Value for Money is about efficiency and in a post Covid world it matters.
Registered providers have been faced with some of the most challenging months in their history over the last year. With the ongoing pandemic affecting each provider in a unique way, including the rise of arrears and loss of rental income (the RSH reported in Sept 2020 a rise of 2.2% in the quarter) and many are having to re- allocate funds towards ensuring the safety of their tenants (in 2020 the NHF stated the cost of fire safety work for the entire housing association sector will “easily exceed” £10bn) budgets are being stretched and strategic priorities are being shifted. It is now more important than ever that providers have a strong grasp and understanding of their costs and how they can operate more efficiently.
The Regulator has not been as vocal on their Value for Money (VfM) expectations in the last year given the current backdrop, but what is required is complete transparency. Now in the fourth year of the updated VfM Standard, the expectation is that providers do not just report the statutory VfM metrics but have a complete understanding of their cost drivers and critically what they mean to your organisation and have set in motion embedding VfM throughout. Each organisation has a different makeup, with a different cost profile, understanding your own context and cost drivers is the first step in becoming a truly efficient organisation.
Low hanging fruit
For many providers, truly embedding VfM can seem a daunting task and given the current environment, VfM for many has moved down the priority list. However, some simple steps can set the structure in place:
- Be SMART – A golden thread needs to be established, VfM is about achieving your strategic priorities in the most efficient way and ensure your strategic priorities have suitably aligned, measurable targets.
- Measure and report – Go further than the seven regulatory metrics and develop bespoke VfM metrics that reflect the key elements of your organisation and are aligned to your strategic priorities. While operational VfM indicators allow you to draw out further insight and efficiencies within function areas
- Lead from the front – Providers ahead of the curve will monitor leading as well as traditional lagging indicators to inform future desired results. One example is sustained tenancy metrics, which provides a key lead indicator for future voids, management costs and rental income.
- Benchmark appropriately – Identify a genuinely appropriate benchmark group and where performance is below or above average levels, be clear on the leading and underlying reasons why.
- Board responsibility and oversight – The Board should as a minimum approve the VfM Strategy and regularly (we suggest quarterly) be kept informed of VfM performance.
Identify, learn and grow
The pandemic has taught and forced us to think differently and act innovatively. This might mean having parts of your workforce operate from a virtual setting. Or the accelerated need for online services which provide business intelligence and customer insights, allowing for better planning particularly around lettings, repairs and rent. Ask yourself what learning from the pandemic should your organisation take forward?
There is an acknowledgement across the sector that costs will be driven higher by recent events, and that indicators will be difficult to benchmark for 2020/21 given, for example, Covid related delays to repairs and development programmes. This does not mean the structures and processes to embed VfM should be compromised. With the expected raft of consumer-focused metrics to come into force in the near future, social hosing providers will need to act now to demonstrate how they are delivering VfM not just to the Regulator but their customers too.
VfM at its core is not an exercise in cost cutting but an ethos across an organisation to achieve your strategic objectives in the most effective and efficient way.
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