Business Plan

2016-2019

Contents

Page

EXECUTIVE SUMMARY 3

1. Introduction 6

2. History and Achievements 7

3. Governance and Leadership 9

4. New Gorbals’ Vision, Mission and Values 10

5. Strategic Objectives and Priority Actions 11

6. Strategic Analysis 14

7. Asset Management 24

8. Value for Money 32

9. Strategic Risk Appraisal 44

10. Financial Plans and Forecasts 47

11. Delivering the Business Plan 53

Annexes

Annex 1 Annex 3 (bound separately: A3 document) Details of Management Resource Plans for 2016/19 Committee and Senior Annex 4 Staff, and Organisational Benchmarking Analysis Structure Annex 5 Annex 2 Performance Indicators (bound separately: Annex 6 (bound separately: A3 document) A3 document) Strategic Risk Register Financial Plans and Forecasts (Summary of Assumptions; Stress Testing and Sensitivities)

Annex 2A 30 year cashflow and cashflow years 1 to 5 is this still proposed rather than 5 years?

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EXECUTIVE SUMMARY

Introduction

New Gorbals Housing Association has produced this Business Plan to set out our mission and values, and our objectives, plans and resources for the future. The Plan takes account of the Scottish Housing Regulator’s “Recommended Practice” on business planning, published in December 2015.

The Association, its services and achievements

The Association operates in Gorbals, Hutchesontown, Laurieston and Oatlands, owning and managing over 2,500 homes for social rent and factoring 1,600 privately owned properties. Our voluntary Management Committee is made up of local residents, contributing to strong and stable governance and high levels of trust in the Association by the local community.

The Association delivers a comprehensive range of services, all focused 100% on the needs of our service users and the Gorbals community. These services include tenancy and neighbourhood management, repairs and property management, property development, asset management, environmental works, income maximisation, factoring and estate-based services. We have recently established a subsidiary that will let, manage and maintain 69 mid market rent properties in the area.

First registered in 1989, the Association has an outstanding record of achievement:

 We have completed more than 1,000 new build homes, winning in the process over 20 major design and planning awards including RIAS, RIBA, Civic Trust, Saltire and Scottish Design.  We have invested more than £40 million in existing housing acquired through stock transfers, resulting in the modernisation of 1,500 homes and energy efficiency works to 2,000 homes.  Our factoring service provides a local, responsive repairs service to property owners, as well as safeguarding the wider neighbourhood and owners’ investment in their homes.  Our housing and maintenance services are of a high quality and are valued highly by tenants. Our most recent tenant satisfaction rating with the Association’s overall service was 92% (national average 89%), while our tenant satisfaction rating for the value for money received in return for rent was 83% (national average 77%).  Our service delivery costs are lower than those of our local peer organisations and national averages. In 2014/15, we employed one member of office-based staff for every 55 properties, compared with one member of staff for every 40 to 43 properties for our local peer group. Our 2014/15 management and maintenance administration costs per property were £967 per unit. This was 19% below the average for all RSLs in Scotland and £300 less per unit compared with our local peer group.  The Association has maintained a “low engagement” rating since the current regulatory regime was introduced in 2012.

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The Business Plan: Key Highlights

The Management Committee has set the following vision and mission in the Business Plan:

 To provide the highest possible quality housing, environment and services to all of our customers  To maximise our contribution to the overall regeneration of the Gorbals, addressing wherever possible the needs of those in the community who are disadvantaged.

The six strategic objectives that will contribute to achieving the vision and mission are as follows:

 Completing the physical regeneration of the Gorbals  Keeping rents affordable, and supporting our tenants in dealing with welfare cuts and the high cost of energy  Providing high quality, value for money services, and managing our assets effectively  Strengthening our engagement and communication with tenants and the wider community  Making Gorbals a Thriving Place  Ensuring that we are a cost-effective and well-managed organisation, achieving high standards of governance and of financial probity and competence.

The Business Plan sets out in detail the specific activities we will undertake to achieve our objectives. The following overview focuses mainly on areas where change or improvement will be sought.

Service/Activity Area Resource Plan Summary

Development  79 new units to be completed (Laurieston G6/G7 and Sandiefield) programme  Review of future development strategy to be carried out  Progress other opportunities that will contribute to regeneration and that can be accommodated within the Business Plan Energy efficiency works  District Heating and external insulation at Riverside MSFs (308 units)  Electric storage heating conversion to gas at Silverfir Court (94 units) Fuel poverty  Provision of advice and education on home energy use Income Maximisation  Continued advice and support to tenants, to promote full take-up of benefit entitlements and mitigate the effects of Welfare Reform Tenant satisfaction  Implement action plan for the 2015 Tenant Satisfaction Survey Housing options  New Housing Options for Older People service to be introduced  Partnership working on Section 5 referrals with new Glasgow City Council Housing Access Team

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Service/Activity Area Resource Plan Summary

Estate-based services  Full review to be completed, with the aim of modernising the service and achieving cost reductions where feasible Maintenance  Review of all maintenance contracts to be undertaken, to help ensure best value is being achieved Asset management  Develop a comprehensive major repairs profile (based on 100% stock condition survey currently being completed)  Fully integrate planning and programmes with cashflows and budgets and with stock performance data Governance  Completion of governance review and implement committee development plan  Develop and implement new internal communications strategy Procurement  Develop organisation-wide new procurement policy and strategy, with priorities for action to be taken forward in all business areas Customer  Comprehensive review of strategies for communicating with tenants communications and factored owners Thriving Places  Fully implement the Association’s role as lead community agency for Thriving Place initiative, ensuring that the role focuses on key outcome areas (community engagement, communications, social capital development and partnership working) Mid Market Rent  Provide staffing services to NGPM Ltd and maintain a strategic overview of NGPM’s activities.

The financial projections accompanying the Business Plan confirm that the Association is in a strong financial position, but must also exercise firm control over income and costs. Proactive risk management, strong financial controls and reporting, and maintaining the confidence of funders will all be essential disciplines in pursuing the priorities set out in the Business Plan.

Achieving our Business Plan priorities

Developing and approving the Business Plan is only a starting-point. The ultimate success of the Plan also depends on all of the following:

 Ownership of the Plan by the Management Committee and Senior Management Team  Regular Management Committee and sub-committee reviews of progress and achievements, as well as any changes in the Association’s finances and risk profile  The Senior Management Team driving change for cross-cutting areas that will apply across teams or across the Association as a whole, as well as for their own areas of responsibility  Communicating the Business Plan to the whole New Gorbals staff team, so that every member of staff is clear about the Association’s priorities and how their own job role contributes to these.

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 Building on New Gorbals’ excellent track record of partnership working. This will be important in many business areas but none more so than the Gorbals Thriving Place Initiative which involves Glasgow Community Planning, the City Council, a wide range of other public service agencies, and the Gorbals community and voluntary sector. The prize on offer is to help make Gorbals a truly sustainable place, utilising the assets of the Gorbals community itself.

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1. Introduction

1.1. The Business Plan sets out:

 New Gorbals Housing Association’s vision, mission and values.

 Our strategy and resource plans for the period 2016-2019, describing planned actions and how we these will contribute to achieving our strategic objectives.

 30-year financial projections, to demonstrate the long-term impacts of our proposed strategy.

1.2. The Business Plan serves several important purposes:

 The Plan enables the Management Committee to set the Association’s strategic objectives and priorities, and to review performance in achieving these.

 The Plan draws together key themes and actions for the future, for example in relation to the Association’s financial plans, asset management strategy and service planning.

 The Plan informs the Association’s relationships and communications with service users and key partners, and will also be of interest to our funders and regulators.

 The Plan helps us to communicate the Association’s priorities and future direction to our staff, providing a platform for agreeing the contribution that teams and individuals will make in meeting organisational aims and objectives.

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2. History and Achievements

Introduction

2.1. New Gorbals is a community-controlled housing association operating in Gorbals, Hutchesontown, Laurieston and Oatlands as shown in the map below. We own and manage more than 2,500 homes for social rent and factor a further 1,600 privately owned properties.

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New Homes and Regeneration 2.2. The Association was set up in 1989 by a group of local residents, with the initial aim of replacing poorly-constructed public housing built in the 1960s and 1970s. The Association has succeeded in transforming housing conditions in the Gorbals:

 We have now completed more than 1,000 new build homes, to replace the damp and unpopular housing that previously blighted the area and residents’ lives. We have also invested over £3 million in completing several high quality streetscape projects  New Gorbals is widely recognised as an exemplar in housing design, urban regeneration and place making. We have won over 20 major design and planning awards including RIAS, RIBA, Civic Trust, Saltire and Scottish Design. In awarding the client of the year for 2015, the RIAS cited that the Association “has continuously achieved excellence within constrained budgets and has never accepted the argument that housing for their tenants needs be anything but very special indeed”.  Having completed substantial new build programmes in Gorbals East, Crown Street and Queen Elizabeth Square, our most recent development (Laurieston 1A) is the biggest ever grant-funded social housing project in Scotland. It has been awarded the four most prestigious annual design awards (Scottish Design, Saltire, RIAS and RIBA) and selected as the most recent of the RIAS 100 best buildings in Scotland 1916 – 2016.

Improving Existing Homes 2.3. New Gorbals has invested over £40 million in existing housing acquired through stock transfers from Scottish Homes (2) and Glasgow Housing Association. All of the stock transfers went ahead following ballots with overwhelming tenant support for the transfer of their homes to community ownership.

2.4. Our investment in existing housing is resulting in:  Modernisation of around 1,500 homes  Improved energy efficiency and lower energy costs for around 2,000 houses, including over 500 owners, through replacement high performance windows, new boilers and gas district heating.

Tenure Change 2.5. Regeneration has introduced high levels of new build for owner occupation, almost all of it now factored by the Association. The Association is also factor to owner-occupied housing in the former Scottish Homes and GHA housing stock transfer areas. Our offer to owners is based on providing a local and responsive factoring service and safeguarding the wider neighbourhood to help protect owners’ investments.

Housing and Maintenance Services

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2.6. Physical regeneration has been accompanied by providing high quality housing and maintenance services.

 We provide a neighbourhood based service that ensures high standards of maintenance and responsiveness to individual tenants’ needs  Overall, our service results better the national and local averages of other social landlords  In most areas, tenants have expressed high levels of satisfaction with our services.  We have lower stock:staff ratios than our peer RSLs in Glasgow, indicating that our services are efficient as well as effective.

Community Regeneration 2.7. The Association has had a long involvement in Wider Role activities. We have recently broadened our strategy to help play a bigger role in addressing the deep- seated inequalities that affect the lives of many Gorbals residents. The mechanism for doing so is the Gorbals “Thriving Places” initiative, promoted as a priority by the Glasgow Community Planning Partnership in their “Single Outcome Agreement” and led locally by the Association as the community anchor organisation.

2.8. The Association’s role is to manage an intensive programme of community engagement to help the community and public service providers improve outcomes for Gorbals residents. This represents a new approach to tackling deprivation and inequality in the Gorbals, with much higher priority now given to community empowerment and leadership than in past regeneration approaches.

3. Governance and Leadership

Constitution 3.1. The Association is a Scottish Charity and is registered with the Scottish Housing Regulator.

3.2. Membership of the Association is open to people living in our area of operation. Members may attend and vote at general meetings, seek election to the Management Committee (MC), and vote in the election of Committee members.

Management Committee and Structures 3.3. All of the MC’s members are Gorbals residents and this has been the case throughout our 25-plus years’ history. Community governance is part of the Association’s DNA and has been central to our success and credibility with local people. The Association’s origins lie in the comprehensive failure of earlier, top-down attempts to replace slum housing in the Gorbals. In place of the failures of the past, community governance has been the foundation for sustainable regeneration, better value for public money, and increased community confidence and trust inspired by a commitment to properly fulfil the promises of the 1960’s modernist vision whilst retaining the best qualities of the Victorian sandstone tenements. 10

3.4. The MC has up to 18 members:  15 committee members elected by the Association’s members.  Up to 3 co-opted members appointed directly by the MC, if the MC decides this would be beneficial (e.g. to broaden overall skills and experience).

3.5. The MC is supported by three Sub Committees: Finance and Audit; Property Management; and Development. An additional Sub Committee will be set up in 2016, to direct and oversee the Association’s involvement in Thriving Places activities.

3.6. Skills audits and committee member reviews have been introduced, the results demonstrating that the MC has a strong blend of skills and experience. The Association will develop a pilot programme of in-house training sessions for committee members, to make training more accessible. A review of governance policies and procedures is scheduled to complete in 2016 and will ensure that documentation and practice meet good practice and regulatory standards.

3.7. The Association’s subsidiary New Gorbals Property Management Ltd (NGPM) began trading early in 2016. NGPM will lease 69 properties from the Association and let/manage these properties for mid market rent. NGPM is 100% owned by the Association and will operate through formal intragroup and service level agreements. The Association will have constitutional and strategic control, including the power to set group objectives, approve the NGPM business plan, and to appoint and remove NGPM board members.

Further information 3.8. Annex 1 provides information about the members of the MC and senior management team, as well as our operating structure for providing services and managing the organisation.

4. New Gorbals’ Aims and Values

4.1. The Association’s overall vision and mission is:

 To provide the highest possible quality housing, environment and services to all of our customers  To maximise our contribution to the overall regeneration of the Gorbals, addressing wherever possible the needs of those in the community who are disadvantaged.

4.2. Our core values are based on:

 Being representative of, and accountable to, the local community  Being open and accessible  Being fair and equitable, and treating every individual with courtesy and respect

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 Being innovative and creative, and working in partnership with others, to achieve the best possible outcomes  Delivering services which are customer-focused and which provide the best quality possible for our tenants

 Promoting and implementing an approach to our community engagement and development work founded on the strengths and potential of the Gorbals community

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5. Strategic Objectives and Priority Actions

5.1. The Management Committee has set six strategic objectives for 2016/19. These are described in this chapter, along with a high-level summary of key priorities for the next 3 years. Annex 3 provides a Resource Plan showing how the priority actions will be delivered.

Strategic Objectives and Priority Actions 2015/18

Strategic Objective 1 Complete the physical regeneration of the Gorbals Key priorities 2016/19  Completion of Laurieston 1A and 1B  Begin Gorbals Parish Church Site  Demolition of Norfolk Court  Completion of the Crown Street regeneration, including the Association’s offices, the north and south “triangular sites” and the new civic street connecting Crown Street with Laurieston Road.  Complete investment programme at Riverside High Rise blocks (concierge station, corridors and foyers)  Work with partner organisations to promote environmental improvement, transport and economic development strategies for key locations (O2 environs; Gorbals Street corridor; Eglinton Street corridor and North Laurieston)  Progress other identified development opportunities, where these will contribute to the Association’s regeneration objectives and can be accommodated within the Business Plan Strategic Objective 2 Preserve the affordability of rents, and support our tenants in dealing with welfare cuts and the high cost of energy Key priorities 2016/19  Obtain and assess tenant feedback on the affordability of the Association’s rents  Regularly test affordability for different household types, also comparing our rents with those charged by local peer RSLs and by private landlords in the Gorbals area  Reduce fuel poverty by completing Fuel Efficiency Project (windows, boilers, District Heating)  Installation of District Heating and additional external wall insulation to Riverside MSFs (308 units)  Electric storage conversion to gas combi boilers in Silverfir Court (94 units)  Provision of advice and education in efficient and economic use of home energy.

 Advise and support tenants adversely affected by Welfare Reform measures  Help tenants safeguard household incomes and manage risks to NGHA rental streams  Partnership working to support tenants (e.g. bank accounts and digital inclusion)

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Strategic Objective 3 Provide high quality, value for money services, and manage our assets effectively

Key priorities 2016/19  Delivery of housing options service, to maximise choice for new housing applicants  Introduce a housing options service for older people, and contribute to the multi-agency Housing Access Team to improve the homeless referrals process  Complete 100% stock condition survey and develop revised asset management strategy which:  Integrates 5 year cash flows and one year detailed budgets with maintenance planning and implementation of contract works  Establishes systems for reviewing the management and financial performance of existing stock.  Conduct spending reviews for the following areas, to maximise value for the Association and service users:  Repairs and cyclical maintenance (including options for insourcing and analysis of data from stock condition data for 100% of stock; review of voids approach and standards; implement more targeted cyclical programmes; reduce 100% replacement and restoration to repair/renewal as required, where practicable)  Estate Based Services and security  Close cleaning  Analysis of 2016 benchmarking data (ARC and Quality and Efficiency Forum) to identify priority areas for further development/improvement Strategic Objective 4 Strengthen our engagement and communication with tenants and the wider community

Key priorities 2016/19

 Develop and implement a comprehensive Communications Strategy including review and updating of NGHA website and increased NGHA social media presence  Develop and implement priority actions from 2015 tenant satisfaction survey  Complete NGHA rebranding exercise  Review and update the Association’s Tenant and Owner Participation Policy and Procedures  Review of Complaints Handling Procedure Strategic Objective 5 To make Gorbals a Thriving Place

Key priorities 2016/19  Implement year 1 of high-intensity and sustained programme of community engagement  Establish Social, Economic and Community Development Committee, to oversee the Association’s involvement in Thriving Places activities  Maintain excellent partnership working with all public and voluntary bodies involved in Thriving Places

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 Take lead role in Gorbals Regeneration Group as Hub Organisation for Thriving Place initiative Strategic Objective 6 To be a cost-effective and well-managed organisation, achieving high standards of governance and of financial probity and competence

Key priorities 2016/19  Maintain compliance with all loan covenants, terms and conditions  Complete review of governance policies and implement procedures for compliance  Review and improve methods for committee and senior staff communications and for internal communications among the whole staff team  Conduct annual committee member reviews and implement the Committee Development Plan  Provide support to our Management Committee members through training and other development opportunities  Ongoing review of staffing needs and structures (for example, as posts become vacant and in response to requests for part-time working)  Provide property management and business support services under contract to our subsidiary New Gorbals Property Management Ltd  Appointment of new internal auditor and approval of new audit plan  Continue to review the costs and affordability of the SHAPS and SPF pension schemes and meet auto enrolment requirements  Integration of new asset management software with NGHA’s repairs and financial systems  Comply with Financial Reporting Standard 102 for 2016/17  Improve the efficiency of our systems and processes for invoicing, payments and management accounting  Review procurement policy and procedures across the Association in response to commencement of Procurement Reform (Scotland) Act 2014 / Regulations 2016 and the EU Procurement Directives

5.2. The Association’s strategic direction is defined by our focus on the Gorbals. The Management Committee is not currently planning any major changes in direction that would require strategic options to be reviewed at this time.

5.3. We may, in due course, conduct options reviews in areas where impact or value to the Association need to be re-appraised periodically (for example, development, wider role, and factoring services in blocks where we have no ownership interest).

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6. Strategic Analysis

Local Context and Population

Population and Households

6.1. The Association works exclusively in the Greater Gorbals area of Glasgow, which had a population of around 8,500 people and 4,655 households at the time of the 2011 Census. Figure 6.1 Key facts about population and households in Greater Gorbals (2011 Census)

9% increase in Gorbals population since 2001 Average age of Gorbals Significant increases in residents fell from 41.1 number of owner (double the growth rate for years in 2001 to 38.6 occupiers and BME Glasgow, 3 times the years in 2011 households growth rate for Scotland)

Children and young Older people aged 65 16% of Gorbals population people (0 to 15 years): plus: 15.2% of Gorbals 2011 born outside the UK 14.9% of Gorbals population in 2011 (Glasgow 12%) population in 2011 (Glasgow 13.9%) (Scotland 7%) (Glasgow 16.1%) (Scotland 16.8%) (Scotland 17.3%)

5% increase in number of 53% of Gorbals Average household size in households 2001 to 2011 households with children 2011: 1.78 persons headed by a lone parent Growth rate the same as Little change since the Glasgow but lower than (Glasgow 40%) 2001 Census Scotland (8%) ( Scotland 19%)

6.2. Looking to the long-term future, official projections for the city of Glasgow1 indicate:  A 15% increase in the city’s population and a 24% increase in the number of households in the period 2012 to 2037. Both figures are substantially higher than the increases forecast for Scotland as a whole.  The age groups set to increase the most in Glasgow are people aged 65-74 and under 16. A 38% increase in one-person households is forecast, the biggest rates of increase are for all age bands from 45 years upwards.  Modest increases for one adult households with children (8%), and a forecast 5% reduction for households with 2 or more adults and children.

1 National Records of Scotland, Glasgow City Council Area – Demographic Factsheet (October 2015)

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The Gorbals Community: Challenges, Assets and Improvements

6.3. Despite the physical transformation that has taken place, Gorbals residents experience substantial social and economic inequalities compared with Glasgow as a whole, for example in relation to child poverty, worklessness, educational attainment and levels of disability. The following table provides an overview of some of the challenges that affect residents. Figure 6.2 Greater Gorbals Profile (Source: Glasgow Indicators Project website)

6.4. It would be wrong to misrepresent the Gorbals as a place defined only by problems. The Gorbals community has substantial assets and there are many examples of areas where outcomes and opportunities have improved. One such area is community safety, with Community Safety Glasgow reporting that there have been substantial reductions in crime in the area during the last 10 years.

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Figure 6.3 Crime Levels in Gorbals: Comparison between 2004/15 and 2014/15 Type 2004/05 2014/15 % change Assault, with intent to rob 6 3 -50% Attempted Murder 4 0 -100% Common Assault 206 191 -7% Housebreaking 87 8 -91% Robbery 26 6 -77% Serious Assault 47 12 -74% Vandalism 359 128 -64% Vehicle Crime 174 32 -82%

6.5. The most recent Health and Wellbeing Survey conducted by NHS Greater Glasgow and Clyde in 2014 provides important information about how Gorbals residents see their community. Key results are shown below, with comparisons also shown for Glasgow as a whole:

Figure 6.4 Positive Perceptions among Residents: NHSGCC Health and Wellbeing Survey 2014

Local schools Public Transport Food shops Police Gorbals: 73% Gorbals: 87% Gorbals: 42% Gorbals: 75% Glasgow: 75% Glasgow: 78% Glasgow: 69% Glasgow: 57%

Leisure/sports Activities for young Local friendships Childcare provision facilities people Gorbals: 56% Gorbals: 55% Gorbals: 74% Gorbals: 44% Glasgow: 73% Glasgow: 47% Glasgow: 46% Glasgow: 38%

Perceptions of Social support reciprocity Gorbals: 75% Gorbals: 56% Glasgow: 78% Glasgow: 73%

These results suggest that services and amenities in Gorbals compare favourably with the rest of Glasgow whereas indicators related to social cohesion compare poorly. These issues require further consideration within the community to inform future action.

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The Local Housing Market

6.6. There were more than 4,600 dwellings in Greater Gorbals at the time of the 2011 Census, made up as follows: Figure 6.5 Tenure Profile of Greater Gorbals (2011 Census) Number of Type % Households Social Rent 2810 61 Owner-Occupied 1209 26 Private Renting 570 12 Other 66 1 Total 4655 100

6.7. The Association has grown through development and stock transfers and now owns over 95% of the social housing in Greater Gorbals. Link, Hanover (Scotland) and Loretto Housing Associations own the remaining 4% of social housing in the area.

6.8. Successive regeneration projects in Gorbals have produced a sizeable owner- occupied market in the area, where none previously existed. The housing available to buy includes main door dwellings suitable for families, as well as flats on upper levels. As factor for over 80% of the private housing in the area, the Association helps to maintain and protect owners’ investment in their homes. This, along with the scale and quality of the regeneration, has ensured that Gorbals’ housing market has proved more sustainable than new owner occupation markets created nearby in Tradeston and Strathbungo.

6.9. In January 2016, the Rightmove website reported an average sales price of £112,500 for Gorbals (excluding heavily discounted right to buy sales), while the top end of the market is around £210,000 for penthouse style properties. The local market has survived the worst of the post-2008 recession, and demand for housing in new developments continues to be high which increases confidence in the Association’s ability to market the small number of shared equity properties in the development programme.

6.10. Greater Gorbals has a well-established market for private renting (2011 Census: 570 households, 12% of all households). Private rented properties in the area rose by almost 300% between 2001 and 2011, compared with a growth rate of 115% for Glasgow.

6.11. Average private rented sector (PRS) rents in the area are typically around double the level of New Gorbals’ social rents. The following table compares rental values for PRS properties, New Gorbals’ social rented housing, and the newly-let Mid Market Rent (MMR) housing being managed by the Association’s subsidiary NGPM Ltd.2

2 All rental figures are per calendar month.

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Figure 6.6 Rental Comparisons for Rented Housing in Gorbals

House PRS G5 rents New Gorbals PM New Gorbals HA Size 2015 Quarter 3 MMR rents social rents 1 bed £543 £379 £297 2 bed £645 £475 £330 3 bed £871 £558 £370 4 bed n/a £792 £422

Stakeholder Relationships and Priorities

6.12. In implementing our strategy, the Association will work closely with our tenants and a wide range of public sector and community partners.

New Gorbals Tenants

6.13. The Association’s Tenants Panel has provided important input on matters such as the Annual Charter Report and annual rent reviews, which have then been the subject of wider dissemination or consultation with all tenants.

6.14. The Association conducts regular tenant satisfaction surveys as well as targeted, transactional surveys on particular services. In our most recent large-scale tenant satisfaction survey (October 2015), tenants were asked to specify their top three priorities for the Association’s services, with the following results:

Q23 Top 3 priorities for Association services Top 2nd 3rd Overall Base: All respondents, n=402 priority priority priority The repairs service 16.9% 20.9% 12.2% 50% The overall quality of your home 17.2% 14.7% 9.7% 42% Keeping tenants informed 23.4% 8.2% 8.2% 40% Estate services e.g. cleaning and security 6.7% 15.7% 13.2% 36% Dealing with anti-social behaviour 9.0% 12.2% 10.4% 32% Management of the neighbourhood 6.7% 7.5% 8.5% 23% Value for money for your rent 4.5% 6.0% 10.4% 21% No top / second / third priority 1.2% 8.2% 9.5% 19% Listening to tenants views and acting on them 4.0% 1.2% 6.5% 12% Helpfulness of Association staff 1.5% 1.5% 7.0% 10% Providing opportunities to participate in decision 1.7% 2.5% 2.0% 6% making Ease of contacting the Association 1.0% 1.5% 2.5% 5% Can't pick/ all priority 6.2% - - 6%

Sources: Citylets Quarterly Report (2015, Q3) for PRS rents, and New Gorbals HA Annual Return on Scottish Social Housing Charter (at 31.3.15) for NGHA rents

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6.15. We will implement a programme of improvement actions during 2016/17, to respond to the priorities tenants have identified in the satisfaction survey. We will also develop a comprehensive external communications plan as well as carrying out intensive engagement with the wider community, as part of the Thriving Place initiative.

External Partners: Glasgow City Council and Others

6.16. Within the Gorbals, our key public agency partners are the Glasgow Community Planning (GCPP) itself and its members including Glasgow City Council (GCC), the Glasgow City Health and Social Care Partnership, Police Scotland, Scottish Fire and Rescue, Glasgow Life and Jobs and Business Glasgow. Additionally, we will also work with a range of community agencies and Gorbals Voluntary Sector providers.

6.17. At citywide level, the Association has strong and positive relationships with Glasgow City Council. This reflects the Council’s role as the strategic housing authority and its role in housing investment and homelessness.

6.18. Completion of the Laurieston Transformational Regeneration Area is recognised as a funding priority in the Council’s Strategic Housing Investment Plan 2015/16 to 2018/19. The SHIP states support for five developments by New Gorbals, three of which are categorised in the SHIP as “high priority” and will therefore have the greatest priority within the funding available to the City Council.

6.19. The Council is currently responsible for the management of Housing Benefit, although this is set to end as Universal Credit is introduced. The phasing in of Universal Credit in Glasgow (including Laurieston Jobcentre Plus) began in June 2015 for new claims by single applicants. This will bring significant challenges for tenants and for the Association.

Single Outcome Agreement and Thriving Places

6.20. New Gorbals contributes significantly at a local level to the outcomes described in Glasgow’s Single Outcome Agreement (SOA), for example, in relation to improving outcomes for vulnerable groups such as homeless people and older people. The current SOA states the following vision:

”Glasgow is a thriving, inclusive and resilient city; a city where all citizens can enjoy the best possible health and well-being, and have the best opportunities to meet their potential.

6.21. This vision is underpinned by:

 Three priority areas for concerted action to improve outcomes (alcohol misuse, youth unemployment and vulnerable people), all of which are significant issues in the Gorbals  A commitment to tackle inequalities in nine of the city’s most deprived neighbourhoods, through a series of “Thriving Places” initiatives including the Gorbals. 21

6.22. New Gorbals is now well-established as the lead agency and anchor organisation in the Gorbals in implementing and managing the Thriving Places agenda. Dedicated staff, employed by New Gorbals, will undertake engagement, development and co- ordination work with the community, voluntary sector and public sector partners to ensure the Gorbals becomes a safer, more resilient and more prosperous community.

Funders and Regulators

6.23. The Association’s main funders are Bank of Scotland, Nationwide, The Housing Finance Corporation and Affordable Housing Finance, with a variety of fixed and variable rate loan agreements in place. The Association maintains close relationships with our funders, and robust checks are carried out on an ongoing basis to ensure compliance with loan covenants, under scrutiny by the Finance and the Audit Sub Committee.

6.24. The Association’s main regulators are the Scottish Housing Regulator (SHR) and the Office of the Scottish Charity Regulator.

6.25. SHR’s Regulatory Framework was introduced in 2012, followed by the first annual reports against the Scottish Social Housing Charter in 2014. SHR has had a “low engagement” with the Association since 2012, indicating that SHR considers the Association represents a low risk to its regulatory purpose. The Association provides the SHR with detailed annual reports on its performance and finances, and advises SHR of any Notifiable Events as they occur.

6.26. Our strategy must also take account of specific SHR priorities. These include an increasing focus on business planning, strong governance, financial performance and risk management, cost control, asset management and value for money. SHR has also questioned the sustainability of future rent increases in excess of inflation, although there does not currently appear to be an appetite on the part of SHR or the Scottish Government to intervene directly in rent-setting for the housing sector as a whole.

Environmental Analysis: SWOT and PESTLE

6.27. As part of the business planning process the Association has conducted two types of environmental analysis:

 SWOT analysis (strengths, weaknesses, opportunities and threats), and  PESTLE analysis (political, economic, technological, legal and environmental factors).

6.28. The results are presented on the following two pages.

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Figure 6.7: SWOT Analysis Summary

STRENGTHS OPPORTUNITIES  100% focus on Gorbals: clear purpose  Complete regeneration (84 more units, with the prospect of additional opportunities beyond this)  Success of NGHA element of Laurieston, and risks managed effectively  NGPM Ltd creates a structure for managing other diversification opportunities that may arise  Existing housing substantially improved (modernisation, energy efficiency works)  Market our services to others (e.g. development)  Strong performance in meeting transfer  Improving performance and maintaining financial promises to GHA tenants strength will help preserve NGHA’s position in a more challenging environment  High demand for new build and strong local/national/international reputation  Tenant feedback will allow us to improve frontline services and make these more responsive to  Turnover in Management Committee (MC) tenants’ needs membership with no loss of stability  Continue to strengthen and support the MC  MC has strong skills and commitment  Ofgem redress decision in NGHA’s favour resulting  Staff have in-depth knowledge of housing in £5M+ additional fuel efficiency investment stock and customers and “can do” culture  Final outcome of Scotland Act legislative powers  High tenant/community expectations package and associated financial frameworks  Strong relationships with the City Council and  With the community and partners, addressing long- other partners term deprivation and its causes, through Thriving  Financially robust Places

WEAKNESSES THREATS

 Business Plan sensitive to reductions in  Austerity measures: impact on tenants and NGHA income stream (e.g. Welfare Reform,  Legislative or financial changes with no warning or Housing Benefit reductions, increases in consultation by central or local government voids and bad debts)  Welfare Reform: impact on income management and  Future pension costs unpredictable and financial viability increasing  Not managing future repairs/replacement costs  Capacity to produce new build beyond the currently identified programme is limited,  Challenge of reducing costs while also improving unless fair subsidy levels are available service quality and efficiency  Following recent growth, need to improve staff training, performance management and internal communication  Growth and diversification places pressure on staff and committee resources  Governance failures and consequent regulatory attention  Completion of physical regeneration essential to secure long-term stability of the area  Final outcome of Scotland Act legislative powers package and associated financial frameworks

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Figure 6.8: PESTLE Analysis Summary STRENGTHS/OPPORTUNITIES THREATS/PRESSURE POINTS POLITICAL/LEGAL/REGULATORY  Scotland Act settlement and increased  Political and financial uncertainty over Scottish Scottish powers over welfare powers and about Housing Benefit  Strong strategic and operational  Substantial cuts to GCC budgets, and knock-on relationships with Glasgow City Council effects for local, non-statutory services  New procurement legislation  Extension of Freedom of Information  Maintaining SHR confidence in NGHA ECONOMIC  Scottish Government Welfare Reform  Roll-out of Universal Credit to Glasgow: mitigations (including expectation of direct administrative competence issues with DWP; payments to social landlords and abolition impact on tenants’ ability to pay rent; pressures of bedroom tax) on NGHA’s income stream  Housing Benefit cuts could reduce rents  GCC commitment to funding for further  SG grant levels per unit for new build new build by NGHA (84 housing units)  Low inflation forecast to 2020, Bank of  Increasing regulatory interest in rent increases; England target is 2% versus scope to move away from RPI+1% increases; versus meeting loan covenants  Pensions: costs arising from SHAPS and auto- enrolment; impact on NGHA balance sheet  Accounting requirements changes: SORP already introduced, preparation needed for the introduction of FRS 102 in 2016/17 SOCIAL  Demographic change/customer profile  Housing Charter: results demonstrate excellent NGHA performance; benchmark for improvement and tenant scrutiny  Homelessness prevention and NGHA  Rising demand from GCC for settled involvement in housing options service accommodation  With partners, NGHA provides access to financial inclusion/advice services TECHNOLOGICAL  Good use is being made of technology for  Continual change in technology is now a given, management and communications with resulting need to change and adapt

ENVIRONMENTAL  Major investment made to address fuel  New Scottish Government’s energy efficiency poverty standards (EESSH), and reduced commitment by UK Government to make funding available

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Conclusions

6.29. All of the factors described in this chapter are potentially significant for the Association’s future strategy and must therefore be monitored and acted upon appropriately.

6.30. The most important external factors affecting the Association’s strategy will include:  Scottish Government changes to procurement and housing grant levels  Welfare reform, in particular the roll-out of Universal Credit, and the potential impact on tenants’ incomes and the Association’s future cashflows and viability  Detailed articulation of the welfare powers the Scottish Government will assume as a result of the Scotland Act and the accompanying financial frameworks, to provide assurance to social landlords that they will receive direct payment of housing cost element of UC.  UK government economic policy, particularly in light of economic performance and its effect on public investment levels and the pressure on welfare benefits.  The deep cuts being made to Glasgow City Council’s budgets, and how these will impact on local, non-statutory services at community level and on spend to save initiatives (such as “Thriving Places” and the integration of health and social care).

6.31. At local level, the most important factors for our strategy will include:  Maintaining demand for our housing  Maintaining and improving the quality of our services  Retaining the confidence of Glasgow City Council, our funders and SHR  Keeping our rents affordable, versus the need for long-term investment that will reduce fuel poverty and costs for tenants, versus the financial disciplines required to ensure strong financial performance.

6.32. Clearly, the Association’s ability to manage the factors identified varies considerably. For example, there is little or nothing that we can do to control interest rates, inflation or government policy on taxation or housing benefit. However we can and must ensure that our financial planning assesses the Association’s risk exposure should such risks occur, and the resulting implications for our overall strategy.

6.33. New Gorbals has substantial experience of complex strategic initiatives involving a wide range of stakeholders. Continued growth and diversification has placed significant demands on the Association’s staff and committee resources, and it can safely be predicted that the initiatives described in the Business Plan will create similar pressures resources for both Committee and senior staff.

6.34. Moreover, achievement of our strategic objectives demands a continued focus on sound and stable governance and strong financial management. These have been high priorities in the past, and must remain so. 25

7. Asset Management Strategy

Stock Profile

7.1. The following tables provide a profile of the Association’s housing stock (they exclude 23 Shared Ownership, 63 mid market rent leased to NGPM and 2, eight bed space dementia care units :

Existing Housing and New Build Existing Homes (Stock New Build TOTAL Transfer) Homes Hutchesontown 1233 701 1934 Laurieston 236 201 437 Oatlands 40 83 123 TOTAL 1509 985 2494

House Types Houses Flats (other Multi Storey TOTAL than MSF) Flats Hutchesontown 393 823 718 1934 Laurieston 54 383 0 437 Oatlands 13 110 0 123 TOTAL 460 1316 718 2494

House Sizes 1 bed 2 bed 3 bed 4+ bed TOTAL

Hutchesontown 710 999 189 36 1934 Laurieston 154 174 88 21 437 Oatlands 12 94 15 2 123 TOTAL 876 1267 292 59 2494

7.2. As can be seen, the housing stock is diverse. While there are some variations in turnover levels and re-letting times, none of the stock can be classed as giving cause for concern and demand ranges between moderate (for MSFs) and very high (for the majority of our stock). We have financial plans in place to maintain all of our stock in good condition over a 30-year period.

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Asset Management Strategy

7.3. The key asset management activities undertaken by the Association are:

 Managing and investing in our existing homes and neighbourhoods. We do this through tenancy and neighbourhood management services, the responsive repairs service, and the major repairs and replacements programme.

 Improving the thermal efficiency of our tenants’ homes, to tackle fuel poverty.

 Building new homes to meet housing need and to contribute to regeneration strategies agreed with public and private sector partners.

 Providing factoring services to home owners, using our role as landlord and factor to ensure high standards of neighbourhood management.

 Maintaining additional services and specialist plant in our multi-storey blocks at Hutchesontown and Riverside, a significant additional responsibility because of the profile of our housing stock.

7.4. The Association’s asset management priorities during the period of the Business Plan will reflect a number of factors:

 The Association has achieved the SHQS for 100% of our stock (including a small number of qualifications by exemption because of unalterable layouts such as galley kitchens).

 Works to redevelop the sites of the former Gorbals Parish Church and the Sandiefield multi-storey flats will begin and will bring completion of the Laurieston and Crown Street regeneration strategies significantly closer.

 Our large-scale programme of energy efficiency works, covering 2,500 houses including 500 owners and undertaken with the help of energy company funding of over £11m and Glasgow City Council funding of £2m, is nearing completion. We must now assess what level of additional investment, if any, may be required to meet the Energy Efficiency Standard for Social Housing

 We have recently completed a new stock condition survey, covering 40% of our stock and have commissioned the remaining 60% to be surveyed and reported on during 2016. This will provide us with unprecedented insight into future investment requirements

7.5. Taking account of all of these factors, the Association will develop a revised asset management strategy during 2016/17 with the aim of:

 Better integrating our cash flows and budgets with maintenance planning and implementation of work programmes  Establishing new systems for reviewing the management and financial performance of existing stock.

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 Examining the scope for cost reductions in repairs and cyclical maintenance, including: . Options for insourcing . Our voids approach and standards . More targeted cyclical programmes . Estate Based services, close cleaning and security.  Working with partner organisations to achieve high quality external and environmental works as part of the regeneration of Laurieston, to match the standards achieved in the remainder of the Association’s stock areas.

Development Programme

7.6. The following tables show:

 The Association’s committed development programme, based on projects that have SHIP approval.

The committed programme is incorporated in the Business Plan financial projections and private funding is available from the Association’s Affordable Housing Finance facility.

 The Association’s indicative development programme, which makes allowance for additional future projects.

None of these projects are committed and would need additional funding to be raised. Accordingly, the indicative programme is excluded from the Business Plan cashflows at the present time.

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Development Programme Summary (Committed and Indicative Programmes)

PROJECT Rent Other Total Particular Acquire Tender Start Complete Needs Committed

Gorbals Phase 1C 46 9 55 Apr-16 Sep-17 (G6/7) (NSSE) Sandiefield 29 2 units Mar-16 May-16 Jul-17 (wheelchair users)

Indicative

Oxford Street 8 32 40 4 units Jan-17 Dec-16 Feb-17 Aug-18 (MMR) (wheelchair users)

Crown Street 24 24 2 units Aug-16 Jun-17 Sep-17 Jan-19 Triangular site (wheelchair users)

Laurieston 5 24 24 2 units May-17 Apr-17 Jun-17 Aug-17 (TBC) (wheelchair users)

Laurieston 6 50 50 TBC Dec-17 Nov-18 Jan-19 Apr-20 (TBC) Pine Place (health 24 24 TBC Apr-16 Mar-19 May-20 Aug-21 centre site)

Committed Programme: Investment and Output 2016/17 2017/18 2018/19 Total

EXPENDITURE (£ million)

GRANT 5.144 0.000 0.000 5.144 SALES 0.000 0.770 0.000 0.770 PRIVATE 3.005 1.225 0.000 4.230 OTHER 0.000 0.000 0.000 0.000 TOTAL 8.149 1.995 0.000 10.144 OUTPUT (number units) SOCIAL RENT 75 75 MID MARKET RENT SHARED EQUITY 9 9 TOTAL 84 84

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Indicative Programme: Investment and Output 2016/17 2017/18 2018/19 2019/20 2020/21 Total

EXPENDITURE (£ million)

GRANT 1.711 4.72 1.321 5.144 0.000 12.896 SALES 0.000 0.00 0.000 0.000 0.000 0.000 PRIVATE 0.000 1.80 6.040 2.952 0.400 11.192 OTHER 0.000 0.000 0.000 0.000 0.000 0.000 TOTAL 1.711 6.520 7.361 8.096 0.400 24.088 OUTPUT (number units)

SOCIAL RENT 56 50 19 125 MID MARKET RENT 32 19 51 SHARED EQUITY TOTAL 88 50 38

7.7. The Association’s development track record is evidenced by the physical transformation we have brought to the Gorbals and by unparalleled recognition through major design and other awards. These include:

 18 Major Design Awards, including 6 Saltire Awards; 5 Glasgow Institute of Architects Awards; 4 Scottish Design Awards; and awards from the Royal Incorporation of Architects in Scotland and the Royal Incorporation of British Architects  2 major planning awards from the Royal Institute of Town Planning  2 Civic Trust Commendations.  Scottish Government/RIAS Award for Client of the Year

7.8. The Association’s Head of Finance and Head of Development work closely to ensure that all new developments are financially sustainable. The Association uses the Brixx package to test the financial impact that each project will have on the Association’s Business Plan as a whole.

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Planned and Cyclical Maintenance Programme

7.9. The following tables show the Association’s programmes for planned and cyclical maintenance over the next 5 years.

Planned and Cyclical Maintenance

2016/17 2017/18 2018/19 2019/20 2020/21 No of No of No of No of No of replacements replacements replacements replacements replacements

Curtilage Paths and 0 0 0 8 0 Paved Areas Common Close 29 0 0 0 0 Floor Finishes Common Main 0 36 38 23 17 Entry Door Common Rear 74 0 3 37 0 Entry Door Common Door 0 0 0 0 0 Entry System Common Area 0 0 0 0 84 Windows Dwelling Front 0 0 2 5 0 Access Doors Dwelling Rear 0 0 0 4 17 Access Doors Kitchens 105 65 66 60 130

Bathroom 63 57 14 0 81 Amenities Electrics 0 0 0 19 4

Heating 152 84 86 97 48 Boliers/Appliances

Heating Distribution 0 1 2 8 0

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Planned Renewals: Specialist Plant

MAJOR CAPITAL 2016/17 2017/18 2018/19 2019/20 2020/21 WORKS Lift Modernisation 9Nr 2Nr 2Nr (407 3Nr (4, 18 and Renewal (Riverside (Caledonia Cumberland, Mathieson, 141 MSF+32QEG) Rd MSF) 197 Waddell) Cumberland)

Riverside District Heating planned renewals Caledonia Rd misc minor misc minor misc minor misc minor renew - boilers, District heating renewals renewals renewals renewals block heat planned renewals exchanger plant, flat hydraulic boards renwals, flat radiators and cylinders as required Ventilation to misc minor misc minor misc minor misc minor misc minor Riverside MSF renewals renewals renewals renewals renewals

Sheltered Disabled 1Nr Equipment

CCTV Replacement misc minor misc minor misc minor misc minor misc minor renewals renewals renewals renewals renewals

Smoke detector 511Nr 511Nr 511Nr 511Nr 511Nr renewal

Communal water 1Nr tank bypass

Renew Pumps and 1Nr 2Nr 1Nr 2Nr 1Nr Starters

Sheltered Housing 1Nr 1Nr Alarm Systems

Energy Efficiency Standard for Social Housing (EESSH) 7.10. The Association requires to a) achieve the EESSH for all houses within the scope by 2020, and b) include an assessment of our current position and progress towards compliance in the 2015/16 ARC submission.

7.11. Desk top evaluation of data already held indicates that the Association has very little stock that does not already meet the EESSH standards, or that will not meet the standard once planned investment is completed. The Association’s planned actions are to:  Complete a detailed action plan for completing the EESSH compliance

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assessment (February 2016)  Complete the first stage of 250 targeted energy efficiency surveys by the end of March 2016  Complete an EESSH compliance report by the end of 2016  Finalise an initial EESSH compliance implementation plan by the end of May 2016.

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8. Value for Money

Introduction

8.1. New Gorbals aims to achieve Value for Money (VFM) by:

 Providing our tenants with affordable housing, high quality services and investment in their homes and neighbourhoods  Making the best use of our assets and resources, for the benefit of tenants and our local community.

8.2. The main tools we will use to help assess and monitor VFM include:

 Analysis of benchmarking information  Tenant feedback and engagement  Policy and spending reviews for particular service or business areas  Performance reporting to the Management Committee and sub committees  Where relevant, strategic options appraisals.

Current Performance: Costs and Resources

8.3. The table below compares New Gorbals’ costs with the national average for all RSLs in Scotland and our chosen local peer group (Glasgow, Govanhill and Southside Housing Associations).

Figure 8.1 Per Unit Management and Maintenance Costs 2014/15

Glasgow Govanhill New Gorbals Southside Average HA HA HA HA All RSLs in Scotland Management & £1,238 £1,267 £967 £1,345 £1,195 maintenance admin. (£) Planned maintenance (£) £576 £1,043 £383 £498 £458 Reactive maintenance (£) £691 £471 £622 £567 £550 Total direct maintenance £1,267 £1,514 £1,005 £1,064 £1,008 (£) Total management & £2,504 £2,781 £1,972 £2,410 £2,204 maintenance (£) Source: Scottish Housing Regulator Audited Financial Statements Return (2014/15)

8.4. The most significant of these measures when making VFM comparisons is the management and maintenance administrative cost per unit. New Gorbals’ costs per unit are:

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 Around £300 per unit lower than GHA and Govanhill Housing Association who have the next lowest costs in the local peer group.  19% lower than the national average cost for all RSLs in Scotland.

8.5. New Gorbals is also highly efficient when comparing the local peer group members’ stock to staff ratios. The following results are based on each organisation’s number of office-based staff.

Figure 8.2 Ratio: Number of Homes, to Number of Office-Based Staff (2014/15)

New Glasgow Govanhill Southside Gorbals HA HA HA HA Number of homes per member 55.4 43.5 40.2 39.8 of staff (office-based) Source: calculated from Scottish Housing Regulator ARC database 2014/15

8.6. The main area where New Gorbals’ costs are relatively high is reactive maintenance costs (£622 per unit), in comparison with the national average of £550. New Gorbals’ costs are also higher than the local peer group organisations, with the exception of GHA whose 2014/15 unit cost was £691.

Current Performance: VFM Scorecard 2014/15

8.7. The Association has compared its performance with national averages for all social landlords (RSLs and local authorities) and with local peer organisations (Glasgow, Govanhill and Southside Housing Associations).

8.8. The result of the analysis is a VFM Scorecard that reports on three different dimensions of value for money: Value, Process and Business/Financial Measures. The purpose of measuring VFM in this way is to ensure that a balanced assessment is carried out. For example, completing repairs quickly is not value for money unless the work also meets quality standards and is valued by tenants.

8.9. The VFM Scorecard is set out in detail over the next two pages.

 Columns 1 and 2 show the VFM measure and New Gorbals’ 2014/15 performance result  The boxes in Column 3 are shaded green where New Gorbals is the top performer in the peer group, and pink where another RSL in the peer group is the top performer  Column 4 indicates whether New Gorbals performance in 2014/15 was better shaded in green, or worse shaded in pink than the national average for all RSLs in Scotland.

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FIGURE 8.3 NEW GORBALS HOUSING ASSOCIATION: VALUE FOR MONEY SCORECARD 2014/15

New Gorbals Top Performance in NGHA better  HA Peer Group or worse  than national average for all social landlords VALUE MEASURES  % tenants satisfied with overall service 92% New Gorbals  provided by landlord % tenants who feel landlord is good at 92% New Gorbals  keeping them informed about services and decisions % tenants satisfied with opportunities to 87% New Gorbals  participate in landlord’s decision making % tenants who feel rent for their property 83% New Gorbals  represents good value for money % tenants satisfied with repairs service 92% New Gorbals 

% factored owners satisfied with factoring 69.96% New Gorbals  service % tenants satisfied with quality of home 85% 91.78%  (rank 3 of 4) GHA  % tenants satisfied with standard of 78% 98.17%  home when moving in (2013 survey: see (rank 4 of 4) GHA para 8.17) % reactive repairs completed right first 98.26% New Gorbals  time % tenants satisfied with management of 91% 91.25%  neighbourhood (rank 2 of 4) Southside HA % properties meeting NHER / SAP 99.92% New Gorbals  ratings next year % all tenancies began in previous year 91.89% New Gorbals  sustained for more than a year % tenancies (statutory homeless 88.37% 91.62%  applicants) began in previous year (rank 2 of 4) GHA sustained for more than a year % tenancy offers refused 19.79% New Gorbals  % approved applications for medical 100% New Gorbals  adaptations completed % average weekly rent increase to be 2.36% 0.5%  applied next year (rank 2 of 4) Southside HA ASB cases per 100 homes 1.95 New Gorbals 

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New Gorbals Top Performance in NGHA better  HA Peer Group or worse  than national average for all social landlords PROCESS MEASURES  Average hours to complete emergency 2.07 hours 1.79 hours  repairs (rank 2 of 4) Southside HA Average working days to complete non- 3.36 days New Gorbals  emergency repairs Average reactive repairs completed per 3.35 New Gorbals  occupied property Average calendar days to re-let 16.53 days 13.09 days  properties (rank 3 of 4) Southside HA Percentage properties with gas safety 100% New Gorbals  record renewed by anniversary date Percentage of court actions initiated 0% New Gorbals  which resulted in eviction Average days to complete approved 8.51 days New Gorbals  applications for medical adaptations ASB cases resolved within local target 96.3% New Gorbals  % all 1st stage complaints responded to 88.08% 91.67%  in full within SPSO timescales (rank 3 of 4) Govanhill HA BUSINESS & FINANCIAL  MEASURES % of rent due lost through properties 0.34% 0.33  being empty (rank 2 of 4) (GHA) Number of homes per office based 55.4 New Gorbals Not available member of staff Management & Maintenance Admin Cost £967 New Gorbals  per unit Reactive Maintenance Cost per unit £622 £471  (rank 3 of 4) Govanhill HA % of total rent due collected in previous 101.1% New Gorbals  year % gross rent arrears of rent due 5.68% 4.65%  (rank 3 of 4) GHA % former tenant rent arrears written off 12.33% New Gorbals 

Turnover: % lettable self-contained 7.42% New Gorbals  houses that became vacant in year Average management fee per factored £124.20 £122.04 National average property (2 of 4) Govanhill HA comparison not relevant Percentage days lost through staff 1.74 days New Gorbals Not available sickness absence

8.10. The VFM Scorecard results show that New Gorbals is achieving a very high level of performance in comparison with our peer group and with the national averages for all RSLs in Scotland. This all the more creditable because the Association’s staff:stock ratio and management and maintenance administration cost per unit are well below 37

sector norms.

8.11. The Association is the top performer among the local peer group for 24 out of 36 (two-thirds) of the VFM measures tested, as well as being the top performer overall in all 3 Scorecard categories (Value, Process and Business/Financial Measures).

Figure 8.4 VFM Scorecard Summary

Number of measures where RSL is top in peer group

Total Number New Gorbals Glasgow Govanhill Southside of VFM HA HA HA HA Measures

VALUE 17 12 3 0 2

PROCESS 9 6 0 1 2

BUSINESS & 10 6 2 2 0 FINANCIAL

TOTAL 36 24 5 3 4

8.12. The benchmarking results suggest that the most significant areas for further investigation or improvement are New Gorbals’ costs for responsive repairs (see 8.6), tenant satisfaction with the home, and tenant satisfaction with the standard of the home when moving in (see 8.17).

Priority Areas for Improving Value for Money

8.13. The Association’s priorities for improving value for money during 2016/17 lie in the following three areas:

 Improving tenant engagement and satisfaction  Asset management planning  Conducting spending reviews in selected business areas

Improving Tenant Satisfaction

8.14. New Gorbals’ tenant satisfaction results are extremely strong overall. During 2016/17, we will implement an action plan to investigate and address issues arising from the November 2015 Tenant Satisfaction Survey.

8.15. In the 2015 tenant satisfaction survey, 10.7% of those responding to the survey expressed dissatisfaction with their home. Among this group, the main causes of dissatisfaction stated were:

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Can you please explain why you are not satisfied with the quality of your home? Base: Respondents who were dissatisfied with the No. % quality of their home, n=62 Home is in need of repairs (not specific) 33 53.2% Problems with heating/ boiler system 13 21.0% Home is too small/ poor size 6 9.7% Poor insulation 5 8.1% Need upgrades/ improvements e.g. kitchen/ bathroom 5 8.1%

8.16. These results combine areas requiring further investigation (“home is in need of repairs”, as well as areas where improvement can be expected as a result of the Association’s investment programme (“Problems with heating/boiler system).

8.17. In relation to satisfaction with the home moving in, the Association tests this as part of settling in visits (SIVs), accordingly we did not include this in the 2015 tenant satisfaction survey. The SIV data for 2014/15 and 2015/16 lets indicates that 96.4% of new tenants were very or fairly satisfied with the standard of the home when they moved in, based on 338 responses.

Asset Management and Programme Planning

8.18. During 2015, the Association completed a comprehensive stock condition survey. For the first time, the Association has a 100% survey covering all of our stock.

8.19. As described in Chapter 7, the Association’s priorities will include:

 Developing an updated asset management strategy  Revising our programmes for planned and preventative maintenance  Fully integrating investment and financial planning  Further developing our approach to assessing the performance of our housing stock.

Spending Reviews in Selected Business Areas

8.20. During 2016/17, the Association will conduct a number of spending reviews, to improve cost affordability and/or certainty for the Association, while maintaining value for tenants.

8.21. The service/business areas selected for review are:

 Repairs and cyclical maintenance  Voids approach and standards  Estate based services and security  Close cleaning.

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Rents and Affordability

8.22. New Gorbals approach to rent-setting and affordability is based on:

 Keeping our rents affordable to tenants who pay some or all of their rent themselves (working households and pensioner households receiving occupational pensions)  Keeping rent increases to the minimum needed to provide tenants with high quality services and homes  Comparing our rent levels with other RSL homes and homes available locally from private landlords  Promoting convergence in rents for comparable properties, to address inconsistencies resulting from different stock transfers, rent policy for new build etc. This is a medium-term endeavour, to avoid unaffordable spikes in rent and other unintended consequences that would impact adversely on tenants.  Ensuring prudent financial and risk management, so that we have sufficient income to meet our obligations to our tenants and funders.

Current Rents and Rental Comparisons

8.23. The following table shows New Gorbals’ average rents in 2014/15, compared with the main housing associations in areas adjacent to our area of operation (Glasgow, Govanhill and Southside Housing Associations).

Figure 8.5 Average Rents 2014/15: New Gorbals compared with other social landlords

House Size New Gorbals HA Glasgow HA Govanhill HA Southside HA

2 apartment £68.73 £69.47 £73.56 £76.85

3 apartment £76.10 £74.30 £77.26 £83.53

4 apartment £85.37 £86.76 £89.98 £91.56

5 apartment £97.50 £94.50 £108.50 £92.88 Key Highest average weekly rent in peer group

Lowest average weekly rent in peer group

8.24. Gorbals has a well-established market for private renting (2011 Census: 570 households, 12% of all households). Average private rented sector (PRS) rents in the G5 area are typically around double the level of the Association’s rent levels. The following table shows how the Association’s social rent levels compare with PRS rents in the area as well as rents for new mid market rent homes that will be managed by the Association’s subsidiary, New Gorbals Property Management.

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House Size PRS Rents NGPM MMR New Gorbals HA G5 area 2015 rents social rents Quarter 3 1 bed £543 £379 £297 2 bed £645 £475 £330 3 bed £871 £558 £370 4 bed n/a £792 £422

Affordability Assessment

8.25. There is an absence in Scotland of agreed definitions of affordability, beyond a general expectation stated by the Scottish Government that rents should be affordable to households in low paid work.

8.26. Previous affordability measures (e.g. households in full-time employment should pay no more than 25% of their household income) have become less relevant because of the increasingly complex nature of the tax and benefit systems.

8.27. This added complexity has benefited many tenants, most notably through the various tax credits that are currently available. How this will play out under Universal Credit (UC) remains to be seen – to date UC has been rolled out in the Association’s area of operation only for new single claimants.

8.28. The Scottish Government publishes a benchmark affordable rent for newly-built properties receiving subsidy. Currently, this is £3,990 per annum or £76 per week, based on a 3 person equivalent dwelling. This is broadly equivalent to a New Gorbals rent for a 3 apartment property in 2014/15 (£76.10).

8.29. To provide a further way of illustrating affordability, the Association has modelled its proposed rents for 2016/17 for 10 common household types: 6 working household types and 4 pensioner household types. The results are shown in the following table.

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Figure 8.6 NGHA Rents 2016/17, analysed by household income and rent payable after Housing Benefit Household Circumstances Household Income Weekly Housing Left to as % of Rent Benefit Pay by H/hold Tenant Income Single parent aged under 25, with Total: £268.19 per week £77.08 £40.55 £36.53 13.6% one child Earnings: £107.20 Working 16 hours per week at Child Tax Credit: £63.94 minimum wage. Also receives Child Working Tax Credit: Tax Credit, Working Tax Credit and £76.35 Child Benefit Child Benefit: £20.70 Single parent aged over 25, with Total: £276.19 per week £77.08 £35.35 £41.73 15.1% one child Earnings: £115.20 As above, except parent is aged Child Tax Credit: £63.94 over 25 Working Tax Credit: £76.35 Child Benefit: £20.70 Couple under 25 with two Total: £416.92 per week £86.54 £13.65 £72.89 17.5% children Earnings: £201 Child Tax Credit: £63.94 One person works 30 hours per Working Tax Credit: week on minimum wage. Also £64.12 receive Child Tax Credit, Working Child Benefit: £34.40 Tax Credit and Child Benefit

Couple under 25 with two Total: £431.92 per week £86.54 £3.91 £82.63 19.1% children Earnings: £216 Child Tax Credit: £117.40 As above, except parents are over Working Tax Credit: 25 £64.12 Child Benefit: £34.40 Single person aged under 25 Total: £140 per week £69.46 £21.59 £47.87 34.2% Earnings: £140 Working 20 hours per week at £7 per hour

Single person aged over 25 Total: £144 per week £69.46 £28.87 £40.59 28.2% Earnings: £144 Working 20 hours per week at £7.20 per hour

Single pensioner Total: £234.68 per week £69.46 £27.11 £42.35 18.0% SRP: £119.30 Receiving the State Retirement Occup. pension: £115.38 Pension (SRP) and an occupational pension

Pensioner couple Total: £306.18 per week £69.46 £34.09 £35.37 11.6% SRP: £119.30 plus £71.50 Receiving the State Retirement Occup. pension: £115.38 Pension and an occupational pension

Single pensioner Total: £151.20 per week £69.46 £69.46 £0.00 0.0% SRP: £119.30 Receiving the State Retirement Pension Credit: £31.90 Pension only

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Household Circumstances Household Income Weekly Housing Left to as % of Rent Benefit Pay by H/hold Tenant Income Pensioner couple Total: £230.85 per week £69.46 £69.46 £0.00 0.0% SRP: £119.30 plus £71.50 Receiving the State Retirement Pension Credit: £40.05 Pension only

8.30. This analysis suggests that affordability ratios are within reasonable limits for all of the household/income scenarios shown, with the exception of the two single person household types.

8.31. Under current Housing Benefit rules, it is becoming increasingly difficult for single people to afford any type of tenancy unless they are working more than part-time and for more than the minimum wage. Further challenges are on the horizon, as a result of the UK Government’s 2015 announcement that housing costs subsidies will be capped at the LHA rate for shared accommodation (currently £68 per week in Glasgow) from 2018 for single people aged under 35 with no dependent children.

8.32. The Association is also increasingly concerned about affordability issues for non- working households due to the impact of the UK Government’s welfare reform policies. Working age benefits have been frozen and added financial pressure is being created by substantial increases in the use of benefits sanctions.

Tenant Feedback on Value for Money

8.33. Compared with other landlords locally, and with the national average, New Gorbals tenants have more positive views about:

 Whether their rent represents value for money  The overall service provided by New Gorbals.

Percentage tenants who feel rent for their property represents good value for money (NGHA tenant satisfaction survey 2015, compared with ARC dataset, 2015)

85 83 77 80 75 75 69 70 65 59 60 55 50 New Gorbals Average all GHA Govanhill HA Southside HA HA Scottish social landlords

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Percentage tenants satisfied with overall service provided by landlord (as above)

92 95 90 88 88 90 85 85 80 75 70 65 60 55 50 New Gorbals Average all GHA Govanhill HA Southside HA HA Scottish social landlords

8.34. We have further analysed these results to identify the views of tenants who pay the full rent on their homes, without any Housing Benefit. The results indicate that satisfaction rates with the Association’s services exceed 90% for tenants receiving no Housing Benefit and those who receive full or part Housing Benefit.

8.35. There are different results in relation to whether rent represents good value for money. On this measure, 77% of those not receiving any housing benefit agreed that their rent represented good value for money. Satisfaction levels were higher among those receiving Housing Benefit (85% among those receiving full HB and 84% for those on part HB).

Rent Increase 2016/17

8.36. The Association’s proposed rent increase for 2016/17 is 1.30%. A recent benchmarking exercise involve 25 RSLs in Glasgow indicates that the New Gorbals increase is among the lowest in the city (7th lowest of the 25 participating RSLs).

8.37. The Association has consulted tenants about the proposed rent increase for 2016/17. This exercise generated an extremely high level of response from tenants (327 responses received in total). 86.5% of tenants who responded agreed that the proposed increase was reasonable.

8.38. In subsequent years, the Business Plan assumes that rents will rise by inflation +0.5% per annum. The impact of increases below this rate has been considered as part of the sensitivity tests included in the Business Plan but is not currently feasible without increasing the risks of failure to meet covenants.

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Future Value for Money Priorities: Rents and Affordability

8.39. The Association will take the following actions:

 Regularly benchmark our rents against those of other RSLs and private landlords  Assess the impact that rent review proposals will have on different household types, including working households who receive part or no Housing Benefit towards their rent.  Track the impact that wider economic factors may have on affordability, for example if rents, food and energy costs rise more quickly than income levels.  Review our existing strategy on rent harmonisation/convergence, so that a new and agreed strategy is developed during 2017  Consult tenants about their priorities for optimising value for money and about measures we are taking to achieve better VFM  Conduct spending reviews in selected areas where we believe improvements in service quality and/or reductions in costs may be achievable

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9. Strategic Risk Assessment

9.1. The Business Plan includes a comprehensive assessment of the major risks that may affect the Association’s overall strategy and the achievement of its main priorities (see Annex 6).

9.2. The Risk Management Strategy follows HM Treasury guidance by quantifying each risk in terms of inherent risk (the inherent risk if no action is taken) and residual risk (the risk after measures to control it are applied). Risks are assessed with reference to likelihood and potential impact, each scored from 1 (lowest risk) to 10 (highest risk), with the scores then multiplied to arrive at an overall risk score.

9.3. The Management Committee will keep the Association’s risk exposure under constant review. The Committee will be supported in this by a Risk Panel that meets quarterly, made up of representatives from the management team. The Risk Panel will report back to the Management Committee as required, for example to advise on material changes to existing risks, any new risks that have emerged, and any areas where action is needed to safeguard the interest of the Association and its service users.

9.4. The following table provides a summary of the 10 risks we have scored most highly (residual risk score of 30 or more), along with a description of the controls that are in place and the additional measures to be implemented in future.

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Strategic Risk Assessment: Top Ten Risks Risk and Residual Controls in Place Future Action Needed Risk Score Political/financial 1. Close scanning of the external 1. Lobby politicians directly and uncertainties threaten environment through representat ive bodies future rental income 2. Close working relationships with 2. Ensure good liquidity, to manage (e.g. transfer of elected representatives short - term cost pressures while welfare powers from 3. Budget-setting and monitoring longer term solutions are found UK to Scottish 4. Financial reporting and projections 3. Seek savings in operating costs, if Government) this is required to accommodate 5. Business plan stress testing Score: 64 externally-imposed cuts Loss of rental income 1. Potential impacts on BP assessed and 1. Joint working with DWP on local due to current Action Plan being implemented implementation of Universal Credit Welfare Reform 2. Assessments made of tenants at risk 2. Communication with tenants making and/or housing 3. Income maximisation support in place transition to UC to emphasise the benefit changes importance of paying rent 4. Partnership working with GCC and Score: 56 others 3. Ensure payment methods include new innovations (e.g. Apple Pay) 5. Current rents compare favourably with local comparator organisations for 4. Improve co-ordination of available most house sizes data on household incomes 5. Engage more with households on low incomes but not entitled to Housing Benefit via Rent Awareness Campaign and Rent Increase Consultation Inability to provide 1. Procurement Policy and procedures 1. Consider contractor financial statutory service to 2. Business Continuity Plan standing as part of forthcoming tenants (e.g. Right to review of procurement policy (e.g. Repair and Gas) due 3. Regular financial checks for major Dun & Bradstreet checks) contractors to contractor 2. Accompanying procedures to be liquidation or a developed to evidence control and contract being compliance determined. 3. Annual walk through of Business Score: 45 Continuity Plan Failure to comply 1. Develop and test Business Plan to 1. Research future funding options with with loan covenants ensure robustness of data and professional advice assumptions. 2. Continually test the Business Plan Score: 32 2. Stress test the Business Plan and financial results against loan 3. Maintain close relationships with requirements funders 4. Obtain treasury and legal advice before entering into new loan agreements 5. Third party assurance obtained re Business Plan assumptions and results Major health and 1. Health and Safety Policy 1. Keep Health and Safety Policy and safety or stock 2. Health and Safety Committee Disaster Recovery Plan up to date. disaster incident 2. Periodic testing of disaster recovery 3. Disaster Recovery Plan in place and tested plan Score: 32 Failure to comply 1. Appropriate contractual arrangements 1. Regular monitoring of Gas Contract with legal obligations set up. performance and service records due to gas servicing 2. Close monitoring of visits, inspections and standard agenda item at procedures not being 47

Risk and Residual Controls in Place Future Action Needed Risk Score followed achieved and audit processes Maintenance Team meetings 2. Any failures in compliance reported Score: 30 immediately to Director, Depute Director and Management Committee Employer pension 1. Pension contribution rates included in 1. Ensure the MC receives contributions Business Plan independent advice and considers continue to increase its policy on pensions periodically and have negative (next review due in 2016) impact on NGHA 2. Include pension scenarios in finances Business Plan stress testing

Score: 30 Repairs and 1. Actual and projected costs closely 1. Complete 100% stock condition replacement/elements reviewed by management survey and life cycle costings costs increase above 2. Review of costs and standards and levels allowed for in develop options for achieving Business Plan greater efficiency

Score: 30 3. Review option of insourcing elements of service 4. Committee and tenant consultation on any proposals for revised service standards Committee and staff 1. Strong framework in place to ensure 1. Staff training, communication and lack capacity to staff and committee competence performance management are key deliver the (policies and procedures, line areas for development in response Association's management structures, audit, to growth strategy and regulation, affiliations) 2. Make best use of resources: operational targets 2. Internal audit function and committee procurement of additional resources and standards 3. Financial appraisal of new business through consultancy where affordable and will deliver results Score: 30 opportunities 4. External professional advice obtained 3. Continue to develop planning and as required performance management framework Development: 1. Financial Checks on Contractor before 1. Review and update Contractor Contractor appointment Liquidation Policy and Procedures Liquidation 2. Quantity Surveyor to undertake as required valuations/certification, no over 2. Develop formal Risk Assessment Score: 30 payment takes place Procedures for exceptionally low 3. Payment in arrears in accordance with tenders terms of contract 4. Contractor Liquidation policy/procedures in place 5. Supervision of site works by Design Team/Clerk of Works 6. Careful risk assessment of very low tenders

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10. Financial Projections and Stress Testing

Introduction

10.1 This chapter provides an overview of the key assumptions and issues associated with the Association’s financial plans and projections. The full 5-year and 30-year financial projections are set out in Annex 2 to the Business plan, along with supporting figures.

Rental Income

10.2 The Association’s average weekly rents for 2016/17 are shown in the following table.

House Size Average weekly rent

1 Bedroom £69.46

2 Bedroom £77.08

3 Bedroom £86.54

4 Bedroom £98.54

10.3 2016/17 rents include an increase of 1.3% relative to 2015/16 (equivalent to RPI 0.8% at end September 2015, plus 0.5%). From 2017/18 onwards, the Business Plan assumes an annual rent increase of inflation plus 0.5% per annum, with the assumed rate of inflation stepping up from 1.5% in year 2, to 2% per annum from 2019/20.

10.4 As demonstrated in Chapter 8 (Value for Money), we consider the Association’s rents to be broadly affordable to households in employment while also generating the income needed to invest in our housing stock and services and meeting our obligations to funders. Paradoxically, working households may now find rents more affordable than those who derive all of their income from benefits, as a result of UK Government welfare policy.

10.5 Chapter 8 also demonstrates that our rents are regarded by tenants as good value for money, and that they compare favourably with rents charged by other housing associations in neighbouring areas.

10.6 In terms of the sustainability of future rent increases, early indications from the partial roll-out of Universal Credit are that the UC system is placing the greatest financial pressures on tenants who are fully reliant on assistance to pay their rent. The key issue is that some tenants are experiencing real-terms cuts in their income. We will monitor this situation closely, as well as offering direct assistance with income maximisation.

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10.7 The sensitivity tests carried out for the Business Plan confirm that we currently have no scope to reduce rents below current levels. A 1% real terms reduction in rents would produce a £69 million deficit by year 30 of the Business Plan. It would also require immediate action to be taken to prevent a breach of our quick ratio covenant from year 3 of the Business Plan.

Voids and Bad Debts

10.8 Void losses are assumed at 1.0% throughout the lifetime of the Business Plan. This is a prudent assumption in comparison with recent performance (0.34% of rental income lost in 2014/15).

10.9 In response to Welfare Reform risks (most notably, payment of the housing costs element of Universal Credit to tenants), we have increased the provision for bad debts to 1.5% of annual rental income during the first 3 years of the Business Plan.

10.10 Higher levels of bad debts have also been included in the Business Plan stress testing. The results indicate that higher levels of void losses and bad debts would reduce the Association’s projected long-term surpluses as well as creating risks of non-compliance with funders’ covenants from year 3 onwards.

10.11 We are optimistic that the final Scotland Bill settlement will result in the Scottish Government permitting direct payments to social landlords of the housing cost element of Universal Credit. This is allowed for in the Bill and will not involve any additional expenditure by government (indeed, it should create savings to the public purse, by reducing the scope for rent arrears to accrue in the first place).

10.12 Clearly, the Association must give the highest priority to making sure that losses due to voids, rent arrears and bad debts are managed rigorously. We will also keep the bad debts assumptions currently used in the Business Plan under close review.

Stock Condition and Investment Programme

10.13 The financial projections in the Business Plan incorporate the results of the updated Stock Condition Survey and Life Cycle Costings completed in 2015.

10.14 The Association’s investment programme priorities for the next 5 years are described in Chapter 7 of the Business Plan. We will continue our intensive programme of works to improve thermal efficiency and reduce tenants’ energy costs, as well as undertaking works to renew building components in need of replacement. The main categories of works in the programme include:  Common entry doors  Kitchen replacements  Bathroom replacements  Replacement of heating boilers and appliances  Renewal of lifts and plant  District heating systems 50

10.15 Total spend including fees and VAT is projected at £99.6 million in 2016 prices and we anticipate raising a further £2 million to fund the programme. The Business Plan assumes that 75% of investment spend will be capitalised under Component Accounting. 10.16 The Association will review its Asset Management Strategy in 2016/17, a key focus being to ensure that the investment programme can be delivered within the cost assumptions set out in the Business Plan.

Responsive and Void Repairs

10.17 Responsive repairs have been provided for at £640 per unit in 2016/17 and £600 per unit thereafter.

New Build Programme

10.18 The base case in the Business Plan is that the Association will build 75 social rented units and 9 shared equity units in the period 2016 to 2018, at Crown Street and on the site of the former Gorbals Parish Church. Total spend is budgeted at £10.1 million, with a requirement for £4.23 million private funding and assumed sales income of £770,000 from the 9 shared equity units to be sold. The Association is funding this scheme from finance obtained for Affordable Housing Finance at a fixed rate for 30 years of 2.223%, the lowest fixed rate received by a Scottish Housing Association.

10.19 Beyond this, there are substantial opportunities for the Association to carry out further developments to further consolidate the regeneration of our area of operation and the quality and choice of housing that is available. Funding for any future developments will have to be a minimum of cash neutral on the overall cashflow of the Association and leave the Association with sufficient unencumbered security to allow flexibility in its overall treasury management function.

Staff and Operating costs

10.20 Assumed staff costs are £2,401,908 and office overheads have been set at £904,000 per annum for the duration of the Business Plan, except for a reduction for 4 years of £105,000 per annum to allow for part-time working requests. Staffing costs may also be reduced during the Business Plan period as a result of reviews of individual posts, retirements etc.

10.21 New Gorbals is already the most efficient among our local peer group for stock:staffing ratios and management and maintenance administration costs per unit (see Chapter 8). With the multiple financial pressures facing the housing sector, we fully understand the need to look critically at our cost base and will continue to do so on an ongoing basis.

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Pension Costs

10.22 The Association operates 3 pension schemes with the following levels of employer contributions:

Scheme Employer Contribution

SHAPS Final Salary 12.3% SPF Final Salary (ex GHA staff) 19.7% SHAPS Defined Contribution (for auto enrolment) 10%

10.23 When budgeting we assume that all staff members are in the pension scheme that they have the right to join. The table below shows that the Association’s actual costs are lower than the budgeted amounts, since not all employees join the pension scheme they are entitled to choose.

SHAPS Final Salary SPF Final Salary SHAPS DC

2015/2016 £272,580 £104,849 £36.374 Budget 2015/2016 £114,047 £70,006 £27,612 Actual

10.24 The SHAPS final salary scheme is subject to actuarial review, with the latest review reporting in 2016. Past Service Deficit (PSD) for SHAPS final salary is £145,000 per annum, increasing by 3% per annum until its completion in 2028. Actuarial review may increase the Association’s PSD although the outcome of this will not be known until later in 2016.

10.25 The Management Committee will fully assess the implications of the actuarial review of the SHAPS scheme in the coming months and may wish to switch to either a career average or close the final salary scheme. Expert advice will be sought on the options available.

10.26 The SPF scheme has a £7,000 per annum PSD contribution, which has remained the same since transfer of staff from Glasgow Housing Association in 2011, including after recently actuarial review.

10.27 The Business Plan stress testing allows for a 50% and 100% increase in PSD for SHAPS final salary. This confirms that the Business Plan is sensitive to further significant rises in SHAPS PSD amounts and could create issues in relation to the quick funding ratio loan covenant that we are obliged to meet. The outcome of the actuarial review and the resulting cost implications are therefore critical.

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Testing the Business Plan 10.28 The Business Plan has been tested for its sensitivity to changes to the key assumptions in our 30-year cashflows, with the following results:

£ Year Year Interest Rate Quick Ratio Year 30 surplus Covenant Breach Covenant Breach Base Case 23,094.8 Never Never

Rents + 1% 65,619.5 Never Never

Rents - 1% (69,148.5) 7 3

Reactive & Cyclical + 1% 3,155.7 7 3

Management Costs + 1% 5,514.1 7 3

Major Repairs + 1% 3,098.9 Never 12

10.29 We have also tested the capacity of the Business Plan to withstand more substantial stresses, focusing on core business areas and areas which carry high levels of risk. The areas that have been tested and the key results are as follows:

£ Year Year

Interest Rate Quick Ratio SCENARIO Year 30 surplus Covenant Breach Covenant Breach

Voids and Bad Debts 2% 11,452.3 7 3

Voids and Bad Debts 3% 950.4 7 3

Management Costs increasing by 5% for 5 (2,329.5) 7 3 years (years 1-5)

Management Costs increasing by 10% for 5 (28,066.2) 6 3 years (years 1-5)

Reactive Repairs increasing by 5% for 5 5,355.3 7 3 years

Reactive Repairs increasing by 10% for 5 (34,595.8) 6 3 years

SHAPS Pension Deficit increasing by 50% 21,662.3 Never 3 in year 2

Inflation 1% for period of plan (low inflation) (19,231.0) 7 3

Variable Interest Rates at 7% for period of £15,340.0 7 3 plan

Mid increases 3 (4,780.2) 7 3

High Increases4 (45,430.8) 5 3

3 Assumed increases of: Voids and Bad debts 2%, Management Costs 5%, Reactive Repairs 5% and PSD 50% 4 Assumed increases of: Voids and Bad Debts 3%, Management Costs 10%, Reactive Repairs 10% and PSD 100% 53

10.30 In most of the scenarios examined, one key risk is tested, and the risk is assumed to arise at the start of the plan period and to continue throughout the plan period. The figures do not take account of the corrective action that would be taken, as a result of effective monitoring and management responses.

10.31 The testing also addresses combined scenarios, to assess the worst-case impact if multiple stresses on the Business Plan were to occur simultaneously, again without any corrective action being taken. The multiple scenarios tested relate to simultaneous increases in voids and bad debts, management costs and pensions costs.

10.32 As can be seen from the tables above, all of the scenarios reported on have the potential to lead to breaches of loan covenants. And if we exclude macroeconomic factors (which no single organisation has the power to predict or control), the key vulnerabilities lie in scenarios that reduce cash income or increase operating cash spend, for example:  Increased repairs costs  Reduced rental income due to Welfare Reform  Reduced income, through lower rent increases and/or higher voids costs, arrears and bad debts  Additional major repairs costs  Having to adjust to external factors such as freezing of housing benefits, government capping of rent levels, or reductions in the subsidy available for new house building.

10.33 Specific action to address many of the potential risks are addressed in the earlier sections of this Business Plan, for example in relation to:  Seeking to reduce voids and repair costs  Strengthening future planning of the major repairs programme  Keeping firm control of staffing costs  Safeguarding the Association’s future rental stream in the difficult circumstances presented by Welfare Reform.

10.34 The Management Committee and senior managers will be vigilant in identifying emerging stresses on the Business Plan, so that recovery options can be considered in detail. Recovery options could include reduction in staff numbers, wage freezes, alternative pension arrangements, postponing major or planned repairs, reduction in reactive repairs services or refinancing.

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11. Delivering the Business Plan

11.1. The Management Committee and senior management team are responsible for managing the Association’s performance, including the delivery of the Business Plan and the priorities it sets out.

11.2. Committee scrutiny, by the Management Committee and/or relevant sub committees, will include:

 Reviewing overall performance in relation to the financial Business Plan twice a year, at the mid-year point and when approving the following year’s plan  Reviewing progress in relation to the priority actions set out in the Business Plan;  Receiving quarterly reports of performance against Key Performance Indicators (KPIs).

11.3. The Director and senior management team are accountable to the Management Committee for ensuring the effective implementation of the Business Plan. The senior management team will also act as New Gorbals’ Risk Panel, maintaining oversight of strategic risks and alerting the Management Committee and Audit Sub Committee to any emerging risks to the Association’s strategic objectives, financial position or reputation.

11.4. Managers will discuss the Resource Plans appended to the Business Plan with their teams, so that staff members and teams have a strong connection with our organisational aims and priorities.

11.5. For “cross-cutting” issues that involve a number of teams, a senior manager will be assigned lead responsibility for ensuring appropriate input from across the organisation. The senior management team and Management Committee will ensure that cross-cutting issues (such as asset management and financing for the investment and development programmes) are managed to facilitate input from the appropriate parts of the staff and committee structure.

11.6. Actions and timescales will change throughout the Business Plan period, particularly because the Association’s activities will in many cases be dependent on working with others. The Business Plan will be subject to annual revision. New operational plans will be produced at the start of each financial year.

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ANNEX 1

DETAILS OF MANAGEMENT COMMITTEE AND SENIOR STAFF, AND ORGANISATIONAL STRUCTURE

Management Committee Members (2015/16)

Committee Member Years of Service Position of Name Responsibility W Sharkey 29yrs Member Tenant S Cameron 14yrs Member Tenant J Miller 15yrs Secretary Tenant E Peden 8yrs Member Tenant L Malone 8yrs Member Tenant E Bradley 7yrs Member Tenant R Shannon 5yrs Chairperson Tenant T Smart 4yrs (Break in 2015) Member Tenant A Reilly 4yrs Member Owner D Denham 4yrs (Left in Feb 16) Member Owner K Adams-Mackenzie 3yrs Vice Chairperson Tenant I McCreaddie 2yrs Member Owner S Mandaniya 2yrs Member Tenant R Murray 2yrs (Left in Dec 15) Member Owner D Nixon 1yr Member Private Tenant

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Senior Management Team

No. of years with Private Public Position Professional Name New Sector Sector Held Qualifications Gorbals Experience Experience HA

Fraser Stewart Director B.A. (Hons) 2:1 24 years 35 years English

Mary Reilly Head of CIPFA Diploma 24 years 9 years 24 years Finance & Administratio n

Norman Depute B.A. (Hons) 2:1 23 years 3 years 28 years Fitzpatrick Director/ Housing Studies Head of Member of Maintenance Chartered Institute of Housing

Simon Metcalfe Head of First Class 14 years 2 years 30 years Development (Hons) Psychology

Kirsty Head of BA (Hons) 5 years 32 years Fotheringham Housing Social Science Services (Economics & Sociology) Certificate in Management Certificate in Training

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Organisational Structure

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ANNEX 2

FINANCIAL PLANS AND PROJECTIONS

A3 DOCUMENT: BOUND SEPARATELY

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ANNEX 2A

FINANCIAL PROJECTIONS: SUPPORTING COMMENTARY

1. Assumption

1.1 Global Assumptions Year 1 2 3 4 5 6> LIBOR 0.6% 1% 2% 3% 4% 5% Inflation 0% 0.8% 1.5% 2% 2% 2% Rent 0% 0.5% 0.5% 0.5% 0.5% 0.5% above inflation Voids 1% 1% 1% 1% 1% 1% Bad Debts 1.5% 1.5% 1.5% 1% 1% 1%

Opening Balances from 31st March 2015 Accounts. Opening Bank Balance £7,067,592

1.2 Savings Interest Rate Year 1 2 3 4 5 6> Savings 0.5% 0.5% 1% 1% 1% 1% Rate

1.3 Treasury – Loans Opening Years Loan Type Rate Balance Remaining 1.7% above BoS £2.432m Variable 12 years Libor BoS £991k Fixed 6.72% 13 years BoS £222k Variable 1.7% 12 years 22 years with 14 Nationwide £6.991m Fixed 4.06% yrs fixed. Nationwide £2.045m Variable 1% 24 years Nationwide £1.623m Variable 1% 24 years THFC £4.4m Fixed 5.59% 26 years THFC £10m Fixed 4.99% 27 years 30 years remaining. AHF £6.1m Fixed 2.223% Yrs 1-10 interest only then capital yrs 11-30 QES F3 MMR £1.68m Variable 1.5% 30 years AHF shortfall £1.32m Variable 1.5% 30 years Additional Finance and £2m Variable 1.5% From July 2016 major repairs

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1.4 Rents and Service Charge Stock Type Stock No Average Rent Early New Build 342 £3,728.28 New Build 412 £4,117.50 Sharing Owners 24 £1,478.00 Devon Street 48 £3,066.84 Tracobas 81 £3,566.95 Hutchie Multis 276 £4,217.28 Hutchie Maisonettes 233 £3,839.31 Riverside Multi 307 £3,949.31 Riverside Maisonettes 144 £4,012.66 Laurieston (ex GHA) 190 £3,600.58 Waterside Improved 53 £3,730.00 Rents Riverside Unimproved 104 £2,112.50 Rents Oatlands 109 £3,918.50 Laurieston NB 201 £4,110.61 Additional new build 72 (Sandiefield, G6/G7) £4,209.00 rents Total Stock 2,590

In addition to rented units: 2 care units @ £22,699 per annum 2 shops @ £185.58 per week

Total service charge income is £369k and reconciles with charges being made to tenants.

1.5 Service Expenditure Service Charge allowed for in Business Plan. NGHA and ex GHA actual costs from 2014 - 2015 plus 15% (10% allowance for min wage increase and 5% contingencies).

NGHA £420,352 GHA £322,559

Actual Expenditure for 2014/2015 on NGHA units Landscaping £92,282 Lighting £45,359 Electricity £33,914 Close Cleaning £154,719 Furnished £39,250 Total Expenditure £365,524 Actual Expenditure for 2014/2015 on ex GHA units Landscaping £155,692 Lighting £ 67,138 Electricity £ 7,572 Close Cleaning £ 50,084 Total Expenditure £280,486

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1.6 Estate Costs Overall there has been an assumption that we can save £60,000 on the security costs included below:

Hutchesontown Costs allowed for in BP are £348,551 If you deduct half saving (£30,000) Allowed for £318,551

Riverside Costs allowed for in BP are £347,696 If you deduct half saving (£30,000) Allowed for £317,696

1.7 Factoring Income Current factoring - £195k per annum for 30 years with a 0.5% above inflation increase for 30 years.

Future Factoring - £10k per annum, from 2017 (Laurieston NB) increasing as above. With additional 100 units in 2018 and 100 units in 2019.

Bad debts as per global assumptions.

1.8 Other Income Yr 1 – 3 :£15,870 (based on historic income – radio masts etc - contract terminating) Yr 4 – 30: £3,870 (based on token income only)

1.9 VAT Disclosure Yr 1 - £50k (of which £27k already received) Yr 1 - £47,932 refund of Tracoba lift replacement VAT

1.10 PCF Funding Yr 1 - £268,797 Yr 2/3 - £35k

1.11 Reactive and Void Maintenance Reactive repairs - £640 per unit year 1 - £600 per unit all other years. Void Repairs - £200k year 1 - £42k per annum thereafter - additional allowance will be made within building components for kitchen, boiler, bathroom etc. replacements.

Year 1 allowance of £30k for subsidence works.

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1.12 Planned and Major Repairs – New Gorbals Year 1 2 3 4 5 Link Building £100,000 - - - - Norfolk Court £833,300 £416,667 - - - Demo MSF Landing - - £244,800 - - Doors Riverside MSF - £114,436 £343,309 - - Foyer Cabin Flats £60,000 - £360,000 £360,000 £360,000

11 Waddell £72,000 - - - - Court Com Room Riverside £150,000 - - - - Door Entry CESP £450,000 - - - - Windows Laurieston £600,000 £700,000 - - - Enviros Benthall £53,074 - - - - Street Owners (£88,000) - - - - Income Benthall Street Braehead £100,000 - - - - Enviros Laurieston - £120,000 - - - Community facility Riverside - £134,896 £44,965 - - Concierge CESP £200,000 - - - - Contingencies

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1.13 Management Costs

Office Overheads £904k for duration of plan, this has been increased from £875k to allow for consultants for governance reviews etc, also includes property insurance costs (tendering Jan 2016). Review of office overheads to be carried out. Savings can be made on a number of areas of office overheads (cleaning, printing etc.)

Staff Costs

Staff Name Grade Comments Director 10 Head of Finance 9 Finance Manager 8 Office Manager 7 Finance Factoring Officer 7 Senior Finance Assistant 6/7 Factoring Assistant 5 Finance Assistant 5 x 2 Receptionist 3/4 Administrator 5 Receptionist 3 Previously grade 4 trainee 3 3 days per week for 5 years then Receptionist going to full time Head of Maintenance 9 Area Maintenance Manager 8 Area Maintenance Manager 8 Maintenance Officer 7 x 4 Maintenance Assistant 5 x 2 Maintenance Administrator 5 Maintenance Assistant 5 Mat leave cover Sept 2016 Depute Director 9 Head of Housing 9 Area Housing Manager 8 x 3 Area Housing Manager 8/7 8 for 1 year only then reverts to 7 Housing Officer 7 x 8 Housing Assistant 6 x 4 1 Vacant Post Housing Officer 7 x 3 March 2017 Housing Assistant 6 Sept 2016 (mat leave) Communications Manager 8 Community Dev Officer 8 3 years from Sept 2015 Communications Officer 7 3 years from Sept 2015 Welfare Rights Officer 7 Welfare Rights 7 3 years from April 2016 Head of Development 9 Ending March 2020 Senior Development Officer 8 Development Officer 7

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Salaries are calculated on full time basis with each staff member included in their relevant final salary pension scheme. For the Business Plan Cashflow salaries have been reduced for 4 years by £105,000 per year to allow for part time hours (including assumption that staff are on relevant Final Salary Scheme). If assumed on actual participation in pension schemes and reduction for part time hours, the saving per annum is £190,000, i.e. giving an £85,000 contingency within salaries.

Other Staff costs Assume all staff on appropriate Final Salary schemes, SHAPS - 12.3%, SPF - 19.7%. Temps all assumed on Auto Enrolment schemes with employer contribution of 10%. Past Service Deficit for SHAPS £145k increasing by 3% until 2028. Contingencies 1% of total salaries.

1.14 Development No Cost Grant Completion units Laurieston 201 £345,000 £150,000 Complete and including rents Sandiefield 1 5 Yr 2 £590,000 Yr 2 £320,000 April 2018 Yr 3 £118,000 Sandiefield 3 24 Yr 1 £470,071 Yr 1 £470,000 April 2018 Yr 2 £2,820,429 Yr 2 £1,485,000 Laurieston 1B 39 Yr 1 £3,520,501 Yr 1 £743,281 Jan 2016 Yr 2 £63,000 G6/G7 – Gorbals 46 Yr 1 £720,113 Yr 1 £720,113 April 2018 Parish Church Yr 2 £4,300,681 Yr 2 £2,483,326 Yr 3 £1,440,227 Yr 3 £770,000 (sales) QES F3 24 Yr 1 £2,626,496 Yr 2 £940,060 Jan 2016

Triangular Site - Yr 1 £25,000 Yr 1 £25,000 -

As units complete £100 per unit and £500 per unit are included for insurance and reactive repairs, respectively.

Planned maintenance costs have been cloned to an appropriate new build contract as per our stock condition survey.

1.15 Other Fixed asset additions Year 1 2 3 4 5 New office £237,074 £2,637,074 £825,852 - - Current £35,000 Office Amendments Fixtures and £15,000 £5,000 £20,000 £5,000 £5,000 Fittings and IT replacements

1.16 Other Expenditure Wider Action £54,000 per annum Adaptions £50,000 per annum Development Consultants Yr 1 £50,000 PCF Expenditure Yr 1 £130,000

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1.17 Ofgem Restricted Reserve

Income April 2015 - £4,800,000

Expenditure Year 1 2 3 4 5 Riverside DH £350,000 £4,000,000 - - - Tracobas £331,200 - - - - Heating Riverside EWI £500,000 - - - - Riverside £227,500 - - - - Doors/Screens

1.18 Major Repairs from Stock Condition Survey Year 1 2 3 4 5 Building £750,000 £168,344 £373,315 £389,786 £445,886 Component Replacement Lift - - £1,049,055 £359,599 £56,238 Replacement and renewals 5% Vat allowance Riverside DH - - - - - Renewals – starts year 7 5% VAT allowance Cal Road DH £27,038 £27,038 £27,038 £27,038 £27,038 renewals – 5% VAT allowance Ventilation £24,720 £24,720 £24,720 £24,720 £24,720

Renewal of White goods - - - - - care units – spend year 7 Renewal of - - £7,663 £7,663 - Play area Equipment

Sheltered - - - - - Equipment renewal – year 6 1st spend CCTV £8,652 £8,652 £8,652 £8,652 £8,652 replacement Yr 7 Smoke £12,632 £12,632 £12,632 £12,632 £12,632 Detector Renewal Fire Protection - - - - - System Yr 11

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Renew - - - - - Sprinkler Heads Yr 26 Communal - £8,652 - - - Water Tanks Renew Pumps £7,416 £7,416 £7,416 £7,416 £7,416 and Starters Sheltered £12,360 £12,360 £12,360 - - Alarm System Structural - - £11,866 - - Repairs MHVR – no - - - - - spend early years – spend years 15/17 and 30 Cyclical - - - - - DH £46,000 £46,000 £46,000 £46,000 £46,000 Cyclical Maint £950,000 £169,000 £193,242 £217,698 £196,723 Lift £22,000 £22,000 £22,000 £22,000 £22,000 Maintenance M&E contracts £96,000 £96,000 £96,000 £96,000 £96,000 CCTV £27,120 £16,000 £16,000 £16,000 £16,000 Laundry £33,869 £33,869 £33,869 £33,869 £33,869 Asbestos £200,000 - - - - Removal Stock £40,000 - - - - Condition Consultants Window - £25,000 - - - Servicing - Caledonia Road

1.19 Subsidiary Income Year 1 2 3 4 5 Leasing £32,100 £217,300 £217,900 £220,800 £240,300 Charges Gift Aid £11,100 £25,100 £25,800 £26,200 £19,700

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2. Business Plan Testing

The business plan has been subjected to the following scenarios to test the overall financial strength of the organisation. This type of testing allows us to plan for risk and allows strategies to be considered by Committee.

2.1 Sensitivities £ Year Year Interest Rate Quick Ratio Year 30 surplus Covenant Breach Breach Base Case 23,094.8 Never Never Rents + 1% 65,619.5 Never Never Rents - 1% (69,148.5) 7 3 Reactive & Cyclical + 1% 3,155.7 7 3 Management Costs + 1% 5,514.1 7 3 Major Repairs + 1% 3,098.9 Never 12

In testing the Business plan on small increases or decreases in key areas of income and expenditure, does not ( with the exception of a rent reduction) place the business plan under pressure.

2.1 Stress Testing £ Year Year Interest Rate Quick Ratio Year 30 surplus Covenant Breach Breach Voids and Bad Debts 2% 11,452.3 7 3 Voids and Bad Debts 3% 950.4 7 3 Management Costs increasing by 5% for 5 years (years 1-5) (2,329.5) 7 3 Management Costs increasing by 10% for 5 years (years 1-5) (28,066.2) 6 3 Reactive Repairs increasing by 5% for 5 years 5,355.3 7 3 Reactive Repairs increasing by 10% for 5 years (34,595.8) 6 3 SHAPS Pension Deficit increasing by 50% in year 2 21,662.3 Never 3 Inflation 1% for period of plan (low inflation) (19,231.0) 7 3 Mid increases 5 (4,780.2) 7 3 High Increases6 (45,430.8) 5 3

5 Assumed increases of : Voids and Bad debts 2%, Management Costs 5%, Reactive Repairs 5% and PSD 50% 6 Assumed increases of : Voids and Bad Debts 3%, Management Costs 10%, Reactive Repairs 10% and PSD 100%

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The Association is vulnerable to external economic conditions. Increasing costs in a number of key expenditure areas could push cash balances to the limits.

Recovery from these position could include reduction in staff numbers, wage freezes, postponing major or planned repairs, reduction in reactive repairs services or refinancing.

If considering any of these options full costings and options appraisals would be considered

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2.2 Cash Balance

The graph below shows cash balances at year 1 (red columns), year 5 (green columns) and year 30 (purple columns) based on the sensitivity and stress testing scenarios carried out above.

80000

60000

40000

20000

0

-20000

-40000

-60000

-80000

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2.3 Covenant Compliance

Over the period of 30 years, the base plan meets the requirements of both our interest rate covenants from Bank of Scotland and Nationwide as shown on the graph below.

6

5

4

Benchmark 3 Bank of Scotland Nationwide 2

1

0 1 2 3 4 5 6 7 8 9 10

2.4 Net Debt Per Unit

Net Debt per unit (i.e. Debt after deduction of cash) peaks in year 3 at £13,849 per unit dropping in year 25 to zero. Although there will be debt remaining after year 25, free cash resources will be more than outstanding loan balances.

Net Debt / Unit 16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

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2.5 Pensions

The Association operated 3 pension schemes:

 SHAPS Final Salary  SPF Final Salary  SHAPS DC Scheme (for Auto enrol)

Employer contributions on all schemes are

SHAPS 12.3% SPF 19.7% SHAPS DC 10%

SHAPS final salary scheme is subject to Actuarial review, the outcome of which will be known around March 2016, although initial indications are there will be a small increase (under 1% - no decision has been made whether increase will be split between employee and employer).

SPF scheme has recently undergone an actuarial review and has seen no change in employer contribution.

SHAPS DC scheme is not subject to the financial reviews and restrictions of a final salary scheme and pension outcomes are based only on what has been paid into the pension and not linked to the staff member’s final salary.

Pension Advice has been provided in the past by Cheine and Tait and the Association are members of EVH Pension Group, to ensure we are given the most up to date and complete advice on our pensions. We are also active within the SPF employers group.

When budgeting we assume that all members are in the pension scheme that they have the right to join and as a comparison the table below shows what we have budgeted for pension contributions opposed to what we pay.

SHAPS’s Final Salary SPF Final Salary SHAP’s DC scheme 2015/2016 Budget £272,580 £104,849 £36.374 2015/2016 Actual £114,047 £70,006 £27,612

Past Service Deficit (PSD) for SHAPS final salary is £145,000 increasing by 3% per annum until its completion in 2028. Actuarial review may increase the Associations PSD although the outcome of this will not be known until later in 2016.

Stress testing has allowed for a 50% and 100% increase in PSD. Final increase, if any, will be known around March 2016.

Committee will fully assess the implications of the actuarial review of the SHAPS scheme in the coming months and may wish to switch to either a career average or close the final salary scheme. Advice will be sought on their options.

SPF scheme has a £7,000 per annum PSD contribution, which has remained the same since transfer of staff from Glasgow Housing Association in 2011, including after recently actuarial review.

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ANNEX 3 RESOURCE PLANS FOR 2016/19

A3 Document: bound separately

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ANNEX 4 Benchmarking Comparisons

1) Comparison with average for all Scottish RSLs at 31 March 2015 (SHR ARC data)1  means NGHA result is better than national average  means NGHA result is below national average Measure New Gorbals Average all New Gorbals Scottish social comparison landlords Business & Financial Measures Percentage of total year due collected in previous 101.1 99.46 year  Percentage gross rent arrears of rent due 5.68 5.29  Percentage former tenant rent arrears written off 12.33 36.97  Percentage of households whose housing costs 67.2 n/a n/a are paid direct to landlord Percentage lettable self-contained houses that 7.42 8.85 became vacant in year  Number of homes per office based member of 55.4 n/a n/a staff Percentage days lost through staff sickness 1.74 n/a n/a absence Average management fee per factored property 124.2 83.99  Process Measures

Average reactive repairs completed per occupied 3.35 3.62 property  Average hours to complete emergency repairs 2.07 5.85  Average working days to complete non- 3.36 7.89 emergency repairs  Average calendar days to re-let properties 16.53 36.88  Percentage properties with gas safety record 100 99.49 renewed by anniversary date  ASB cases resolved within local target 96.3 83.21  Average days to complete approved applications 8.51 54.78 for medical adaptations  Percentage of court actions initiated which 0 14.68 resulted in eviction  Percentage all 1st stage complaints responded to 88.08 83.6 in full within SPSO timescales 

1 Source is SHR data file with all ARC data for 2014/15, except updated tenant satisfaction results for NGHA used (2 exceptions as noted – not in updated TSS so ARC figures used instead 74

Measure New Gorbals Average all New Gorbals Scottish social comparison landlords Value Measures  Percentage reactive repairs completed right first 98.26 90.24 time  Percentage of rent due lost through properties 0.34 1.11 being empty  Percentage tenancy offers refused 19.79 41.95  Percentage average weekly rent increase to be 2.36 2.66 applied next year  Percentage approved applications for medical 100 84.29 adaptations completed  Percentage all tenancies began in previous year 91.89 89.35 sustained remained more than a year  Percentage tenancies (statutory homeless 88.37 89 applicants) began in previous year sustained for  more than a year ASB cases per 100 homes 1.95 8.84  Percentage tenants satisfied with overall service 92% 88.09 provided by landlord  Percentage tenants who feel landlord is good at 92% 89.33 keeping them informed about services and  decisions Percentage tenants satisfied with opportunities 87% 79.58 given to them to participate in landlords decision  making Percentage tenants who feel rent for their 83% 76.79 property represents good value for money  Percentage tenants satisfied with repairs service 92% 89.31

Percentage tenants satisfied with quality of home 85% 85.84  Percentage tenants satisfied with management of 91% 84.91 neighbourhood  Percentage tenants satisfied with standard of 77.78% (ARC) 86.05 home when moving in  Percentage factored owners satisfied with 69.96% (ARC) 62.98 factoring service  Percentage properties meeting NHER / SAP 80.01 95.6 ratings year end  Percentage properties meeting NHER / SAP 99.92 97.53 ratings next year 

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2) Comparison with peer RSLs at 31 March 2015 (SHR ARC data)1

Selected peer organisations are Govanhill, Southside and Glasgow Housing Associations. Final column shows how New Gorbals performance compares with the peer group (1 = best performance in group, 4 = worst performance in group)

New GHA Govanhill Southside NGHA Category Gorbals HA HA HA Ranking (1 to 4) New Gorbals rank 1 out of 4 Percentage reactive 98.26 95.39 90.81 90.24 1 Value repairs completed right first time Percentage tenancy 19.79 25.72 63.67 37.76 1 Value offers refused Percentage approved 100 96.14 80 78.57 1 Value applications for medical adaptations completed Percentage all 91.89 90.17 91.08 91.72 1 Value tenancies began in previous year sustained remained more than a year ASB cases per 100 1.95 5.61 12.29 12.24 1 Value homes Percentage tenants 92% 90.64 84.8 88.13 1 Value satisfied with overall service provided by landlord Percentage tenants 92% 84.28 89.53 90.75 1 Value who feel landlord is good at keeping them informed about services and decisions Percentage tenants 87% 81.56 85.44 86.5 1 Value satisfied with opportunities given to them to participate in landlords decision making Percentage tenants 83% 74.69 59.25 69 1 Value who feel rent for their property represents good value for money Percentage tenants 92% 88.39 88.75 90 1 Value satisfied with repairs

1 Source is SHR data file with all ARC data for 2014/15, EXCEPT updated tenant satisfaction results for NGHA used (2 exceptions as noted – not in updated TSS so ARC figures used instead 76

New GHA Govanhill Southside NGHA Category Gorbals HA HA HA Ranking (1 to 4) service

Percentage factored 69.96% 66.71 69.28 59.52 1 Value owners satisfied with (ARC) factoring service Percentage properties 99.92 96 98.75 81.5 1 Value meeting NHER / SAP ratings next year Average reactive 3.35 3.58 3.58 3.65 1 Process repairs completed per occupied property Average working days 3.36 6.51 7.55 4.21 1 Process to complete non- emergency repairs ASB cases resolved 96.3 86.87 89.04 83.21 1 Process within local target Average days to 8.51 25.17 67.15 87.76 1 Process complete approved applications for medical adaptations Percentage of court 0 36.75 11.54 62.5 1 Process actions initiated which resulted in eviction Percentage properties 100 100 99.96 99.1 1= Process with gas safety record renewed by anniversary date Percentage of total 101.1 99.57 99.09 99.02 1 Business/ year due collected in Financial previous year Percentage former 12.33 53.84 46.69 64.64 1 Business/ tenant rent arrears Financial written off Percentage lettable 7.42 8.61 9.05 12.87 1 Business/ self-contained houses Financial that became vacant in year Number of homes per 55.4 43.5 40.2 39.8 1 Business/ office based member Financial of staff Percentage days lost 1.74 3.32 7.76 3.37 1 Business/ through staff sickness Financial absence New Gorbals rank 2 out of 4 Percentage of rent 0.34 0.33 1.61 0.72 2 Value due lost through 77

New GHA Govanhill Southside NGHA Category Gorbals HA HA HA Ranking (1 to 4) properties being empty Percentage average 2.36 2.7 3.3 0.5 2 Value weekly rent increase to be applied next year Percentage tenancies 88.37 91.62 85.07 83.33 2 Value (statutory homeless applicants) began in previous year sustained for more than a year Percentage tenants 91% 89.9 80.36 91.25 2 Value satisfied with management of neighbourhood Average hours to 2.07 4.82 2.79 1.79 2 Process complete emergency repairs Average management 124.2 125.63 122.04 172.64 2 Business/ fee per factored Financial property

New Gorbals rank 3 out of 4 Percentage tenants 85% 91.78 90.18 76.25 3 Value satisfied with quality of home Percentage properties 80.01 95.74 99.12 77.2 3 Value meeting NHER / SAP ratings year end Average calendar 16.53 14.39 48.87 13.09 3 Process days to re-let properties Percentage all 1st 88.08 89.92 91.67 84.62 3 Process stage complaints responded to in full within SPSO timescales Percentage gross rent 5.68 4.65 6.41 5.14 3 Business/ arrears of rent due Financial

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New GHA Govanhill Southside NGHA Category Gorbals HA HA HA Ranking (1 to 4) Percentage properties 90.07 97.54 86.06 90.13 3 Business/ meeting SHQS by Financial 31.3.16 New Gorbals rank 4 out of 4 Percentage tenants 77.78% 98.17 97.51 81.82 4 Value satisfied with standard (ARC) of home when moving in

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ANNEX 5 KEY PERFORMANCE INDICATORS

Note: Targets will be set by the Property Management Sub Committee during the first quarter of 2016/17, to allow consideration of 2015/16 outturn results

HOUSING MANAGEMENT

Performance Indicator

Percentage of annual income lost during the year through voids

Total amount of rent lost during the year through voids

Average Re-Let Time

Number of Re-Lets that are:  Less than 2 weeks  Between 2 and 4 weeks  More than 4 weeks

Non-technical arrears as a proportion of rental income (excluding former tenants)

% Gross rent arrears as a proportion of rental income (including former tenants)

Total value of Gross rent arrears

Housing Applications Target Response Time (calendar days)

% of Housing applications dealt with in target response time

B.M.E. applicants as % all applicants

Number of lets made to homeless referrals met by NGHA

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REPAIRS AND MAINTENANCE

Performance Indicator

1) Reactive Repairs

i) Routine - 10 working days

ii) Urgent - 3 working days

iii) Emergency - Attendance within 4hrs (make safe) iv) Repairs completed right first time

2) Repair Inspections

i) % of repairs pre-inspected

ii) % of repairs post-inspected

3) Cyclical Maintenance

i) % of cyclical maintenance completed

4) Disabled Adaptations

i) Number completed

ii) Number of outstanding tenant applications at end of financial year

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ANNEX 6 STRATEGIC RISK REGISTER

A3 Document: bound separately

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