To the Assistant Mayor for Housing and Environment

Part one open to the public / ITEM

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REPORT OF DIRECTOR OF BUSINESS SERVICES

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TO THE ASSISTANT MAYOR FOR HOUSING AND ENVIRONMENT

ON 28 AUGUST 2012

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TITLE:Salix Business Plan 2011-16 Update

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RECOMMENDATION:

That the Assistant Mayor for Housing and Environment approves:

The revised Business Plan April 2011 – March 2016
The 2012/13 Delivery Plan

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EXECUTIVE SUMMARY:

This report provides the Assistant Mayor with the refresh of the Salix business plan for the period April 2011 to March 2016 and the financial and delivery plan for the period 2012/13 for approval.

The financial plan is contained in the report and the delivery plan for 2012/13 is enclosed at appendix 1. The financial plan demonstrates that there are severe financial challenges in future years that are being considered as part of the wider options appraisal work and future delivery models.

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BACKGROUND DOCUMENTS:

(Available for public inspection)

Business Plan 2011-16

Asset Management Strategy 2011-14

Business Support Strategy 2011-2014

Better Places, better life chances 2011-14

Equality and Diversity 2011 -14

Financial Strategy 2011-14

Green Strategy 2011-14

Money Matters 2011-14

Total Salix Strategy 2011-14

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KEY DECISION: YES

DETAILS:

1. / Introduction
1.1 / This report provides the Assistant Mayor with the refresh of the business plan for the period April 2011 to March 2016 and the financial and delivery plan for the period 2012/13 for approval.
1.2 / This is the first progress review of the Salix 5 year Business Plan, within this report the following areas will be discussed:

Operating context
Key Achievements 2011/12
Outcome review
Delivery Plan 2012/13
Financial Plan 2012/13.

2. / Operating Environment
2.1 / Since the 5 year Business Plan was developed there have been a number of significant changes within the operating environment, namely:

Confirmation of financial projections
Developments relating to Welfare Reform
Progression of PFI
Implementation of the change programme – Right People, Right Place, Right Time.

2.2 / Confirmation of Financial Projections
The revenue budgets have been updated to reflect the 2012/13 budget as approved by the Salix Board on the 27th March 2012. During the financial year there will be a re-negotiation of the management fee for 2012/13 with the Council to reflect the commencement of the Pendleton PFI project, the full year impact of which is reflected in future years. To help mitigate the financial impact of the PFI scheme in 2012/13 a request will be made to the Council for Salix Homes to retain the underspend from 2011/12 of £0.1m shown in table 1 below. The combination of the PFI scheme, investment requirements and the implications of HRA Self Financing will be financially challenging to deliver the services to our customers whilst remaining financially viable.
Table 1: Summary Revenue Resources (2011 – 2016)
2011/12
Final Outturn
£m / 2012/13
Approved
Budget
£m / 2013/14
Draft
Budget
£m / 2014/15
Draft
Budget
£m / 2015/16
Draft
Budget
£m
Expenditure
Operational Management
- Employees
- Service Level Agreements
- Running Costs and Overheads / 7.2
1.4
4.1 / 7.4
1.5
2.8 / 6.7
1.2
2.5 / 6.8
1.3
2.6 / 6.9
1.4
2.7
Sub Total / 12.7 / 11.7 / 10.4 / 10.7 / 11.0
Repairs & Maintenance
- Responsive Repairs
- Gas Servicing & Repairs
- Voids
- Planned Maintenance / 2.9
1.9
2.1
4.8 / 3.3
2.1
2.1
4.6 / 3.0
1.5
1.8
2.7 / 2.8
1.4
1.7
2.6 / 2.7
1.3
1.6
2.4
Sub Total / 11.7 / 12.1 / 9.0 / 8.5 / 8.0
Gross Expenditure / 24.4 / 23.8 / 19.4 / 19.2 / 19.0
Income
Management Fee / 23.4 / 23.5 / 19.4 / 19.2 / 19.0
Other Income / 1.1 / 0.3 / 0 / 0 / 0
Gross Income / 24.5 / 23.8 / 19.4 / 19.2 / 19.0
Balance / 0.1 / 0 / 0 / 0 / 0
The public sector capital programme table has been updated to reflect the final position for 2011/12 and the budget approved by the Council for 2012/13, with the indicative figures for future years being based on work undertaken as part of HRA Self Financing. The table demonstrates that there are severe financial challenges in future years that are being considered as part of the wider options appraisal work and future delivery models.
Table 2: Summary Capital Investment Programme & Resources (2011 – 2016)
2011/12
Final Outturn
£m / 2012/13
Approved
Budget
£m / 2013/14
Draft
Programme
£m / 2014/15
Draft
Programme
£m / 2015/16
Draft
Programme
£m / Total
Program
me
£m
Decent Homes / 18.3 / 22.3 / 20.8 / 28.2 / 13.1 / 102.7
Other Works / 5.3 / 10.2 / 2.8 / 2.8 / 2.8 / 23.9
Total Expenditure / 23.6 / 32.5 / 23.6 / 31.0 / 15.9 / 126.6
Decent Homes / 13.5 / 9.0 / 12.0 / 17.0 / 0 / 51.5
SCC/HRA self-financing / 8.7 / 22.5 / 8.1 / 8.0 / 7.8 / 55.1
Other Resources / 1.4 / 1.0 / 0 / 0 / 0 / 2.4
Total Resources / 23.6 / 32.5 / 20.1 / 25.0 / 7.8 / 109.0
Balance / 0 / 0 / 3.5 / 6.0 / 8.1 / 17.6
2.3 / Managing the impact of Welfare Reform
The Welfare Reform Act came into force in March 2012 and brought with it the biggest shakeup to the welfare benefit system since its implementation.
The changes will take place over the next 18 months. The changes that will have the biggest impact on Salix Homes and its customers are:

Reduction in housing benefit rates for working age customer who are under occupying their properties. Claimants will only receive housing benefit based on their bedroom needs from April 2013.
From April 2013 a benefit cap will be introduced for claimants of working age. This will limit benefits to the average family income of £26,000 per year/ £500 per week
Introduction of Universal Credit from October 2013 to 2017. The introduction of Universal Credit will replace all current benefits with one single benefit paid monthly directly to benefit claimants.

The impacts of these changes will include;

A financial impact of £1.68 m on Salix Homes in lost rental income
Additional increased costs due to more recovery action, higher levels of lettings, potential increase in void loss, higher demand for support
Our customers having to manage on less income, prioritise payments and plan household budgets leading to increased levels of financial hardship
Higher transaction costs as customers need to make more payments
Lack of suitable size accommodation to move people to or offer new applicants.

Salix has developed a response to welfare reform and aim to manage the impact of the reforms on both their business and customers wherever possible. Actions to mitigate the reforms include:

Setting up the welfare reform steering group to manage and monitor our response to welfare reform
Detailed customer profiling to identify those customers who will be affected by the changes and using this information to contact these customer directly
Development and delivery of an under occupancy strategy aimed at contacting all tenants who are under occupying and ensuring they are aware of the changes and are provided support wherever possible
Development of interventions to help mitigate the impact of the changes. This range from income maximisation and support with budgeting through to re-location where this is feasible.
Delivery of staff training on the changes so that all staff are trained and can information and advice to customers
Development of a detailed communications programme
Recruitment of a financial inclusion officer and a welfare benefits advisor who are able to provide effective advice and support to customers.

2.4 / Progression of PFI
Salix Homes was formally notified of mobilisation of Pendleton PFI in April 2012 with financial close of 25thSeptember 2012. Since the mobilisation notice was issued Salix Homes has launched the second phase of the change programme which reflects the implementation of the PFI contract.
Salix Homes are working very closely with the new contractor to successfully TUPE transfer the Pendleton team to them and set up a shadow team in preparation for the transfer in August. In addition to this Salix Homes are working with the contractor to continue to provide services to the customers in relation to First Response and caretaking and cleaning service. Other back office services may be provided to the PFI contractor which may include the ICT housing management system.
As mention above in 2.2 there will be a re-negotiation of the management fee for 2012/13 with the Council to reflect the commencement of the Pendleton PFI project.
2.5 / Implementation of the change programme – Right People, Right Place, Right Time.
In September 2011 the 3 phased change programme, ‘Right People, Right Place, Right Time’ commenced. Phase 1 has been implemented, and Phase 2 is due to conclude in June 2013.
2.5.1 / This significant organisational restructure was driven by a range of internal and external factors including:

Responding to feedback from the Top 100 Employers survey on leadership by rationalising the levels of management.
Reviewing the structure of Executive Management Team following the departure of the Director of Finance.
Introduction of Housing Revenue Account (HRA) self-financing in April 2012.
Reacting to continued public spending cuts, ensuring the organisation is as efficient as possible.
A requirement to reflect tenant led self regulation following the abolition of the Audit Commission.
A reduction of 20% less stock and rental income for Salix Homes following the transfer to Pendleton PFI.
Decent Homes investment programme to deliver nearly £100 million of improvements over the next 5 years.
Improving how Salix handle customer enquiries.

2.5.2 / The change programme to date has directly impacted on approximately 25% of the Salix workforce, and whilst it has been recognised that the change programme has been successfully and sensitively managed there has been an impact on the progression of planned activity. In particular the Organisational Development Team has had to divert their energy into the management of the programme and the subsequent employee relation issues. However, the overall result is that Salix will be in the best possible position to tackle the factors outlines above whilst continuing to provide excellent customer service and become a stronger organisation.
3.0 / Key Achievements 2011/12
The business and delivery plan is achieved through Salix’s 8 principle strategies which are designed to deliver 22 business priorities which in turn deliver 6 organisational objectives. The organisational objectives are known as SPIRIT. The organisational objectives and business priorities remain unchanged.
3.1 / The key achievements against the 8 principle strategies over the period 21001/12 are as follows:
3.2 / Better Places, Better Life Chances
The Better Places, Better Life Chances Strategy sets out the strategic vision for delivering excellent neighbourhood services and the development of opportunities for our customers to improve their life chances, and translates the vision into a model for delivery at an operational level.
The key successes in 2011/12 include:

The relaunch and relocation of the First Response Team
The review and launch of in-hours security and concierge services, and fair and transparent service charges put in place
Caretaking and low rise cleaning services reviewed and fair and transparent service charges put in place
The development of the TMO Tripartite agreement
Secured 40p for every £1 of Salix Homes investment in neighbourhood activities.

3.3 / Business Support Strategy
The Business Support Strategy sets out how Salix’s business support infrastructure will develop to meet the needs of the business plan over lifetime of the plan, and includes the following services:

Information communication technology
Performance management
Risk management and business assurance
Governance
Marketing and communications
Organisational development.

The key successes in 2011/12 include:

The development and implementation of internal procedures to improve the standard and consistency of customer communication
The production of a number of rent campaigns at Christmas and year end
The development of an interactive micro-site on green issues
The development of social networking to improve access to services
The restructure and recruitment of the ICT Team
The implementation of competency based performance appraisals for Board members
The development of performance reporting from Northgate using Business Objects.

3.4 / Equality and Diversity
The Equality and Diversity Strategy describes how Salix Homes will fulfil its moral, social and legal obligations in terms of equality and diversity in its roles as an employer, service provider and partner.
The key successes in 2011/12 include:

We have ensured we are able to publish information on our workforce profile and equal pay
We have evidence compliance with the current codes of practice
We have delivered training to partners and customer groups on changes to legislation
We have monitored contractor performance in relation to equality and diversity
We have developed our Equality and Diversity partnership group to cover a wider range of contractors and suppliers
We have delivered the Disability Protocol training to contractors.

3.5 / Financial Strategy
The Financial Strategy sets out how, in the face of cuts in public spending, the impact of the Pendleton Private Finance Initiative (PFI) and the implementation of Housing Revenue Account (HRA) self financing, Salix Homes will continue to be a financially viable organisation and maintain capacity to invest in services that customers want and need.
The strategy addresses the short term financial implications of the PFI scheme and HRA self financing for the next three years and gives consideration to the longer term 30 year requirements of HRA business planning.
The key successes in 2011/12 include:

The maintenance of fit for purpose financial governance and reporting arrangements
The successful closure, audit and sign off of accounts for 2010/11
The successful closure of accounts for 2011/12
Production and approval of annual revenue budgets
The maintenance of the VFM monitoring framework to record efficiencies and select appropriate reinvestment opportunities
The maintenance of an accurate and current contracts register
The co-ordination of all procurement activities
Supporting the council in the development of the 30 year HRA business plan model
Work with the council to assess the implications of PFI on the HRA
Work with the council to assess the implications of self financing on the debt portfolio.

3.6 / Green Strategy
The Green Strategy sets out the strategic approach to achieving the Salix Homes business objectives through reducing fuel poverty, reducing carbon footprints and becoming more energy efficient, both as an organisation and through customers.
The key successes in 2011/12 include:

CESP funding identified for a number of schemes
Opportunities to bring an investment through the Green Deal have been explored
We have worked with AGMA to identify collaborative funding opportunities.

3.7 / Money Matters Strategy
The Money Matters strategy sets out how Salix Homes will continue to maximise rental and other income, support our customers in maximising their personal and household income and work in partnership with key agencies to tackle financial exclusion in Salford.
The key successes in 2011/12 include:

A review of the function and structure of the Income Management Team
The recruitment of a financial inclusion officer
Taking responsibility for the recovery of leaseholder service charge arrears
The submission of a Big Lottery Fund bid and getting through to the second round of the process (to date).

3.8 / Total Salix
The Total Salix Strategy sets out how Salix will:

Communicate with and enable customers to access services
Continue to broaden customer involvement and increase their influence in service design
Develop our organisation to put the customer first, take ownership of issues and problem solve through the business intelligence we provide and through which we engender the right culture in our organisation
Work together and remove silo working, to improve processes and policies and harness technology to engineer a seamless customer journey.

Key successes in 2011/12 include:

The development of our role as a co-regulation champion, selling advice, training and support to others
Supporting the Senate to extend their remit to include monitoring performance on behalf of the Salix Board
Achieving external accreditation through Investors In People, Customer Service Excellence and Tenant Advisor
The involvement of customers in procurement exercises
Working in partnership with a range of agencies to enable all customers to influence services, particularly by developing links with BME customers, LGB customers and transgender customers
The development of a programme of activities to engage with young people.

4.0 / Outcome Review
4.1 / To understand whether the delivery of strategic actions is achieving the desired results Salix monitor performance against 8 key outcomes.
4.2 / The Business Plan was developed to achieve the following 8 outcomes over its lifetime:

Be an increasingly efficient organisation
Remain a financially viable organisation
Develop and grow the business
Provide an excellent customer experience
Reduce crime and fear of crime
Manage sustainable properties and places
Be energy efficient and have fewer customers in fuel poverty
Have a diverse, committed and empowered workforce.

4.3 / The detail breakdown of the performance against the above outcomes is attached at Appendix 1. Of the 45 level one indicators reported for March, 24 are green, 9 amber and 10 red. This results in an overall performance rating for level one ofGREEN.
4.4 / Central to understanding whether these outcomes are improving the customer experience is an analysis of customer satisfaction levels. In 2011/12, quarterly customer satisfaction surveys have been undertaken.
4.5 / At year end the overall satisfaction with the service provided by Salix Homes was 88.1% this was 3.6% above target, the upper quartile figure for the sector is 83.9%. A further interrogation of the information by protected characteristic identified that all groups remained within a 5% tolerance of their position at the start of the period, except ‘Not Christian’ where an improvement of 10.1% over the period.
4.6 / In quarter 1 there were 3 groups who were significantly less satisfied than the average customer, these groups were:

Those aged 24 – 44 (80.8% satisfied)
Those who classified themselves as not heterosexual (76.9% satisfied)
Those who classified themselves as not Christian (58.3% satisfied).

4.7 / As mentioned in 3.6, the ‘Not Christian’ category improved by 10.1%, those aged 24 those aged 24-44 improved by 1.3% and those who classified themselves as not heterosexual also communicated an improvement in satisfaction with an increased level of satisfaction of 3.1% as at quarter 4.
5.0 / Delivery Plan 2012/13
The delivery plan for 2012/13 is attached at Appendix 1. As mentioned in section 4 above the outcomes will be monitored over the lifetime of the business plan rather than the lifetime of this delivery plan, and the second set of tables included in this delivery plan show how we are monitoring the outcomes through our key performance indicators.
Progress against the actions in the delivery plan and the key performance indicators are reported to the Customer Performance Panel, Senate, the council, Board and the Senior Management Team on a monthly basis.
6.0 / RECOMMENDATIONS
6.1 / That the Assistant Mayor for Housing & Environment approves:

The revised Business Plan April 2011 – March 2016
The 2012/13 Delivery Plan

KEY COUNCIL POLICIES: