New Performance Indicators, Interest Rate Rises and Continued Uncertainty Means Understanding Value For Money is Crucial
Value for Money (VfM) is now a standard phrase in a housing provider’s lexicon.
VfM Sector Scorecards were developed with the intention of being adopted voluntarily by Housing Associations, to provide a uniform measure of past performance. They bring the ability to demonstrate to tenants, investors, the Regulator and other stakeholders, a consistent view across the sector on the delivery of VfM.
Following on from this, in April 2018, the Regulator mandated that English housing associations publish VfM metrics, a subset seven of the Sector Scorecard indicators, principally focused on financial efficiency, in their financial statements. And now the Government has published a social housing green paper which, amongst other things, suggests HAs publish a consistent set of Key Performance Indicators, including information on service delivery, which will form the basis of league tables upon which access to grant may be predicated.
Knowing your costs, and knowing the value of your services therefore continues to be a core concern of the Regulator and government. It should also be a key concern for all boards and executives. For example, the Regulator has estimated that the recent interest rate rise will reduce HA sector surpluses by £50m and, with predicted future rate rises and increased uncertainty during an already unstable economic climate, in part caused by Brexit, knowing what adds value and what could be delivered more efficiently, delivered differently or not delivered at all, should be a key part of every board’s strategic awayday discussions over the autumn.
It is essential that board members know the right questions to ask to ensure that the evidence they see in VfM reporting is accurate, timely and enables both compliance with the Regulator’s current VfM Standard and potentially new reporting to customers on service delivery performance. Understanding cost and other drivers enables board members to consider whether allocation of resources and mix of activities continues to be suitable: transforming the business or changing direction may be rational outcomes. VfM strategies will be debated and approved by boards and our work in supporting boards and executives to ask the challenging questions, to develop business resilience and effective scrutiny continues to grow. This includes financial modelling of options.
Housing Brixx is perhaps the most popular tool used by Housing Associations and is increasingly used by developing ALMOs and new private sector Registered Providers, to plan the growth and development of their businesses. As part of the business planning process, we’ve also developed a cutting-edge suite of VfM dashboard reports that are tailored to your business and slot into your existing Brixx business plans. These will analyse and automatically report on your forward-looking performance against VfM metrics, Sector Scorecards and peer comparison. Knowing your costs and understanding their value are the first principles of good value for money strategies.
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