Value for Money Statement 2014/15
1.0Definition
Value for money for Soho Housing means that:
- We are delivering our mission
- We have a large majority of very satisfied customers in a range of delivery areas
- We are financially sustainable
- Our costs compare well with other housing organisations
- We are becoming more efficient, which means having the same outcomes for reduced resources applied or better outcomes for the same resources applied.
In order to demonstrate value for money we must have metrics which can show that we are achieving the above.
This statement sets out how Soho Housing can demonstrate where we are meeting the criteria which we believe indicate Value for Money is being achieved, the areas where there is room for improvement and an action plan which shows how and when we will be addressing those areas.
2.0Purpose and mission
Based in the heart of one of the world’s greatest cities, we are in the unique position of owning and managing homes at social and affordable rents for members of the local community: Since the 1970s we have sought – and fought – to protect and preserve residential accommodation in the West End. Now, more than ever, our mission is to acquire and develop more homes to ensure that we have a balanced community of homes and local businesses in the centre of a capital city with extreme land value pressures.
Anyone working for or on behalf of Soho Housing needs to understand not only the day-to-day functions of the housing association but also have knowledge and understanding of the sense of history and community in the local area. In addition, we should all understand that diversity in the area is not just about the men and women here, but more about shared attributes, perspectives and commitments. Central London villages, like Soho, Covent Garden, Fitzrovia, Bloomsbury and Victoria, are places where families have lived for generations, and continue to work and raise their children; a place where families and friends support each other.
We continue to seek out team members, shareholders and Board members with the expertise, knowledge, judgement and above all the passion to help sustain this unique area, so that we can continue to supply an increasing number of quality homes, at rents people in the community can afford, for people with strong local connections and who are in housing need.
We are an organisation that joins forces with other causes (such as the Soho Society and other local groups) that share in the aim of fighting to preserve social and affordable homes and develop new ones as well as challenging planning applications for other developments which may pose a threat to local communities.
2.1Self assessment
The shareholders and the board have been clear that while it remains financially viable to retain the 770 social rented units that should be a priority for Soho Housing. In this way Soho Housing have not adopted affordable rents for properties in existing ownership. However for new S106 opportunities in management or ownership the short form agreement is being entered into to enable additional delivery of affordable housing in our heartland. It is understood that not adopting affordable rents reduces the return on a large part of the housing stock and the decision has been made in that knowledge.
Soho Housing has worked hard to develop new affordable rented homes and delivered 5 new homes in Hanway Place and 2 new homes in Whitehall. It is with disappointment that the site in Mora Street, Islington, purchased in 2012/13 which could have delivery a further 11 affordable homes, is currently being disposed of due to planning difficulties which made it uneconomic to bring forward. We do have a pipeline to deliver an additional unit in Whitehall and 7 additional units in Greek Street. Soho Housing has an ambition to deliver more new affordable housing in Soho and its other areas of operation and this is an area for improvement.
Soho Housing is working in partnership with a number of landowners;Capital and Counties, Dolphin Square Foundation and Soho Estates, helping them to deliver affordable housing that they would otherwise choose to provide through commuted sums, in this way improving the amount of affordable housing in Soho and the West End.
Soho Housing is thoroughly engaged with the community. Our 70 shareholders are 50% residents and the remaining 50% have strong links with the area and are actively engaged. There have been 7 informal meetings between shareholders and board this year working towards reforming governance arrangements and enhancing engagement with shareholders. The Soho Housing Chief Executive is a Trustee on the West End Community Trust which is a charity serving the community in Soho. The Soho Steering Group which is the Council’s liaison body with the Soho community, both business and residential, is hosted at the Soho Housing office and Soho Housing is at the heart of the process to form a Neighbourhood Panel for Soho working with other stakeholders and the Soho Society. It is recognised that the work on reforming our governance arrangements is not complete and this will appear in our action plan.
Soho Housing has been independent since 1974 and the shareholders and the board wish to retain this independence. The strategy for doing so is to be financially strong and well governed. Our work on governance this year is strengthening our arrangements, engagement and corporate understanding of our mission and what good governance structures look like. Decisions around asset management, development and treasury have all served to strengthen our financial position. Our action plan shows a need to further develop our risk management approach if we are to maintain independence.
3.0Customer Satisfaction
Soho Housing measures customer satisfaction in a number of ways.
Targets / 2013/14 results / ComparisonHow’s Things – live data capture every month speaking to 1000 residents across the year collecting the subject at the forefront of their minds and a score out of 10. Recorded and analysed every month and reported to board / 8.5/10
500 calls per 6 months / 2013/14
8.7/10
1,000calls / 2012/13
8.8/10
1001 calls
Responsive repairs survey – 10% of all repairs completed in a month generate a phone survey of the customers measuring satisfaction / 85% Satisfaction / 2013/14
93% / 2012/13
99%
Planned and cyclical satisfaction survey – this is a survey undertaken each year of all the residents whose blocks benefit from the planned and cyclical works programme in that year / N/A / 2013/ 2014
Overall Satisfaction
70.4% / 2007 /2012
Overall Satisfaction
Average:
51.8%
Customer satisfaction index – This is an annual survey undertaken based on 7 questions and then compared with other property companies as part of our benchmarking group Realservice / 2013
Soho Hsg:
61%
CSI Index
61% / 2012
Soho Hsg
64.7%
CSI Index
71.9%
3 yearly status survey – detailed written survey sent to all tenants approximately 30% response rate
3 comparable results for the 2007 and 2012 surveys
- Satisfaction with overall quality of home
- Satisfaction with services provided by SHA
- Satisfaction of value for money for rent.
Overall satisfaction
78%
71%
71% / 2007 results
Overall
Satisfaction
77%
66%
66%
3.1Self assessment
While the How’s Things results are on target and pleasing and the responsive maintenance service is also indicate good satisfaction, we are less content with the level of satisfaction we are achieving with planned and cyclical results. In order to address this we are engaging with the contractor with whom we have a partnership and our Strategic Residents Group at a strategic level, we also wish to run a focus group of residents about to receive the service to understand aspirations and expectations. We also have work to do on some of the issues raised in the Customer Satisfaction Survey. Soho Housing was precisely in the middle of the benchmark group. In 3 of the questions below the average and in 2 above and in 2 exactly average. Overall satisfaction and responsiveness were the two areas for improvement.
4.0Financial sustainability
There are a number of key indicators which are assurances for stakeholders that the organisation is financially sustainable and will continue to be so. These are measured with targets as set by our lenders in the form of covenants and our board establishes the target for operating margin. We have a new measure for return on capitalemployed which we publish here.
Covenants – our principal covenants are that our gearing (the amount we borrow compared to our reserves and grant received) must be below 60% and that our interest cover (operating surplus after adjusting for depreciation divided by the interest we have to pay to our lenders) must be 110% or higher. In our 2013/14 accounts our gearing was 40% and our interest cover was 234% so we were well within the required levels.
Operating margin – our target is to achieve an operating surplus before interest and property sales equal to 23% of our income. In 2013/14 we achieved an operating surplus of 31% of our income.
Return on capital employed–these figures are based on our 2013/14 results and show the differing rates of return on our housing and commercial property portfolios.
Business type / Operating surplus / Capital employed / Return (%) / NHHT2012/13 (%)Housing / £1.414m / £39.329m / 3.6 / 4.6
Commercial properties / £0.716m / £9.223m / 7.8 / N/A
Total / £2.110m / £48.552m / 4.4 / 4.6
Very few housing associations have published their returns on capital employed, so only limited benchmarking is possible. However, we operate in a high property cost area so it is unsurprising that the return on our capital is lower than those who operate more widely.
4.1Self Assessment
The key measures of our financial health – lending covenants and operating margin are in robust health. There is work to do in target setting and measurement of the return on capital employed.
5.0Cost comparisons
Soho Housing 2013/14 / Best of G15 2012/12 / Largest 221 HAs in England2012/13 / Global Accounts 2012/13 / NHHT 2012/13
Management cost per social housing unit / £1,039 / £913 / N/A / £1,012 / £921
Average pay per unit / £1,108 / N/A / £1,108 / N/A / £1,085
Number of units managed per member of staff / 49 / N/A / 25 / N/A / 32
Maintenance costs per unit / £2,851 / £2,652 / N/A / £1,200 / £3,325
5.1Self Assessment
Soho Housing compares well with others for management cost and pay per unit which is pleasing given the location and nature of the stock. However there is a less favourable comparison on maintenance costs. There has been work undertaken in 2013/14 to identify the issues generating these costs. Costs for 2014/15 have been dramatically reduced and work is in progress to create a sustainable lower cost programme of works.
6.0Efficiency
After the comparison work undertaken in 2012/13 there was felt to be an immediate need to reduce the planned and cyclical costsfor 2013/14. This was undertaken and the programmed works were reduced to half the costs, generating a saving on the previous year of £456k. During 2014/15 analysis will be undertaken to generate savings in procurement delivery or scope of works in order to deliver an ongoing programme of works which can be delivered for the equivalent of the budget for 2013/14 as this figure is seen to be sustainable. That assumption will be tested in 2014/15.
The Next Step project is aimed at targeting resource differently through the segmentation of our customer base and properly identifying needs and tailoring service delivery to meet those needs. Part of the outcome will be that service delivery for the majority of our customers will be broadly similar and where savings are made they will not be immediately cashable. It is anticipated that once we are tailoring services to the minority of our customers who have different needs there ought to be a reduction of waste in processes thereby releasing resource however once again these savings may not be cashable. Soho Housing is a growing business and it is anticipated that these savings will allow additional work to be undertaken without growing the team.
Our budget for 2014/15 projects an increase in our income of 9% and a decrease in expenditure of 8%, these savings will allow us to continue to invest in both new housing stock and to allow us to make improvements to our existing properties. Ongoing surpluses are vital if Soho Housing is to continue to provide good quality homes to our tenants at rents that people can afford in the heart of one of the most expensive cities in the world.
6.1Self assessment
The discipline of producing a robust VFM statement has shown a weakness in our measurement of efficiency gains or savings. There needs to be a greater focus on efficiency through the whole team to allow gains to be properly identified, quantified and reported.
7.0Action plan
Action / Target date / leadMission / Development – Actions, targets for development for the new year / 30 April / JE
Governance finalise the update to the rules in order to strengthen our governance arrangements thereby maintaining our independence / 30 June / JC
Risk appetite and management to be assessed and recorded at board away day, with live risk indicators built into monthly performance report / 5 April / DM
Customer satisfaction / Planned and Cyclical – focus group / 30 June / RB
Customer service index – analysis of responses leading to actions which will be brought to executive / 31 May / CC
Financial health / Return on assets – target setting / 31 Dec / DM
Cost comparison / Planned and cyclical costs – specific approach to cost reduction going forward, analysis and comparison of procurement / 1 sept / RB
Efficiency / Measurement of costs of services / 31 Dec / DM