BUSINESS PLAN 2012-2017 (Year Three 2014/15 update) Contents INTRODUCTION ............................ 3 THE ASSOCIATION ......................... 4 PRODUCTS AND SERVICES........... 11 OPERATING ENVIRONMENT........ 14 STRATEGIC KPIs........................... 19 STRATEGIC RISK MANAGEMENT . 20 CONTINUOUS IMPROVEMENT .... 21 OPERATIONAL INFRASTRUCTURE 22 ASSET MANAGEMENT STRATEGY 26 FINANCIAL STRATEGY ................. 28 Appendix 1 ................................. 31 Appendix 2 ................................. 33 2 Continued our efforts to support our customers through the impact of welfare reform Made a significant investment of £2.8m in our homes, working towards the Scottish Housing Quality Standard Continued focus on and investment in learning and development for all staff INTRODUCTION By the Chief Executive, Jason MacGilp and Chairperson, Ken Ward Welcome to year 3 of our 5-year business plan 2012-17. We have achieved much over the course of the last year. Here are a few highlights: This year will follow a similar trend, that of improvement and change. We face a range of challenges such as: The outcome of the referendum on Scottish independence The impact of Welfare Reform Housing Support funding changes Ageing stock profile Requirements of the Scottish Housing Quality Standard (SHQS) Pension Deficits The wider economy and uncertainty of employment prospects and income for our customers Requirements of the Energy Efficiency Standard for Social Housing (EESSH) Improved overall customer satisfaction to 86% Moved our head office to new modern open plan premises in Edinburgh Continued to develop our ABC (A Better Cairn) programme in conjunction with Quality Scotland Achieved European Framework for Quality Management (EFQM) Committed to Excellence (C2E) status Continued to innovate in our approach to Customer engagement and involvement including establishing a Customer Panel and delivery of a Customers’ Conference and Mystery Shopping programme Introduced new business systems to improve our approach to business planning, performance management and risk (Clearview), provision of a modern in-house repairs service (Epix), and electronic document management system (Documotive) Preparation for the first submission of the Annual Return on the Charter (ARC) in 2015 including participation in a rigorous pilot process facilitated by Scottish Housing Best Value Network (SHBVN) Joined the HouseMark benchmarking service Developed and approved our new Customer Excellence Strategy Undertook process mapping and improvement on how we deal with vacant properties Undertook a review of pensions provision Continued our preparation for Investors in People accreditation Commenced a Leadership Development Programme for Senior and Operational Managers Undertook a review of sheltered and very sheltered housing provision Commenced delivery of our first community project with Cradlehall Primary School Football Club through the Cairn Community Fund We have a range of initiatives and activities planned to address these challenges, these include: Investment in our stock Continuation of the review of our Sheltered and Care and Support services Welfare and benefits advice Customer engagement Investment within the communities in which we work A focus on continuous improvement Ken Ward, Chairperson, and Jason MacGilp, Chief Executive 3 Values THE ASSOCIATION Our values underpin everything that we do. Mission Customer Focus “We will provide good quality affordable homes and services in communities where people want to live.” We will focus on outcomes for customers. The views, welfare and quality of life of our customers will be at the heart of all we do. Our mission statement reflects an emphasis not only on maintaining homes to a high standard, but on working with and supporting communities where people want to make their homes. Equal Opportunities and Diversity We will strive to remove and prevent discrimination of any kind from our activities and will embrace diversity. Everyone is equal, everyone is different. Value for Money We will strive to achieve greater value for money in all that we do. Continuous Improvement We will strive continuously to improve the quality of all that we do. We work as a team to do the right things, and to do them right. Respect and Understanding We are committed to working with customers, partners and staff colleagues with mutual respect, understanding and trust. Integrity and Inclusiveness We are open, honest, trustworthy and inclusive in all our dealings. We do what we say we will do. Customers at Cairn House in Inverness Innovation We will try new and better ways of delivering our services and actively consider new ways of working and service provision. 4 Key Objectives Priority Tasks 2012-17 With our values underpinning everything that we do, we will achieve our mission by focusing our activity around 4 key corporate objectives, to: The priority tasks identified to achieve the key objectives of the Association are detailed below: Deliver Customer Excellence Deliver Customer Excellence Sustain Communities Sustain Business Achieve Continuous Improvement We will: Continue to gain a better understand of the needs of our customers and act upon information gathered on satisfaction levels, needs and demographics Continue to meet the new Social Housing Charter standards and best practice Continue to allocate resources to customer priorities Continue to equip our staff with the skills and resources they need to deliver the services our customers expect Exploit technology for the benefit of our customers These key objectives were agreed during 2011-12. The priority tasks to achieve these objectives in the medium term, through service plans, are detailed in the next section. We have: Developed a Customer Excellence Strategy Introduced a ‘Cairn Customer Panel’ to enable our customers to scrutinise our performance and improve services The opening ceremony for our new development at Woodside of Culloden Sustain Communities We will: Continue to provide high quality affordable homes Review our Asset Management Strategy Continue to engage with customers at all levels within the Association Share services with other housing providers where there is a business case to do so Commit to providing opportunities for community employment Continue to provide money advice Work towards tackling fuel poverty Continue to work with local community groups in order to benefit our customers and the wider community Explore mid market development opportunities Customers in Coatbridge 5 We have: Introduced the Cairn Community Fund to help support local initiatives Achieve Continuous Improvement We will: Achieve Investors in People accreditation Commit to continued investment in staff learning and development Aim for top quartile performance against our peers Continue to develop performance management and benchmarking to highlight areas for improvement and success By the conclusion of this plan period, have an office structure which supports and enhances the services we provide to our customers Continue to fully utilise the capacity and capability of our existing Information Technology (IT) systems Provide modern information systems that support effective service delivery Improve our website Introduce a comprehensive procurement management system Sustain Business We will: Secure the long term funding of the Association, and maintain its financial viability Invest in existing stock over the five year lifetime of this plan Achieve SHQS compliance by 2015 Continue to pursue opportunities to deliver other or additional services Achieve our Key Performance Indicator (KPI) targets Remain an independent national housing association and explore partnerships with others Invest in our staff to show our commitment to them and to ensure they are fully committed to the Association Continue to drive efficiencies in operating costs through procurement, partnerships and new ways of working Continue to reduce our management costs and overheads including office accommodation Continue to review operational risk management and act on plans as a result. Develop a Business Continuity strategy Pursue organic growth through development and partnerships Undertake a comprehensive rent review Continue to evaluate the impacts of the Welfare Reform Act and establish plans to mitigate the changes on our business and customers We have: Implemented the ‘A Better Cairn Action Team’ programme to improve internal communication, staff engagement and quality services Achieved ‘Committed to Excellence’ accreditation from Quality Scotland Reviewed our structure to ensure we were best placed to meet our future challenges and seize opportunities Reviewed our governance arrangements to ensure they are fit for purpose and meet the Scottish Housing Regulator’s requirements Implemented our IT strategy We have: Critically evaluated the cost of our Care Homes, Very Sheltered and Sheltered services and assessed options for their future These priority tasks are linked to the key objectives and are used to build Service Plans. These monitor the performance and measurement of the tasks undertaken by teams, senior management and the Board as appropriate. The main areas of focus for this year can be found within the Strategic Goals section of this document. 6 STRATEGIC GOALS In this section you will find an overview of our strategic goals. These are our main areas of focus for 2014/15. Customer Excellence To have implemented a contact centre solution and improved our approach to how we collect, store and report on information about our customers. To have implemented a system of proactive and regular customer satisfaction surveys which will ensure that action is taken and individual feedback is provided to customers. Performance and Regulation To have continued the review of our Care and Support services, including our care homes. To have reviewed our approach to performance reporting and made progress towards top quartile performance in all ARC indicators, including 100% SHQS compliance by 31st March 2015. To have achieved budgeted performance in 2014/15 and interest cover covenant compliance of 120%. Knowing our properties To have developed a comprehensive asset management strategy and considered the establishment of a property standard that exceeds minimum regulatory requirements and meets the aspirations of our customers. Active in the Community To have developed our approach to accessing external funding and initiated new business/social enterprise projects in communities in which we operate. A Better Cairn To have improved communication and engagement levels with our staff and invested in their development. To have increased our self awareness and become more outcomes focussed. To have validated our efforts around continuous improvement and employee engagement by achieving the Best Companies One to Watch Status. To have reviewed our approach to people performance management. Growth and Partnerships To have continued to look at opportunities for growth through partnership working with other organisations. 7 Organisational Structure We are a registered Charity and an Industrial and Provident Society and are governed by a voluntary Board. The following diagram provides an outline of our main governance and management structures within Cairn Housing Association. Cairn Homes and Services Ltd Customer Panel Board Audit and Compliance Remuneration Committee Board Structure Chief Executive Director of Finance and Investment Director of Customer Services Executive Team Structure Organisational Diagram Formal control of our Association rests with the Board. The Board currently has 13 members. The members are drawn from a cross section of the community, including our customers or those with specific business expertise. 8 Director of Business Services Delivering on our mission is not quite so simple, but our dedicated staff team strive on a daily basis to ensure we deliver a quality and professional service which provides excellence and value for money to our customers. Past Present & Future Our Association was formed as an independent Scottish organisation in 1990. Prior to this it had been the Scottish arm of the Royal British Legion Housing Association, with the primary purpose of housing and care of former armed forces personnel in sheltered housing. In 1992 we changed our name to Cairn Housing Association and expanded our range of affordable housing. Over the last ten years, we have focussed on developing new properties throughout Scotland, working with local authorities and other partners to meet housing needs. As we move forward with this plan, we are refocussing our energy and finances to improve the housing stock we have. We will however continue to explore opportunities for new build development. In 1996, after a tenant ballot, we acquired 850 properties from Scottish Homes in the Highlands. Since then, through a variety of means including transfers of engagements, stock transfers and our new build development programme, the stock has grown from 916 homes in 1990, to 2,351 in 2002, to a current holding of almost 3,500. In addition to rented homes, we also offer shared ownership and shared equity products as well as a range of specific accommodation and care solutions for special needs groups. The bulk of our current operational activity is focussed on landlord services and housing support. We currently find ourselves under increasing financial pressures relating to our housing support provision, as funding for this is constrained. We are however committed to provide quality services, and as such we will only continue to deliver services where we can guarantee quality will be maintained, as judged by our customers. We employ 244 staff and have an annual rental income of £11.6m with total income of £14.2m. We believe the future holds a number of challenges, as well as opportunities. Continuous improvement and innovation are vital to our future success. Cairn is in a strong position to rise to these challenges and intend to continue to provide homes and services in all our areas of operation. We are a registered housing association with charitable status. Our rules are based on the Scottish Federation of Housing Associations (SFHA) Model Rules (Scotland) 2013, and we are registered under the Industrial and Provident Societies Act 1965. As a not-for-profit housing association, we are registered with and monitored by The Scottish Housing Regulator and manage our housing through principal offices in Edinburgh, Inverness, Glasgow, Coatbridge, Thurso and Wick. Our mission is simple: “To provide good quality affordable homes and services in communities where people want to live.” 9 Lenders Stakeholders As a charitable “not-for-profit” organisation, we are reliant on money received from Lenders to support both the building of new homes and the refurbishment of existing stock. Communicating with this group of stakeholders and providing them with relevant, accurate and timely information is vital. We are a national housing and support provider. Customers There are various names for our customers, “Tenants”, “Residents”, “Service Users” being just some of them. Whatever term is used, our focus is on delivering the best possible services and developing meaningful relationships between ourselves and our customers. Partners We work with a number of partners on a variety of initiatives. These relationships are vital to us and allow us to learn from others whilst increasing the volume of our collective voice. This is the group of stakeholders for which we exist. These are the people that we build homes for and deliver services to. Our customers are the basis of our Association and as such are the most important stakeholder group. Scottish Government As a publicly funded body, we provide services on behalf of the public sector in Scotland. As such, the Scottish Government have a vested interest in our activities. It is important that we provide Government with any requested information in a timely fashion. It is also important that we seek to influence the Government on housing policy and related issues such as health and social care for the benefit of all our stakeholders. Staff Our staff team are vital to all that we do as an organisation. We are only as good as those who deliver services on our behalf. It is vital that we provide appropriate incentives, support and rewards to our staff in return for high levels of performance and high levels of professional behaviour. We will focus on improved communications with all groups of staff. Suppliers We work with a number of suppliers, contractors and developers throughout Scotland, and have developed a good relationship with all our suppliers. Local Authorities We work in 24 local authorities across Scotland. The customers we serve are also customers of the local authority therefore the local authority group have significant interest and influence on our work. We will maintain and develop our existing good relationships with local authorities and strive to develop and build new relationships. Regulation As we receive public money, it is only right that we are subject to scrutiny by public bodies to ensure we are delivering value for money and that we are operating effectively and efficiently. Providing this group of stakeholders with accurate and timely information and evidence is essential. We have a partnership agreement with Jewson for Cairn HomeWorks 10 PRODUCTS AND SERVICES Sheltered Housing Sheltered housing is provided to rent for people aged 60 or over or those demonstrating a particular need, living independently in their homes, who would benefit from a housing support service. One of our strategic goals for 2013/2014 was to consult with stakeholders on the redesignation of 15 sheltered housing locations to retirement housing. This is well underway and will continue during 2014/15. We provide a range of housing and services. General Needs General needs housing is provided for single people, couples and families to rent in a wide range of developments throughout Scotland. Very Sheltered Housing Very sheltered housing is provided to rent for older people who are less independent and who benefit from housing support for personal care needs. This service was reviewed during 2013/14 and a decision was taken, in consultation with residents, the City of Edinburgh Council, local councillors, politicians and other partners, to transfer the service to a new provider. The transfer is anticipated to take place in mid 2014. Milton of Leys, Inverness Shared Equity and Shared Ownership Shared equity and shared ownership are Government initiatives which assist people to become homeowners by building properties that are regarded as affordable. In addition there is an advantage to the householder of owning a percentage of the equity of the home. A tenant at Falconer Court in Inverness Amenity and Retirement Housing Amenity and Retirement housing is provided for people aged 50 or over living independently in their homes. 11 Care Homes Care and Repair Care homes are registered with The Care Inspectorate and provide a warm and homely environment for very frail older people. Highly experienced and qualified staff provide full personal care and support to ensure a high quality of life for residents in their later years. These care homes will be subject to review in 2014. The Care and Repair team in the Highlands is responsible for providing a technical and administrative service to assist older and disabled people in private sector accommodation to remain living in their homes in comfort and safety and to assist other sections of the community with property improvements. Cairn HomeWorks Customer Involvement Cairn HomeWorks launched in July 2012, to provide an in-house repairs and maintenance service in the Highlands. Customer involvement is afforded a high priority within our Association. Supported by our dedicated Communications and Engagement Team, we employ a variety of means to increase and enhance our customer participation. At the centre of our approach is our innovative Customer Panel that provides a new level of engagement and customer scrutiny. Mystery Shopping, Satisfaction surveys, Registered Tenant Organisations, Customers’ Forums, working groups and our Annual Tenant Conference are all ways in which we seek our customers’ views so we can continue to improve our services. This ambitious change to how we deliver maintenance services in the North is a great opportunity to deliver the service that meets our customers’ expectations. Members of the Customer Panel interviewing Rory Gaffney, Director of Business Services, as part of their scrutiny project into complaints Our HomeWorks service has proven to be extremely popular with customers 12 Supported Housing and Special Lets Welfare Benefits Advice Ensuring our customers have appropriate advice on benefit entitlement and, where necessary, assistance with applying for benefits is a key role for our dedicated Welfare Benefits Advisor. We act as landlord to voluntary agencies, where properties are let to meet specific needs through supported housing, leases or special lets. These types of accommodation cater for a range of people with special needs including autism, mental health issues and physical disabilities. We also provide accommodation for women at risk of domestic violence and provide crisis centres and associated outreach services. Provision of Back Office Functions We already provide IT hosting services to other Housing Associations. Over the course of this business plan we will look to develop our provision of Back Office functions further. Housing in East Lothian Flora MacDonald House Flora MacDonald House provides accommodation and housing support for single homeless women aged over 16 living in the Highlands. The staff team provide a range of housing advice and general support to service users in a safe and secure environment. In particular work is undertaken to ensure residents have the skills and confidence to manage an independent tenancy when they move on. Maggie, our Benefits Advisor, leading a workshop at our customers’ conference Money Advice Service A specialist money advice service is provided by the Flora MacDonald House team to our customers living in the Highland region. The team assist customers with debt management, income maximisation, specialist welfare rights advice and setting up a new tenancy. 13 Demand OPERATING ENVIRONMENT In the vast majority of cases, there is significant demand for our homes and services, particularly in the wake of the economic recession and reductions in public finances. Customer Profile We are committed to getting to know our customers better so that we can tailor our services to the needs of the people who rent homes from us. However, some of our accommodation, for older people in particular, is no longer attracting adequate levels of interest from prospective customers because of its lack of contemporary facilities and/or location. These high risk properties have been identified within the context of both our Asset Management and Care and Support strategies, and during the life of this plan, decisions will be taken as to how we deal with them. This process of getting to know our customers better involves improved data collection and production of reports that show patterns of characteristics based on age, household compositions, income levels, employment and disability status. We already know a great deal about our customers but we aim to build on this knowledge as a means of improving our services. In light of the UK welfare reform agenda, demand profiles will be kept under regular review. Below we highlight some general characteristics about our existing customers: Around 49% of customers are over 60 years of age Around 80% of customers live alone or with one other person Around 49% of customers are dependent on housing benefit to pay all or some of their rent Around 23% of customers are in receipt of support and/or care Wester Inshes,Inverness 14 New Services and Homes Welfare Reforms There are significant challenges to the future public funding of new homes and services by housing associations across Scotland. We will continue to explore new development opportunities in selected parts of the country. We will explore opportunities to provide mid market homes. The Welfare Reform Act has been described as the biggest change to the welfare state for people of working age since 1945. We recognise that many of our customers receive a range of benefits and tax credits and may be affected by the changes. Of particular concern to us are the: We will devote a significant proportion of our financial resources to funding our major stock investment programme during the period of this business plan, and will assess our capacity to provide funded services on a continuous basis. Our housing re-let standard will be reviewed to ensure we continue to provide homes of the highest quality. Changes to the number of bedrooms a household is entitled to claim for through Housing Benefit Direct payment of Housing Benefit to customers We recognise that these changes have the potential to impact on our income through greater levels of rent arrears and void loss. In preparation for these changes we: Our focus in the plan period will be on creating efficiencies in our service delivery to create more capacity to improve the quality of what we do whilst exploring opportunities to develop new working practices and services where appropriate. We will always remain alert to opportunities and/or need to develop new services or products recognising the uncertain climate in which we work and the constant need to adapt our business practices and plans to meet the changing housing and care needs of society and local communities. Shared services and other partnership arrangements will be part of that approach. Undertook work to assess the numbers of customers who may be affected by the various changes Communicated the changes to staff and customers Set aside money in our training budget to ensure staff are able to advise customers Identified a range of policies and procedures which require review given the changes Assessed the potential financial impact of the changes on our business Appointed a specialist Benefits Advisor to provide advice and information to customers and staff Our work continues in this area so we are able to support our customers through the changes and minimise the impact the changes will have on our business. 15 Keeping our rents affordable forms part of our mission statement. Our affordability mitigates some of the risks associated with current welfare reform issues, as well as giving us an opportunity to realign our rents to generate additional revenue in future years. In 2014/15 we are increasing rents by 2.9%. Benchmarking We are members of two specialist benchmarking groups focussing on housing management issues. A report is presented annually to the Board in order that trends can be identified and adverse material variances addressed. Use is also made of the Scottish Housing Regulator’s published statistics to enable comparison with the overall Scottish housing association sector. Particular attention is paid to this data at the time of considering future rental policy to ensure that we are within reasonable sector parameters. Our stock has grown in a number of ways over the years, including stock transfer, traditional HAG assisted new build homes, and transfers of engagements. This has led to a degree of variation in rent levels for similar homes throughout the portfolio. In order to address this we started a comprehensive rent review process during 2013/14. The outcomes of this review will be implemented during 2014/15. During 2013/14 we became members of the HouseMark benchmarking service. This is in addition to our membership of the Scottish Housing Best Value Network. Benchmarking services enable us to maximise value for money across all aspects of the business and compliment our approach to continuous improvement in performance. Fort Augustus Residents at Madelvic Square, Edinburgh 16 Shown below are the results of our Strengths, Weaknesses, Opportunities and Threats analysis (SWOT) and Political, Economic, socio-cultural and Technological (PEST) analysis. These represent an examination of the environment in which we operate – external and internal. Strengths, Weaknesses, Opportunities and Threats (SWOT) Analysis Strengths Opportunities National dimension – 38 staffed locations in 24 local authority areas Effective governing body and governance framework Awareness of priority issues and plans to tackle them Experienced staff team Current financial robustness Major producer of new homes with track record Capacity to address variety of diverse client groups Successful partnership working record Focused tenant/customer involvement and participation Current and future investment in IT Corporate appetite for change and improvement More collaborative working with partners Increase in housing demand Tenant Participation Corporate appetite for change and improvement Organisational scale to accommodate structural change to facilitate better working practices Improve service delivery through better use of existing IT facilities Service Plans Threats National dimension – 38 staffed locations in 24 local authority areas Rising interest rates and borrowing costs Pension Liability Low demand properties Reduced capacity to increase income from rents Severely restricted public finance for capital and revenue functions, particularly special needs groups Marginalisation of national HAs both in stock management and new homes provision, and HA sector rationalisation Increasing regulatory requirements and associated costs Loan debt repayment capability Viability of sheltered housing and care services Welfare Reform Act Fuel poverty Changes to funding stage 3 adaptations Weaknesses Overhead costs Reliance on subsidy for new home production Capacity to invest annually in existing stock Differential in performance in North and South areas Inconsistent performance management culture 17 Political/Legal, Economic, Socio-Cultural and Technological (PEST) Analysis Political/legal Change in Westminster and Holyrood administrations 2014 referendum on Scottish independence Change to housing legislation Change to housing benefit system Change to government investment strategy, development programme priorities or subside rates Change to Planning Reform Scottish Housing Quality Standard (SHQS) National Rent Policy Equality and diversity agenda Environmental stewardship Sustainability Value for money Changes to the Regulatory Framework Socio-cultural Demographic change Migration Peoples’ expectations Equality and Diversity Consumerism Rural services Crime and antisocial behaviour Training and education Technological Energy efficiency requirements Dependency on computer systems Building standards Partnering Shared services E-government Accessibility of information for diverse groups Systems development and complexity Economic Need to fund pension costs Interest rate fluctuations Inflation/deflation Unemployment levels Competition for funding – Housing Association Grants (HAG) and private finance. Stability of private lenders Availability and stability of private contractors Rising costs Fuel poverty Access to mortgage finance Flexibility of labour market Poverty and deprivation Diversification 18 STRATEGIC KPIs Performance – the management and improvement of - is a core area of focus for us. We have performance indicators and targets in place at various different levels within the organisation. The KPIs listed here are our strategic KPIs. The targets outlined in this section reflect our commitment to continuous improvement and our longer term aim to achieve top quartile performance against our peers. Key Performance Indicator Target Emergency (24 hours) response repairs completed to target Non emergency (routine & urgent) response repairs completed to target Percentage of appointments kept 99% First time fix 92% Overall customer satisfaction (all services) 90% Percentages of complaints responded to within target timescales Planned Maintenance spend vs. budget profile 100% Scottish Housing Quality Standard compliance 100% Properties with gas safety certificates 100% Interest cover 120% Staff absence 3.25% Rent loss due to voids as a percentage of debit 1.5% Total arrears as percentage of debit (current) 3.68% 98% 99% 100% Average turnaround times of new lets* 25 days Hours of training per staff member 14 hours Staff satisfaction with training 70% Number of ABC Improvement Team Actions implemented Overall staff engagement (Best Companies Survey) 19 24 ‘One to watch’ status STRATEGIC RISK MANAGEMENT We will be proactive in working to contain and limit the risks to which our organisation is exposed. As we work towards achieving our corporate objectives for the life of this plan, each activity we undertake will bring its own particular area of risk. We will regularly identify and appraise risks, taking a prudent approach to managing them. In our management of risk we: Recognise that risk responsibility rests with the Board Comply with all statutory, regulatory and good practice requirements Adopt structures which delegate authority to the appropriate level for risk management of various activities Adopt, implement and regularly review key policies Support Board members and staff with risk training Employ a programme of internal audit to assist in risk identification Obtain verification from external auditors of the statements of internal control To enable risk management reporting, identified risks need to be assessed and evaluated in terms of the likelihood or probability of the risk occurring and the impact that such an occurrence would have. We have developed a Strategic Risk Register which identifies the risks to our business plan and the achievement of our strategic goals. This includes the actions that we are and will take to mitigate these risks. The Strategic Risk Register is reviewed on a regular basis by our Audit and Compliance Committee and Board. 20 To help us focus on the task in hand we have created our ‘A Better Cairn’ programme or ABC for short. ABC is all about how we improve our organisation, both now and in the future. This is centred on the use of selfassessment to identify and drive improvement action planning, with the use of external validation to bring independent challenge to the process. CONTINUOUS IMPROVEMENT As an organisation we are committed to the principles and practice of continuous improvement. We have, are, and will continue to strive for improvements in all that we do. This includes: During 2013 we undertook a self-assessment and validation process under the EFQM framework, carried out by Quality Scotland. This resulted in our achievement of Committed to Excellence status. Improvements in the products and services that we supply our customers, as well as how we supply these Improving the way in which we communicate with our customers, staff and other key stakeholders Improving our internal processes and systems to realise greater and greater efficiencies and productive working practices that create more value for our customers and a richer working environment for our staff 2013 also saw us take the development of our ABC programme to the next level with the introduction of ABC Action Teams. These teams are made up of staff from across the organisation that come together to focus on the delivery of change that will help us to achieve sustained performance improvement. Dalneigh, Inverness 21 of the actions that underpin these components will enable us to improve IT integration, improve business information and processes, extend access to our information and services and ensure that we only invest in IT where there is a business benefit. OPERATIONAL INFRASTRUCTURE As a national housing association we have adopted the principle of delivering products and services as locally as possible. With a presence in 24 local authority areas in Scotland, there are inevitable constraints. We are however, committed to this concept and to investigating and implementing better ways in which we can deliver our products and services locally. This may involve a rationalisation of offices over the life of this plan, with a greater emphasis on mobile staff, shared services and better use of mobile IT. Corporate Objectives i un s t ie s e tiv tem ec ys Eff on S a ti or m Inf Su n ai st s Bu ble e na tai ctur s Su astru r Inf m om D C Ac hi e Im ve pr C ov on e m tinu en ou t s s es in in There are presently 6 offices in Edinburgh, Coatbridge, Glasgow, Inverness, Wick and Thurso to deliver our services. We recognise that operating from 3 offices within the central belt, represents a significant overhead cost burden which we will reduce through a process of rationalisation. IT Strategy ng rki Wo s nt e icie ractic P Premises ed ss cu Fo r me E ff sto Cu a st Su el iv Ex e r ce Cu lle sto nc m e e r IT Enabler Key IT Components Additionally, some of the offices are no longer deemed to be fit for purpose by reason of access and facilities. Sustainable Technical Infrastructure By 2017 we will have an office structure which supports and enhances the services we provide to our customers. Improved Customer Access Information Technology (IT) Sustainable Business Infrastructure IT Strategy Flexible and Proactive Reporting We have developed an IT Strategy to describe how we intend to use technology over the next few years to promote innovation and efficiency, drive service improvement and maximise the potential to deliver quality services to our customers. Integrated Information Systems IT Enabled Processes The IT Strategy has taken our corporate objectives and determined a number of coordinated IT components that collectively form key enablers of our Business Plan (see diagram across the page).The implementation 22 Mobile & Other Modes of Working In order to achieve this strategy, and support a programmed approach to business change, a number of broad high level actions have been identified. These will be delivered through an annual action plan, which will be implemented through the Service Planning process. These six areas of work will be progressed via the following actions: Review our staff structure to ensure we are serving our customers as efficiently and as effectively as possible Monitor our staff efficiency against our peer group and Key Performance Indicators (KPIs) Undertake a staff engagement survey and monitor performance against KPIs for the life of the Business Plan Review our Absence Management policy, procedures and monitoring systems and support managers to achieve a sustained reduction in employee absences Review our current reward systems and assess the introduction of an element of performance related pay Develop our existing employee information systems to provide excellent management information and employment related KPIs Create a framework for training and development based on attitudes, skills and knowledge relevant to the role in question Continue the roll out of vocational training to meet Scottish Social Services Registration requirements Continue to roll out e-learning solutions to meet diverse training needs Review our complaints handling procedures to ensure they meet statutory requirements and support organisational learning Revise the Health and Safety Manual and ensure all risk assessments and fire risk assessments are up to date Introduce Health and Wellbeing initiatives Progress towards Investors in People accreditation Review work life balance policies to ensure equality of application Carry out procurement exercises to achieve greater efficiency in: o Recruitment advertising o Employment Law Service o Stationery o Recruitment of Temporary Staff People A knowledgeable, engaged and well trained staff team underpins the provision of excellent services to our customers. We recognise the value of all of our staff and are committed to achieving a culture of staff engagement, innovation and empowerment. During the life of this Business Plan we will develop and implement a people strategy to: Ensure our staff are providing an excellent service as efficiently as possible, by providing them with the right tools to do their job and monitoring customer satisfaction Attract professional and high performing staff to match the needs of our service Retain and support staff at all levels within the Association Seek continuous improvement through structured learning and development Promote and maintain the health, safety and well being of all our staff Promote equality of opportunity in our employment Staff took part in a cycle from Edinburgh to Inverness, in partnership with Jewson, to raise money for Barnardos. 23 Customer Service Excellence As an organisation we are always striving to provide the best service to our customers. We are committed to the pursuit of service excellence and will develop our approach to this over the life of this plan. We will positively embrace the new Scottish Housing Regulator’s Social Housing Charter requirements and provide annual updates to our customers on how we are performing against these National Charter Standards. Cairn staff raised more than £5,000 for Maggie’s Centre, a cancer charity in Edinburgh. In 2013 the Board approved our first Customer Excellence Strategy. This contains a detailed and ambitious action plan that we look forward to delivering on over the coming years. We achieved Committed to Excellence status by the EFQM 24 Customer Involvement The development of customer involvement within our Association will continue to be a strategic priority. Continually developing and expanding opportunities for participation with our customers is fundamental in relation to improving the quality of our housing services. Our key aim is to ensure that we are putting our customers first and we have placed a high emphasis on working together with our customers to ensure their views are heard and acted upon. Over the life of this Business Plan, we will: Review our Tenant Participation Strategy and Action Plan Continue to support our new Cairn Customer Panel to scrutinise performance and provide recommendations for improvements Continue to develop our Mystery Shopping team to provide feedback on customer services Support Registered Tenant Organisations to build their capacity for effective involvement, and we will encourage and support individual customers to form Registered Tenant Organisations Continue to promote membership of the Register of Interested Customers to ensure this group is representative of the tenant body Continue to support Customer Focus Groups to discuss and address specific issues of shared interest Maintain a Calendar of Consultations and Events Provide clear information on our services, and performance in tenant participation, to all stakeholders Ensure that individual customers and tenant groups are given opportunities to influence key decisions Work to remove all barriers to tenant participation and we will develop methods of engaging with hard to reach groups and individuals Our customers’ conference for the north of Scotland, September 2013 25 ASSET MANAGEMENT STRATEGY Context One of our objectives for 2014/15 is to revise our Asset Management Strategy. A considerable amount of work has been undertaken to improve our stock data and management systems. We now have more accurate stock condition information, which covers a 30 year period. The primary focus in the AMS is on the life of this plan. Planning investment in our housing stock based on good investment principles, including:- We currently own and manage over 3500 properties throughout Scotland. In addition to operating over a wide geographic area, the stock types and client groups we cater for are varied. Our stock also varies in age and condition and with changing needs and aspirations of customers, it is important to ensure that we continue to provide good quality affordable homes and services in communities where people want to live. Value for money Property option appraisals where; The investment needed seems excessive Future demand is causing concern There are other issues with current stock Engagement with key stakeholders to inform investment decisions. In order to meet our objectives, our Asset Management Strategy (AMS) has evolved from a framework for making investment decisions into a more comprehensive document providing a clearer understanding of our stock characteristics: Its condition Its popularity with existing and potential client groups The popularity of particular geographic locations The AMS document is a “living document” which helps to influence our strategic and corporate objectives. Analyses of stock surveys previously undertaken and information provided by customers and staff, have provided a clearer understanding of the works and associated finances required for us to bring existing properties to our own standards, which will exceed the requirements of the Scottish Housing Quality Standard (SHQS). Fort Street, Motherwell 26 Asset Management Strategy Actions Scottish Housing Quality Standard The key actions to emerge from the AMS are to: The Scottish Government set social housing landlords a target of achieving Scottish Housing Quality Standard (SHQS) compliance in all of their stock, by 2015. This standard specifies certain requirements and we are comfortable that the updated stock data information has captured our requirements, and that we can undertake the necessary works to achieve the standard by the end of March 2015. Meet our own standards, the Scottish Housing Quality Standard and the aspirations of our customers Continue to look at growth opportunities through new build development Continue to review underperforming assets to determine whether future levels of investment represent sound decisions Review the geographic spread of our stock locations, to determine whether or not we are best placed to provide the level of service expected by customers, efficiently. Review the suitability of sheltered accommodation assets for their intended purposes, when revenue support grants are reducing. To review the suitability of care and support assets for their intended purpose and resource implications, resulting from a more stringent/ demanding regulatory requirement and fluid funding climate in revenue terms. Improve the methods of delivery of development and asset management services making use of new technology. Continue to evaluate the external environment and evolving markets, to identify opportunities to grow or provide alternative services and products. We are on target to meet 80% compliance by end of March 2014 and 100% compliance by March 2015. Munlochy, in the Black Isle 27 FINANCIAL STRATEGY Current Position Objectives A critical element of sound business planning is the assurance that the organisation remains in good financial health to enable it to achieve the key objectives previously highlighted in this plan. The key financial objectives underpinning the thirty year projections are to: Secure the long term financial viability of the Association Ensure funding is available to secure the investment of up to £18m required to maintain and enhance our existing stock Seek overhead efficiencies Ensure that all individual activities undertaken by the Association at least break even, and that any short term deficits are explicit and transparent to both the Executive Group and the Board Deliver best value for our customers Sustain the Association’s financial reputation Ensure compliance with loan covenant requirements from all our lenders We have a 30 year corporate financial plan covering the period from 2014/15 to 2043/44. The underlying financial forecasts are broken into a detailed annual budget, five year projections, and thirty year financial projections. Each set of projections includes an income and expenditure account, balance sheet and cash flows. An extract of the thirty year projections which incorporate both the annual budget and five year projections are included in appendix 1 to this business plan. Financial planning within our Association is a dynamic process, with sensitivity analyses undertaken during the plan preparation and reviewed regularly. This financial plan shows how we will meet the costs of achieving our key objectives and it details the associated income and expenditure assumptions over the next thirty years. The financial projections are consistent with the requirements of the Scottish Housing Regulator and our lenders, The Royal Bank of Scotland, Santander Bank and the Dunfermline Building Society. Staff at a renaming ceremony for regenerated homes in Wick 28 Financial Assumptions Scenario Planning Our financial projections are based on the following base assumptions over the life of the plan: It is important that we can respond to any changes in the assumptions detailed above. Sensitivity analyses and stress tests on the financial projections have shown how the financial position would handle material changes to the income and expenditure assumptions. The following sensitivities were considered. Inflation or Consumer Prices Index (CPI) runs at 2%pa There will be an investment in planned maintenance of up to £17.5m in the first five years of the plan Scenario 1: Rent increases reduced by 0.5% per annum Millions Investment in Existing Stock Scenario 2: LIBOR increased by 1% per annum £4 £3 Scenario 3: Voids increase by 2% per annum £2 £1 Scenario 4: Inflation 1% higher than Business Plan per annum £0 The results of these sensitivities are included as appendix 2 to the plan, and are measured against the base projections as well as the covenants set by the lenders. The sensitivities illustrate that we would be able to meet our loan obligations whilst accommodating these challenges. Annual rent increases are based on CPI plus 1% until 2023 and CPI thereafter Bank Interest rates increasing to 4.5% by 1st April 2019 and remaining at that level Pension costs incorporate past service deficit costs, as well as ongoing defined contribution and auto enrolment costs Welfare reforms have been incorporated within our anticipated arrears figures We will develop our land bank holding over the next five years and recommence a low level development activity A full set of financial forecasts has been produced for each of these scenarios, and is available on request. If more challenging scenarios arose we would review our spend profile to ensure that banking covenant compliance was maintained. The process of covenant review and cash flow monitoring is undertaken on a monthly basis and reported to our Board quarterly. We believe that these assumptions are prudent and are designed to protect the Association from external fluctuations. 29 Private Finance Cairn Homes and Services Ltd Private finance from the Association’s lenders, The Royal Bank of Scotland, Santander Bank and the Dunfermline Building Society is used to fund our business plan. Current funding facilities of £48 million exist and we will continue to draw from these sources as we progress with our enhanced investment programme. We have capped our borrowing levels at £50 million. Cairn Homes and Services Ltd was established in 2007 to provide a vehicle to augment our provision of new homes by engaging in housing for sale, market rent and mid market rent opportunities to cross subsidise our social rent provision. It also gives access to land that otherwise might be too expensive for social rent provision alone. Given our charitable status, a non charitable vehicle is required to carry out such activities, namely Cairn Homes and Services Ltd. Our borrowing is financed on both fixed and variable interest terms; 56% of the current debt is on fixed interest rate terms at present. We will continue to explore opportunities to use this vehicle for potential business development opportunities in the future. The existing loan agreements carry with them financial covenants, and we closely monitor these to ensure compliance. At present this company remains dormant. Our financial projections show full compliance with all loan agreements, including the repayment of capital within the time period of the borrowings. 30 Appendix 1 Income and Expenditure Extract of Income and Expenditure Account from the 30 year financial projections. 2014/15 2015/16 2016/17 2017/18 2018/19 2023/24 2028/29 2033/34 2038/39 2043/44 Rental Income Service Charges Other Total Income £m 12.2 2.3 1.1 15.6 £m 12.7 1.8 0.4 14.9 £m 13.0 1.9 0.5 15.4 £m 13.4 1.9 0.6 15.9 £m 14.0 2.0 0.5 16.5 £m 16.3 2.3 0.7 19.3 £m 18.5 2.5 0.7 21.7 £m 20.8 2.8 0.8 24.4 £m 23.5 3.1 0.8 27.4 £m 26.4 3.4 1.0 30.8 Operating Costs Interest Costs Total Costs 14.0 1.5 15.5 13.3 1.5 14.8 13.6 1.7 15.3 14.0 1.8 15.8 14.1 2.2 16.3 15.8 3.0 18.8 17.1 3.5 20.6 18.8 3.6 22.4 20.7 3.4 24.1 22.7 2.8 25.5 Surplus/(Deficit) 0.1 0.1 0.1 0.1 0.2 0.5 1.1 2.0 3.3 5.3 2016/17 2017/18 2018/19 2023/24 2028/29 2033/34 2038/39 2043/44 Balance Sheet Extract of Balance Sheet from the 30 year financial projections. 2014/15 2015/16 £m 62.3 £m 63.6 £m 64.0 £m 64.9 £m 66.0 £m 70.7 £m 76.6 £m 83.1 £m 90.3 £m 96.7 5.4 (4.8) 6.1 (4.8) 3.6 (4.8) 5.7 (4.8) 3.9 (4.9) 3.8 (4.8) 3.7 (4.8) 3.5 (4.8) 6.3 (4.8) 15.4 (4.8) 0.6 1.3 (1.2) 0.9 (1.0) (1.0) (1.1) (1.3) 1.5 10.6 62.9 64.9 62.8 65.8 65.0 69.7 75.5 81.8 91.8 107.3 (42.5) (44.4) (42.2) (45.1) (44.1) (46.7) (48.8) (47.1) (44.7) (36.0) Net Assets 20.4 20.5 20.6 20.7 20.9 23.0 26.7 34.7 47.1 71.3 Retained Surplus Surplus for year 20.3 0.1 20.4 0.1 20.5 0.1 20.6 0.1 20.7 0.2 22.5 0.5 25.6 1.1 32.7 2.0 43.8 3.3 66.0 5.3 Net Assets 20.4 20.5 20.6 20.7 20.9 23.0 26.7 34.7 47.1 71.3 Fixed Assets Current Assets Current Liabilities Total Assets Loan Balances 31 Cash Flow Extract of Cash Flow from the 30 year financial projections. 2014/15 2015/16 2016/17 2017/18 2018/19 2023/24 2028/29 2033/34 2038/39 2043/44 £m 1.7 £m 1.8 £m 2.1 £m 2.2 £m 2.6 £m 3.6 £m 4.6 £m 5.6 £m 6.8 £m 8.2 (1.5) (0.3) (1.5) (1.5) (1.7) (0.7) (1.8) (1.1) (2.2) (1.1) (3.0) (1.2) (3.5) (1.3) (3.6) (1.4) (3.4) (1.5) (2.8) (0.1) (2.1) (2.2) 1.9 0.7 (2.1) (2.4) 2.9 2.2 (1.1) (1.8) 0.6 0.0 (1.7) (1.9) (1.4) (0.8) (0.4) 1.5 0.0 5.3 Balance b/f 4.8 2.6 3.3 0.9 3.1 1.0 2.8 1.5 3.5 7.4 Balance c/f 2.6 3.3 0.9 3.1 1.3 1.0 0.9 0.7 5.0 12.7 Cash - Operating Activities Interest Paid Capital Expenditure & Financial Investment Financing Inflow/(outflow) of funds 32 Appendix 2 Scenario Planning The financial impact of the scenarios outlined in the Business Plan is highlighted on the graphs below. All the scenarios have the effect of decreasing the Net Assets of the business and reducing the Annual Surpluses of the business. The impact of each of the scenarios is graphed below, indicating the annual reduction in Net assets, and also the cumulative impact for the 5 years of the Business Plan. We would mitigate the impact of these scenarios by reducing costs, or if appropriate increasing rents. Rent Increases 1% Lower £0 2014/15 2015/16 2016/17 2017/18 2018/19 -£200,000 -£400,000 -£600,000 -£800,000 -£1,000,000 Annual Impact Cumulative Effect LIBOR 1% Higher £0 2014/15 2015/16 2016/17 2017/18 -£200,000 -£400,000 -£600,000 -£800,000 -£1,000,000 Annual Impact Cumulative Effect 33 2018/19 Voids Increased by 2% £0 -£200,000 -£400,000 -£600,000 -£800,000 -£1,000,000 -£1,200,000 -£1,400,000 -£1,600,000 -£1,800,000 2014/15 2015/16 Annual Impact 2016/17 2017/18 2018/19 Cumulative Effect Inflation 1% Higher £0 -£200,000 2014/15 2015/16 2016/17 2017/18 -£400,000 -£600,000 -£800,000 -£1,000,000 -£1,200,000 Annual Impact Cumulative Effect 34 2018/19 This document is available on CD, in Braille, large print and community languages from Cairn HA, Citypoint, 65 Haymarket Terrace, Edinburgh EH12 5HD. Email [email protected] or call 0131 556 4415. A registered Scottish Charity No SCO16647. The Scottish Housing Regulator Registration No 218. Property Factor Reg No PF00292.
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