Unity Homes & Enterprise

Value for Money

Self-Assessment Statement

2015/16

14 July 2016 (v6)

© 2016 David Tolson Partnership Ltd

Unity Homes & Enterprise - VFM Self-Assessment Statement - 2015/16

CONTENTS

1.EXECUTIVE SUMMARY

2.STRATEGIC CONTEXT

3.OPERATING CONTEXT

4.ASSETS

5.VfM GAINS

6.OVERALL SELF-ASSESSMENT

Appendix 1 – Unity – KPI Benchmarking

1.EXECUTIVE SUMMARY

1.1This is Unity Homes & Enterprise (Unity) third Value for Money Self-Assessment Statement. This document provides a critical analysis of our achievements in 2015/16 and it demonstrates that we consider accountability to our residents and all our stakeholders and partners, including the regulator, a very high priority.

1.2In relation to the latter point above, it is clear that Value for Money remains a high priority with the regulator. We have received a letter from the HCA outlining our relative position on costs in early summer 2016. Unity emergesvery well from this analysis, which can be seen in the benchmarking section (starting at 3.50).

1.3As part of the regular dialogue with the regulator, in March 2016, the chief executive of Unity wrote to the HCA addressing several matters that had been raised. The letter provided a thorough assessment of Unity’s financial outlook, covering the association’s response to the rent reductions in July 2015, cost saving measures that had been developed, stress testing on the business plan that had been undertaken, the ongoing commitment to a development programme, plans for securing new funding, the commitment to investment in existing stock and the association’s approach to delivering Value for Money. In July 2016, Unity was delighted to receive confirmation of its G1/V1 status. This result was achieved after a thorough analysis of our forecasting submission and after some very useful dialogue with the regulator. The previous confirmation of these ratings was done in 2013.

1.4It is clear that the regulatory approach to the Value for Money standard is becoming tougher and therefore it is clear that Unity must be relentless in its mission to improve in this area.

1.5In preparing this statement for 2015/16 we have therefore taken note of the guidance provided by the HCA in its publication ‘Delivering better value for money: Understanding differences in unit costs’, which is available on the HCA website. This sets out changes to our approach to regulating the Value for Money (VfM) standard.

1.6We have also noted and used the additional 2016 guidance provided by QAHC, consultants advising on ‘Efficiency in Social Housing’in the preparation of this statement.

1.7We have included a summary of our overall approach, including our strategic and operational context. We have assessed our gains and achievements, focusing on measureable outcomes and also on those outcomes that are harder to measure, but which nonetheless have added a social value and a return for our residents and our communities. A forward look at our future VfM plans can be found towards the end of this document, as can our overall self-assessment.

1.8A copy of this document can be found on our web-site at

1.9Unity has a clear understanding that Value for Money is not just about costs. We understand and have embedded the view that the best Value for Money is achieved through optimising ‘effectiveness and efficiency’. This document provides an up to date assessment of what we have achieved in 2015/16 and how we will achieve this as we move forward.

2.STRATEGIC CONTEXT

2.1The board of Unity performs a strategic role in steering the business and setting the vision for the organisation’s future and defining and monitoring the achievement of corporate objectives.

2.2Achieving Value for Money is clearly an important element of the board’s focus. Our VfM Strategy has been developed to underpin our mission. This is reviewed regularly to ensure that it remains relevant and up to date with circumstances and the landscape we operate within.

Unity’s Mission

2.3Unity’s mission is:

“To provide housing choice, improve life opportunities and address inequalities.”

2.4This clear statement enables the organisation to focus and ensures that everything we do is for the benefit of our communities, our customers and our homes.

Unity’s core values

2.5These core values underpin our mission:

  • Integrity - Being honest, transparent and sincere with strong principles;
  • Respect - In the way we treat people, service users and each other;
  • Flexibility - In how we work for the benefit of our tenants, other people, the organisation and each other;
  • Commitment - To provide services to meet the needs of our tenants, localpeople and local neighbourhoods;
  • Business focussed - Continually review and adopt best practice and ensure we operate efficiently and effectively in order to make best use of resources;
  • Equality and fairness - In the way we work and deliver services.

Unity’s corporate objectives

2.6The board has established six corporate objectives which are outlined in our Business Plan for 2016-19:

  1. Provide and continue to develop good quality mixed tenure housing which reflects needs and aspirations – we will ensure the highest standards of repair and maintenance of our existing stock. We will continue to develop new high quality stock in geographic areas of Leeds where members of the BME community would choose to live. Our new development programme will consist of the type and tenure of unit for which we know there is a growing need.
  2. Provide high quality affordable housing services – we aim to achieve the highest level of tenant satisfaction through the delivery of a range of flexible high quality services which respond to the needs of our current tenants. We will take account of emerging needs of new tenants and redesign our services accordingly. We will be sensitive to the needs of existing and new tenants in regard to the current economic climate and the Government’s legislative programme.
  3. Involve and work with our tenants and the communities we serve to inform and improve services – we will engage with our tenants and BME communities to develop a good evidence base to help us design our services and influence the policy and delivery of services to others. On this basis we will seek to represent BME communities, and others, in the multi-cultural neighbourhoods within which we work.
  4. Work with partners to encourage and support the regeneration of our target neighbourhoods – we will work in partnership to deliver physical, social and economic regeneration programmes to help create and sustain neighbourhoods where BME communities want to live. We will focus our efforts in those neighbourhoods where our tenants live and where there are high percentage of BME communities. We will aim to deliver and facilitate the delivery of services based on our understanding of current and future needs. We will continue to ensure our tenants have the best advice and access to training and employment opportunities and we will aim to promote and sustain financial inclusion.
  5. Provide and facilitate business support services and encourage local enterprise – through our Unity Enterprise Company we will offer affordable managed workspace to support the needs of a wide range of small businesses and other organisations. We will provide direct support to encourage local enterprise and we will offer business advice to our existing business tenants. Through these services we will aim to support the economic regeneration of our target neighbourhoods.
  6. Be a progressive and expanding business with a sound resource base – we will be a strong and forward looking organisation. We will have a robust financial plan to support the delivery of high quality services and new development. Our governance and performance management arrangements will be of the highest standard and we will be a place where people want to work.
  7. The achievement of VfM clearly underpins many of these aims, whichall help us to plan, manage and control our activities in the pursuit and delivery of value for money.

Unity’s Value for Money Strategy

2.8Unity’s VfM Strategy was established by the board in 2011. It is reviewed on a regular basis.

2.9The Strategy has the following key objectives to ensure we achieve our objectives at all levels and functions within the organisation as follows:

  1. To embed VfM and continuous improvement into the organisation’s culture;
  2. To adopt good practice in relation to VfM, reducing the risk of exposure to financial and material waste;
  3. To benchmark and review VfM in relevant services;
  4. To involve stakeholders and tenants where relevant in achieving VfM;
  5. To ensure we comply with our green strategy when considering VfM ;
  6. To consider using a range of procurement practices to achieve VfM where appropriate;
  7. To pursue VfM by setting and monitoring VfM targets and efficiency savings.
  8. These objectives are key priorities for the board and they influence our approach to the delivery of the corporate plan and our plans for the provision of services to customers.
  9. Our full VfM Strategy is published on our website and it can be seen at

3.OPERATING CONTEXT

Our stock portfolio

3.1Unity owns and manages just over 1,200 homes that are located across Leeds in high demand areas and has a focus as a community based organisation, supporting local multicultural neighbourhoods such as Chapeltown. The stock portfolio includes a mix of houses, flats and bungalows, the majority of which has been newly built or acquired and refurbished within the past 30 years.

3.2The stock breakdown for Unity can be seen below:

General Needs and Supported Housing

Stock breakdown by type - General Needs/ Supported / No.
Studio / 3
Bungalows / 36
Flats / 342
Houses / 753
Total / 1134

Shared Ownership

Stock breakdown by type - Shared Ownership / No.
Bungalows / 7
Flats / 27
Houses / 54
Total / 88

Challenges facing the sector

3.3Along with the rest of the social housing sector, Unity has been faced with one of the most diverse and complex set of challenges that it has faced for many years. Many of these challenges can be found within the Housing and Planning Bill 2015, the Comprehensive Spending Review 2015 and the ongoing roll-out of Welfare Reform measures.

The Housing and Planning Bill

3.4The bill articulates the Government’s wish to end the housing crisis before the next general election in 2020. The National Housing Federation (NHF) has had some reservations, but it believes that the Bill provides an important opportunity to help housing associations to scale up the number of homes that they can offer. The main elements of the Bill, as currently drafted, are:

  • Starter homes;
  • Self/custom build;
  • Extending right to buy for housing association tenants;
  • Sale of high value stock;
  • Pay to stay;
  • Reduced regulation.
  • Other aspects of the Bill include giving local authorities more powers to tackle rogue landlords and providing assistance with ‘private sector’ enforcement work; reforms to the planning system with the aim of speeding it up and allowing it to deliver more housing; making Compulsory Purchasing Orders more efficient in order to assist with land assembly.

Comprehensive Spending Review

3.6The housing elements of the Review focused on a package of measures to deliver 400,000 affordable housing starts by 2020/21, in line with the policy objectives of the Housing and Planning Bill. The major change for housing associations arising from the spending review was the change in rent setting. As part of the 2013 spending review the Government announced that from 2015/16 social rents would rise by CPI plus 1% each year for 10 years. Plans were also announced to cut short the policy of converging council and housing association rents. This 10-year plan was introduced in part to help mitigate the previous cutbacks in new development grant and also address concerns about the ability of housing associations to repay debt and invest in new and existing social housing. The 10-year settlement was short lived however as the Chancellor announced (in July 2015) that rents in the social housing sector would be reduced by 1% per year from 2016 for four years, resulting in a 12% reduction in average rents by 2020/21. The measure was forecast to save £1.4 billion in housing benefit and also that tenants not in receipt of housing benefit will benefit from reduced rent levels. Inevitably this change has resulted in all associations reviewing their costs and their ability to fund future new affordable housing.

Welfare Reform

3.7This has been with us for some time now and we have some experience of the impact of this. Universal Credit was introduced in Leeds in February 2016 on a phased roll out basis. Prior to this change the main impact of Welfare Reform in terms of a reduction in income for some of our tenants was the spare room subsidy (otherwise known as the ‘bedroom tax’). Other changes which have impacted on our tenants are: the replacement of Council Tax Benefit with a local Council Tax support system (which generally has resulted in lower levels of support), a cap on out of work benefits (including Housing Benefit), tougher sanctions for non-compliance on out of work benefits and a ‘replaced’ Disability Living Allowance.

Local Housing Market

3.8A recent study of the housing market in Leeds identifies that the affordability of housing in many parts of the city remains problematic with house prices on a continuing upward trend. A continuing difficulty for households to afford or access home ownership is placing more pressure on rented housing stock and is increasing the demand for private rented housing. Demand for social housing remains very strong with around 25,000 registered on Leeds Homes. The study revealed that those with a priority need were rehoused together with a half of those with a moderate need. This left over 19,000 applications unable to access or afford market priced housing. The study also identified the need for a new approach towards housing people as they get older. In particular, there is a need to recognise that older people have different wants about whether to live in their own homes or in a specialised setting, and that the type of specialist housing on offer needs to be attractive to older people and non-institutional in appearance and approach.Leeds City Council has developed an ambitious strategy for the provision of a mix of housing by 2028, which includes additional Council social housing. We continue to work closely with the Council to assist with the delivery of this ambitious strategy and we will be assessing our capacity to develop additional affordable housing beyond that to which we are already committed.

BME Housing

3.9We remain committed to our founding principle as a BME Housing Association. The UK and Leeds in particular is becoming increasingly diverse, with BME households more frequently living in overcrowded or poor housing. We also remain committed to our focus as a community based organisation supporting local multi-cultural neighbourhoods. This commitment is given added weight through the findings of a recent study of BME housing organisations.This study revealed that BME organisations operate mainly in some of the country’s most deprived neighbourhoods; have been well received and a major success for BME communities; are well manged and offer good value for money.

3.10The study suggests the BME housing sector needs to expand in terms of the number of homes managed and needs to continue to make a significant contribution to meeting the housing, care, support and health needs of BME communities. Our new plan includes ambitions for growth and improved financial capacity in order to ‘extend our reach’ in support of local diverse communities and local people from a range of backgrounds.

Regulatory Framework

3.11We carried out a major review of the revised regulatory framework last year and introduced new governance arrangements alongside new approaches to risk management, stress testing and value for money. We believe we have an improved Board ‘team’ which has the necessary skills and experience which is capable of operating in this ever changing environment and one which is able to conduct affairs with the appropriate degree of independence. We are not complacent and we will continue to ensure our governance arrangements are continually reviewed and are of a high standard.

Responding to the challenges

3.12As part of the strategic response to these challenges Unity held a joint SMT/Unity Board Away Day in October 2015. The outcomeswere enshrined within a new Business Plan for the UHA ‘group’, which encompassedall the agreements reached, including future plans for Unity Enterprise.

3.13As part of the business planning process Unity’s Audit and Risk Management Committee met in February 2016to consider the major risks facing the organisation and to agree a risk mitigation strategy and Risk Map. The revised Risk Map is included within the updated Business Plan, which can be found at

3.14Major issues of note in the first five years of the 30-year financial projections were:

  • The plan is based on the 1% rent reduction for the next four years. It is assumed for the purposes of this plan that rent increase will revert back to CPI +1% from 2020/21, although stress tests have shown that the association would be viable if this was reduced to CPI +0%.
  • The potential impact of Welfare Reform has been reflected on bad debt provision.
  • A review of the repairs and maintenance expenditure in view of actual cost and the completion of the planned programme.
  • New developments are based on the completion of the 120 units by 2018 within the current development programme.
  • Savings have been identified to maintain the level of surplus in future years and improve the capacity for further development.
  • There is significant improvement in the cash reserve position of Unity Enterprise as higher levels of occupancy in the business centre takes effect.
  • Overall the loan covenants are met throughout the period and gearing peaks at 50% in 2018/19 but all loans are repaid by 2042.
  • The Board carried out a ‘stress testing’ workshop in February 2016 from which an action plan was been developed.
  • The new Business Plan contains ‘high level’ targets and actions. A dashboard of overall performance against these will be presented to each Board meeting. More comprehensive targets and actions are contained within our Operational Plan, which is monitored by the Senior Management Team.
  • In summary, in response to the sector and localised challenges Unity has continued to set ambitious targets, including a continued drive to reduce rent arrears, maintain our development programme and meet improved targets for letting our commercial units at Unity Enterprise. This will lead to improved year on year surpluses and cash reserve growth.

Significant investment