www.cymru.gov.uk Welsh Government Housing Policy Regulation Regulatory Assessment Report Wales & West Housing Association Ltd L032 December 2015
Welsh Government Regulatory Assessment The Welsh Ministers have powers under the Housing Act 1996 to regulate Registered Social Landlords in relation to the provision of housing and matters relating to governance and financial management. Part 1 of the 1996 Act is amended by Part 2 of the Housing (Wales) Measure 2011 ( The Measure ) and provides the Welsh Ministers with enhanced regulatory and intervention powers concerning the provision of housing by Registered Social Landlords and the enforcement action that may be taken against them. The Welsh Ministers are publishing this Regulatory Assessment report under section 33A of the Housing Act 1996. The work undertaken follows the risk-based approach to regulation and seeks to identify strengths and areas for improvement in meeting the delivery outcomes (standards of performance) set out in The Regulatory Framework for Housing Associations Registered in Wales ( The Regulatory Framework ). http://gov.wales/topics/housing-and-regeneration/services-andsupport/regulation/regulatory-framework/?lang=en Basis of Regulatory Assessment The report is designed to provide the Registered Social Landlord, its tenants, service users and other stakeholders with an understanding of how well it is performing, at a specific moment, in time in relation to: Governance Financial Management Services This report is based on information provided by the Registered Social Landlord and the Regulator s knowledge and must not be relied upon by any other party for any other purpose. The Registered Social Landlord is responsible for the completeness and accuracy of information provided to the Regulator. Housing Regulation Team Housing Policy Division Welsh Government Merthyr Tydfil Office Rhydycar CF48 1UZ e-mail: housingregulation@wales.gsi.gov.uk Digital ISBN 978-1-4734-5271-8 Crown Copyright 2015 1
Introduction Wales & West Housing Association Ltd Wales & West Housing Association Ltd ( Wales & West Housing ) provides homes and services to more than 17,000 people. Working in 12 local authority areas, the Association has approximately 10,000 homes. Wales & West Housing has around 350 staff and offices in Cardiff and Flint. The Association was founded in 1965. It is registered in England and Wales with charitable rules and under the Co-operative and Community Benefit Societies Act 2014. Wales & West Housing has three subsidiaries: Cambria Maintenance Services Limited, providing repairs services to all Wales & West Housing homes since 2011. Castell Ventures Limited providing catering services to Wales & West Housing service users and others, building homes for sale and providing domiciliary care Enfys Developments Ltd, providing development agent services internally. Systems Thinking Wales & West Housing is run on a systems thinking approach which is embedded within the organisational culture. Key to the approach is the identification of value and waste in service delivery and the removal of any waste to ensure delivery of efficient and effective services, tailored to the needs of the individual service user. This approach is fundamental to the Group s operating principles and values with the aim of ensuring that everyone does the right thing to deliver what matters to the individual service user. Scope Details of the risks identified for the social housing sector in Wales can be found at: http://gov.wales/topics/housing-and-regeneration/publications/sector-risks-facing-housingassociations/?lang=en An assessment of these risks identified the undernoted areas as requiring further regulatory assurance. That assurance will be achieved through regulatory engagement with the Association. This is an exceptions based report and risks not referred to specifically are judged to be appropriately managed and mitigated at present. Our opinion may change as circumstances change. The Welsh Government intends to issue a regulatory opinion at least annually but may also do so at any time to reflect any significant changes in the organisation s risk profile. 2
Significant risks which are part of this Regulatory Assessment: Governance Risk management Services Governance and Financial Management Governance Wales & West Housing has an effective and well structured approach to governance. The Board has adopted Community Housing Cymru s Code of Governance ( the Code ) and has used internal audit to test compliance with the Code, producing a robust action plan for the limited areas of non-compliance. Board members clearly understand their role and responsibility and provide appropriate challenge and scrutiny. The Board is strategic and holds Directors to account whilst setting a clear strategic direction. The Board undertakes an extensive annual appraisal process to maintain the skills, qualities and experience needed for an effective Board. The entire organisation demonstrates a firm adherence to, and support for, the principles of coregulation with an open and transparent approach to regulatory engagement and assessment. The Group s systems thinking approach devolves authority for decision-making to staff within their own service area. This facilitates a speedy response to resident concerns, solving individual issues promptly, at an operational level, and reinforcing positive resident relationships with the Group. What matters to residents and doing the right thing for residents are at the heart of the Group s approach. Residents have easy and accessible mechanisms to feedback to Wales & West Housing with its systems thinking approach facilitating a significant volume of feedback. Feedback is valued and is used to develop operational and strategic improvements. Wales & West Housing recognises the need to provide residents with more information about changes resulting from their feedback. Residents have clear information on what to expect from services and resident satisfaction and service quality feedback is used to regularly review service expectations. Wales & West Housing actively monitors and communicates to residents its performance against service expectations. Performance information and business plans are produced in an accessible format and are widely publicised. The accessibility and appropriateness of communications is regularly reviewed in the light of resident feedback and consultation at both local/scheme level and with residents groups. Wales & West Housing has a very positive approach to complaints with a focus on putting things right and investigating once and investigating well. Complaints are reviewed on an 3
annual basis and reported to Board. This positive approach could be further improved by providing information to residents on changes made as a result of upheld complaints and by considering service user satisfaction with complaints handling. There is substantial assurance of the positive quality of staff culture. This is evidenced by Investors in People Gold accreditation, Sunday Times Best Company listing and being a top 30 employer for Working Families. This assurance was supported by the staff during regulatory engagement with observed high staff morale and a staff culture that was supportive and focused on delivery to residents. The Group undertakes comprehensive equalities monitoring of services, staffing and the Board. There is an annual report to Board on equalities for residents and housing applicants which reported no areas in which any particular group of residents appear to be treated less favourably than another. Wales & West Housing actively looks at areas of low satisfaction linked to protected characteristics and any equalities implications for this performance whilst acknowledging some areas of performance are potentially skewed by low response rates. Wales & West Housing uses resident profile data to inform service planning and improvement. Wales & West Housing undertakes, and reports the results of, self evaluation through its suite of performance reports to the Board and performance reporting to service users. Self evaluation information would be more accessible to residents if consolidated into one accessible area. The Group has a strategic approach to value for money with performance reported regularly to the Board. Its approach seeks to identify added value across the business rather than only cost savings. This approach could be further improved by sharing information with, and seeking feedback from, residents on value for money. Financial Viability Judgement This financial viability judgment covers the activities of Registered Social Landlord, Wales & West Housing Association Limited. Cambria Maintenance Services Limited and Enfys Developments Limited provide services to Wales & West Housing and the cost of this is adequately reflected in the business plan of Wales & West Housing. It does not include the activities of Castell Ventures Limited as we are satisfied that it is not significant in the context of the Group s activities and therefore does not pose a material risk to the financial viability of the Group. This financial viability judgement is issued on the basis that the Group s 30 year financial plan complies with existing Welsh Government Policy, in particular the Policy for Social Housing Rents. Any changes to policy may necessitate a review of the findings of this judgement. Our judgement of the Group s financial viability remains unchanged from last year. As at November 2015, the judgement is: Pass 4
The Group has adequate resources to meet its current and forecasted future business and financial commitments. The Group has prepared its 30 year financial forecast using a reasonable set of assumptions and is funded, in terms of cash and secured facilities, for the next 12 months. It shows the Group continuing to operate within the lenders covenants under reasonably foreseeable scenarios. The Group s gearing is currently in the region of 45% compared to a covenant limit of 60% (net worth basis). Interest cover is above the minimum level of 110% throughout the forecast period. The Group has 70% of its debt at a fixed rate of interest, thereby ensuring that it has a reasonable level of certainty in relation to this cost. The assumptions made in relation to the debt at a variable rate of interest are reasonable. The impact of the UK Government s welfare reforms, to date, has been within the expectations of the Group. Going forward, it has assumed there will be increases in arrears and bad debts (from 1.1% in 2015 to 2.8% in 2016) as the UK Government introduces Universal Credit. We are satisfied the assumptions made by the Group are reasonable given its experience. Future regulatory engagement will focus on: Performance reporting on complaint outcomes and lessons learned to the residents. Improving residents access to information on self-evaluation to provide a comprehensive picture of performance. Sharing of value for money performance information with residents and more involvement of residents when assessing value for money performance. Risk Management Risk management is embedded throughout the organisation with appropriate levels of scrutiny by the Board and the Directors. Risks are well managed by the Group. Wales & West Housing plan to undertake an evaluation of risk management in 2016 and should explore whether a more systematic approach to the assessment and scoring of risks would bring additional benefit. Future regulatory engagement will focus on: The evaluation of the risk management approach. 5
Services Services are well provided with good overall levels of satisfaction from tenants and stakeholders. Wales & West Housing uses its systems thinking approach and the data from its resident profile information to tailor services and is exploring improved methods to gather more profiling information at a community level. The benefit of additional information about more residents needs to be explored further to understand the extent to which this supports improved service delivery. Future regulatory engagement will focus on: Improvements to tenant profiling data use and collection Shared Learning Wales & West Housing undertakes comprehensive equalities monitoring across its range of services and the range of protected characteristics. This information has been used by the Group to identify and take action on areas of lower satisfaction and provides a robust assurance process that its services are fair and free from discrimination. 6