Value for Money self-assessment

Value for Money self-assessment 2016-17 1

Contents 1. Introduction 2. Our approach to VfM 3. The regulatory requirements 4. How we make the best use of our assets 5. How our operating costs compare to others 6. How we have reduced our costs and invested the savings over the past year 7. Future improvements and cost savings 8. How the board monitors Plus Dane s VfM plans 9. Summary of Plus Dane s compliance with the VfM standard 10. Board s overall self-assessment 2

Plus Dane Housing Annual Value for Money Statement 2016/17 1. Introduction In 2016/17 Plus Dane owned and managed over 18,000 homes across Merseyside and Cheshire, employed more than 700 people, and had an asset value in excess of 592m and a turnover of 94.4m. During the period covered by this self-assessment, Plus Dane provided housing management services for 5,800 homes in Ellesmere Port and Neston, on behalf of Cheshire West and Chester Council. In autumn 2016, following robust due diligence and a thorough cost-benefit appraisal, Plus Dane Boards decided not to pursue the retendering opportunity. The contract was transferred to another registered provider at the end of June 2017. In 2016, Plus Dane underwent an In-Depth Assessment (IDA) by our regulator the Homes and Communities Agency (HCA), the outcome of which was that Plus Dane retained its G2:V2 grading. The HCA recognised a number of improvements since 2013, most notably concerning Board and Leadership Team changes, the introduction of the unitary Board, strategic risk management, and a more structured approach to business planning. The HCA was particularly pleased with the level of self-awareness, in terms of where the organisation is and where it aims to be. There was also recognition that the last two years have been focused on resolving a number of strategic and structural issues, which, had they not been resolved, would have led to significant problems for the organisation. At the end of the IDA review, the HCA highlighted a number of key issues, which the organisation still needs to fully address, including: Further simplification of the organisation s governance; Further stress testing; Implementation of the Assets and Liabilities Register; and Implementation of a number of strategic improvement plans that had been delayed. A detailed action plan has been established that will ensure the changes needed to deal with the above issues are delivered by autumn 2017. The Board has carried out a strategic review resulting in a reaffirmation of the organisation s purpose, 4 strategic goals, and a range of supporting strategies which reflect the organisation s ambitions to continue to improve and deliver value for money. 3

The following working principles, by which Plus Dane operates, help us achieve value for money: Be clear about what we do Get it right first time Communicate well Take responsibility In 2016/17, Plus Dane has continued to strengthen the customer voice in all we do; we have conducted both a broad satisfaction survey as well as a segmentation exercise, which will support our ambition to provide quality and efficient services. This approach is based on a shared and greater understanding of our cost base as well as appreciation of how that links to value-adding improvement. This ensures that genuine efficiencies are delivered, without detriment to service provision, ultimately leading to better outcomes. Looking back to last year s VFM statement we committed to achieving the following: Action Status Deliver the new Customer Access Strategy, improving service through better use of technology Improvements have continued to be made through our Customer First programme; however, the delivery of our ambition has been hampered by the current IT infrastructure that will be fixed through our new IT & Digital strategy and a new housing management system. Carry out service reviews We have completed service reviews of Neighbourhoods and IT; almost completed our review of Finance and will review Repairs within the current year. Conduct a review of Supported Housing A new Supported Housing Strategy was completed and approved in 2017. Complete a full review of office accommodation This was completed and we have full understanding of asset value of our office estate. This information will be taken forward to influence our future office needs. Further simplify our governance arrangements The next stage of our governance evolution is the bringing together our two housing associations. This is expected to complete by the end of September 2017. 4

In this document: Our approach to Value for Money is outlined in Section 2. In Section 3, we highlight the current regulatory requirements and expectations. Section 4 explains how we make the best use of our assets through active asset management. Our costs are compared to other similar registered housing providers in Section 5, and those comparisons are based upon the HCA s Global Accounts of English Housing Associations 2015/16. Section 6 shows how we have reduced our costs and what we have done with the savings. Section 7 highlights our plans for further investment and cost reduction for 2017/18 and beyond In Section 8, we explain how VfM plans are monitored by the Board and Committees. 5

2. Our Approach to VfM As part of our approach to monitoring value for money, our Board review high-level performance, on a bi-monthly basis, as well as conducting a quarterly in-depth assessment. At each meeting, Board seek assurance from the Executive Team that, where there are areas of underperformance, the root cause is clearly understood and that corrective actions are planned and executed. This can be demonstrated in areas such as continuing improved void turnaround and better income collection. We see the setting, management, and control of the Business Plan as key contributors to achieving value for money, and as such, our framework includes the following activities: Board Away Days that assess the operating environment and the capacity and capability of the organisation to respond effectively to any impact on the business; Board visibility of performance across the organisation, based on four strategic elements in our Balanced Scorecard: Financial performance, Customer feedback, Service delivery, and Human resources. An annual business planning cycle that includes budget approval and a 30-year business plan that allows long term projections of financial performance and stress testing; Customer feedback, through independent monitoring and in-house review, resulting in service improvements; Benchmarking our services and performance using the HCA s Global Accounts dataset; Programme of service reviews based on the Regulatory Framework, the cost of provision, and quality of service; Improved approach to procurement, capital, and routine expenditure; Performance Management and reporting, in which annual corporate plan performance indicators are cascaded down through the organisation to individual team members through annual appraisal and target setting procedures; and Tenant and customer engagement is an area we are currently working to strengthen considerably. Our new strategy and framework ensures that we better understand our tenants/customers, and their needs, so that we can focus on the services and tenures that make the greatest impact and so deliver better value for money; we can also better target our efforts to reduce dependency. In 6

addition, we have now established our Tenant Scrutiny Panel with a good crosssection of participants, and we await the outcome of their first review. Figure 2.1, below, demonstrates how Value for Money is woven throughout Plus Dane s normal business practices. Figure 2.1: The VfM golden thread linking VfM to corporate and operational plans Corporate Plan Objectives Business Plan Medium/Long-term Objectives VfM Strategy Budgets Shortterm Objectives Action Plans (Project/ Departmental) Team Targets Individual/ Appraisal Targets 3. The regulatory requirements The HCA has outlined what it expects registered providers to deliver in relation to VfM in its 'VfM Standard', which is summarised in Appendix 1. The contents of this document, and the future action plans, show that the organisation will meet both its business needs and the requirements of the regulator 4. How we make best use of our assets Number and location of our homes Our housing stock currently comprises 13,300 units, within thirteen Local Authorities, in the North West of England. Over 50% of our stock lies within the Liverpool City Region, and the rest is in Cheshire. Age profile of the homes The age profile of our stock splits; 41.29% pre-1964, 32.73% 1965-2002, and 25.99% post 2002. 7

Figure 4.1: The age bands of our homes %age of homes by age band 30.00% 25.00% 25.99% 20.00% 16.88% 15.00% 10.00% 5.00% 13.83% 10.58% 5.87% 4.84% 4.07% 5.42% 12.53% 0.00% Pre 1919 1919-1944 1945-1964 1965-1973 1974-1980 1981-1989 1990-1994 1995-2002 Post 2002 Figure 4.2: Stock profile by unit type Bedspace, 1.16% Garage, 3.84% Maisonette, 0.12% Commercial, Bedsit/Studio, 0.13% 0.55% District Office, 0.17% Bungalow, 12.54% House, 56.21% Flat, 25.17% 8

Figure 4.3: Stock profile by number of bedrooms 5 Bed, 0.12% 4 Bed, 2.97% 6 Bed, 0.03% 0 Bed, 4.83% 1 Bed, 17.41% 3 Bed, 31.83% 2 Bed, 42.82% Two and three bedroom homes make up over 74% of the organisation s stock. Figure 4.4: Profile by tenure type Other Staff Accom Discounted for Sale Commercial Extra Care Office Managed Market Rent General Needs AST Leasehold Supported Garage Shared ownership Sheltered General needs Percentage of housing stock by tenure type 0.01% 0.02% 0.08% 0.10% 0.13% 0.15% 0.07% 0.86% 1.68% 3.08% 3.15% 3.95% 4.59% 11.05% In terms of tenure, 70.42% of our stock is classed as general needs. 70.42% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 9

Through our ongoing Routes to Growth work we will identify by geography, unit type, number of bedrooms, and tenure the type of stock in which we wish to develop and invest over the next 3-5 years. We will ensure that we are mitigating the risk presented through welfare reform and aim to address properties which, due to financial or neighbourhood sustainability reasons, no longer meet the needs of the business or its tenants. We have sustained our sheltered and supported housing stock numbers in 13 schemes and are planning a review of investment to maintain this stock. This will allow tenants to maintain their independence for longer durations, in their homes. Managed Properties Included in our portfolio are a small number of managed properties. Over the last 12 months we have significantly reduced this number of properties by circa 5,000 through the decision not to re-bid on the Ellesmere Port and Neston management contract. Non-Housing Assets In addition to housing stock, we are responsible for a small quantity of non-housing assets. We currently have six offices, of which five are owned and one leased. We have a strategy to rationalise this number and, by March 2018, the organisation will have produced a fully costed Corporate Accommodation Strategy to enable the organisation to deliver the following key objectives: One centralised office which provides staff with a modern working environment and that facilitates mobile and agile working, where appropriate; Reduced operating costs by occupying a single head office with satellite offices, where required, to meet customer needs; Generation of capital receipts by selling the buildings owned by Plus Dane which are no longer required or viable; Increased satisfaction of staff with workplace; and A reduced carbon footprint and more energy efficient, environmentally friendly office, close to transport links that support the retention and recruitment of staff. Understanding the returns from our assets In 2015, we invested in an asset performance model which evaluated and graded stock based on a combination of its contribution to surplus and neighbourhood sustainability indicators. Following the implementation of the 2015/16 NPV model, we developed an options appraisal model, which, during 2016/17, allowed the organisation to evaluate alternative uses of stock in Class C (i.e., the homes with negative NPVs). In 2016/17, this resulted in the disposal of 13 properties. During 2017, the organisation reviewed both of these models and implemented a revised and updated version, which takes account of the following factors: The rent reduction regime; Net present value of individual properties over a 30 year period; and 10

Updated sustainability indicators. It is expected that this refresh of the NPV model will reduce the number of schemes currently showing negative net present values. This information will be used to allow the organisation to appraise the impact of poor performing stock, at both a scheme and neighbourhood level. This will enable the organisation to take strategic decisions about the future of investment or disposal of homes, based on both financial performance and the impact on each neighbourhood. Ongoing investment Plus Dane was formed in 2008, following a merger between Plus Housing Group and Dane Housing (originally a stock transfer from the Cheshire East local authority). Stock previously managed by Plus Housing has been subject to more traditional investment programmes, annually, with major components replaced based on the condition of stock and tenant priorities. Stock managed by Dane Housing was subject to a more whole-house approach in order to bring under-invested stock up to the Decent Homes Standard. This brings challenges and risks, particularly in relation to peaks in investment programme requirements and demands on cash-flow. The simplification of the group structure will allow us to take a more holistic view of the resources that are available for the planned maintenance program which will enable the organisation to target budgets at the stock which requires investment, and to review units which are having a negative financial impact on resources. The costs of investment over the next 30 years has been incorporated into our planned maintenance budgets and reconciled against the 30-year Business Plan capacity. The 30-year Business Plan has resources totalling 598.5m (i.e. 425.7m at current prices), allocated to major and capitalised repairs, which matches the sum identified in the stock condition survey. 5. How our operating costs compare to others Plus Dane uses the HCA s Global Accounts (consolidated) dataset to assess how its costs and performance compare to other 'similar' social housing providers. The following organisations have been identified as Plus Dane s peer group, as they offer similar services to Plus Dane and/or operate in the same geographical locations. 11

Figure 5.1: Peer Group RPs information generated from the HCA s 2015/16 dataset (Consolidated) RP Name Number of homes managed Headline CPU per social home k Great Places Housing Group Limited 16,996 3.06 Knowsley Housing Trust 13,497 3.12 Regenda Limited 12,815 3.20 New Charter Housing Trust Limited 20,026 3.25 Liverpool Mutual Homes Limited 15,189 3.35 One Vision Housing Limited 12,351 3.44 Plus Dane Housing Group Limited 12,890 3.46 Together Housing Group Limited 35,353 3.51 Symphony Housing Group Limited 35,474 3.55 Wirral Partnership Homes Limited 12,503 3.57 Your Housing Group Limited 32,472 3.87 Bolton at Home 17,924 4.07 Rochdale Boroughwide Housing 13,477 4.14 ForViva Group Limited 17,550 4.34 First Choice Homes Oldham Limited 11,664 4.49 From the HCA s Global Accounts dataset (consolidated), five key cost comparison measures (i.e. Cost per Unit (CPU)) are generated: 1. Management CPU 2. Service charge CPU 3. Maintenance CPU 4. Major repairs CPU 5. Other social housing costs CPU The bar charts below show the comparison figures for Plus Dane Group and its two subsidiaries against its peer group and the HCA s median figures, which are the sector s benchmark figures. Figure 5.2: Management CPU Management CPU - 2015/16 1,400 1,200 1,000 800 600 400 200-941 Symphony Housing Group Limited 1,003 1,020 Liverpool Mutual Homes Limited Median 1,077 Plus Dane Housing Group Limited 1,157 Peer Group As can be seen from the above bar chart Plus Dane Group s management costs are slightly below its peer group, but are 5.6% higher than the median benchmark. 12

Figure 5.3: Service Charge CPU Service charge CPU - 2015/16 400 350 300 250 200 150 100 50-203 Liverpool Mutual Homes Limited 239 Plus Dane Housing Group Limited 269 Peer Group 338 Symphony Housing Group Limited 360 Median Plus Dane Group s service charge costs are lower than the peer group s CPU, as well as the median benchmark. Figure 5.4: Maintenance CPU 1,400 1,200 1,000 800 600 400 200-881 Liverpool Mutual Homes Limited Maintenance costs - 2015/16 966 970 976 Plus Dane Housing Group Limited 1,318 Median Peer Group Symphony Housing Group Limited Plus Dane s maintenance costs are in line with its peer group and the benchmark median figure. 13

Figure 5.5: Major Repairs CPU Major repairs - 2015/16 1,400 1,200 1,000 800 600 400 200-784 810 Symphony Housing Group Limited Median 869 Plus Dane Housing Group Limited 976 Peer Group 1,225 Liverpool Mutual Homes Limited Plus Dane s major repair costs are below its peer group but higher (7.2%) than the median benchmark figure. Figure 5.6: Other costs CPU 350 300 250 200 150 100 50-39 Liverpool Mutual Homes Limited Other social housing costs - 2015/16 170 Symphony Housing Group Limited 210 248 311 Median Peer Group Plus Dane Housing Group Limited Plus Dane s other costs are higher than its peer group and the benchmark median figure. Included within other social housing costs are Supporting People and Careline service costs. Within 2015/16, overheads have also been apportioned to these operations, depreciation on leased properties, as well as abortive development costs. This is a difficult CPU to compare with other organisations as there is not a common methodology for the costs that should be allocated to this heading. 14

Figure 5.7: Total CPU 3,650 3,600 3,550 3,500 3,450 3,400 3,350 3,300 3,250 3,200 3,350 Liverpool Mutual Homes Limited 3,462 Plus Dane Housing Group Limited Total CPU 3,550 Symphony Housing Group Limited 3,570 Median 3,625 Peer Group Overall, Plus Dane s total CPU (2015/16) was 163 lower than its peer group and 108 lower than the benchmark median figure which demonstrates that the organisation is controlling its cost base and delivering the targets set in its VfM strategy and Corporate Plan. Key Operating Metrics In addition to comparing the CPU figures, Plus Dane also monitors a number of Key Operating Metrics, which are detailed below. Figure 5.8: Key Operating Metrics Key metric 2016/17 2015/16 Operating surplus margin % 27% 21% Earnings before interest, tax and depreciation % 40% 35% Headline operating cost per unit ( ) 2,505 2,735 Social lettings cost per unit ( ) 3,084 3,462 Operating surplus on social housing lettings % 35% 29% Return on capital employed % 4% 3% Capital investment in existing homes ( m) 6.4 6.9 Investment in completed new homes ( m) 12.7 8.6 Number of new homes delivered 114 109 Gearing 1 - Plus Dane Merseyside 68% 73% Interest cover 2 235% 188% Debt per unit owned ( 000) 23 24 1 Gearing is based on gross loans as a percentage of grant plus reserves and is calculated for Plus Dane Merseyside 2 Based on adjusted operating surplus (operating surplus plus housing depreciation less component replacement spend) divided by gross interest payable 15

The organisation has improved its financial performance across these key operating metrics during 2016/17: The operating surplus for the year, as a percentage of turnover and earnings before interest, tax, and depreciation, has increased. This improved position is due to reduced operating expenditure, primarily on social lettings, and also an improved position in relation to the Ellesmere Port & Neston management contract. Debt per unit has reduced due to loan repayments, which, combined with continuing low interest rates, has reduced our interest costs; The increase in operating surplus and reduction in interest costs has also led to an improved interest cover ratio; Gearing has reduced to 68% (based on Plus Dane Merseyside only 3 ) due to loan repayments and the increase in reserves during the year; and We have invested 6.4m in our existing homes and a further 12.7m in new development, delivering 114 completed new homes. 6. How we have reduced our costs and invested the savings over the last year Figure 6.1 shows the movement in our operating costs for the last two financial years. Figure 6.1: Social lettings costs per unit 2015/16 vs 2016/17 Social lettings costs per unit 2016/17 2015/16 Movement Management cost 906 1,077 171 Maintenance cost 994 966 (28) Total management & maintenance 1,900 2,043 143 Service costs 248 239 (9) Major repair (revenue & capital) costs 684 869 185 Other social housing costs per unit ( ) 252 311 59 Total social lettings cost per unit ( ) 3,084 3,462 378 Rent loss percentage 1.6% 2.4% 0.8% Compared to the previous year, we have demonstrated value for money in a number of areas; however, we will continue to target other areas, such as maintenance and corporate services costs: Our management costs have reduced by 171 per unit = 2.2m (16%). This is due to savings resulting from service reviews, across the organisation, that have led to a reduction in staff costs; 3 Plus Dane Cheshire w as originally a large scale voluntary transfer, w hich traditionally have a high level of debt that is gradually repaid over the life of the Business Plan. Gearing is therefore not measured for Cheshire as part of the loan covenants w ith funders 16

Other social housing costs have reduced by 59 per unit = 0.7m (20%), and this is mainly due to a reduction in Supporting People contract costs of over 0.5 million; Improved performance in relation to voids and lettings has reduced our losses from rent by 0.5m; Our service costs per unit have remained at a similar level; Our major repairs expenditure has reduced by 185 per unit = 2.4m (21%), with a significant reduction in major repair costs charged to revenue. The amount invested in our properties, and charged to capital, has also reduced by 0.5 million; and Our maintenance costs have increased by 28 per unit = 0.4m, which is equivalent to 3%. Improving VfM in this area will be a key aspect of a review of the in-house maintenance activity (DLO). Efficiencies delivered in 2016/17 analysed by Directorate In 2015, Plus Dane held a Board Away Day with the objective of developing a planned savings programme to improve efficiency and mitigate the impact of the impending four-year rent reduction, as well as wider welfare reform measures. The overall savings plan target was 7 million over four years. In 2016/17, the savings targets built into the budget were to deliver a net surplus of 5.6 million, representing an improvement on the previous year s budget of 3.4 million. The actual net surplus for 2016/17 is 8.3 million, representing net savings delivered against the 2015/16 budget of 6.1 million. The savings and efficiency plans have been tracked across the three main Directorates, as well as for the Ellesmere Port & Neston management contract. The table (Figure 6.2) below shows the actual outturn delivered in 2016/17, and the net savings that resulted from this compared to the 2015/16 baseline budget. 17

Figure 6.2: 2016/17 outturn and savings actuals vs the 2015/16 budget 000 Income/ (costs / adverse movements) 2016/17 actual (A) 2016/17 Budget (B) 2015/16 budget (C) Actual net saving in 2016/17 compared to 2015/16 budget (A-C) 000 s 000 s 000 s 000 s Neighbourhoods (5,311) (6,318) (6,814) 1,503 Assets (13,137) (12,443) (14,697) 1,559 Corporate Services Ellesmere Port & Neston 26,350 24,334 23,760 2,590 343 58 (26) 369 Total net surplus 8,246 5,630 2,224 6,022 We have set out below some examples of the efficiencies achieved in 2016/17, for each area of the business compared to the baseline budget for 2015/16, as well as noting areas where costs have increased. Neighbourhoods Reduced staff costs resulting from restructures totalling 1,180k; Reduction in strategy & project costs 220k; Reduction in void Council tax costs 135k; Reduction in environmental works costs 115k; Reduction in community safety costs 75k; Reduction in Careline alarm costs 50k; Reduction in ASB legal costs 20k; Reduction in utility costs 15k; Reduction in tenant reward scheme & compensation costs 15k; Reduction in ground rents & other small movements 65k; Reduction in housing management contract costs 140k; Netted off this, there was a reduction in Supporting People income of 525k. 18

Assets Reductions in planned works such as cyclical costs and adaptations of 1,155k; Increased Help to Buy income and reduced marketing costs totalling 585k; Reduction in DLO costs including reduction in number of vehicles, reduction in materials costs, savings from the closure of a depot and savings from a new supplier for equipment, totalling 405k; Reductions in responsive repairs & voids and gas servicing of 310k; Increased income for Homes Hub team including increased management fee income and income from property sales totalling 175k; Reduced staff costs resulting from restructures totalling 140k; Reduction in facilities costs for offices including utilities, repairs and other office costs totalling 115k; The above savings/increases in income were partially offset by increased costs totalling 800k in areas such as disrepair claims, Include grounds maintenance, non-recoverable service charges from managing agents, costs in relation to commercial voids and reduced development fee income, plus a reduction in capitalised reinvestment costs of 500k. Corporate services Reduced interest and financing costs of 1,580k; Reduced policy & development and legal costs totalling 920k; An improvement in the bad debt provision totalling 910k; Net positive movements in accounting adjustments, such as grant and depreciation, totalling 870k; Reduced Corporation tax of 530k; Reduced staff costs resulting from restructures and unfilled vacancies totalling 410k; Reduction in IT costs of 345k, due to deferred projects and reduced hardware costs; An increase in net rental income of 280k, partly due to the reduction in rent loss from voids; Increased VAT recovery totalling 55k; Reduced legal & tribunal advice costs 50k; Reduced subscription, legal and quality assurance costs 30k; 19

Netted off this were increased costs for professional services of 120k, including internal audit and special reviews and one-off uncontrollable costs of 3,270k relating to pensions and other FRS102 adjustments. Ellesmere Port & Neston Reductions in IT, office, pension related and strategy costs, partially offset by increases in legal and property costs, giving a net saving of 370k. How the savings were used The net savings realised in 2016/17 ( 6m see Figure 6.2) have been used to fund the development programme which delivered 93 new affordable rent, intermediate rent and shared ownership homes, in addition to 21 new homes for outright sale. Impact on services Whilst we have made significant improvement in the financial position of the organisation, this has not been to the detriment of service delivery. Customer satisfaction with neighbourhoods (90%), landlord services (90%) and the quality of the home (92%) have remained the same as previous years and on target. Income collection rates have improved to 100% compared to last year. Lost income on empty properties has reduced from 1.87% to 1.34%. Percentage of properties with a valid gas safety certificate was 99.99%. 7. Future improvements and cost savings As shown in Section 5, our headline CPU costs are falling see Figure 7.1 below: Figure 7.1: Plus Dane headline CPU 2015/16 vs 2016/17 20

4,000 3,500 3,000 Plus Dane CPU 2015/16 and 2016/17 3,462 3,084 2,500 2,000 1,500 1,000 500 - CPU 2015/16 CPU 2016/17 For long-term business planning purposes, our budgeted costs are in line with the 2015/16 outturn CPU figures. The diagram (Figure 7.2) below shows the headline CPU (at current prices) over the next 10 years: Figure 7.2: Projected CPU 3,600 Projected CPU for the next 10 years at current prices 3,500 3,400 3,300 3,200 3,100 3,000 1 2 3 4 5 6 7 8 9 10 To further improve VfM, over the short to medium term, we will: 21

Simplify our legal structure, which will allow us to optimise our tax position, lever resources much more effectively, and improve our borrowing capacity to deliver additional new homes; Drive out procurement savings through the establishment of a strategic procurement team that co-ordinates all procurement activity for the business from a central hub; Deliver further savings as a result of service reviews, including Finance and IT; Deliver improvements in productivity and efficiency through the DLO review; Optimise income through the Service Charge Review project, which will ensure service charges are consistent, fair, and reasonable and that all costs are recovered from those tenants and customers who benefit from the services they receive; and Develop a comprehensive asset management plan based on a new Plus Dane Standard of investment. The plan will maximise efficiencies through competitive procurement processes and streamlining investment into component-based and geographical work packages. The Business Plan does not factor in the further improvements in VfM that are anticipated through the improvement projects, as these are not at a stage to be able to quantify the savings. We therefore anticipate these projects will deliver further savings over and above the Business Plan assumptions. The above actions will deliver savings that will add to Plus Dane s development capacity. Over the next 5 years, the committed development programme includes 718 units, plus a further 480 units in the pipeline programme. The investment in the committed development programme and schemes that are already progressing is 55 million over the first four years of the business plan which is supported by 9 million of grant. Pipeline development accounts for a further 56 million between year three and five, supported by 17 million grant. 8. How the board monitors Plus Dane s VfM plans Plus Dane operates as a single Board, across all entities, and is supported by four Committees, each with specific terms of reference and a particular focus on scrutinising targeted strategic objectives and delivery. Figure 8.1 illustrates the approach: Figure 8.1: Plus Dane s governance structure 22

Plus Dane Board Audit & Risk Committee Governance & Nominations Committee Property Committee Neighbourhoods Committee Performance is reported to Board using a Balanced Scorecard that monitors the Big 4 Strategic Objectives. In addition to the performance indicators, contained within the Scorecard, the overall assurance report includes sections on risk and progress against our Work and Improvement Programme. This is detailed at a more granular level for Committees to scrutinise. Each formal report includes a section titled Financial and Value for Money Implications which authors are requested to complete. 9. Summary of Plus Dane s compliance with the VfM standard To demonstrate delivery of value for money, we are required by our regulator to produce this self-assessment. The HCA s Value for Money Standard provides specific expectations that must be met in order to be considered compliant. These are shown below, together with a summary of the evidence we believe demonstrates our continued compliance; referencing the section of this document which provides more comprehensive commentary. Figure 9.1: HCA VfM compliance expectations VfM Standard Have a robust approach to making decisions on the use of resources to deliver the provider s objectives, including an understanding of the trade-offs and opportunity costs of its decisions. Evidence Section 1 outlines the decision to stop the Ellesmere Port and Neston management contract. Section 2 outlines our approach to VfM and the golden thread. Section 4 shows that the asset appraisals we undertake have led to 13 property disposals. 23

Understand the return on its assets and have a strategy for optimising the future returns on assets including rigorous appraisal of all potential options for improving value for money, including the potential benefits in alternative delivery models measured against the organisation s purpose and objectives. Have performance management and scrutiny functions which are effective at driving and delivering improved value for money performance. Section 4 outlines the asset appraisals undertaken in 2016/17 and the plans to refresh the NPV model we use. The appraisal process also considers other issues such as neighbourhood sustainability. Section 6 details the change in our cost base in 2016/17 and the savings made. Understand the costs and outcomes of delivering specific services and which underlying factors influence these costs and how they do so. Section 5 compares our costs to similar registered housing providers and we compare favourably with them. Section 5 also shows our operating measures and the trend over the last year which on the whole are again favourable. Publish a robust self-assessment, on an annual basis, which sets out in a way that is transparent and accessible to stakeholders how they are achieving value for money in delivering their purpose and objectives. The assessment shall: Enable stakeholders to understand the return on assets measured against the organisation s objectives. Set out the absolute and comparative costs of delivering specific services. Evidence the value for money gains that have been and will be made and how these have and will be realised over time. See sections 4 and 5. See sections 4 and 5. See sections 6 and 7. 10. Board s overall Self-Assessment Given the evidence provided in the above table and wider content of this selfassessment, we are of the opinion that we comply with the HCA VfM Standard. An accessible version of this self-assessment against the HCA s VFM regulatory standard will be available on http://www.plusdane.co.uk. 24

Appendix 1 The HCA s Economic Standard 1 Required Outcomes 1.1 Registered Providers shall articulate and deliver a comprehensive and strategic approach to achieving VfM in meeting their organisation's objectives. Their boards must maintain a robust assessment of the performance of all their assets and resources (including for example financial, social and environmental returns). This will take into account the interests of and commitments to stakeholders, and be available to them in a way that is transparent and accessible. This means managing their resources economically, efficiently and effectively to provide quality services and homes, and planning for and delivering on-going improvements in VfM. 25

2 Specific Expectations 2.1 Registered providers shall: - Have a robust approach to making decisions on the use of resources to deliver the Provider's objectives, including an understanding of the trade-offs and opportunity costs of its decisions - Understand the return on its assets, and have a strategy for optimising the future returns on assets including rigorous appraisal of all potential options for improving VfM including the potential benefits in alternative delivery models - measured against the organisation's purpose and objectives - Have performance management and scrutiny functions which are effective at driving and delivering improved VfM performance - Understand the costs and outcomes of delivering specific services and which underlying factors influence these costs and how they do so. 2.2 Registered Providers' boards shall demonstrate to stakeholders how they are meeting this standard. As part of that process, on an annual basis, they will publish a robust self-assessment which sets out in a way that is transparent and accessible to stakeholders how they are achieving VfM in delivering their purpose and objectives. The assessment shall: - Enable stakeholders to understand the return on assets measured against the organisation's objectives - Set out the absolute and comparative costs of delivering specific services - Evidence the VfM gains that have been and will be made and how these have and will be realised over time. 26