Organisations need to sharpen their focus on Value for Money to enable them to deliver more for less - but the traditional 'best value' approach is outdated and no longer relevant. As the TSA stated in the preamble to the regulatory standards: “We recognise that there are many routes to improvement and it is important that providers are able to choose approaches that match their culture and values - we will encourage effective forms of independent validation, audit and benchmarking of performance to encourage providers to improve continually and free the best from unnecessary red tape.”
Best Value was introduced in the 1999 Local Government Act, and between 1999 and 2007 formed the statutory basis on which councils had to plan, review and manage their performance " to secure continuous improvement in the way ... functions are exercised, having regard to a combination of economy, efficiency and effectiveness “via;
- an annual performance plan
- a five-year programme of best value reviews
- the annual publication of performance against a government-defined set of best value performance indicators (BVPIs)
Best Value was superseded across the housing sector with the emergence of the cross cutting Value for Money and Prospects for Improvements KLOE’s utilised in full and short notice inspections by the audit commission, and , in April 2010, the specific Value for Money regulatory standard introduced by the TSA.
The Vfm KLOE focused on how costs compare to others and how value for money was managed. The Prospects for Improvement KLOE focused on whether the service could evidence a record of effectively implementing change that had led to improvements in service delivery and outcomes that would be experienced by customers. Taken together, the two KLOE’s provided a requirement for an ongoing, continuous improvement approach to economy (cost) efficiency (performance) and effectiveness (quality).
The introduction of new Regulatory standards from April 2010 confirmed this approach within a new co-regulatory framework, with the TSA clarifying that ‘We are primarily concerned about outcomes for tenants, not detailed processes’. A specific standard on Value for Money for housing providers was introduced detailing that:
1 In meeting all TSA standards, including their local offers, registered providers shall have a comprehensive approach to managing their resources to provide cost-effective, efficient, quality services and homes to meet tenants and potential tenant’s needs. Registered providers shall set out in an annual report for tenants how they are meeting these obligations and how they intend to meet them in the future. The provider shall then meet the commitments it has made to its tenants.
1.1 Registered providers shall demonstrate to their tenants:
* how expenditure has been prioritised in relation to each of the standards and in the delivery of local offers, and in meeting other needs such as investment in new social housing provision
* how they have ensured value for money has been secured and tested
* plans and priorities for delivery of further value for money improvements
1.2 Registered providers shall have arrangements for tenants to influence the services delivered and the cost of those services that result in service charges to tenants.
What Housing organisations need to be focussing on
The Value for Money regulatory standard effectively places the original ‘best value’ legislative requirement onto a regulatory footing, and outlines the need
- for a comprehensive approach to cost, performance and quality,
- to demonstrate on an annual basis how these have been secured and tested, and
- to publish plans and priorities on an annual basis for delivery of further value for money improvements,
While in these constrained times, a focus on costs is essential, the standard also stresses the need for a balanced approach which focuses on improving outcomes of value to customers such as the performance and quality of services. Organisations doing the same things that have always been done - cutting numbers of staff/budgets - or following the latest trends of investing in centralised procurement teams/seeking mergers in an attempt to deliver £ efficiencies won't achieve that. Performance and quality issues underpin true and effective approaches to Value for Money.
There are also plenty of recent examples demonstrating that in the long run, mergers don't necessarily deliver Vfm gains as central teams increase in size and scope, and repairs procurement based on squeezing costs actually results in increased costs and falls in performance or quality.
Where to Begin?
The balanced approach needs to begin through learning from the best by understanding how costs, performance and quality compare with top performing organisations - then using that understanding to demonstrate, review and improve Value for Money on an ongoing, annual basis in partnership with boards, executive teams and customers .
Cynics of such benchmarking will state that comparisons with other organisations are not relevant or accurate based on different geography, stock profile, tenant profile or that data isn't entered or accounted for in the same way. Lean systems advocates will stress that unit cost benchmarking isn't relevant either.
Cost is, however, only part of a balanced approach, and while costs will vary by geography or stock profile, good overall performance and quality (i.e. customer satisfaction) in key areas such as responsive repairs, asset management, ASB, income and customer service are the product of effective organisations and processes - not their location, characteristics, geography or stock profile. Tenant profiles can also be factored into benchmarking.
Achieving Value for Money
Value for money can only be achieved with a balanced focus on outcomes for customers, and only truly measured by customers. Your customers want better value for money too – as outlined in the recent ‘First year review of annual reports – could do better’ TSA publication.
"Many landlords did not compare their services at all, and several compared their services with landlords not performing particularly well –making comparisons difficult for tenants (e.g. many landlords only compared themselves with other local landlords; one council compared their performance with one other poorly performing council; and large associations generally only compared themselves with each other – particularly enabling one large association to mask some poor performance in relation to anti-social behaviour). We would urge tenants to insist that their landlords seek out and compare themselves with the best performers"
A 5 year programme of best value reviews, or 3 yearly 'status' satisfaction surveys are clearly not the answer.
An ongoing, continuous improvement approach to testing, measuring, demonstrating and improving economy (cost) efficiency (performance) and effectiveness (quality) is. That needs to begin by understanding how costs, performance and quality compare with top performing organisations.