2020 Vision - Our Corporate Plan

2020 VisionCorporate Plan 2015 - 2020October 2015

CONTENTS1. Context

2. Setting the Scene

3. Overview of the SVHS strategic planning system

4. Vision

5. Strategic Objectives

6. Guiding Principles

7. Values

8. Detailed breakdown of Strategic Aims

9. Measuring Progress

10. Organisational Structure - Executive Team

11. Risk

Appendix A: Board Score Card

Appendix B: Annual Delivery Plan

Appendix C: Strategic Risk Analysis

1. CONTEXTThe Corporate Plan 2015 recognised that Severn Vale Housing was a high cost, fairly average performing housing

provider, albeit that customer satisfaction was high, and finances extremely stable.

At that time the Board stated its desire for SVHS to remain independent in order to continue delivering local services

to local people who constantly advise that they like the standards of service provided by the Society.

With this in mind, the Board was under no illusions that in order to sustain control over its own destiny the

organisation needed to focus on reducing running costs, improving efficiency, and increasing effectiveness. The

Board also recognised the need to utilise some of the efficiencies made to invest in four key areas in order to turn the

organisation in to a high performing business. These four key areas being;

1. Investment in the people of SVHS (Board and Staff) to ensure the right skills are available to meet the demands

of the business;

2. Fund new infrastructure (ICT, Mobile technology, Workflow design) to provide cost effective solutions to further

improve efficiency and effectiveness;

3. Expand existing customer services and introduce new ones;

4. Invest in the neighbourhoods and communities in which we operate;

The organisation was, and continues, to undergo significant transformation in a number of areas. These include;

• The Board creating the 2015 strategy; and supporting it with a robust 40-year financial plan;

• Introduction of new ways of working across the business to enable the Society to improve customer services;

manage and mitigate risks; and exploit opportunities in an agile manner that facilitates quick decision making

– being agile is key to being able to adapt to a fast changing housing world;

• A cultural shift in the way staff work at SVHS - new values created by all staff working as ‘One team’ together,

breaking down silo working, improving staff enjoyment at work while maintaining (and in some cases,

improving) operational performance levels across the business - a remarkable achievement given all the

change that is going on;

• Introducing a new Executive Management team bringing in new ideas from outside of Severn Vale Housing’s

own operational experience;

• Implementing a new Business Improvement programme and Performance Management framework; creating

a programme of projects within this plan that are achievable; with the aim of introducing them across the

business once a new HR Business Partner and a Business Improvement Business Partner had been recruited;

• Staff restructure (ongoing) to support the new ways of working – Introduction of ‘Change Agents’ to help

facilitate the Society’s ‘Change programme’; investment in a new Business Improvement team and a new

Governance team (to build upon Governance improvements made since March 2014);

• Utilising key business partners to improve the use of technology and data across the organisation (Orchard,

Housing Partners, Telecetra and Keystone);

• All teams, at all levels, being coached to create ‘One team’ – to support our ‘ONE TEAM, ONE VISION’ approach;

• With all these changes beginning to take effect, pilot projects are being run by cross-functional teams, and

an ever-increasing feel-good factor is coursing through the veins of Severn Vale Housing, individual members

of staff and teams across the Society are becoming inspired that they are able to, and can, MAKE A POSITIVE

DIFFERENCE TO PEOPLE’S LIVES through their work at Severn Vale Housing;

Six months on from the signing-off of the 2015 Corporate Plan the operating environment for the Society has changed

significantly, both from an ‘external influences’ perspective, as highlighted in Section 2 (Setting the Scene) of this

revised Corporate Plan (October 2015); and also from an ‘internal influences’ perspective, not least influenced by

the appointment during the last six months of a complete new Executive Team with the skills necessary to lead a

successful organisation.

The challenge for the Executive Team is to build on the excellent work to date over the life of this new Corporate Plan

(extended to cover the period ended 31st March 2020).

It is important to note that although this new plan ensures the Society is sustainable as an independent organisation,

despite the effects of the Government’s July Budget announcements, the Board have to consider all options open to it

in regard to ensuring the best possible service is provided to its customers; and that it provides such services to the

maximum number of families that are in need of suitable housing. Severn Vale remains fully committed to ensuring

our customers live healthy and independent lives, and we have explored how we can achieve this in the most

effective way. As a result we will move from directly funding those community services ourselves to working with

partner agencies to fund those services or attract grants to fund our provision of those services.

With the imminent introduction of the ‘Joint Core Strategy(JCS)’ (3 local authorities where the Society currently

holds housing stock have put together a bid to facilitate the development of 30k new homes over the next 15 years

- significantly all of this new development falls within Tewkesbury BC’s area!); and recognising that critical mass is

a key driver of minimising unit costs and that SVHS does not have sufficient financial capacity to develop all of the

social homes that are likely to result from the JCS (estimated to be in the region of 12k new units); it is imperative

that the Board consider all options in respect of ‘delivery vehicles’ that will ensure a local housing service provider is

available to the people of Gloucestershire.

If everything included in this plan is completed this will have a major positive effect on reducing the Society’s unit

costs and position it strategically to create a more ambitious follow-up plan that would see Severn Vale Housing as an

important part of the wider community of Gloucestershire in the long-term.

2. SETTING THE SCENEThe SVHS Board had approved a new Corporate Plan in April 2015 to guide the organisation over the following three

years. This Corporate Plan document is a revised version of the April 2015 Plan, which has been amended to take into

account the implications from the Government’s Summer Budgets 2015.

Following the announcements in July 2015, the Board and Executive Team reviewed the Corporate Plan and Business

Plan to ensure the vision and objectives set for the organisation are still viable. This assessment showed that the

organisation’s direction of travel would not change.

The Board remains committed to providing high quality, local housing services to local people, and are embracing the

organisation’s role being an effective strategic partner in creating healthy communities. The Board also continues in

its ambitions to grow the organisation’s portfolio through development and other avenues.

However, the recent changes have led to some amendments to the Corporate Plan, which allow the organisation to

deliver our vision.

The new Corporate Plan is covering a 5 year time frame until March 2020, which gives the organisation time to both

lay robust foundations and build a sustainable, creative and ambitious future for the provision of affordable housing

services in Gloucestershire.

The following section is setting out the contexts in which SVHS is operating using the PESTEL model. There are many

consistencies with the assessment published in the April 2015 documents, and there are some key changes.

PESTEL

Political

Political Economic Social Technological Environmental Legal/regulatory

UK Government

This section could talk about the huge surprises included in the July 2015 budget, but in reality the Board understood that a significant challenge to the Society’s income stream was very likely following the Conservative Government’s election in May 2015; although the Board recognises that the magnitude of the effects of the budget were not expected.

It is clear that the Government expects the social housing sector to become more efficient, and play a significant part in delivering new homes, both for rent and home ownership.

The key policies signifying this expectation are:• The introduction of the 1% rent cut over 4 years starting in April 2016• The ongoing reforms made to the Welfare System• Planned introduction of Pay to Stay and the extension of the RTB legislation to non-Council tenants• The announcement to introduce a greater variety of tenures, ending life time tenancy as a default position

The cut in rent leads to a cumulative loss of income of almost £3m per annum by 2025/26. We have also modelled the impact on the other policies to ensure we understand what these changes mean for our customers and for our business. SVHS have been in a strong position to meet this challenge, as we had already started to review our services, create efficiencies and explore opportunities for increased partnership working with other organisation. Building on this work, we have created a Business Plan which will confirm our financial viability over the next30 years.

The impact of recent and future changes is felt right across the housing sector, and our ambition is not only to safeguard our own assets and services, but to work with others to create strong partnerships to continue and to grow services beyond Severn Vale.

Local GovernmentThe movement for devolution has also reached our shores, with Gloucestershire Councils applying for devolved powers in September 2015. Whatever the outcome, opportunities as well as challenges will emerge from this movement, which we are poised to meet. We are working closely with the Local Authorities to ensure services will continue to be delivered in a strong partnership and to continue to meet local and national demand and expectations.

The Joint Core Strategy (JCS), a plan agreed by the 3 local authorities of Tewkesbury B.C, Cheltenham B.C, and Gloucester C.C, to deliver 32k new homes over the next 15 years, is out for public consultation culminating in a decision by DCLG (Department for Communities and Local Government) for adoption early 2016. There are 6 strategic sites in the plan, all of which are in the Tewkesbury B.C. area. It is anticipated this could result in circa 12k new social housing units, most of which are within 15 minutes of our head office. SVHS is currently seeking preferred partner status to deliver the strategy.

As part of the austerity cuts introduced by the previous Government reductions in DCLG grant support for local authorities have reduced. This is further heightened by their policy of freezing Council Tax levels for the last few years, so undoubtedly community support services within the neighbourhoods SVHS serves will be greatly affected. Similarly Gloucestershire County Council is also looking for big budget savings in anticipation of the results of the spending review later this year. We will work closely with our LA partners to ensure services to customers are delivered in a sustainable way.

EconomicAusterity measures introduced by governments across the world have resulted in a world economy that at this time is slowly coming out of recession. As a result, many people have, and continue, to suffer hardship in terms of being able to afford a good safe home, keep their family lives stable, and ensure their future prospects are maximised.

However with low interest rates and low inflation, when the economy does start to pick up, the financial situation for our customers may actually deteriorate before their lives become more affordable. The result is likely to be further pressure on our ability to collect rental income from them.

The ability for customers to budget effectively in order to meet their everyday needs, including paying their rent post introduction of Universal Credit will be paramount. This will not only affect those at the bottom end of the income scale, but also those better off, as the introduction of Pay to Stay might require some tenants to pay higher rent levels.

SocialAs time moves forward, people’s expectation of what life should offer them increases greatly. This is particularly true in terms of children always wanting the latest technology, fuelled by ‘peer pressure’, resulting in pressure on parents to meet their children’s ‘needs’. Therefore anything that we can do to assist this in reducing their costs of running a home for example, will improve customers’ ability to meet such needs.

Another issue facing customers living in our neighbourhoods is that local communities have become less cohesive. It is therefore very important that SVHS clearly understands and maximises its role within the community and the impact of its services in creating sustainable, healthy communities. The need to take our services out to customers is also important so investment is being made in mobile technology that will assist this.

Demographic changes too are challenging housing organisations like ours - people living longer, more single parent families, etc. Our properties need to not only be fit for purpose but they must be of the right type, size, and location; and we must provide them at the right price. We will review our stock in order to identify what improvements/changes we need to make. This equally applies to our tenancies. In line with government announcements, we will ensure we use the full variety of tenancy types to best support our customers and meet local demand.

There are 18,000 people on the housing waiting list in Gloucestershire, all requiring different housing solutions. As part of developing a new development strategy this will be a major influence on where/what new properties we develop. We will also require new financing to support new development so a project has been set for this in year 1 of this plan to review the financing options.

TechnologicalWe need to ensure that the equipment and systems used are as up-to-date as possible, integrated/interfaced/work - flowed where desirable, that staff are appropriately trained to use equipment provided for them to do their jobs effectively, customers have the opportunity to use our ICT services where practical, and that the ICT team is able to support this. We also need to ensure future ICT opportunities are not missed. The Society will therefore continue to invest greatly in its ICT and ICT staff to ensure such opportunities are grasped.

Aligned to these changes improving the use of customer data to improve the efficiency of our customer services, identify services that might enhance customers’ lives and opportunities, as well as ensuring customer data is protected at all times is a key part of the Society’s ICT strategy moving forward. As a result of recent reviews by the staff of Severn Vale Housing ‘Digitalisation’ is one of five key programmes for the Society over the next 3 years.

We will need to support our customers to meet these challenges, by creating accessible advice on dealing with their finances and supporting them in setting up the best ways to pay their rent, but also by ensuring we create sustainable tenancies for all tenants from the outset by understanding their financial situation better when they apply for housing.

Another factor that is important to housing associations is that the housing market remains strong. Our financial business plan only assumes very moderate sale proceeds, so the risk from this perspective is low. However, we fully accept the challenge to build more homes for ownership, through shared ownership and some outright sale.

As well as building the right type of homes, the Society needs to ensure its financial return from its current housing stock and other assets is maximised. Therefore, this continues to be one of the main areas of focus in this plan.

Legal/regulatoryIn 2014, prior to the current Board, Chair and Chief Executive being appointed, the Society received a regulatory downgrade to G2 (“Meets governance requirements but needs to improve some aspects to continuecompliance”). A “Governance Improvement” programme was completed during 2014/15 in conjunction with the housing regulator (the Homes and Communities Agency - HCA), and despite not meeting a specific consumer standard on gas servicing, the Society has been advised that in recognition of the general improvements made SVHS will maintain its G2 standard.

The Board has targeted a return to G1 as soon as possible and as part of continued improvements the Society’s new Executive Team structure now includes a Governance and Strategy Director.

From a financial perspective the Society has enjoyed a top-rated financial rating from the HCA for the last few years; and this too has recently been reconfirmed. This, supported by two of the large programmes being followed over the next 5 years, will help realise significant transformational efficiencies and enable the Society to become more competitive.

The HCA published a new Regulatory Framework in April 2015. It follows a number of issues arising from the governance of various housing organisations that the HCA felt needed tightening up.

From June the HCA has introduced ‘deep dive’ reviews of housing organisations’ to review such issues, as well as governance arrangements in the organisation.

In a similar vein the National Housing Federation (NHF) has published a new Governance Code of Conduct 2015. The Board will shortly be adopting this as a guide for Board Members and Staff to follow, thereby replacing the current code being used (the 2012 Code).

EnvironmentalThe Society continues to meet Decent Homes standards, is working towards improving its SAP ratings across its stock by upgrading heating systems, insulation, etc in line with the current Asset Management strategy.

Over the next 5 years SVHS will need to begin working towards a 2020 Carbon Reduction target but this is yet to be considered in detail.

However, incremental inroads are being made, evidence the recent changes made to the Grounds Maintenance service whereby mulching grass/trees has reduced carbon production by 75% through not having to take waste for tipping to local recycling centres.

3. Overview of the SVHS Strategic planning systemThe Executive Team has taken a step by step, structured approach to the development of this strategy as shown in

the hierarchy below. This approach is iterative, starting with a vision that is cascaded down to the core behaviours

(values) that underpin the achievement of the strategy.

These KPIs will be benchmarked against housing and non-housing organisations to ensure the Society is continually

improving its services to customers.

In view of the changes we have made to the Corporate Plan, we felt it necessary to refresh some of the terminology

and provide clarification on its meaning.

The rest of this document follows this methodology, and outlines the detail of SVHS’s objectives and goals at

each level.

Where we are going

What we aim to achieve

What rules we will follow

How we will achieveour objectives

How we will behave

What we aim to achieveby 31 March 2020

at the latest

VISION

OBJECTIVES

PRINCIPLES

GOALS

VALUES

OUTCOMES

4. VisionOur 2020 Vision of where we would like to be by 31 March 2020 is:

‘To be recognised as the leadinghousing provider in Gloucestershire.’

Taking each key word in turn, the Executive Team believes the following:

• ‘Recognised’ means that SVHS will be ‘known, immediately associated with…’

• ‘The leading’ means quite simply that we will be the best in, setting the pace for, etc., in a certain area and

category of activity. It also implies that we will be setting the highest standards for others to follow in this area

(or not), by our behaviours, investments and actions. We feel particularly strongly about our responsibility to

take the lead in creating innovative solutions for a strong, sustainable business model which delivers local,

affordable housing services.

• ‘In Gloucestershire’ sets out the field in which we will play; we are setting a clear marker here that

Gloucestershire is our predominant focus, and that activities in any other areas would be assessed to ensure

they would enable us to maintain this strong local focus.

5. STRATEGIC OBJECTIVESThis Corporate Plan is supported by three objectives

1. Efficiency

2. Growth

3. Adaptability

These aims form the thrust of all activities that SVHS will undertake over the life of this plan, and will help steer and

inform improvement efforts and investment (both in cash and resource terms) across the business.

Running through these strategic aims are two distinct types of activity: those that consume cash and resources, and

those that produce cash and resources. These two need to be kept in balance, and to a great extent dictate the pace

of change.

This is as shown in the diagram below;

Generating Profit for a Purpose

£MONEY

OUT

£MONEY

IN

HOW WE WILL GENERATE ANDMAXIMISE RESOURCES

HOW WE WILL INVESTRESOURCES

VALUES

GOVERNANCE AND FINANCIAL VIABILITY

GUIDING PRINCIPLES

STRATEGIC OBJECTIVES

6. GUIDING PRINCIPLESThe Executive Team continues to embrace the set of guiding principles set out in the previous plan. This shows the

level of continuum between the two plans, with both setting out a clear direction of travel, which remains unchanged.

1. We are supported by robust, transparent and audited governance and strong financial planning

2. We operate under stringent quality controls across all our service areas

3. We identify and effectively manage risks throughout the business

4. We make decisions based on evidence and knowledge of our business, customers and communities

5. We work collaboratively on shared goals, both inside the organisation; and with selected

external partners

6. We maximise the commercial value of our assets

7. We invest in and support our staff in achieving their full potential

In the course of the sometimes difficult trade-offs, prioritisations and decisions that will need to be made to achieve

the SVHS vision, these ‘rules’ or guiding principles will provide a clear guidance for the Board and staff.

Values are key drivers of behaviours, and we recognise that we must align the behaviours of all staff to an agreed set

of shared values – a common way of looking at the world – and these in turn will drive a set of common behaviours –

essential to getting changes made coherently and quickly. These are:

The development of the SVHS values was led ‘bottom-up’ by one of the strategic work teams, which involved a

significant part of the organisation to do so. The values therefore sit easily with and are supported by most if not all

SVHS staff, and form part of the ‘contract’ between individuals in carrying out the actions required of this strategy.

7. Values

CARING

CREATIVE

PROFESSIONAL

PURPOSEFUL

TRUSTWORTHY

• Understand our customers’ and communities’ diverse needs• Proactively ensure services are delivered and resourced effectively

and efficiently • Recognise that staff are our greatest asset and we will nurture their talent • Reflect on and learn from feedback given to us

• Develop and deliver services by understanding our customers and the changing market environment

• Seek new and innovative ways to develop and deliver improved and efficient services

• Have a flexible and adaptable approach to minimise risk; and to maximise opportunities

• Deliver services with a passion for excellence• Engage those we work with to help us develop the business• Recognise and reward achievement• Encourage all employees to enjoy their work and be proud of it

• Make informed and fair business decisions• Strive to continuously improve the areas in our control• Keep our staff, customers and information safe• Build a positive “ One Team” spirit• Pursue personal growth and learning

• Committed to promoting respect, equality, openness and honesty in all our work

• Keep our promises and tell the truth• Have the courage to challenge behaviour not in line with our shared values• Take personal responsibility for our own development

The Strategic Objectives are the major aims that must be realised in order for the Society to achieve its Vision.

Each objective is in turn achieved by a set of supporting goals, leading to specific outcomes.

8. STRATEGIC OBJECTIVES

VISION

GOALS

OBJECTIVES

To be recognised as the leading housing provider in Gloucestershire

GrowthEfficiency Adaptability

We will: We will: We will:• Improve efficiency of

our service delivery

• Improve affordability and quality of our homes

• Improve procurement

• Offer flexible tenures to meet customer demand and increase income

• Continually review the long-term financial viability of our assets and maximise the financial return

• Increase value from external contracts, partnerships, and formal collaboration.

• Work with stakeholders to improve the health & wellbeing of residents, enabling older/vulnerable customers to live independently

• Maximise future funding opportunities

• Ensure all staff and stakeholders understand what we aim to achieve and how they contribute

• Understand our risks and manage these effectively throughout the business

• Invest in staff and Board members so they have the necessary skills to support current and future business needs

• Maintain a robust business planning and governance framework, that allows the business to respond quickly to any challenges

EFFICIENCY

OBJECTIVES

OutcomeS

Goal

Efficiency

Improve affordability and quality of our homes

• Maximise the return on our assets through developing and implementing an asset management strategy that considers the performance of individual properties

• SAP rating of all stock to be a minimum score of 55 by 2020

Improve efficiency of our service delivery

• Create a 20% increase in financial contribution from operational teams

• Operating costs per social housing unit under management to be at least 5% below national average by 31 March 2019

• Demonstrable cashable and non-cashable value for money savings to be identified by 31 March 2016

• New performance management framework implemented, embedded and used to monitor business effectiveness

• Increase in net income from service charges by 20%

Improve procurement

• Contractor commitments to provide social value for Severn Vale customers are extracted, for the benefit of our customers and the organisation

• Finalise and implement new procurement framework; embedded and used to drive Value for Money across business

GROWTH

OBJECTIVES

OutcomeS

Goal

OutcomeS

Goal

Growth

Increase value from external contracts, partnerships and

collaborations

Maximise futurefunding opportunities

• Secure national and local grant opportunities for community-based work for the benefit of SVHS customers

• Reduce overhead costs, or increase income by sharing services with Gloucestershire Homes & Community Partnership (GHCP) and other providers

• Review the structure of the group to ensure it is fit for purpose and eliminates any future charge to corporation tax

Offer flexible tenures to meet customer demand

and increase income

Maximise the health and wellbeing opportunities

for customers

• Generate additional revenue by converting appropriate vacant social rental homes to affordable

• An increased income from non social housing portfolio

• Using knowledge and understanding of our residents to best support them to improve health & wellbeing and in so doing support and strengthen local neighbourhoods and communities

Continually review the long-term financial viability of our assets and maximise

the financial return

• All customers paying their rent via Direct Debit will be paying a minimum of weekly in advance

• Increase income from external contracts by 10% p.a. and work with partner organisations to generate new business

• Maximise the opportunity to dispose of high value and/or high cost assets & replaced on a 2 for 1 basis by newly developed or acquired homes

• Increase return from our garage sites by min 5% p.a. from 2018

• We will complete financial affordability assessments pre-allocation for all new customers and we will use this to inform the decision about the allocation

ADAPTABILITY

OBJECTIVES

OUTCOMES

OUTCOMES

Goal

Goal

Adaptability

Offer flexible tenures to meet customer demand and increase income

Invest in staff and Board members so they have the necessary skills to support current

and future business needs

Understand our risks and manage these effectively throughout the business

Maintain a robust business planning and governance framework, that allows the

business to respond quickly toany challenges

• Embed a robust Governance framework across the organisation

• Improve external reputation as assessed by annual Stakeholder Survey

• All staff are clear about and measured on their contribution towards business objectives and values

• Role profiles are used to underpin personal development plans and support succession for organisational resilience

• Staff and our Board are recognised and rewarded fairly for their contribution to the business

• New risk management and assurance framework implemented, embedded and used to mitigate against the risk of not achieving our business objectives

• Regain and retain G1 rating

• Maximise ‘V’ rating from HCA

• Ongoing stress testing of business plan completed and results fall within organisation’s financial capacity

• Embed a robust Performance Management framework across the organisation

Key Performance Indicators

The SMT has developed a powerful but simple set of KPIs to accompany the Strategic Aims. These are

comprehensive, generally easy to measure, and will be reviewed by the Board on a regular basis (quarterly) to ensure

progress is being made; and that corrective action is taken if necessary.

The indicators are grouped into a KPI structure, indicating the level of information provided and the focus on specific

areas of the business. The diagram below illustrates the overall KPI structure.

The Board scorecard is presented in detail at Appendix A.

9. Measuring progress

BOARD

TEAMSTEAMS TEAMSTEAMS

G&SDirectorate

Fi&DDirectorate

C&CDirectorate

ASSETDirectorate

EXECUTIVE

The Chief Executive and Board have created an Executive Team to deliver this proposed strategy. The structure

reflects a renewed focus on SVHS’s core business areas, as well as ensuring clear accountability on behalf of each

executive driving that area.

10. organisational structure - Executive Team

ChiefExecutive

Head ofHR

Asset and Commercial

Director

Customer andCommunities

Director

Finance andDevelopment

Director

Governance andStrategyDirector

Marketing and CommunicationsBusiness Partner

SVHS seeks to identify and manage key risk exposures that could threaten our ability to deliver the Corporate Plan

objectives. As part of our risk management approach we scan our wider environment to highlight key risks. We

identify risk mitigation strategies which we stress test and review carefully through our management and governance

structures.

Going forward, risks will continue to be assessed in isolation, but more importantly as part of potential risk scenarios,

which emphasises the fluidity and interdependencies of risks and the requirement for this to be reflected in the way

we manage risk.

The key risks identified for SVHS over the life of this strategy are clustered around the following topics:

Compliance, including:

• Statutory standards

• HCA regulation

• Data protection

• Health and Safety

• Decent Homes

• Counter party risks

• Employment law;

Income Security, including:

• Changes in Government Policy

• Deflation Impact on Rent levels linked to CPI

• Welfare Reform/ Universal Credit

• Pay to Stay

• RTB

• Affordability (General Living costs)

• Diversification of social tenure types, increase in fixed term tenancies

• Non-social assets (market rents, student accommodation)

Access to funding, including:

• Viability rating vs cost of new finance

• Economic crisis

• Interest rates increases - current plan and future funding

• Ability to re-finance at sustainable levels

• Finance availability to deliver within framework of covenants

• Valuation of assets

• Failure to grow;

11. Risk

Costs, including:

• Pensions

• Funding Mark to Market exposure

• Sustainability of staffing structure

• Change in VAT rates

• Increase in demand for labour/material and impact on maintenance costs

• Decent Homes Standard changes;

Political agenda, including:

• RTB and Pay to Stay

• Welfare Reform

• EU referendum - economic/ financial stability

• LA funding cuts

• LA restructure (Devolution)

• Political pressures to develop (especially Home Ownership products)

• Changes in regulation;

Governance and Operational structure and skills, including

• Effective governance arrangements

• Strong and effective leadership

• Poor risk management

• Ability to deliver efficiencies

• Change Management

• Managing Customer Expectations

• Staff turnover

• Reputation;

In the context of this risk environment, the Board has discussed and agreed the Risk appetite which will support

the delivery of the Corporate Plan. In order to establish the risk appetite, the Board carried out exercises to firstly

understand they key position with regard to a number of key strategic topics, and then assessed the risk exposure

and appetite this position signifies.

Appendix C provides a summary of the outcome of the strategic risk appetite assessment held at Board in October

2014 and compares this to the position of this Corporate Plan. It also includes an assessment of the strategic delivery

risks of this Plan, with a summary of the control actions to minimise any negative impact.

Overall, the assessment shows that the revised Corporate Plan and business plan exposes the organisation to a lower

level of risk, by having a strong understanding of the potential risk areas and delivering a clear strategic response

and effective control actions to mitigate any adverse impact, as well as seizing the opportunities emerging from the

changed environment.

To follow at January 2016 Board meeting

APPENDIX A - Board Score Card

APPENDIX B - Annual DELIVERY PLAN

Draft Corporate Plan and Business Plan - Delivery Risk Assessment – October 2015APPENDIX C - STRATEGIC RISK ANALYSIS

Individual Risks Summary of Control ActionsRisk TopicsGross Risk Benchmark

Failure to develop sustainable Business Plan

Failure to provide Business Plan in time to HCAand Lenders

Failure to put in place strategies, policies and procedures to ensure implementation of

Corporate Plan

Failure of Board to maintain and develop skills to adapt to provide robust direction and challenge in

a changing business environment

Failure to develop Corporate Plan taking into account changing Government policy

Business Planning process not robust

Business Plan considerations to include: lender covenants, Government and Regulator policies,

service standards, organisations objectivesand skills

Approval process includes sufficient time to discuss draft plan with Exec, Board and seek

approval before deadline of 31st October 2015

Create Strategy and Policy review programme, allocate monitoring of programme to

Executive Team

Ongoing and flexible Board development plan, proactive and skills based recruitment, regular appraisals of Board as a whole and individual

Board members, introduction and ongoingreview of Board pay

Assessment of policies, publications, speeches, articles of Government officials, HCA, lenders, Housing Sector etc. Strategic discussions at

Executive and Board, circulation of key documents to Board and Senior staff, attendance at

conferences and seminars

Strategy away day and Board stress testing event ensured strategic guidance from Board from the outset, Executive proposals for budget reviews

were complemented by staff ideas, robust option appraisal, joint review of BP and Corp Strategy, independent verification by CEO, discussion of

draft BP and Corporate Plan at Board in September, followed by Board approval in October

Gove

rnan

ce

3

3

3

3

2

3

1

1

1

1

1

1

Probability Probability

5

5

4

5

5

5

5

5

4

5

5

5

Impact Impact

8

8

7

8

7

8

6

6

5

6

6

6

Score Score

7

BP will not able to withstand further significant cuts in income/funding/increase in costs

Failure to raise sufficient finance at planned costs to provide working capital and meet business

plan requirements

Failure to provide sufficient resources (officer, exec and project budgets) to deliver Corporate Plan (Day

to day as well as project work)

BP will not able to withstand impact of introduction of Pay to Stay and extension of RTB

Efficiency savings included in BP do not materialise/lower than planned

Failure to maintain focus on day to day performance during review work

BP will not able to withstand income reductions resulting from Welfare Reform changes

Failure to eliminate corporation tax when required

Failure to up skill staff to deliver new objectives

Regular programme of stress testing to ensure changes are modelled promptly and

reported to Board.

Treasury project commenced to review our activities and work with us through raising of new finance. Retained treasury management advisors.

Manpower Planning, Project budget planning and ongoing project approval, KPI performance

monitoring system across organisation to highlight performance shortfalls


reported to Board.

Annual review of business plan assumptions.

Robust performance management supported by clear HR guidelines, KPI performance monitoring

system across organisation to highlight performance shortfalls


reported to Board.

Project plan in place, monitoring at Board level.

Role profiling across organisation to establish skill sets, skills gap analysis, development of personal development plans and corporate training plan,

Stre

ss T

estin

gDe

liver

y of

fina

ncia

l ou

tcom

esRe

sour

ces

plan

ning

to s

uppo

rt

deliv

ery

of C

orp

Plan

4

1

2

3

4

3

3

4

4

2

1

1

2

2

1

2

2

2

5

2

4

3

4

3

3

5

5

5

2

4

3

4

3

3

5

5

9

3

6

6

8

6

6

9

9

7

3

5

5

6

4

5

7


Probability ProbabilityImpact ImpactScore Score

Failure to develop partnership working to prevent serious detriment to customers

Failure of local competitors to remain viable

Reputational damage due to changes to Corporate Plan/service delivery

Impact of failure of other organisations acrossthe sector

Negative impact on staffmorale/retention/succession due to revised

strategic focus

Stakeholder Senate work, operational partnership working, Impact assessments during strategy/

policy reviews

Maintain relationships with local RPs, support GHCP partnership work,

Effective External Communication (corporate and by individual Board members/exec/staff),

Stakeholder survey

Monitoring of sector developments, maintain relationships with HCA, Lenders key

consultants, etc.

One team culture change programme, effective internal communication (corporate and through

mgt structure),

Stak

ehol

der

impa

ctW

ider

Sec

tor

impa

ctSt

aff

Impa

ct3

3

4

3

4

2

3

2

3

3

3

3

3

4

2

3

3

2

4

2

6

6

7

7

6

5

6

4

7

5


Probability ProbabilityImpact ImpactScore Score

Comparison of Board discussion October 2014 and Draft Business Plan/Corporate Plan September/October 2015

Position Statements (Questions and Categories) and Risk Level

FinancePosition Statement:

Q: “At the time of a refinancing, how much more additional finance and how much additional risk does the

Board want to SVHS to take on?”

• Level 1: Refinance only to satisfy the current lending requirements. This would mean in practice that the

remaining finance facility (unused) would be used up and refinancing sought only to pay down the ‘bullets’ of

remaining capital to be paid

• Level 2: Refinance to pay off existing loans and support continued development at the current level of

development – i.e. circa 70 properties p.a. or a facility of about £6m per annum going forward

• Level 3: Refinance to pay off existing loans and support increased development at the current level of

development – i.e. circa 120 properties p.a. This would mean a facility of about £10m per annum going

forward

• Level 4: Refinance to pay off existing loans and support increased development at the current level of

development – i.e. circa 200 properties p.a. This would mean a facility of about £15m per annum going

forward

Risk Exposure:

• Low: SVHS Business Plan has capacity to cope with a “wide” range of stress testing scenarios (equivalent of

V1 HCA rating)

• Medium: SVHS Business Plan has capacity to cope with a “reasonable” range of stress testing scenarios

(equivalent of V2 HCA rating)

• High: SVHS Business Plan has capacity to cope with a “very limited” range of stress testing scenarios

Level 1 Level 3Level 2 Level 4

Low HighMedium

Sep 2015 Draft Business Plan PositionOct 2014 Board Position

DevelopmentPosition Statement:

Q: “In light of the JCS, what should be the geographic focus of SVHS’s portfolio, and what mix of tenure

should SVHS offer to its portfolio customers?”

• Concentrated, Highly Social: Compact area, after pruning of the build portfolio through stock rationalisation,

with a predominantly social tenure mix

• Dispersed, Highly Social: Dispersed portfolio (as is or even more so) with a predominately social tenure mix

• Concentrated, Highly Commercial: Compact area, after pruning of the build portfolio through stock

rationalisation, with a predominantly commercial tenure mix

• Dispersed, Highly Commercial: Dispersed portfolio (as is or even more so) with a predominantly commercial

tenure mix

In October 2015, the key question the Board agreed to consider takes a slightly different position, such as:

Q: “Considering the expectations of Central Government on Housing Associations to develop homes for

ownership, what should be the geographic focus of SVHS’s portfolio, and what mix of tenure should SVHS

offer to its portfolio customers?”

• Concentrated: Compact area (Gloucestershire), after pruning of the build portfolio through stock rationalisation

• Dispersed: Dispersed portfolio (considered expansion beyond Gloucestershire)

• Highly Commercial: With a predominantly commercial tenure mix, including for sale, market rent, Shared

Ownership, Affordable and Social rental

• Highly Social: Dispersed portfolio (as is or even more so) with a predominantly social tenure mix, including

affordable and social rent as well as shared ownership

DispersedHighly Commercial

DispersedHighly Social

ConcentratedHighly Commercial

DispersedHighly Social


Risk exposure:

• Low: Level reflects SVHS understanding of Government expectations in terms of increased level of

development unit numbers and tenures, but includes increased risk levels resulting by high gearing levels and

project delivery risk levels with regards to an slightly more divers tenure base and area focus

• Medium: Level reflects SVHS understanding of Government expectations in terms of significantly increased

level of development unit numbers and tenures, but includes increased risk levels resulting by high gearing

levels and project delivery risk levels with regards to an significantly more diverse tenure base and area focus

• High: Level reflects high strategic risk levels resulting from SVHS ignoring Government Expectations to develop

(both in terms of numbers and increase the level of Home Ownership products). This levels also reflects

involved in intensive diversification of products and areas developed.

Growth/Commercial

Q: “How much ‘commercial’ activity does the Board want SVHS to take on?”

• Level 1: Use current workforce’ spare capacity to provide work currently picked up by contractors (Cyclical

and Planned Maintenance works)

• Level 2: Use current workforce’ spare capacity to provide ‘current services’ to a larger customer base

(including general public), in terms of unit numbers

• Level 3: Expand workforce on a stepped-cost basis (increase resources as needed) to provide ‘current

services’ to a larger customer base (including general public), both in terms of unit numbers, and geographical

spread

• Level 4: Provide commercial activities in service areas that the Society does not currently operate in – e.g.

Build own homes and develop Open-market Sale Housing

Low HighMedium



Risk exposure:

• Low: This level includes medium project delivery risks associated from work to create increased efficiencies to

deliver both in house contract work and to create the option for expansion into the commercial sector

• Medium: Level reflects the lower risk of enabling some income from commercial activities, improving the

sustainability of future income levels. This level also includes medium project delivery risks associated from

work to create increased capacity to deliver both in house contract work and an expansion into the commercial

sector and the risk associated with ensuring high returns on investment

• High: Level reflects the risk of failing to increase efficiencies and further capacity within current service,

and thus also not enabling the generating of income from commercial activities, putting the sustainability of

future income levels at a higher risk. This level also reflects project delivery risks resulting from a significant

expansion into the commercial sector and the risk associated with ensuring high returns on investment

Low HighMedium

Customer Involvement

Q: “What level of influence should customers have over SVHS policies (the ‘what and how’), and what level of

power should they have to hold SVHS to account for results (the outcomes)?”

• Level 1: Providing regular, accurate information to (possibly large numbers of) customers through the cheapest

channels (i.e. digital, etc.) with no/limited opportunities for influence

• Level 2: Involving few customers in the least number of areas possible, with a minimum number of events and

some customer participation/influence

• Level 3: Consulting with a larger number of customers on a greater number of areas, with minor areas being

subject to delegated customer authority and decision-making. Low level of influence on decision making at a

strategic level

• Level 4: Regular, meaningful involvement of customers, blending mass information and group involvement

through the business, with robust processes to influence decision making at a strategic level



Risk exposure:

• Low: Reflects full compliance with HCA Customer Involvement standard and co-regulation principles

• Medium: Reflects partial compliance with HCA Customer Involvement standard and co-regulation principles

• High: Reflects low compliance with HCA Customer Involvement standard and co-regulation principles

Low HighMedium

Communities

Q: “What strategy should SVHS use to deliver community services (and social value) and how much should it

invest to do so?”

• Level 1: SVHS is a ‘Reactive Sign-poster’, leading the delivery of few if any community services, just enough to

keep the neighbourhood happy. More focused on own ‘patches’ than anything else

• Level 2: Reactive Sign-poster in the main, but leads some services in some areas – mainly its own patches but

sometimes in partnership with other landlords or bodies

• Level 3: A mix of proactive and reactive services, informed by demographic data-driven insights, with an

active partnering policy, taking the lead on several important community initiatives locally

• Level 4: Mainly proactive services, informed by demographic data-driven insights, with an active partnering

policy, taking the lead on several important community that cover SVHS properties but more importantly broad

swathes of community outside



Risk exposure:

• Low: Reflects low risk related to return on investment from community activities due to high level of expertise

and experience or risks associated with low adverse impact of reduction in community investment work on

other customers and performance in service areas and low level of dependency on outcomes delivered by co-

operation with external partners

• Medium: Reflects risks associated with requirement on high return on investment from community activities

and medium level of costs associated with delivery or risks associated with medium adverse impact of

reduction in community investment work on other customers and performance in service areas and medium

level of dependency on outcomes delivered by co-operation with external partners

• High: Reflects high risk related to return on investment from community activities due to low level of expertise

and experience or risks associated with high adverse impact of reduction in community investment work on

other customers and performance in service areas and high level of dependency on outcomes delivered by co-

operation with external partners

Low HighMedium


Draft Business Plan/Corporate Plan October 2015 Assessment only

Additional Position Statement (Question and Category) and Risk Level category

Sustainability Position Statement:

Q: “Which steps should SVHS take to ensure the sustainability of its service delivery?”

• Level 1: Create a Business Plan which ensures medium to long term viability of SVHS as an independent

organisation

• Level 2: Explore and create options for increased co-operation with other Registered Providers (partnership

working, shared resources, and joint ventures)

• Level 3: Explore and create options for merger with other local or regional Registered Providers

• Level 4: Explore and create options for merger with other local or regional private companies or other bodies

Risk Exposure:

• Low: Low level of dependency on single business model, high level of adaptability resulting in reduced risk of

financial viability threats. High skills base within organisation ensures low exposure to project related

delivery risks

• Medium: Medium level of dependency on single business model, medium level of adaptability resulting in

medium risk of financial viability threats. Medium skills base within organisation ensures medium exposure to

project related delivery risks

• High: High level of dependency on single business model, low level of adaptability resulting in increased risk of

financial viability threats. Low skills base within organisation ensures high exposure to project related

delivery risks

Sep 2015 Draft Business Plan Position


Low HighMedium

Documents

2020 Vision - Our Corporate Plan