/ popularity
Neighbourhood
Development potential
30
30
15
0
What’s measured
Metric weighting*
In core development area/strong LA relationship
50
Density of stock in LA area
50
Stock condition
30
Decent Homes Compliance
30
Energy Efficiency
40
Current demand for type of property
50
Average void loss in last 3 years**
25
Tenancy turnover**
25
Multiple deprivation index score**
20
Satisfaction with services
25
Satisfaction with neighbourhood
25
ASB incidents**
30
Capacity for property to be extended**
50
Potential for large scale regeneration **
50
Notes * The higher the weighting, the more important the criteria or metric. ** These measures have negative scores. Hyde’s VFM Statement 31 March 2015
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A low social score could indicate issues with long-term sustainability of a property or group of properties. For example, a property in poor condition in a low demand area would have a low social score on the AIM model. A property in good condition in an area where Hyde holds a lot of stock and works closely with the local authority would have a high score. The social score is considered with the financial performance of the property over 30 years – a low social score and poor financial performance might trigger an appraisal for re-modelling, investment or disposal. We are developing Local Asset Management Plans which will help us make decisions about stock at a local level. We have started analysing the relationship between Net Present Value (NPV) financial assessment over 30 years and the AIM non-financial score for each property in a local authority area. This allows us to easily identify and assess properties with a negative NPV and low AIM score. We have carried out several options appraisals of key estates with low AIM scores, with a view to making decisions about their future in 2015/16.
As part of our voids disposal strategy, we identified 30 properties that were uneconomical to repair. Their disposal generated a net surplus of £ 4.1m to reinvest in future development programmes.
Hyde’s offices We are continuing to streamline our office portfolio, to ensure we obtain the maximum value from these assets. We moved staff from our Hillside Office to the Stonebridge Community Centre, allowing the building to be redeveloped to provide four homes. This move will reduce annual facilities costs by £70,000, as well as creating a vibrant hub of housing and community services. We have ambitious plans for next year, to rationalise our office accommodation further. “The move to the Stonebridge Centre went smoothly. It’s great to work in an office that is also the centre of the community, providing housing and employment advice.” Resident Engagement Officer Deepa Hirani
Resident contract scrutineers help monitor and challenge repairs performance.
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Hyde’s VFM Statement 31March2015
“Our longer term efficiency targets challenge the business to control and where possible, reduce operational costs. Many of these projects are already underway and should save Hyde around £25m by 2020.” Tracy Allison, Hyde Group Director of Corporate Services
Buying better – procurement highlights During 2014, Hyde’s best practice procurement methodology has saved more than £5.2m for Hyde and its residents. July 2014: Sourcing suitable staff. Hyde recruits hundreds of staff every year and our new contract with Reed Global, as our preferred supplier, aims to ensure that we hire the best people, while saving more than £900k over the next three years. August 2014: The right technology at the right price. Trans European Technology (TET) was selected to provide staff with the ICT kit to do their job. Through supply chain management arrangements (procuring direct from manufacturer), we are purchasing new computers at more competitive prices. This arrangement will save Hyde about £180k a year. November 2014: Customer satisfaction surveys. Opinion Research Services and Service Tick have been awarded the contracts for our customer satisfaction surveys. The agreement is set to save £300k over the next three years and will deliver a greater range of services as well as improved data quality through more frequent surveys and better reporting.
Hyde’s procurement team received a Highly Commended award in the Team of the Year category of the National Government Opportunities (GO) Excellence in Public Procurement Awards 2015/16.
Hyde delivers social value through its procurement function, going above and beyond the requirements of the Social Value Act. The re-procurement of repairs contracts in 2013 resulted in our contractors delivering 72 work placements, 247 training places and 37 apprenticeships. Hyde’s Residents’ Procurement Panel is involved in a number of service-related procurement projects worth more than £4.5m, bringing social value, with the added benefit that residents are increasing their skills and experience.
We are continuing to streamline our office portfolio, to maximise the efficiency of our teams and to obtain the best value from our assets.
Hyde’s VFM Statement 31 March 2015
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“Over the next two or three years we will begin to develop new services that better reflect our diverse customer base.” Carol Carter, Hyde Group Director of Housing
Maximising our income
Future Plans 2015/16
Rental income We have improved our performance on rent arrears (for all tenures) achieving 3.9% arrears as a percentage of rent due at the year end. This is our best result since 2010/11 and is a significant achievement in the challenging environment of Welfare Reform.
■ Deliver £9m of additional income by disposing of
To help us mitigate the effects of Welfare Reform, we hired 14 additional staff in a variety of roles. These include housing options staff, to help residents to downsize, and financial inclusion advisers, who contacted 90% of those affected by the ‘Bedroom Tax’ and benefit cap, ensuring support was in place to manage any rent shortfall. As a result, we mitigated the estimated £2.8m of rental revenue at risk. Service charges We are investing £1.5m in new software, which is now at the scoping and design stage. Residents will have greater accuracy and clarity on service charge statements and estimates, allowing more effective scrutiny. For Hyde, it will streamline data processing and ensure greater accuracy on capturing costs for communal works and service contracts. This will enable project costs to be recouped within five years. Void rent loss Void rent loss was at 1.1% last year, just above the target of 0.8%. Performance has improved significantly over the course of the year and we now have the lowest number of void properties we intend to re-let on record.
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Hyde’s VFM Statement 31 March 2015
empty properties beyond economical repair and a further £1m by disposing of a small number of Hyde’s ‘High profit properties’ once they are vacant. Proceeds will then be used to fund new homes, benefitting a larger number of residents. ■ Produce Local Asset Management Plans for all areas to inform future investment and strategic disposals. ■ Deliver £31.9m of stock investment works. ■ Implement the Hyde Quality Standard for stock investment work, moving from an age-based trigger to one based on condition, using a new ‘Common Sense Investment’ approach. This allowed us to reduce our stock investment budget for 2015/16 by £2.9m and means we will spend money more wisely. ■ Complete the next stage of our office rationalisation strategy, closing our Long Lane office and relocating our Hove and Southampton offices. The Hove office site will be redeveloped into homes, while the Southampton office will be sold. ■ Deliver £2.4m of procurement gains through retendering our grounds maintenance and cleaning services contracts; re-procurement of building materials for our internal repairs operation (Hyde Property Services) and setting up a main contractor partner framework for our £1bn development pipeline. ■ Complete the sale of our student accommodation in Greenwich and Rochester and exit from our health and temporary housing portfolio. ■ Review supported and sheltered housing to create a two to three year strategy focused on long-term management of return on asset and risk exposure. ■ Complete the transfer of 1,000 homes in Sutton currently jointly owned by Hyde and Metropolitan Housing Trust (MHT). Hyde will take 800 homes in Croydon from MHT, concentrating ownership in one of our key boroughs and provide more efficient management of homes.
Build more homes To help increase supply of all tenures and ease housing pressures; develop more housing for sale and private rent to subsidise the development of affordable homes
During 2014 we delivered the following: ■ Built 1,103 homes, of which 88 were in Kent, 656 in London and 359 in the South Region. ■ Sold 162 outright sale units and 235 shared ownership generating surpluses of £22.1m and £8.8m respectively. These will be reinvested in services and more new homes. ■ Developed 54 homes as part of our new Private Rented Sector offer. We housed more than 4,400 people (through a combination of new build and re-lets), 83% of whom pay a subsidised price. Hyde’s shared ownership
homes are two thirds of the cost of renting or buying a comparable property on the open market and, on average, each home built created 4.5 construction jobs, stimulating local economies. We completed further phases of our sectorleading regeneration schemes on the Packington Estate, Islington; Kender Estate, New Cross; and Stonebridge Estate in Brent. These have contributed, through the work of Hyde Plus, to building thriving and sustainable communities in areas of London which have suffered from under-investment.
Our sector-leading regeneration schemes are building thriving and sustainable communities.
Hyde’s VFM Statement 31 March 2015
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“We strive to build affordable homes to the highest quality standards, minimising costs and maximising value. The money saved pays for more homes for those who desperately need them.” David Gannicott, Hyde Group Director of Business Development
Development VFM initiatives As well as being affordable, we strive to build our homes to the highest quality standards. Hyde’s Design and Quality Panel assesses all new development projects to minimise costs and maximise value. During 2014, we saved £10m on our development programme through improving design and buildability, enough to pay for 50 new homes housing about 200. A Construction Management (CM) pilot project is underway at Prinstead Court in Chichester. CM brings the development consultancy role in house, so instead of employing a main contractor to oversee the development, Hyde staff carry out this work themselves. A saving of £210k is forecast on this scheme of 20 flats and houses, enough to fund construction of two homes. Quality improvements are also anticipated, as Hyde is fully in control of the design process and has a strong quality assurance framework. A new consultancy framework has been created, including architects, employers’ agents and key development partners, who play a major role in the delivery of Hyde’s £900m development pipeline. The agreement is set to save Hyde £2.3m over the next three years – equivalent to £750 for every home built. Since 2013, the Development team has been running MORE (Managing Our Resources Effectively). This initiative helps to create new homes from land and properties Hyde already owns, offering incentives to staff who identify plots with the potential for redevelopment. More than 100 potential sites were identified last year, 22 of which are due to start on site in 2015/16, creating about 200 homes. Hyde is exploring the option of using Modern Methods of Construction (MMC) to complement its traditionally built development programme. MMC uses modular building components manufactured offsite, delivering time savings to the construction process and increased job opportunities. Hyde has developed a MMC framework, currently out to tender, and is also supporting the campaign for these schemes to qualify for mortgage support in the same way as traditionally built housing.
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Hyde’s VFM Statement 31 March 2015
Managing Our Resources Effectively A site in Christchurch Way, Greenwich was originally given over to garages owned by Hyde. However, many were disused, in a poor state of repair and a magnet for antisocial behaviour. The local housing officer identified this as a possible MORE development and following further assessment, Hyde built three houses on the site, providing much needed homes for local families.
One of the highlights of last year, was the launch of our Local Authority Partnering Strategy. By taking a more collaborative approach, we hope to make the best use of public assets to increase housing supply and to tackle estate regeneration in high value areas – with limited or no public funding requirement. Not only will this deliver more affordable homes, it will also generate increased revenue for local authorities.
Future Plans 2015/16 ■ Deliver 1,000 new homes and explore options
to increase the size of Hyde’s development programme to 1,500. ■ Completion of Hyde’s construction management pilot, achieving a 10% reduction in costs and a further roll out of two additional sites. ■ Further exploration of Modern Methods of Construction, assessing the potential to reduce construction time, improve efficiencies and reduce costs. ■ Implementation of Hyde’s three year stock rationalisation strategy to achieve strategic influence within key local authority areas. For 2015/16, stock swaps are being considered in Sussex, Surrey and Kent.
Overall VFM performance against Hyde scorecard
Build More Homes Service Area
Target 14/15
14/15 Value
13/14 Value
12/13 Value
G15 Average
RAG Status against target
Number of new homes for rent
N/A
707
424
539
N/A
N/A
Number of new homes for sale and shared ownership
N/A
296
362
194
N/A
N/A
Increase Capacity Service Area
Target 14/15
Void rent loss as % of rent due
0.80%
General housing rent arrears as % of rent due
4.50%
Interest cover Gearing Operating margin
14/15 Value
13/14 Value
12/13 Value
G15 Average
1.10%
0.80%
1.05%
4.10%
4.20%
3.87%
4.19%
>1.1
1.84
1.38
1.34
=30
29.9%
50.7% (gross)
38.1% (gross)
1.10%
RAG Status against target
29.3%
Deliver Quality Services Service Area
Target 14/15
14/15 Value
13/14 Value
12/13 Value
G15 Average
200
228
208
181
N/A
Financial gains to residents through advice and support
1,600,000
£1,653,169
£1,606,955
£1,850,161
N/A
Overall satisfaction with Hyde services
83%
73%
75%
79%
77%
Overall satisfaction with quality of new home
85%
88%
88%
93%
85%
Overall satisfaction with repairs services
90%
78%
78%
86%
71%
Overall satisfaction with neighbourhood
N/A
80%
80%
80%
82.3%
Overall satisfaction with ASB services
75%
67%
67%
66%
N/A
Residents into jobs
RAG Status against target
Performance challenges We have set ourselves a challenging target to achieve 83% resident satisfaction with Hyde’s services. We currently achieve 73%, just below our peer group average (77%).
Void rent loss is also below target and below peer group average, due to the issues we faced with embedding new repairs contracts over the year. Although the process review has led to Although satisfaction with our repairs service is higher improvements over the last few months, our plans than the peer group average, we are still not where we to establish a central voids team will see this greatly would like to be. Further repairs service enhancements improved for 2015/16. in 2015 should help us reach our target and place us among the top performing housing associations. Hyde’s VFM Statement 31 March 2015
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Developing a 21st century housing service
Over the next two or three years we will begin to develop a new service offer that reflects our diverse customer base better. We will make a distinction between our core ‘landlord’ function, that we need to deliver to all customers, and our discretionary ‘support and advice’ functions, which will be targeted and tailored to specific individuals, groups and communities.
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Hyde’s VFM Statement 31 March 2015
We will improve key customer touch points (lettings, rent payment etc) to ensure effortless service delivery. We will also explore offering differentiated levels of service, linked to costs and dependent on product, affordability and/or customer behaviour, through a resident loyalty scheme. We aim to become a commercially-aware and profitable business that is seen by staff, stakeholders and customers to be reinvesting profits in its core purpose.
❝
Value for money is still as important as ever to Hyde and its residents. Further Welfare Reform, cuts to local services and the roll out of Universal Credit will have a significant impact on residents and communities. We are committed to working in partnership with Hyde to continue to deliver great value for money and get the best possible outcomes for residents.
❞
Estella Magloire, Chair, Hydewide Residents’ Voice
Hyde’s VFM Statement 31 March 2015
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