Stepping up to Scrutiny Tenants taking the lead on value for money (VFM)? Raj Kumar, Associate, May 0131 240 5212 www.housemark.co.uk/scotland
Contents Acknowledgements... 2 Executive Summary... 2 1. Introduction... 3 2. The approach and making effective use of the Charter... 4 3. The workshops... 6 4. The VFM reviews... 7 5. The key Lessons... 11 6. Conclusion... 14 Appendix 1: Summary of participant feedback from the workshops... 15 Appendix 2: Example of a VFM register... 17 1
Acknowledgements The Scottish Government funded the pilot Stepping up to Scrutiny VFM workshop programme as part of the three year Stepping up to Scrutiny programme being delivered by CIH Scotland and. The team commissioned Raj Kumar, one of HouseMark s expert VFM and tenant scrutiny Associate Consultants to deliver the project. Raj Kumar is the author of this report, and along with, is grateful to the following organisations and the respective scrutiny groups, staff, board members and councillors who attended the workshops and participated in undertaking the VFM reviews: Link Group Ltd North Ayrshire Council Osprey Housing (formerly known as Aberdeen Housing Partnership and Moray Housing Partnership River Clyde Homes (RCH) Thank you to the staff who helped organise the on-site workshop events across Scotland: Adam Knight-Markiegi, Nayna Kavia (HouseMark) and Kirsty Wells () Leah Webb, Joliane Phillip and Steve Clunie (Link Group Ltd) Tracey Wilson and Carolyn Hope (North Ayrshire Council) Stacy MacDonald, Sophia Redford and Glenn Adcook (Osprey Housing) Colin Donnelly and Siobhan O Kane (River Clyde Homes) Finally, thank you to the leadership offered by the tenants, including: Shona Gorman (Link Group Ltd) Ann Buckley (North Ayrshire Council) Bill Chapman (Osprey Housing) James Thain (River Clyde Homes). Executive Summary The aim of this report is to highlight the key findings from the pilot programme, which was designed to help improve the understanding of VFM for key stakeholders. In addition, the report aims to share learning and good practice, which may encourage other social housing providers in Scotland to develop the respective skills and knowledge of their key stakeholders (to enable effective challenge to take place). The headline findings include: Engaged tenants, in particular with quality training, can very quickly develop techniques and practices that offer valuable challenge to help improve landlord services. Engaged tenants can gain insights into the behaviour and responses of other stakeholders/tenants that may not always be obvious to landlords. Social housing providers in Scotland have ample room to improve the way they engage with stakeholders on rent setting. Effective scrutiny requires landlords and stakeholders to make appropriate use of readily available benchmarking tools. It is essential for social housing providers to clearly define what VFM means to the organisation, which will in turn enable stakeholders to offer effective challenge. 2
1. Introduction The Scottish Government s Stepping up to Scrutiny national training and learning programme was launched in 2013. The programme s key aims were to put tenants and service users at the heart of holding landlords to account for delivering better services and making effective use of the Scottish Social Housing Charter (the Charter) as a monitoring tool. The next stage of the Stepping up to Scrutiny programme was developed in late 2015 to enable stakeholders to have a better understanding of VFM, affordability and improving service delivery. A pilot phase programme was rolled out between January and April with four organisations volunteering to take part: Link Group Ltd North Ayrshire Council Osprey Housing (formerly known as Aberdeen Housing Partnership and Moray Housing Partnership) River Clyde Homes (RCH) HouseMark delivered three in-house workshops to each organisation, aiming to: define what VFM means to the landlord and tenants understand VFM at both a service and whole organisation level develop an understanding of the baseline VFM position of each organisation develop tools for tenants to undertake a VFM review of a service area or issue agree actions that would help the organisation to improve its VFM performance. As far back as 2010 in the publication Value for money and tenant involvement by Marianne Hood OBE, HouseMark highlighted the business case for involving tenants. Significantly, the author highlighted the need for linking tenant involvement to business and corporate objectives. The relevance of the programme is timely because of: the continued public sector fiscal deficit and the pressure on social housing providers to provide more through increased borrowing and less reliance on public subsidies the increasing pressure on tenants and service users who are badly affected by welfare reforms the current situation of many tenants and service users, whose incomes are stagnating. As Michael Cameron, Chief Executive, of the Scottish Housing Regulator wrote in Inside Housing magazine on 15 April : So, effective control of costs is not only an important way of social landlords to maximise resources to build much needed new homes; it is also an important way to keep rents at levels tenants can pay. 3
2. The approach and making effective use of the Charter In order to deliver a successful programme and not create additional layers of work for the organisations or their tenants, the approach and methodology we adopted reflected both the key principles of the Charter and the Scottish Housing Regulator s (SHR) regulatory framework. A practical approach was taken when looking at VFM principles, which would allow engaged tenants to understand and monitor how landlords are performing against the outcomes and standards: Getting good value from rents and service charges. More specifically the programme focused on the Charter outcomes: 13: Value for money o services that provide continually improving value for rents and other charges o efficient and effective management of services, which includes minimising void loss and maximising rent collection o managing all resources effectively o controlling costs o increasing the quality of services with minimum extra costs to tenants, owners and other customers. 14 and 15: Rents and service charges (reflecting the landlord s legal duty to consult tenants about rent setting and taking views into account): o what current and prospective tenants and other customers are likely to be able to afford o the importance that tenants place on being able to find out how their money is spent o based on discussions with tenants and other customers whether to publish information about expenditure above a particular level, in what format and the level of detail o striking a balance between the level of services provided, the related cost and how far current and prospective tenants and other customers can afford them o tenants get clear information on how rent and other money is spent. In this way, the workshops complimented the organisations current work streams related to the Annual Return on the Charter (ARC), statutory requirements for consultation with regards to annual rent setting and sharing good practice for: empowering tenants and other service users to hold their landlords to account in relation to delivering tangible VFM benefits enabling social landlords to explain to stakeholders their VFM story and performance, which reflects the local operational context and corresponding organisational priorities. The workshops made use of readily available practical tools such as the SHR s Find and Compare and HouseMark s Scottish Charter Storyboards. Most significantly, participants were provided with a simple mechanism or model for assessing VFM by using the value chain principles, more commonly referred to as the 3Es (economy, efficiency and effectiveness): 4
This model is then used to focus in on: costs performance satisfaction. The model is further enhanced by looking at costs, performance and satisfaction in the context of: trends (for example over a 2 or 3 year period). benchmarking or comparing to peer groups or similar organisations. The model allows any stakeholder to ask the fundamental why? questions. For example, why are our costs, performance or satisfaction different and what can we learn from this? Finally, the model ties into the previous Stepping up to Scrutiny learning and can form part of the scrutiny framework at the review stage as an initial desktop exercise: Foundation Terms of Ref Report & Follow Up Scoping Review Planning 5
3. The workshops Each workshop was carefully crafted to be interactive, informative and enjoyable through: the inclusion of a range of methods to meet different learning needs of participants. undertaking small group exercises to build up confidence. sharing good practice from across the UK. using bespoke and tailored performance and satisfaction data related to each organisation. using visually stimulating content that is current and relevant to each organisation. understanding the different stages of development for tenants and stakeholders involved in the scrutiny journey. The key objectives and outcomes of the four workshops delivered are noted below. Workshop 1 for tenants and other service users: Ensure tenants understand the concept of VFM and how it applies to their landlord. Enable tenants to ask the right questions to offer effective challenge. Ensure tenants debate rent affordability and how this relates to the value their landlord is providing both to the individual household and the wider community. Agree a framework for tenants to undertake scrutiny that includes a VFM assessment, which will be reported on at workshop 3. Workshop 2 for officers, managers, leadership team, board members and councillors: Ensure participants have a common understanding of what VFM means to the organisation. Enable participants to challenge themselves based on the current performance, ARC, benchmarking with peers and the expectations of the Charter. Confirm how the organisation will drive VFM improvements and in the process engage with tenants and service users. Consider how councillors and boards are fulfilling their statutory duties for tenant involvement and making strategic decisions based on a clear understanding of VFM. Workshop 3 for tenants, other service users and staff: Review how learning from workshop 1 was put into practice. Determine the impact of the first VFM scrutiny on the organisation. Consider the next steps for ensuring the scrutiny role of tenants and other service users is embedded in VFM reviews. Determine how best to ensure tenants and services users are able to hold the landlord to account. Workshop 4 for participants from all four organisations that were part of the pilot programme: To share learning and good practice. Develop links and support networks. To offer challenge to improve future workshop content and delivery. A summary of feedback from participant feedback, which was overwhelmingly positive, is included in Appendix 1. 6
4. The VFM reviews The most significant impact of the workshops is captured in the VFM reviews and assessments undertaken by the respective scrutiny groups (Tenant Scrutiny Panel, Resident Inspection Panel, Scrutiny Panel and Customer Panel) from each of the four organisations that volunteered for the pilot programme. Most of the VFM reviews were carried out in a very short period of time (a matter of 2 to 4 weeks) in order to fit in with the timetable for the delivery of the Stepping up to Scrutiny programme. Therefore, it is a great testimony to the hard work of the scrutiny groups and staff in completing the reviews on time. Summaries from each of the VFM reviews are noted below: Link Group Ltd Scrutiny topic Gas servicing contract The Tenant Scrutiny Panel was already in the middle of the review of the gas servicing contract when they agreed to be part of this Stepping up to Scrutiny VFM pilot programme. Therefore, it was agreed their review would also incorporate a VFM review. This review had originally been selected due to: no recent evidence of tenant scrutiny in any review of third party contracts validating tenant satisfaction figures previously reported. Process for the review Key findings / recommendations Good practice identified The Tenant Scrutiny Panel: conducted interviews with the contractor set up a focus group with a cross section of staff undertook a telephone survey of tenants receiving the service undertook work shadowing of operatives carried out a desktop exercise of the costs, performance and satisfaction related to the gas servicing contract. The gas servicing contract compares favourably with the private landlord gas service costs. There is excellent customer service and a good ability to engage with vulnerable tenants in a sensitive manner. Tenant and staff satisfaction with the contract is high. There is a need to develop a campaign around the importance of allowing access for gas inspections. Also a need to understand why limited access is being gained in new build developments. There is a need to reduce the number of no access visits, which will also help reduce costs. Link Group Ltd should consider streamlining gas servicing contracts across the different subsidiaries. The mode of undertaking a focus group of a cross-section of staff and using LEAN Thinking questions yielded high quality responses that identified key issues and solutions. In addition, the process helped develop trust between staff and Tenant Scrutiny Panel. 7
North Ayrshire Council Scrutiny topic Rent matters consultation The Resident Inspection Panel selected a review of the annual rent increase consultation ( Rent Matters ) newsletter due to the: high cost of producing and distributing the consultation newsletter relatively poor response rate to the consultation newsletter. Process for the review Key findings / recommendations Good practice identified The Resident Inspection Panel and staff: undertook a benchmarking exercise of other councils looked at the best in the sector performance undertook three detailed focus groups interviewed the housing portfolio holder. The council should adopt a new approach to the rent consultation process from 2017/18. Replicate Aberdeen City Council success by using a different colour envelope and sent from the Head of Service. Make effective use of Tenants and Tenants Associations to promote the consultation. Consider mass texting. Link to existing engagement methods e.g. Welfare Reform Team, Housing Officers and Survey Monkey. Obtain costs for other options e.g. telephone scheme, radio and newspaper publicity or conversations at cafes / roadshows. The Tenant Participation team is dynamic and has a clear can do attitude. This inspires tenants and service users and can be a catalyst for helping to improve service delivery throughout the housing directorate. Osprey Housing Scrutiny topic Tenant satisfaction survey The Scrutiny Panel selected to review the results of the most recent tenant satisfaction survey to understand the: low level of returns drop in satisfaction levels for overall services provided key tenant priorities and whether they are being met. Process for the review The Scrutiny Panel: carried out door to door interviews with tenants across different neighbourhoods undertook a tenant satisfaction survey of a sample of tenants who had not responded to the initial request to complete the survey sought the views from Moray and Aberdeenshire Housing Partnership Tenant Association. Key findings / recommendations Working tenants gave the VFM of their rents as a key priority. 8
Good practice Identified Non-working tenants considered their heating bills to be too high, which raises issues of fuel poverty and the probable impact on rent affordability. Non-working tenants had more repair issues to report when compared with those from working tenants. Some tenants who had stated neither satisfied nor dissatisfied, were in fact satisfied. This is partly as some tenants were completing the survey in auto-pilot, without paying full attention to each question. Some tenants who chose not to respond to the satisfaction survey believed a non response would be taken to mean that they were in fact satisfied. The satisfaction survey could be more effective if a space is included for respondents to give additional comments. This would mean the landlord could better understand a customer s issue and have an opportunity to rectify matters. This in turn may result in a better response rate to future surveys. Tenants may be more willing to join Tenant Associations or other groups if encouraged by fellow tenants. The Scrutiny Panel was able to gain a deeper insight of customer satisfaction through their door knocking exercise. The findings suggest the standardised surveys could be enhanced with the addition of a deep-dive analysis, for example through quality interviews or focus groups. River Clyde Homes Scrutiny topic Boiler maintenance contract The Customer Panel selected the boiler maintenance contract due to: the contract being up for renewal in the current calendar year the service has a wide impact on tenants the ability to have access to service costs, contract measures and customer satisfaction data within the short deadline period. Process for the review The Customer Panel and RCH officer: undertook a desktop review of the boiler maintenance contract devised a detailed Q&A checklist for staff interviews received detailed feedback from relevant officers responsible for the contract. Key findings / recommendations RCH has been successful in negotiating reductions in the cost of the contract (about 4% based on the original 2013 figures). RCH systematically reviews the lifecycle of boilers and frequency of repair callouts to decide replacement priorities. RCH is streamlining its range of boiler installations. RCH carries out spot checks. Bio-mass district heating is being installed in one neighbourhood; its impact on running costs for tenants and repairs cost will be monitored to see if expectations are being delivered. For new homes, the engineer performs a system check and runs through the controls system with new tenants. RCH reported high rates of customer satisfaction. The focus of the new tender will be to ensure RCH has direct access to live information on callouts and outcomes whilst the 9
Good practice Identified contractor is delivering the service. This in turn should enable communication with customers to be more frequent and up to date. Undertaking a sound desktop review and developing a Q & A checklist helped the Customer Panel deliver a very quick and productive scrutiny exercise. Westminster University recently carried out an independent study into the work of Amicus Horizon s tenants: Success, satisfaction and scrutiny: The business benefits of involving tenants (2015). It comes to the same conclusion as this pilot programme, namely the importance, power and impact of involving tenants: 10
5. The key Lessons Whilst the four pilot organisations are a very small sample, they do offer an insight to lessons for the wider Scottish social housing sector in relation to VFM: For stakeholders to be able to effectively monitor an organisation s VFM achievements, it would be beneficial for social landlords to state their own definition of VFM and set out specific annual VFM targets. This was also a key finding of the report produced by CIH, Wheatley Group and How do you know if you are providing value for money? (2015). Adactus provides a good case study of a housing organisation that completely understands VFM. It operates in some of the most challenging neighbourhoods in the North West of England and has actively chosen to limit diversification. Instead it has focused on improving efficiency whilst meeting the needs of tenants and on its core business of providing new homes. It has managed to reduce operating costs, improve performance and increase resident satisfaction across all services, while increasing its development programme from around 120 homes a year to over 500. A key driver for Adactus is a VFM strategy that focuses on: using business intelligence to inform investment decisions minimising outsourcing, reducing expenditure on VAT whilst driving up standards and investing in more frontline employees disposing of high value empty properties to fund new developments reducing planned maintenance spend by focusing investment on installing new kitchens and bathrooms that are being re-let rather than investing in wholesale area based programmes setting up an in-house construction company to reduce the cost of building by more than 15% by eliminating VAT and the need to pay profits using new technology to better plan responsive repairs, partnered with a single supply organisation and centralised the management of operatives adopting a we are all housing managers now approach and equipped staff with mobile devices with a direct link to the contact centre training call centre staff to achieve a right first time approach abolishing the traditional housing management function, saving the Group and its subsidiaries more than 750,000 year on year by removing unnecessary managerial positions. Establishing a VFM register to record VFM achievements throughout the year would focus all teams and directorates on the importance of delivering better services. This would also help improve accountability by enabling stakeholders to easily assess progress and offer appropriate challenge. 11
An example of a simple VFM register is shown at Appendix 2. Providing tenant scrutineers with cost and resource data in a transparent way is currently difficult for some landlords. This means tenants are missing some of the essential information required in the 3 Es value chain. Tenants must be given access to cost data to enable them to carry out true VFM assessments. For stakeholders such as scrutiny groups to be able to undertake VFM reviews, they require training, support from in-house staff or independent organisations and to offer their own time commitment. Fortunately, in the instance of the pilot organisations there is clearly a commitment to supporting resident engagement activities and scrutiny groups. The work of scrutiny groups should be recognised as an invaluable resource by landlords. The scrutiny groups clearly demonstrated their own (time) commitment during the course of the workshops and whilst undertaking the VFM reviews. It is important to capture and report on the resources, staff time and tenants time committed in each of the final VFM review reports produced. It is important to ensure that any review of services, policies or issues contains within it an element of a VFM review or assessment including an impact assessment on rent affordability issues for tenants. VFM reviews are easier to undertake now as comparative / benchmarking data is readily available as part of the SHR s website Find and Compare and HouseMark s Scottish Charter Storyboards. There is ample room for most organisations to improve the quality of the consultation undertaken in relation to the annual rent setting process as demonstrated by the learning gained from North Ayrshire Council. In addition, some organisations may wish to create opportunities for their stakeholders to be involved in budget setting and monitoring. North West Leicestershire District Council offers a good case study for considering how stakeholders / tenants can have a greater say and role in determining financial priorities. It has a Tenant s top 10 budgets, which was introduced in 2010. These give tenants the opportunity to explore expenditure patterns and the underlying reasons for any variances and to challenge financial performance throughout the year. Exposure to budgets on a regular basis also allowed tenants to make more informed recommendations when it comes to budget development for the following year. The Council invites the working group to propose budget changes as well as review and comment on proposals from team managers. Similarly Merthyr Valleys Homes operates a Star Chamber consisting of tenants, board members and staff from across the organisation. Collectively the panel set Merthyr Valleys Homes budget for 2013/14, which delivered big savings and shifted resources to tenant priorities. Savings of over 200,000 were required to fund the tenants priority of a larger house-painting programme. This target figure was projected onto a screen whilst budget holders presented their proposals. The panel suggested changes (additions and reductions) and the target moved accordingly. This has resulted in an additional 150 houses being painted. The process brought tenants to the heart of how to prioritise services and resources. 12
The scrutiny groups have a greater insight of other tenants views as evidenced by Osprey s learning around customer satisfaction through their direct door knocking exercise. Focus groups can be a powerful tool for getting to the heart of issues. Link Group Ltd s insights were enhanced by the staff focus group, which created a positive platform for sharing ideas and issues in an honest, transparent and non-judgemental manner. River Clyde Homes demonstrated the power of following the simple good practice of carrying out a scoping exercise, desktop review and developing a Q&A checklist, which resulted in a short sharp review of a contract from a tenants perspective. Further guidance and good practice can be found in the following publications (click on the image to download it): An investment not a cost The business benefits of tenant involvement Nic Bliss, Blase Lamber t, Car ole Halfacr e Tr evor Bell & Pr ofessor David Mullins Mar ch 2015 Funded by the Department for Communities and Local Government 13
6. Conclusion Social landlords need to adhere to the statutory requirements to consult tenants and service users in the annual rent setting process by offering appropriate ways for receiving feedback. From the pilot programme North Ayrshire Council s Rent Consultation Matters identified the success being achieved by Aberdeen City Council (14% response rate and see example below), Stirling Council (25% response rate) and East Lothian Council (11.5% response rate). The engagement of scrutiny groups can help to develop appropriate consultation mechanisms, which may result in increased meaningful feedback from the wider resident and service user base. VFM should be the cornerstone of all decision-making, but this can happen only when an organisation itself has defined what VFM means for its business in partnership with its stakeholders. The scrutiny groups should all receive specific training that allows them to understand what VFM means and thereby offer effective challenge to hold landlords to account. Whilst the number of tenants or service users wishing to be part of organised structures such as scrutiny groups may be small, it is important to focus on producing quality outputs. All scrutiny groups should review their own impact each year. With appropriate support, scrutiny groups should be encouraged to take an active lead on all matters related to VFM. 14
Appendix 1: Summary of participant feedback from the workshops We gathered feedback from the workshops (from 91 participants). Below is a summary, showing the overwhelmingly positive results. And here s a selection of comments from participants: What did you find was the most useful part of the programme, and why? The whole session was informative but for me it was how we could improve the annual report to tenants. Tracey Wilson, North Ayrshire Council Particularly enjoyed thinking about how we can assess VFM in our business. Sue Shone, Link Group Ltd The exercise to think of a VFM project. The overheads were great quick flashes of very relevant information without labouring points. Link Group Ltd Ideas around VFM achievements directory a great idea to use this as a tool. Mike Scott, Osprey Housing 15
Will you use any of the information gained today when you go back to your organisation? I have responsibility for the HRA and am keen to see VFM embedded across our service. This supports that ambition. Trudi Fitzsimmons, North Ayrshire Council We are about to start a process of review in our service and this has helped to focus my mind on what to do next. Elaine O'Hanlon, Link Group Ltd VFM as a standing item on team meeting agenda. Build VFM into team objectives. Osprey Housing Yes, and will use as a focus for new joint Board focusing on strategy use VFM as a core element. Mike Scott, Osprey Housing 16
Appendix 2: Example of a VFM register VFM and Efficiency Savings Register TOTALS Annual Saving Dated Period number E1 - Same level of service while reducing resources used improving efficiency Saving Identified - - - E2 - Lower prices for same resource & same outputs improving economy E3 - More output,improved quality/quantity,same resources improved efficiency & effectiveness E4 - Improved service quality/quantity proportionately more resource improved effectiveness Year XXXX saving realised to date Ref Source - staff VfM suggestion/ Customer VfM Suggestion received / committee date Service/ Contract Description Lead Officer Relevant Documents (eg VFM assessments, Strategies) VfM - E1 - E4 Customer / Stakeholder involvement Recurrent /Non Recurrent Cashable / Non Cashable Annual Saving Year XXXX Saving Identified Year XXXX Saving Realised to Date Actioned Date 17
Further information For further information visit our website www.housemark.co.uk/scotland or call 0131 240 5212. About HouseMark HouseMark is the leading provider of integrated data and analysis, insightful knowledge transfer, high quality consultancy support and via Procurement for Housing, cost effective procurement services to the social housing sector. 0131 240 5212 www.housemark.co.uk/scotland