How are you assessing value for money? Event Pdfs/Annual Conference... · How are you assessing...
Transcript of How are you assessing value for money? Event Pdfs/Annual Conference... · How are you assessing...
How are you assessing
value for money?
Ross Fraser
Chief Executive
HouseMark
12 March 2013
01968 661179
The times they are a-changing
Welfare reform – impact on revenue
“Preparing for
welfare reform in
2013” SFHA report:
• West of Scotland has
a higher % of tenants
claiming HB compared
to other areas
• Glasgow 63%
• Renfrewshire 64%
• Ayrshire 66%
• national average 58%.
The Scottish Government's
own assessment (Dec 2011)
"60,000 tenants in Scotland face
losing on average £40 per
month, and at least 95,000
suffering more misery as further
reductions take effect in April
2013”
2009 - Audit Scotland highlighted
analysis by the Centre for Public
Policy for Regions (CPPR) - three
possible budget scenarios:
Ranging from a 5% real-term
reduction at best, to an 11%
reduction at worst
2011 – Audit Scotland report states:
"It is now clear that the scale of the
budget reductions facing Scotland
over the next few years is close to
the CPPR's worst case scenario"
Public finances being squeezed
VFM top of agenda for
government & Social Housing
Regulator
• Maintain new supply with
less public £s
• VFM now actively regulated
by Charter outcome 13
• ‘Lever’ to improve
taxpayer’s return on
embedded public £s
• Increased focus on tenant
scrutiny, transparency, risk
management and VFM
Tough operating environment
The challenge for social landlords
• Public subsidy significantly
restrained over the next 5 -10 years
• Private funding limited and by
implication, increasingly rationed
• Establishing the real value of assets
and utilising opportunities to extract
and re-use asset value is a key
aspect of future strategy and
management
• ‘Multi-local’ focus - finding
management and governance
structures which retain the local
strengths of community-based
housing while achieving economies
of scale and increased efficiency
• Adapt to succeed – even more
business skills, commercial acumen
and business techniques required
VFM – not simply about cutting
costs
Social housing providers exist to create social
value.
Value is just as important - if not more so - as the
money in VFM.
Achieving VFM means maximising social value
through effective use of resources.
The challenge is more social value, for less
input
The key to VFM is about knowing
what you: • Should get for your money before you
spend
it (business case)
• Got for your money when looking back
and evaluating success
So we need a way to measure potential or
actual VFM that works for different types of
social value
We can think about this by comparing money
spent on houses and operations (inputs) with
value (outputs + outcomes)
For example…
Money is borrowed to build a
house
Input: cost of house
Output: a house (physical asset)
Outcome: a home,
satisfied tenant,
social value
Social value doesn’t end with the
provision of a home Human assets deliver services to
provide more social value:
• Tenants get the most out
of their home and neighbourhood
• To maintain and improve the home -
enhancing the value of the asset
to existing/future tenants and landlord
• Support and care for those who need it
• Community services enhance well-being
• Knock-on benefits to other local services
and wider society
How do you assess social value Inputs are primarily measured in cash.
Outputs and outcomes (social value)
generally involve various combinations:
• Social and economic benefits to
individuals and communities
• Service quality - consumer benefits
to paying customers
• Environmental benefits
• Financial benefits
• a return (surplus) for reinvestment
• knock on benefits to other local services
and taxpayer
But how do you measure social value
VFM?
…some thoughts
VFM of human assets
Here are two
repairs
contractors.
Both are external
companies. Both
are being
considered by
Gallus Housing
to deliver its day-
to-day repairs
services. • annual contract price £1.3m
• guaranteed employment of
25% local labour
• will undertake tenant
consultation and feedback
= higher cost, but more social
and economic value
Contractor fee £1.3m
Client costs £0.1m
Total input £1.4m
Total output Properties
repaired
• annual contract price £1m
• ‘green’ credentials high
• longer target timescales for non-
urgent repairs
= lower cost, more environmental
value, but poorer standard of
service
Contractor fee £1m
Client costs £0.2m
Total input £1.2m
Total output Properties
repaired
Different types of social value – so which
to choose?
• lower client costs –
staff can do other
things
• local employment
opportunities
• lower overall cost, £££
can be spent on other
things
• more sustainable homes
for the future
Again, it depends on what outcome is being sought…
• Keep costs low so can spend £££
on other services; improving
performance and tenant
satisfaction not high priority –
choose B
• Gallus Housing pursuing ‘green’
objectives - choose B
• Tenants have made it clear quality
of repairs service is top priority and
understand this means less £££ to
spend elsewhere – choose A
• Gallus Housing’ key objective is to
provide local employment
opportunities - choose A
VFM is about local decisions
• Value for money cannot be a
static measurement
• It is about making the best use
of resources available in
different business environments
that gives your organisation and
your tenants the best
outcomes at that time
• The challenge is to
maintain/improve service quality
in a harsh operating
environment
Opportunity for change
…the times they are a-
changin
This is a big opportunity for the sector
• Chance to demonstrate ownership of VFM
• Chance to define value positively, in social business
terms
Any Questions?