Value for Money

Statement

In this section we set out our approach to value for money across our operations, demonstrating our commitment to provide good quality, efficient services as well as our compliance with the Regulator for Social Housing (RSH) value for money standard.

Our approach to Value for Money

To maximise our delivery against this purpose, we have four strategic objectives;

delivering more homes – playing our part in solving the crisis through the development of affordable homes across a range of tenures in our locality;
a well-run social buisness – ensuring that we maximise our financial capacity while continuing to ensure that we remain stable and viable as well as being a partner of choice to our stakeholders
delivering good services – being known for good customer service and the ability to deliver solutions; using data insight together with customer and colleague feedback; and
being a place where colleagues love to work – to be the ‘go to’ place towork in our geographic area.

In recent years, our approach to value for money has been about how we effectively plan, manage and operate our business so that we maximise our resources in pursuing our purpose. It enables us to understand our core business costs while making sure any future activity or undertaking by settle is considered with a focus on value for money outcomes. Our risk assurance framework enables us to manage the risks we take as effectively as possible.

We also embed value for money through key strands of activity across the business:

(a) Good Governance

We operate a clear scheme of delegation within our financial regulations and operating rules and have a clear approach for reporting financial decisions to our boards. The Audit and Risk Committee is responsible for in-depth examination of risk management and reviewing internal and external audit findings.

(b) Financial Management

Robust financial management arrangements are embedded within our operating rules and financial regulations. These include approved levels of financial delegation, our budget setting and variation processes and procurement limits. Annually, capital and revenue budgets are developed by the Executive Team and submitted to Board for approval. Budgets are set in line with the Group’s 30-year business plan to ensure we deliver our objectives whilst meeting loan covenants and our treasury management ‘golden rules’.

These golden rules set out that key investment decisions, for example, new developments and capital projects, must be supported by a financial appraisal which details the return expected on investment. All budgets are monitored by the budget holder with variations from profiled expenditure scrutinised as well as any changes to projected out-turn. Quarterly reforecasts of the budget position are undertaken and reported to Board.

Our financial regulations outline the framework for achieving value for money when procuring goods and services, for example, tendering, e-procurement and assessment criteria including social value and environmental sustainability gains. A cross-organisational Procurement Panel is in place to ensure that procurement is undertaken appropriately.

(d) Asset Management

We operate an asset performance model to effectively manage our asset base at settle, which takes into account a series of cost and performance data around our stock. Reviews are undertaken to address under-performing stock. Options would include reinvestment, change of tenure type or disposal. Any decisions are discussed at colleague-led groups before they are formally approved at Executive Team or Board depending on the scale of the proposal.

(e) Customer insights and experience to drive good outcomes

We believe that a value-for-money customer experience is one that commands high trust with minimal effort to access the services we provide. We are committed to listening to our customers’ views and designing and improving services as a result. Our internal culture of continuous improvement ensures colleagues understand that the views of customers are integral to how we drive improvements in outcomes. We report on survey results and our sector benchmark position quarterly.

During the year, we have used our customer experience advisory panel – a group of customer experience professionals from a range of sectors who provide challenge and support about how settle can continually improve the service we deliver to our customers. This approach has been in place over the last four years and is currently being adapted so that we move towards a more resident- led approach.

(f) Performance Management Our Annual Delivery Plan outlines what actions are in place during the year to help meet our strategic objectives. Performance against objectives is monitored through key performance indicators presented to each Board meeting quarterly. The key performance indicators are a balance of cost and outcome measures so that there is a comprehensive oversight of the economy, efficiency and effectiveness of services.

(g) Risk Management

A Risk Assurance Framework is in place that helps Board and senior management to identify the key risks facing the budget and the mitigations in place to reduce the scale of risk.

Effective risk management requires clarity in the key controls in place to mitigate the risk and the assurances that are being used to provide satisfaction that the control environment is effective. A fundamental aspect of good risk management is ensuring that we have a strong internal control environment in place. Key controls include ensuring clear policies and procedures are in place, effective training is provided for colleagues to undertake their role and timely and accurate reporting is presented to senior leaders and Board. We gain assurance through a series of management and independent arrangements. Independent assurance is gained through a risk based Internal Audit programme as well as the use of specialist third parties where appropriate.

We conduct a regular review of our customer complaints and perform quarterly root cause analysis that is shared with our service leads. In understanding why things go wrong we can address the issues, minimise the risk of repeat and improve the services we provide.

(h) Developing our People

We have continued to develop our people and reward strategy to ensure settle is able to attract, recruit, develop and retain the right mix of talent, experience and competence to deliver our purpose and the experience we want our customers to have of settle.

To deliver value for money is an integral part of our corporate ethos and values. To do this we need to ensure that everybody at settle has the understanding and opportunity to make this a reality through our learning and development framework.

This approach has underpinned a cycle of service provision reviews to ascertain whether the appropriate balance of effectiveness, economy and efficiency is being achieved. Examples of this approach are summarised here:

Analysis of the cost and effectiveness of settle’s IT infrastructure led to a project that has sought to move our server infrastructure away from our managed service provider to an internally hosted solution through Microsoft Azure. This project also included strengthening our infrastructure through introducing security measures to mobile devices (e.g. multi-factor authentication) and introducing the ‘Always on’ VPN application across the business. This project commenced in 2020 and upon completion will result in a stronger infrastructure and ongoing revenue savings of approximately £120k per annum.
Treasury savings – during 2020 we completed our renegotiation of our £137m syndicate loan. Negotiations enabled us to retain embedded value through sub-market rates, albeit at a small increase in cost to the existing facility, but in return for increase in on-lending limits and other covenant changes. This underpins our ability to invest 10% of our development pipeline in market sale homes through Rowan Homes over the life of our strategy and creates further capacity to deliver new homes.
During the year we have improved our procurement processes. Through a smarter approach to procurement we have saved approximately £600k during the year and £2m over the life of the contracts, including renewing utility contracts and boiler maintenance contracts.
Repairs end to end process review – during 2020/21 we undertook a full review of our repairs service with the aim to improve the overall customer experience around repairs and maximise efficiency within the service. This delivered process efficiencies as well as introducing more efficient technology to our repairs process, providing customers with a better end to end process.

Measuring Performance

During 2020/21, we have measured our performance through a suite of performance indicators that, along with a set of targets, have been approved by Board. The indicators have been selected as they are considered to be the lead indicators of delivery against our four strategic objectives and performance against them is reported back to Board at each meeting.

A summary of the 2020/21 performance is in the tables below:

2020/21 Sector Scorecard metrics

settle also monitors its performance against the Sector Scorecard both in terms of its year-on-year performance and in comparison to other housing associations working in the locality. Performance is highlighted in the table below:

ii This is the Global Accounts median benchmark average for Housing Associations over 1,000 units with 50% of their stock within the East of England

iii This is the Global Accounts benchmark average for similar housing associations in our locality (defined as LSVT housing associations operating primarily in Hertfordshire and/or Bedfordshire). Housing associations used are settle Group, B3 Living, Thrive Homes and Watford Community Action Trust.

iv This is the benchmark average for similar housing associations in our locality (defined as LSVT Housing Associations operating primarily in Hertfordshire and/or Bedfordshire). Housing associations used are settle Group, B3 Living, Thrive Homes and Watford Community Action Trust based on 2020/21 unaudited financial statements.

Key Performance Indicators:

Business health

Our operating margins (SHL & overall) have remained broadly in line with the previous year’s performance and compare positively to the latest global accounts’ averages. With almost 90% of our stock being social rent, there is a natural impact on the level of operating margin we can reach and therefore we are comfortable that our margin performance represents settle’s core financial strength. This has been backed up by the review of our private credit rating from S&P undertaken during 2020/21.

Our EBITDA-MRI interest cover remains above the sector average. While this is not a financial covenant of ours, we monitor this figure closely and continue to perform well vs the regional benchmark.

Development capacity and supply

Our gearing has improved as a result of reducing the amount we have borrowed while simultaneously adding to our asset base. This puts us in a good position from which to launch our new ambitious development strategy and is well within our covenant level. Our development strategy has shifted focus to deliver at least 90% affordable delivery. Our metric of new supply delivered is below the regional benchmark currently but will improve as we build our pipeline sustainably to deliver 1,500 homes throughout the next five years.

Outcomes delivered

Investment in our homes has remained high in 2020/21 despite the impact of the pandemic. This will continue to rise as we consciously invest in ensuring our homes are safe and environmentally friendly.

Effective asset management: ROCE

Our ROCE remains strong, emphasising the robust economic fundamentals of our operations.

Operating efficiencies: Cost per unit

Our cost per unit has fallen during 2020/21 and this was predominantly driven by a reduced capital maintenance cost per unit. While some procurement efficiencies have been achieved during the year for asset components, the main driver of this reduced spend was the pandemic, which reduced the level of capital maintenance spend. It is likely that capital maintenance cost per unit will rise during 2021/22 as we consciously continue to invest in assets, and this will see an overall increase in our cost per unit figures.

Next steps

Our approach to Value for Money has remained the same throughout 2020/21. This is best demonstrated by the diagram below:

The Board receives cost per unit effectiveness measures within the management accounts report at each board meeting. Board also receive an additional deep dive into the value for money provision of services to identify what service reviews should be undertaken.

Along with staff full time equivalent (FTE) numbers, these indicators will measure the cost of providing our core services. We are committed to reducing central overheads as a proportion of turnover to 10% over the next five years; in 2020/21 this was 13.8% in line with previous years and a strong performance given that the pandemic impacted upon expected turnover levels.

Through this cost analysis, coupled with our performance data and risk appetite statement, we will identify areas of service provision that we will review to ascertain how improvements to value for money can be made – this will continue to include identifying whether or not settle should be providing the service.

Customer Engagement

At settle, we are here for our customers and want to deliver excellent landlord services while also being more than just a landlord. We know that the only way we can do this is to really understand what residents value – how we’re performing and maintaining a relationship with our residents that is based on trust and where we are equals. During 2020/21 we have engaged with our customers to seek insight via a variety of methods including:

quarterly ‘Big Check In’ engagement with customers where colleagues from across the business met or spoke to nearly 1,700 customers on a variety of issues to help gain insight, which in turn will shape the services we provide and the investments we need to make;
a bi-annual survey with the Institute of Customer Service, where we gather insights and benchmark our standards against other HAs and other organisations outside of the housing sector;
real-time surveys around our repairs service, new tenancy, end of tenancy and our market sales.

During the year, we continued to use an external panel (The Customer Experience Advisory Panel) made up of respected people in customer service across all sectors, which we present to in order to gather outside input. During 2021, we have been adapting this model and are moving toewards a more resident-focussed approach.

Through these sources of feedback, we learned that we needed to improve our communal spaces and during 2020 we changed our estate services contract to offer a more consistent service across the board with a greater focus on performance management. We also heard from our customers that there was frustration around issues getting lost within the system where our response involved more than one team. We have responded to this by strengthening our case management system to ensure that all contacts within the business can be clearly tracked.