Provanhall Housing Association Business Plan 2019/20 to 2022/23 2019 Review

2019 Review

Contents

Page

EXECUTIVE SUMMARY 3

1. Introduction 7

2. History and Achievements 8

3. Governance and Leadership 10

4. The Association’s Vision, Mission and Values 12

5. The Association’s Strategy and Objectives 13

6. Strategic Analysis 16

7. Asset Management 30

8. Housing Services 38

9. Wider Role 45

10. Value for Money 48

11. Organisational Resources and Development 58

12. Strategic Risk Appraisal 60

13. Financial Plans and Forecasts 62

Appendices

Appendix 1 Appendix 4 Details of Management Committee and Senior Staff, Benchmarking Analysis and Organisational Structure Appendix 5 (bound separately: A3 document) Appendix 2 Strategic Risk Register Financial Plans and Cashflows Appendix 6 Appendix 3 (bound separately: A3 document) Value for money report 2018/19 Resource Plans for 2019/20

2019 Review

EXECUTIVE SUMMARY Introduction

Provanhall Housing Association has produced this Business Plan to set out our mission and values, and our objectives, plans and resources for the future.

The Business Plan will inform our relationships with tenants and residents, funders, regulators and partner organisations. In developing the Plan, we have taken account of the Scottish Housing Regulator’s “Recommended Practice” on business planning, published in December 2015.

The Association, its Services and Achievements

The Association’s roots and our values are firmly based in Provanhall, a community of about 1,500 residents in Easterhouse, 6 miles east of Glasgow city centre.

We own and manage 488 homes for social rent and we factor for a further 17 properties. We have 26 new build units due off site in 2019. We are led by an experienced voluntary Management Committee made up of Provanhall residents who provide us with effective governance and direct links to the local community. Operational management is provided by the Association’s Director and staff team.

The Association provides a comprehensive range of services; all focused 100% on the needs of our customers and the Provanhall community. These services include tenancy and neighbourhood management, repairs and property management, property development, asset management, environmental works, income maximisation and factoring.

First registered in 1991, the Association has reversed the decline and poor housing conditions that Provanhall experienced before the community took ownership of the housing in the area.

Over the last 28 years, we have delivered sustainable regeneration and better long-term value for the public money invested in improving housing conditions. The Association’s achievements include:

 Comprehensive refurbishment of 370  Winning the support of 88% of GHA properties originally acquired from tenants who voted in favour of the 2009 Glasgow City Council, along with the stock transfer to the Association.

construction of 119 new homes.  Improving the external amenity of the  Investing £2.4 million in tenants’ homes neighbourhood, and working hard to keep since 2009 through our major repairs standards high.

programme.  Supporting The Connie, the local  Providing first class housing and community centre, and the services it maintenance services, as shown by provides.

consistently excellent benchmarking  Supporting a range of wider role activities, results and high levels of tenant to increase opportunities and improve satisfaction. residents’ quality of life.

 Keeping our costs low, allowing us to keep  Maintaining the confidence of our tenants rents low for tenants. and regulators.  Maintaining financial strength through low debt levels and strong cashflow.

2019 Review

Business Plan: Key Highlights

The Management Committee’s vision is to make Provanhall a safe, stable and thriving community where:

 Everyone lives in a warm and affordable home, in a neighbourhood that is clean and well cared for, and  Everyone has access to the opportunities needed to achieve a good quality of life

The Association’s Strategy over the period of the Business Plan is as follows:

Managing our Consolidating and Working with the assets and Developing our improving our core community and resources well, for role as a business, through others to improve the benefit of community anchor service opportunities and tenants and the organisation for improvement and the quality of life Provanhall Provanhall investment for local people community

The Management Committee has set five strategic objectives to help us achieve the Vision and Strategy.

 To deliver high quality services that meet tenants’ needs, maximise tenant satisfaction and demonstrate value for money.  To provide affordable, high quality homes that meet local needs and help make Provanhall a thriving, sustainable community.  To develop our role as community anchor in Provanhall, enabling services and activities that benefit individuals and the community as a whole.  To mitigate the impact of welfare reform and other external factors on tenants and on PHA’s business resilience.  To make sure that PHA is an efficient and effective organisation, with the organisational capacity to achieve our goals.

The following summary describes some of the main activities we will undertake to achieve our objectives:

Activity Area Key Actions during the Business Plan period

Rents and Affordability  Make sure that our rents continue to be affordable and competitive.  Make sure that our rents generate sufficient income to fund services and investment in homes, and provide sufficient cover for future financial risks.

Income Maximisation for Tenants  Provide free access to welfare benefits and financial inclusion services for our tenants and their families.  Maximise referral of our tenants to other agencies, where they need specialist support in areas such as debt and money management.  Introduce impact measurement outcomes to maximise benefit entitlement and protect tenants’ income.

Tenant Satisfaction  Undertake a comprehensive Tenant Satisfaction Survey and implement an action plan from the outcomes of this.

Activity Area Key Actions during the Business Plan period

Tenant Participation  Develop an updated tenant participation strategy in consultation with tenants and implement the resulting action plan.

Access to PHA housing  Maintain or increase the proportion of lets we make to homeless households, working in partnership with Glasgow City Council.

Local Environment  Consolidate our work to protect and enhance the local environment in the Auchinlea Action Area.  Pursue the transfer or purchase of Glasgow City Council-owned sites within PHA’s area of operation.

Development Programme  Investigate opportunities that will contribute to regeneration and that can be accommodated within the Business Plan (site 2 in Provanhall Feasibility Study and other vacant land in the area).  Develop a long-term strategy for PHA’s possible involvement in improving the condition and management of private sector housing in Balcurvie Road.

Asset Management approach  Review the performance of our housing stock, using the results to inform future management and maintenance.

Energy Efficiency works  Implement energy efficiency measures through the planned maintenance programme (e.g. the programme of boiler replacements).  Ensure that the Association will meet the Energy Efficiency Standard for Social Housing by 2020.

Governance  Develop closer links with the Youth Sub group and embed this into the Management Committee structure.  Ensure effective training plans in place for Management Committee members and that good attendance is achieved.  Develop a strategy to promote and increase uptake of places on the Management Committee.

Wider Role  Develop and implement an updated Wider Role Strategy.  The new Strategy will include updated priorities for meeting community needs; describe the services and partnerships we want to develop; and provide a platform for securing future funding.

Financial Resilience  Implement PHA actions to manage and mitigate the effects of Housing Benefit and Welfare Reform changes on the Association.  Develop financial management/education services for Tenants on low incomes.

Efficiency  Make best use of mobile technology for our staff.  Consider selling PHA staff services in areas where we have capacity to allow this.  Work with Glasgow City Council to assess how the Council could deliver some of its services from PHA’s offices or in closer partnership with the Association

Financial Position and Risks

The financial projections accompanying the Business Plan confirm that the Association is in a strong financial position, with low levels of debt, low operating costs, no onerous loan covenants, and a strong cash position to help sustain our cash flow if required. Strong financial management will continue to be of the highest priority.

Most of the activities and costs set out in the Business Plan will be funded through rental income. We will continue to seek external funding to support activities such as wider role, welfare benefits and financial inclusion services. We may also be seeking public and private funding to fund new housing for a relatively small development (12/16 units).

Like all housing associations, the Association is working in an environment that involves unprecedented political and economic challenges as a result of Brexit, the possibility of a second Scottish independence referendum, Welfare Reform, rising inflation, volatility in the value of sterling, and the continuation of austerity measures at least until the next UK general election and possibly beyond. The Business Plan is therefore based on exercising firm control over the Association’s income and costs, along with proactive risk management, strong financial controls and reporting, and maintaining the confidence of funders.

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, management and staff.

 Regular Management Committee and sub committee reviews of progress and achievements, as well as any changes in the Association’s finances and risk profile.

 Communicating the Business Plan to the wider staff team, so that every member of staff is clear about the Association’s priorities and how their own job role contributes to these.

 Building on the Association’s track record of partnership working, with the local community, the City Council and other public agencies, and the local voluntary sector.

1. INTRODUCTION

1.1. This Business Plan sets out Provanhall Housing Association’s strategy for the 3-year period from 2019/20 to 2022/23. The Plan describes:

Our vision, mission and values Our financial plans

Analysis of our financial viability and The wider context for our work resilience in the short and long term

The priority actions associated with our The major risks we need to manage and strategy how we will do this

1.2. The Business Plan is a practical management tool:

 It enables the Management Committee to set the Association’s goals and priorities and to review subsequent progress.

 It informs the staff team about our goals, and their contribution to achieving these.

 It describes how we will continue to provide tenants and residents with high quality housing, estate management and repairs services.

 It describes how we will manage growth and business diversification opportunities.

1.3. The Business Plan will inform our relationships with tenants and residents and with partner organisations. It will also be of interest to the Association’s funders and regulators.

1.4. This year’s Business Plan has been produced at a time of considerable economic and political uncertainty. As well as the risks already created by Welfare Reform measures, further uncertainty lies ahead as a result of the UK’s decision to leave the European Union and the possibility of a second referendum on Scottish independence.

1.5. While PHA cannot directly influence these events, we will monitor their likely impact closely and carefully assess what we can do to preserve the position of the Association and our tenants. In this regard, PHA’s financial strength, low debt levels, low rent levels, low management costs and service excellence will help ensure the Association’s resilience in the face of future challenges.

2. HISTORY AND ACHIEVEMENTS

2.1. The Association is based in the Provanhall neighbourhood of Easterhouse, 6 miles east of Glasgow city centre. The following graphic gives a quick profile of the Association:

Community controlled housing Total annual rental income 100% focused on Provanhall association, set up in 1991 £1.76m in 18/19

Registerd Social Landlord with £1.7m private borrowing to be 488 homes for social rent charitable status repaid in long term

11-strong volunteer Average weekly rent for 3 Council agreement to develop Management Committee apartment £66.36 26 New Build units

Operating costs £1.49m in Rent increase 3.5% for 19/20 Equivalent of 8 members of 18/19 staff

Services bought in for welfare Cash at bank £4.17m Factor for 17 properties rights/income maximisation. (at 31.3.18)

2.2. The Association’s roots can be traced back to the 1950s when Glasgow Corporation followed a policy of large-scale slum clearance in the inner city and the creation of a new generation of council houses on the city’s outer edges. Easterhouse was built from the mid-1950s onwards to house a population of 50,000 people and was the largest of the new estates built for this purpose.

2.3. By the 1980s, many communities in Easterhouse including Provanhall had serious housing and social problems which the City Council was unable to resolve. A new breed of community-controlled housing associations emerged in Easterhouse – Provanhall among them - which became landlords, developers, and managers of housing. Led by local residents, the Easterhouse housing associations exemplified “people power” in action and became part of a citywide movement of similar organisations which acted as renewal agents in communities throughout Glasgow.

2.4. PHA’s initial focus was on improving the quality and sustainability of housing, by renovating existing homes and building new ones. The new build element of the regeneration has helped to increase diversity in house types and sizes.

2.5. A second wave of growth occurred in 2009, when Glasgow Housing Association finally completed the transfer of 195 homes to the Association, following a six-year transfer process. This established PHA as the owner and manager of all social rented housing in Provanhall, although GHA has since built 75 new build properties in Provanhall and has plans to build more.

2.6. Community governance has been part of the Association’s DNA throughout its history. The leadership provided by local people has contributed to sustainable regeneration, better long-term value for public money, and a wide range of other achievements, including:

 Comprehensive refurbishment of 370 properties originally acquired from the City Council.

 The construction of 119 new homes.

 Investing £2.4 million in tenants’ homes since 2009 through our major repairs programme. To date, these programmes have focused on boiler replacements, new kitchens and environmental works.

 Excellent local housing and maintenance services, evidenced by the Association’s consistently high level performance results in service delivery, along with very good levels of tenant satisfaction.

 Operational efficiency, demonstrated by low rents, low operating costs and a lean staffing structure.

 Maintaining low debt levels and strong cash flow.

 Winning the support of 88% of GHA tenants who voted in favour of the 2009 stock transfer, and continually promoting a culture in which all tenants identify with the Association and the Provanhall community.

 Improving the external amenity of the neighbourhood, notwithstanding the practical challenges where vacant land and other sites remain in Council ownership.

 Supporting the The Connie, the local community centre, and the services it provides.

 Using PHA funds to support wider role activities, and working in partnership with Connect Community Trust which grows PHA’s investment by raising funds from other sources and delivers wider role activities in the area.

 Providing Provanhall residents with financial support through purchasing services from Connect Community Trust and Connect People’s Gateway. Working collaboratively with other Easterhouse housing associations through Easterhouse Housing and Regeneration Alliance (EHRA) on a wide range of initiatives. These have included joint housing allocations policy and common housing register; benchmarking and service improvement; apprenticeships; learning opportunities and joint training.

2.7. PHA has a long history of achievement, but much remains to be done to meet our ambitions for the Provanhall community and to continually develop our service delivery to meet tenants’ expectations. The Management Committee and staff retain all of their commitment and enthusiasm for addressing the challenges of the future, and our efforts will be assisted by the strong community spirit found in Provanhall.

3. GOVERNANCE AND LEADERSHIP

Governance Model

3.1. PHA is a not for profit Scottish Charity and is registered with the Scottish Housing Regulator and the Office of the Scottish Charity Regulator. PHA is also a Property Factor registered with the Scottish Government.

3.2. PHA’s Rules describe our permitted objects and are based on the principle of “one member, one vote”. This ensures that we operate in a democratic manner.

3.3. Members may attend and vote at general meetings, seek election to the Management Committee (MC), and vote in the election of Committee members.

Management Committe Constitution Regulation (Governing Body)

• Community Benefit Society • Up to 15 members • Scottish Housing Regulator • Individuals/Groupd • Elected by the members • Scottish Charity Regulator become members for £1 (co-options also possible) • Financial Conduct • Registered Social Landlord Authority • Registered Charity • Scottish Goverment (Property Factor Register)

Management Committee and Structures

3.4. Appendix 1 provides information about the current members of the MC.

3.5. The MC meets monthly and is supported by three sub committees which meet quarterly. These are Housing Services; Technical Services and Staff, Learning and Development.

3.6. Sub Committees carry out their role under the authority of the Management Committee, with each Sub Committee’s role and delegated authority being described in the Association’s Standing Orders which are reviewed periodically. The aim of the structure is to enable proper scrutiny of all main business areas, while also permitting the MC to focus on its role of providing strategic direction and leadership.

3.7. Skills audits and committee member reviews take place each year, to help members reflect on their skills and contribution to the MC, and identify what support the Association can provide. A review of the MC itself is also carried out annually.

3.8. PHA works with the other members of the Easterhouse Housing and Regeneration Alliance (EHRA) to provide an annual programme of committee member training. Along with attendance at

conferences, this approach allows committee members to remain up to date with topical subjects and to network with committee members from other housing associations.

3.9. PHA has adopted the SFHA Code of Conduct for committee members and the SFHA/EVH Code of Conduct for staff. The Codes are supported by a range of other governance policies and procedures, to make sure that the Association meets good practice and regulatory standards.

Senior Management Team

3.10. The members of the Association’s senior management team are:

Patricia Gallagher – Director Sean Douglas – Housing Services Manager Jim Wylie – Technical Services Manager

3.11. All Senior Management Team members and agency staff are suitably qualified and have a wealth of service and experience in housing. Further biographical details are provided in Appendix 1, along with a chart showing the Association’s staffing structure.

4. The Association’s vision, aims and core values

4.1. The Management Committee has set the following vision and values:

Vision

• Everyone lives in a warm and affordable home, in a To make neighbourhood that is clean Provanhall a safe, and well cared for stable and thriving • Everyone has access to the community opportunities needed to achieve a good quality of life

Values

4.2. PHA’s values are based on valuing and respecting our customers; our committee members; our staff; and our partners. We will always strive to be:

Supportive of our Accountable to the Inclusive and Open and accessible staff and committee community respectful members

Creative and Efficient Responsible Fair and trustworthy innovative

4.3. As a community anchor organisation, PHA provides a focal point for the Provanhall community. The Management Committee is committed to achieving the best for everyone who lives in Provanhall. This means:

 PHA will work with all sections of the community, including tenants of other social landlords.

 We will work with other organisations who share our Vision and Values, in a spirit of partnership and co-operation.

4.4. Equality is central to our values. We will reflect this in our work, and promote fair treatment and equal access to services and opportunities when working in our own right and when we are working with others. We will always seek to comply fully with equalities legislation, notably the Equality Act 2010 and the anti-discrimination provisions it contains.

5. THE ASSOCIATION’S STRATEGY AND OBJECTIVES

The Association’s Strategy

5.1. The Association’s Strategy over the period of the Business Plan is as follows:

Strategic Objectives

5.2. To deliver the Strategy, the Management Committee has set five strategic objectives, each with a set of intended outcomes. Priority actions for addressing each strategic objective are described in the later chapters of the Business Plan, and then drawn together in the Resource Plan schedules at Appendix 3.

Objective Intended Outcomes

1. Deliver high quality services  PHA services are efficient and effective and responsive that meet tenants’ needs, to tenant priorities and feedback. maximise tenant satisfaction and demonstrate value for  Affordable rents maintained and annual increases kept money to the minimum needed.

 Service delivery continually reviewed and improved where needed.

 All legal obligations met, and high quality performance achieved on Scottish Social Housing Charter.

 Value for money demonstrated.

 Good demand sustained for PHA’s housing. 2. Provide affordable, high quality homes that meet local  Continued investment made in tenants’ homes, needs and help make informed by new asset management strategy. Provanhall a thriving, sustainable community  100% compliance with SHQS maintained and EESSH compliance achieved by 2020.

 Continued positive tenant feedback for repairs, maintenance and neighbourhood management

Objective Intended Outcomes

services.

 Continued cost-effectiveness of these services.

 Tenant safety and other legal obligations met in full.

 PHA’s housing is set within attractive, safe environments.

 Better housing and environmental conditions in Balcurvie Road and Gardyne Street (in partnership with GCC and owners).

 PHA’s role in developing and/or managing sites for new development negotiated successfully with GCC.

Existing services and partnerships maintained/developed 3. Develop our role as community anchor in Provanhall, enabling services  Scottish National Standards for Information and Advice and activities that benefit Provider accreditation ensures residents continue to individuals and the have the best possible active information, sign-posting community as a whole and explanation in relation to housing, welfare benefits, debt advice and wider financial inclusion and capability services.

 Continued partnership with Connect Community Trust to deliver relevant initiatives and services e.g. Job Club.

 Joint working with local groups and charities who can help achieve better outcomes for Provanhall residents.

PHA “community anchor” role examined and redefined

 Feasibility examined of developing PHA‘s office as a neighbourhood hub used by other service providers.

 Discussion stimulated with the community about local services and activities.

 PHA wider role priorities reviewed and inform working with Connect Community Trust and The Connie.

 Changes in legislation and policy at Scottish and UK 4. Mitigate the impact of welfare reform and other external levels monitored closely. factors on tenants and on  Influence exerted through PHA participation in PHA’s business resilience appropriate networks, meetings, consultations etc.

 Financial impact of welfare reform measures on PHA business plan reviewed regularly.

 PHA tenants receive comprehensive information on

Objective Intended Outcomes

how changes may affect them as individuals.

 Local services (PHA and partners) are designed to deal with the wider demands that may be placed on PHA and residents, as a result of welfare reforms.

 Staff trained to deliver their service department objectives, including provision of relevant Scottish National Standards Advice Type I Agency competences regarding Active Information, Signposting and Explanation.

 PHA service provision is flexible to adapt to changes that may arise as a result of welfare reforms and other financial stresses.

 Staffing levels monitored closely, to deal with additional demands placed on PHA resources.

 Monitoring of income stream provides early warning of threats to existing service levels, reduced rental income and changes in PHA tenant/applicant profile.

 High standards of governance maintained. 5. Make sure that PHA is an efficient and effective  Support for Committee and staff, through continued organisation, with the learning and development based on PHA aims/strategy. organisational capacity to achieve our goals.  Decisions based on sound financial evidence and understanding of risks.

 Commitment to equal opportunities reflected in service delivery and organisational management.

 PHA continues to communicate effectively with tenants and residents.

 Strong performance on value for money indicators maintained.

 Staffing and agency resources reviewed, to ensure business needs are being met.

 Selling of agency services, where PHA has the capacity to do this.

 Succession planning conducted for any future changes in the Committee or senior management.

5.3. The Association’s strategic direction is defined by our focus on Provanhall. The Business Plan represents an evolution of our current strategy rather than a fundamental shift. The Management

Committee is not currently planning any fundamental changes in direction that would require strategic options for the organisation to be reviewed at this time.

5.4. We may, in due course, apply options or risk review techniques to areas where impact or value to the Association needs to be re-appraised periodically. For example, if we succeed in gaining GCC approval for a small-scale development programme; in response to re-defining our Wider Role strategy and activities; or if the Association ultimately takes on a factoring role in Balcurvie Road, in blocks where we have no ownership.

6. STRATEGIC ANALYSIS Introduction

6.1. This chapter describes the wider environment that PHA works in, and the issues this raises for our strategy. The chapter uses statistics from the 2011 Census for Easterhouse and from the 2016 Scottish Index of Multiple Deprivation (SIMD 2016) for Provanhall itself.

6.2. The SIMD 2016 is particularly useful since results can be produced for an area that closely matches PHA’s area of operation, also including households from other landlords, owners and private rented properties in the area. Provanhall has two SIMD datazones which can be broadly described as “Conisborough Road/North Provanhall” and “Conisborough Road/South Provanhall”. The combined population of the two datazones is 1,438 people.

Area of Operation

6.3. The Association works exclusively in the Provanhall neighbourhood as shown in the following map:

Provanhall HA Area of Operation

Map accessed from www.google.co.uk

Population and Households

6.4. In the period 2001 to 2011, Easterhouse lost both population and households, at rates that were among the highest in Glasgow. There was a 12% fall in households with children, while the number of single person households stayed largely the same. Overall, Easterhouse lost 552 dwellings between 2001 and 2011 (about 1 in every 8 houses), mainly in the social rented sector. The rate of demolitions in Provanhall has been lower during this period, and this has contributed to the stability of the community.

% Change from 2001 to 2011 Census, Easterhouse and Glasgow 10.0% 5.2% 4.1% 5.0% 2.7%

0.0% Population Households Dwellings -5.0%

-10.0% -10.6% -15.0% -12.3%

-20.0% -16.5% Easterhouse Glasgow

Age Profile (PHA Tenants)

6.5. 11% of Easterhouse residents were aged 65 or over in 2011, compared with 14% for Glasgow. The age profile of Provanhall’s tenants is significantly different as shown in the following graph.

% of Tenants 16- 21years

% of Tenants 22-25 years

Series1 % of Tenants 26-59 years

% of Tenants 60-95 years

0% 10% 20% 30% 40% 50% 60% 70%

Age profile of Tenants in Provanhall as at end March 2018 % of Tenants 60-95 years 28% % of Tenants 26-59 years 66% % of Tenants 22-25 years 5% % of Tenants 16- 21years 1%

6.6. 28% of PHA tenants were aged 60-plus. A further 66% of PHA tenants were aged between 26 and 59, suggesting that further increases in older tenants are likely. This may have implications for the kind of housing services needed in the future, as well as influencing PHA’s future Wider Role priorities such as digital Inclusion support and services.

Household Types (PHA Tenants)

35% 62% 7% The % of tenants 53% The % of tenants The % of tenants with at least one who are single The % of tenants who have family dependent people with no with children members aged (spouse/partner, aged under 16 60+ living with joint tenants or children, them dependents grandchildren)

Deprivation among Provanhall Residents

6.7. The two SIMD datazones in Provanhall are ranked in the 5% most deprived of all datazones in Scotland, for all SIMD domains combined. Provanhall is also ranked in the 10% most deprived datazones (and in some cases the 5% most deprived) for each of the key SIMD domains of income, employment, health and education. Both datazones perform a little better in relation to the SIMD crime domain.

6.8. PHA has a strong awareness of the challenges facing many of our tenants. For example, in our 2015 Tenant Satisfaction Survey, 42% of respondents said they or a member of their household had a long- term health problem or disability that limited their daily activities or the work they could do. The most common types of disabilities stated were:

 Mobility/physical disabilities (67.3% of  Difficulties with hearing (7%) those mentioning a health condition)  Difficulties with sight (3%)  Mental ill health (24%)  Being frail due to old age (3%)  Long term illness, disease or condition (23%)

People from BME [Black Minority Ethnic] communities (PHA Tenants)

6.9. There has been a significant increase since the turn of the century in people from BME communities living in Glasgow. Easterhouse lies outside the core areas where ethnic minority households are most likely to settle, but there have still been significant changes in Provanhall.

6.10. People from BME communities accounted for 2.4% of Easterhouse’s population in 2011, less than half the rate among PHA’s tenants (6%) at July 2016. The main minority ethnic groups in Provanhall are Polish people (4.5% of PHA tenants) and African people (1.5% of PHA tenants).

The Local Housing Market

6.11. Easterhouse had 3,850 dwellings at the time of the 2011 Census, and has seen a number of changes in the local housing market.

Housing Tenure Pattern: Easterhouse and Glasgow (2011 Census)

80% 62% 60% 46% 36% 40% 29% 18% 20% 9% 0%

Owner Occupied Private Rent Social Rent % of All %of All Housing Area in Easterhouse Glasgow

% Tenure Change 2001 to 2011: Easterhouse & Glasgow

15.0% 10.3% 10.0% 4.6% 5.0% 0.0% -5.0% Owner Occupied Social Rent Private Rent -1.0% -0.6% -10.0% -4.6% -15.0% -20.0% -14.4% Easterhouse Glasgow

Easterhouse: Key Housing Market Changes/Factors 2001 to the Present

 552 less houses in Easterhouse in 2011  Substantial growth in private renting in than in 2001. Easterhouse, albeit well below citywide levels.  Reductions greatest in the social rented sector (less popular housing demolished).  By 2011, nearly 1 in 10 Easterhouse households rented their home from a  Vacant and derelict land remains a major private landlord. issue, including in PHA’s area.  GCC development policies are not  Fall in owner occupation in Easterhouse – promoting successful place making GCC development priority has prioritised (2016 report by Stallan-Brand housing for owner occupation, at a time of Architecture and Design for EHRA). sustained poor performance of the housing and lending markets following the 2008  New build in the area has restarted with

financial crisis 106 units on site in the Provanhall area.

6.12. Poor property condition and management standards in private housing are significant issues for the private residents in PHA’s boundary area, at Balcurvie Road and Gardyne Street. The housing in these streets was sold off by GCC many years ago as part of an Improvement For Sale initiative (IFS). It now consists of a mixture of poorly-maintained owner-occupied and private rented housing, with significant management issues.

6.13. 20% of households in Easterhouse were overcrowded at the time of the 2011 Census, more than double the rate for Scotland as a whole. The housing stock in the area is not sufficiently varied to accommodate the range of household sizes and types seeking to be rehoused. In Provanhall, the SIMD 2016 reports that 25% of households (covering all tenure types) are overcrowded. However, analysis of PHA tenants, who have applied to us for rehousing, shows 25 of 488 tenants are currently overcrowded; 5% of our households. Of these 25 tenants 23 (92%) are overcrowded by 1 room only. The remaining 2 tenants (8%) are overcrowded by 2 rooms. 15 of the 25 overcrowded tenants (60%) have been waiting less than 18 months. The remaining 10 (40%) waiting over 18 months are awaiting a particular house type and/or location.

House Prices and Rents

6.14. At end 2018, the Zoopla website reported an average sales price of £60,529 for properties sold in Easterhouse during the last 12 months. The private housing market in Easterhouse can be best described as “still in recovery”, with some recent growth in transaction numbers but still below 2011 levels.

6.15. Higher value housing is available in several areas close to Easterhouse. These include Stepps (average sales price £183k in previous 12 months), Baillieston (average £175k) and Garthamlock (average £126k, but with a considerable number of higher value new build homes recently completed or under construction, for up to £250k).

6.16. The volume of housing for sale in PHA’s area of operation is low, and consists mainly of properties sold under the right to buy and the private housing already described at Balcurvie Road and Gardyne Street. Sales prices are generally well below the £61k Easterhouse average stated above.

6.17. In keeping with general housing market trends, there has been no significant change in house prices during the 6-year period under review:

House selling prices in Provanhall 2012-2018 50,000 45,000 40,000 35,000 30,000 25,000 Amount 20,000 15,000 10,000 5,000 0 2012 2013 2014 2015 2016 2017 2018 2019

6.18. Reliable information about private rents is harder to come by. Advertisements for properties in Provanhall accessed during early 2019 included one, 2-bedroom flats, marketed at £450 per calendar month.

Stakeholder Relationships and Priorities

6.19. In implementing our strategy, PHA will work closely with our tenants, residents, service users and a wide range of public sector and community partners.

PHA’s Tenants

6.20. The Association’s 2018 tenant satisfaction survey shows exceptionally high levels of satisfaction with the Association and our services. The Association is working through a programme of improvement actions, to respond to the tenant priorities identified in the survey. We will use our Tenant Participation strategy, consultation activities and local presence to stay well-informed about tenants’ priorities.

External Partners: Glasgow City Council and Others

6.21. PHA’s main public agency partners are Glasgow City Council (GCC) and its service departments, the Glasgow Community Planning (GCPP), the Glasgow City Health and Social Care Partnership, Police Scotland, Scottish Fire and Rescue and Glasgow Life.

6.22. Unlike these public agencies, PHA has an office in Provanhall and strong ties with the local community. Through partnership working, we are keen to explore the possibility of making the PHA office a neighbourhood hub that helps residents access a range of services more easily and gives other service providers a stronger presence at neighbourhood level.

6.23. The Association has particularly close relationships with GCC. This reflects the Council’s role as the strategic housing authority and its role in housing investment and homelessness. The most critical issues to be addressed through our joint working with the Council include:

 PHA’s role in developing vacant land in Provanhall. The Association has recently been successful in reaching agreement with GCC and GHA to adopt a partnership working approach. This has resulted in a development agreement with GHA to build 26 new build homes for PHA.

 The proposed ending of the Council’s role in managing Housing Benefit, as Universal Credit is rolled out fully across the UK.

 The operation of homelessness referral arrangements, which continue to be problematic for PHA and many of the city’s other housing associations.

 The Council’s strategy for resourcing and delivering public services, in light of the large-scale cuts being made to its budget (reported by GCC to be in the region of £40.9 million for 2019/20).

Single Outcome Agreement

6.24. PHA makes a significant contribution to the outcomes described in Glasgow’s Single Outcome Agreement (SOA), for example, in relation to 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”.

6.25. The SOA vision is underpinned by:

 Three priority areas for concerted action to improve outcomes (alcohol misuse, youth unemployment and vulnerable people), all of which disproportionately affect our area (1).

 A commitment to tackle inequalities in nine of the city’s most deprived neighbourhoods, through a series of “Thriving Places” initiatives.

6.26. The Association will have regard to the key SOA outcome areas, when reviewing the priorities for our Wider Role Strategy. We will also make sure that the Council and others are fully aware of the extent of the inequalities and disadvantage present in Provanhall, to inform their priorities for service delivery and resources. Along with other members of EHRA, we will seek opportunities under the Easterhouse Thriving Places initiative to improve partnership working between the Council, other public service providers and local communitie

Funders and Regulators

(1 ) The Scottish Index of Multiple Deprivation 2016 (SIMD) divides Provanhall into two datazones. The SIMD results are that one Provanhall datazone has a high level of alcohol-related hospital admissions, while the second Provanhall datazone is well below the Glasgow average for this indicator.

6.27. PHA’s main funders are Royal Bank of Scotland (RBS) and Nationwide Building Society. We maintain close relationships with our funders, and robust checks are carried out on an ongoing basis to ensure compliance with PHA’s loan covenants with RBS. There are no covenants for our Nationwide loans.

6.28. The Association’s main regulators are the Scottish Housing Regulator (SHR) and the Office of the Scottish Charity Regulator. SHR has had “low engagement” with PHA since the introduction of the current regulatory framework in 2018. This level of engagement means that SHR considers PHA presents a low risk to its regulatory purpose. We provide SHR with detailed annual reports on our performance and finances, and advise SHR of any Notifiable Events as they occur.

6.29. PHA’s strategy and working practices take account of specific SHR priorities. These include a strong focus on business planning, effective governance, financial performance and risk management, cost control, asset management, rental sustainability and value for money.

Scottish Government

6.30. The Scottish Government is a significant stakeholder for PHA, particularly in relation to its role in funding housing development and Wider Role activities, and publishing housing legislation and statutory guidance. The Scottish Government has also acquired new powers in respect of the social security system in Scotland, giving it responsibility for around 15% of all social security spending.

6.31. The Programme for Government 2018/19 published in September 2018 proposes:

 Building a Globally Competitive, Sustainable and Inclusive Economyy.

 A Healthy and Active Nation

 The Best Place to Grow Up and Learn

 An Empowered, Equal and Safe Scotland

 A Creative, Open and Connected Nation

 Continue to argue for membership of the Single Market and Customs Union

 Fuel Poverty (Target, Definition and Strategy) Bill

 Scottish National Investment Bank

6.32. In addition, the SNP Manifesto published before the 2016 Scottish Elections includes a number of other commitments that are relevant to PHA’s future strategy. These include:

 Permitting the housing costs element of Universal Credit to be paid direct to landlords, with the agreement of tenants. If taken forward, this change would greatly reduce the risks the Association and tenants face under Universal Credit. The Scottish Government has recently published draft regulations, although it is not yet clear how and when the proposals would take effect.

 Provision of guidance and setting timescales for installing housing adaptations.

 Encouragement for communities to buy neglected land and property.

 Using a Government partner organisation to help raise tenants’ awareness of their rights, with a duty placed on social landlords to consult with tenants on the management of their homes.

 Bringing registered social landlords within the statutory Freedom of Information framework.

UK Government

6.33. The Association is subject to UK Government legislation and policy in a number of non-devolved areas, notably housing benefit and welfare. Both issues present significant risks to the Association.

6.34. Following the change in Government leadership in summer 2016, the new Secretary of State for Work and Pensions has announced that the Government remains committed to welfare reform measures already announced, but does not intend to introduce additional measures during the lifetime of the current Parliament.

6.35. This pledge has already been broken since the UK Government now intends to apply Housing Benefit caps to all tenants receiving Universal Credit from 2019, whereas the originally announced policy was that the caps would only apply to tenancies begun after 1 April 2016. While Local Housing Allowance rates (which form the basis of the HB caps) have been frozen to 2020, the timescale for introducing the caps has been pushed back to April 2019. This will reduce the Association’s already limited exposure to the impact of the caps, as a result of its lower than average rent levels.

6.36. The UK Government’s negotiating position regarding Brexit – the UK’s withdrawal from the European Union – is largely unknown at present. However, it seems certain to raise significant issues for citizens and for all sectors of the economy and public services. The Association has a direct interest in relation to the free movement of people, since almost 4% of our tenants have moved to Scotland from Poland. The future rights of these tenants is currently subject to considerable uncertainty.

6.37. The economic impacts of Brexit are the subject of different views among economic experts. However, there have already been tangible impacts in the form of reductions in the value of the pound.

6.38. In the period to end June 2019, the value of sterling fell by just below 5% to its lowest level since the mid 2017.

6.39. Repairs and construction materials prices are a key risk area – in addition to the exchange rate, the UK is a net importer of building materials. Industry bodies are already reporting significant price increases well above the general rate of inflation and are predicting further increases in 2019.

6.40. Concern about the weakness of sterling, along with concerns about a possible “hard” Brexit which would end the UK’s access to the Single Market, has led the Bank of England (November 2016) to increase its inflation forecasts for the period ahead. The Bank is forecasting that inflation will rise to 2.7% in 2017 and settle at around that level until 2019, with a worst-case prediction that inflation

could rise to 5%. High inflation could also lead to an increase in interest rates. Higher inflation and borrowing rates and a weaker pound could have direct consequences for PHA , for example in relation to:

 Increases in the cost of living for tenants

 Increased repairs costs

 Increased procurement costs

 Higher borrowing costs for new developments

 Higher wage costs and pension contributions.

Local Stakeholders

6.41. At a local level, PHA works with a number of community and voluntary sector service providers. These include Connect Community Trust, Re Connect, FARE, RE-Tune, East Area Arts Company, Platform and EHRA, as well as GCC service departments, local schools, John Wheatley College, GHA and Community Police officers. All of these relationships will continue to be important.

Environmental Analysis: SWOT and PESTLE SWOT Analysis (strengths, weaknesses, opportunities and threats)

Strengths Opportunities

 Community based HA means entire focus is on  Diversification/Wider Role Provanhall area  The Connie: widen activities and increase usage  High levels of tenant satisfaction  Joint Working: EHRA  Strong performance by PHA and contractors in core  Balcurvie Rd: improvement of housing and services, e.g. repairs and estate management environmental standards  Financial inclusion services  New build opportunities – Phase 14  Access to local Training & employment services  Possible factoring role in Balcurvie Road / Gardyne  Good area with well-maintained stock Street

 Strong community spirit  EHRA and SFHA membership

 Good reputation of organisation  Green Spaces: Auchinlea Park and proximity to Seven Lochs Wetland Park  Staff commitment and experience, also new staff bring other perspectives  Platform@The Bridge

 Management Committee experience  The Scotland Act: Scottish welfare powers

 Staff/Committee relationship  Services provision to, and from, other organisations

 Staff and committee learning & development  Succession planning opportunities and staff job satisfaction  Scottish Government Local Democracy Review: PHA  Low levels of debt and financially strong or EHRA taking over and running local public services  Membership of EHRA and SFHA

 Scottish National Standards advice accreditation  Community Empowerment (Scotland) Act 2015: taking over land or buildings currently in public  PHA rent levels are among the most affordable in Glasgow ownership

 Wider Role work

Weaknesses Threats

 Organisation size  Austerity measures: impact on tenants (e.g. welfare reform and reductions in local services)  Competition from other HA’s/Mergers  Economic outlook: especially in wake of Brexit  Lack of visible community policing and closure of local police station after office hours  Pensions: future costs and predictability of costs

 Succession planning  Balcurvie Rd: potential for poor conditions to undermine the wider neighbourhood

 New Regulatory requirements and associated costs

 Reduction in Council Service

 Freedom of Information extension to RSL’s: level of information requests

PESTLE Analysis Summary (political, economic, technological, legal and environmental factors)

STRENGTHS/OPPORTUNITIES THREATS/PRESSURE POINTS POLITICAL/LEGAL/REGULATORY

 Scotland Act settlement and increased Scottish  Continued cuts in Housing Benefit powers over welfare policy  Strategic and operational relationships with  Substantial cuts to GCC budgets, and knock-on effects Glasgow City Council for local services

 Extension of Freedom of Information to RSLs

 Frequent change/additions to SHR priorities  Maintaining SHR confidence in PHA  New Regulatory Framework in 2018

 Re-classification of RSLs: proposed legislation  Reclassification of RSLs: existing SHR powers over will help safeguard access to private finance disposals help safeguard RSL assets  May prompt more invasive SHR risk assessments

Scottish Government Local Democracy Review: PHA  Uncertainty caused by Brexit or EHRA taking over and running local public services ECONOMIC

 Scottish welfare powers: direct housing  Tenants currently on Universal Credit and migration of payments to social landlords in Scotland and legacy benefit tenants to UC: impact on tenants’ ability changes to payment timescales to pay rent and PHA’s income stream

 UK Government has stated no further Welfare  Housing Benefit and Universal Credit caps and Reform cuts, beyond those already announced restrictions to maximum of 2 kids plus sanctions

 Other non-devolved benefits: freezing of working-age benefits and reductions in ESA

 Impact of Brexit (e.g. impact of currency stability on procurement costs; impact on private finance availability and terms; increases in inflation and borrowing costs)

 GCC funding of feasibility study for potential  HAG levels further new build in Provanhall.  Higher inflation forecast to 2020 (3.6% in 2018, above Bank of England target of 2%)

 Increases in interest rates are likely to accompany sustained higher inflation

 Increasing regulatory interest in rent increases  Pensions: costs arising from SHAPS and auto- enrolment; impact on PHA balance sheet SOCIAL

 Impact of welfare reform measures on tenants’ incomes  Impact of higher inflation on cost of living for tenants  Demographic change/customer profile. PHA has relatively high proportion of older tenants.  Housing Charter: sustained excellent PHA performance

 Homelessness prevention  Rising demand from GCC for settled and temporary accommodation

STRENGTHS/OPPORTUNITIES THREATS/PRESSURE POINTS

 Quality and quantity of S5 referrals continues to be an issue;  Housing First/Rapid re-housing approach  With partners, PHA provides access to financial inclusion/advice services

ENVIRONMENTAL  PHA has achieved 100% compliance with SHQS  Ensuring EESSH compliance by 2020  Revised EESSH or other environmental standards.  PHA has created a well-maintained safe place to

live.

Conclusions

6.42. All of the factors described in this chapter are potentially significant for PHA’s future strategy and must therefore be monitored and acted upon appropriately. The most important factors include:

External Factors Local Factors

 Continuing to invest in our housing to keep  Performance of the UK economy and the standards high and sustain future demand. economic impact of Brexit; and resulting impacts on inflation, borrowing costs,  The need for Glasgow City Council to address public investment levels, jobs, wages poor quality private housing in Balcurvie and benefits, and the cost of living Road which adjoins PHA’s area of operation and detracts from neighbourhood standards  Welfare reform, especially the roll-out of Universal Credit and the Housing Benefit  Continuing to develop strategies to tackle and UC caps and restrictions to be overcrowding, within the constraints set by introduced in 2019, and the resulting existing house sizes and property turnover. impact on tenant incomes and PHA’s  Addressing deprivation and financial, social future cashflows. and digital exclusion in Provanhall. Although  The Scottish Government’s provision to primarily the responsibility of central and make direct payment to social landlords local government agencies including the new of Universal Credit housing element. Health and Social Care Partnership, PHA can contribute through partnership working and  Changes to the SHR’s regulatory powers external funding for Wider Role initiatives. and approach, introduction of assurance statements.  Consolidating the Association’s role as a community anchor within Provanhall,  Continued deep cuts to Glasgow City supporting and strengthening the community Council’s budgets, and how these will through working closely with public and affect services at community level, voluntary service agencies. especially non statutory services and “spend to save” initiatives.  Developing our thinking on how to respond to the challenges of an ageing tenant population.

6.43. Clearly, the Association’s ability to manage external factors or pressures varies considerably. For example, there is little or nothing that we can do to control interest rates, inflation or government

policy on taxation or welfare benefits. 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. This is addressed further in the Financial Planning chapter of the Business Plan.

6.44. 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.

7. ASSET MANAGEMENT

Overview

7.1. The Association’s main asset management activities are:

 Managing and investing in our existing housing stock.

 Improving the energy efficiency of tenants’ homes, to reduce fuel bills and fuel poverty.

 Building new homes to meet housing need and contribute to regeneration.

 Providing factoring services to home owners.

 Maintaining the external environment and improving standards of neighbourhood management.

7.2. PHA will protect and seek to get the most out of our assets by providing high quality, affordable homes that our tenants want to live in, while maintaining the Association as a viable business.

Stock Profile

7.3. PHA’s rented housing stock is summarised in the following graphs and tables. House Size and Construction Sites as at 31/03/2019

Rent Rent (New (Improved) build) 2apt 19 35 3apt 278 50 4apt 60 24 5+apt 13 9

House Sizes

22 54

2apt 3apt 4apt 5+apt

328

Tenure Profile

Tenure Number of Houses

Social Rent 484

Owner Occupied 37

Temporary Furnished Flat 2

Shared Ownership 2

Lease 1

PFF 1

Grand Total 527

7.4. In summary:

 Three-quarters of the PHA rented housing stock is post-war tenement flats. A comprehensive development programme saw rehab/façade retention (Phases 1- 3) and modernisation contracts in the early 1990’s (Phases 8-12).

 The remaining 25% of the housing stock is new build cottage flats and houses. This includes 5 houses or ground floor flats built to wheelchair standards.

 Two-thirds of the current housing stock has 2 bedrooms.

 Just over 20% of the rented stock has 3 or more bedrooms, which limits opportunities to alleviate overcrowding that exists within smaller properties.

Stock Condition

7.5. Consultants Brown and Wallace were appointed in August 2016 to carry out an up to date stock condition survey (SCS) and 30-year life cycle costings.

7.6. Completed in November 2016, the SCS included a 15% sample of the housing and confirms that our housing is generally in a good state of repair. The SCS takes account of the programmes for maintenance/replacement the Association has carried out on an ongoing basis since 2009. Along with the life cycle costings, the SCS results have been used to develop the major repairs/ replacement programme and the financial base case in the Business Plan.

7.7. PHA also holds a range of other information about the housing stock, for example the asbestos register.

Demand and Stock Performance

7.8. Demand for the Association’s stock is generally good, when compared with the 7 other community- controlled landlords in Easterhouse (EHRA median) and the national average for all social landlords.

7.9. The following table below shows that PHA’s performance on stock turnover, re-let times and lost rental income is significantly better than the averages for all social landlords in Scotland. PHA is performing above the national averages in all areas listed (see commentary in Chapter 8, Housing Services).

Re-letting empty homes: comparative performance (source: ARC data 2017/18)

Provanhall EHRA Average all HA Median Scottish social landlords % of lettable self-contained houses that became 6% 5.75% 8.6% vacant in year % of tenancy offers refused 0% 12.6% 36.0%

% of rent due lost through properties being empty 0.11% 0.18% 0.99%

Average calendar days to re-let properties 7 days 11.7 days 31 days % of new tenancies sustained for more than a year 95.2% 93.2% 87.5%

7.10. The Housing Services and Technical Services teams work together closely to monitor demand for PHA’s housing and to ensure that vacancies are managed efficiently and effectively. In overall terms, the key points from an asset management perspective are that:

 All PHA stock is lettable

 There is good demand for most of our housing

 Some property types/locations take longer to let than others but this is not having a significant impact on the Association, based on relet times and lost rental income

 Our emerging asset management approach is providing useful data about how individual

properties are performing from a cost and management perspective.

Responsive Repairs 7.11. The Association carried out 1,547 repairs during 2017/18, an average of 3.17 repairs per property. Around 33% of all repairs were carried out as emergencies, the rest being carried out using an appointments system.

7.12. In our 2018 tenant satisfaction survey, overall tenant satisfaction with the repairs service was 95% which is among the best in the housing sector. Satisfaction with specific parts of the service was also extremely high:

% Tenants Satisfied with this Aspect of Service 2015 Satisfaction Rating

Arrangements about when repairs would be done 99%

Standard of the Repair Work 95%

Length of time taken to do the repair 97%

7.13. The 2018 Annual Return on the Charter confirms that PHA’s performance is of a very high standard when compared with our local RSL peer group and all social landlords in Scotland. The following table shows that PHA’s 2017/18 repairs performance was better than the national average for all 7 of the measures shown, and better than/or equal to the EHRA median and GHA for all of the 7 measures. Responsive Repairs: Peer Group Comparisons 2017/18 (source: Scottish Housing Regulator, Annual Return on the Charter)

Provanhall EHRA GHA National Average HA Median (all social landlords)

Percentage tenants satisfied with 95.24% 95.52% 85.7% 92.13% repairs service

Average reactive repairs completed 2.89 n/a 3.74 3.6 per occupied property

Percentage reactive repairs 99.48% 97.7% 95% 92.2% completed right first time

Average hours to complete 1.31 hours 2.03 hours 2.8 hours 3.96 hours emergency repairs

Average working days to complete 2.9 days 3.3 days 6.2 days 6.3 days non-emergency repairs

Percentage properties with gas 100% 99.95% 100% 99.8% safety record renewed by anniversary date

Percentage reactive repairs 99.5% 98.58% 100% 95.45% appointments kept

Investment in Major Repairs and Planned Investment

7.14. All PHA properties meet the Scottish Housing Quality Standard, with no exemptions or abeyances. The planned maintenance programme will ensure continued compliance with the SHQS.

7.15. PHA will continue to refine its Investment priorities in line with the Stock Condition Survey and component Life Cycles. We will also invest through a well-established cyclical maintenance programme which includes gas servicing, environmental maintenance, gutter cleaning, external painting and close painting.

7.16. Investment in the Auchinlea Action Area has been a particular priority for the Association. This area, known locally as The Square, consists of 65 properties, 60 of which are owned by the Association. The initiative to make improvements follows consultation with local residents and the Association’s wish to improve stock performance (for example, in relation to letting and re-let times). The works to date have include:  New controlled entry system replacements

 New front and back security close doors  External painting This year works will concentrate on:

 Environmental Works.

New Homes

7.17. The Association has an established development track record, having provided 119 new homes as part of the original Provanhall regeneration.

7.18. As shown in the map below, there is an opportunity to develop an area of land (bounded in yellow), immediately adjoining the Association’s existing stock (bounded in blue):

7.19. PHA has had a long-standing interest in this land and plans to undertake a feasibility study in 2019, to assess the possibility of developing up to 20 units on this land.

7.20. PHA remains committed to seeking a role in the remaining development of Provanhall, since this would help us to:

 Address the blight caused by having large areas of vacant, derelict land immediately adjoining the Association’s housing stock

 Improve housing opportunities in the area

 Meet specific housing needs, especially among existing tenants who need larger homes

 Diversify the type and amenity of houses we have to offer, to balance our stock and better meet the housing needs of our applicants and existing tenants.

7.21. The Scottish Government announced in January 2016 that grant subsidy levels per home will be increased to stimulate new housing provision to meet the Government’s intended target of 50,000 new homes in the current session of the Scottish Parliament. This goes some way towards addressing previous concerns about the financial sustainability of a continued development role.

Improving Neighbourhood Quality in Provanhall

7.22. The City Council has held preliminary discussions with PHA, regarding poor housing and environmental conditions in owner occupied and private rented housing at Balcurvie Road and Gardyne Street, close to PHA’s own housing stock. The Council is interested in developing an approach that would help to tackle these conditions.

7.23. PHA does not have an existing ownership interest in this housing, and will only consider becoming involved if the proposed solutions are fully-funded and risks to PHA are minimised.

Business Plan Priorities

Asset Management Approach

7.24. The Association will be carrying out a review of the performance of our existing stock and will aim to complete this during the lifetime of this business plan. The review will examine factors such as turnover, demand, repairs and void costs, previous and future investment costs, to help identify practical changes we can make to improve stock performance.

7.25. We will continue to use the 2016 Stock Condition Survey and Life Cycle Costings to review our current assumptions about replacement cycles and specifications. There will be internal desktop reviews as necessary to meet changes in regulatory or economic demands.

Major Repairs and Planned Investment

7.26. The main elements of Association’s planned maintenance programme for the period 2019 to 2023 are summarised in the following table:

ITEM PHASE(S)

Boiler Replacements 9, and 6 Kitchen Replacements 6,810,11 Bathroom Replacements 1,2,3,4 Controlled Entry Systems 1, 2, 3,11,12 Smoke Alarms (to new regulation standards) All Paving/Environmental, backcourt fencing, clothes 1,2,3,8,10,11 poles (Auchinlea Road Action Area)

7.27. PHA plans to self-fund this programme, with no requirement to obtain or draw down private finance. This will ensure that PHA has maximum flexibility in the delivery of the programme, for example with regard to the phasing and packaging of works.

7.28. Following on from completion of the SCS and asset management database, we will review and if necessary improve the fit between cash flows and budgets and the planning of maintenance works programmes.

Energy Efficiency and Environmental Sustainability

7.29. The Association is on track to achieve compliance with the Energy Efficiency Standard for Social Housing (EESSH) by 2020 by means of implementing any required energy efficiency improvements through its planned maintenance programme.

Responsive Repairs 7.30. PHA has established a Framework Agreement for trade by trade contractors. Usage and monitoring of the Framework Agreement will be a priority during the period of the Business Plan, to ensure that PHA’s excellent repairs performance levels are maintained at a competitive cost.

New Homes 7.31. The Association was concerned about GCC’s decision earlier in 2016 that all of the large development site adjoining our stock would be developed by GHA.

7.32. However, we remain concerned about the impact that the development could have in displacing Tenants from the Association’s housing.

7.33. The Association will continue to investigate all development opportunities in the area and identify some through annual SDFPs to GCC and DRS.

Procurement

7.34. PHA is aware of, and will comply with, the new requirements arising from the Procurement (Scotland) Regulations 2016, the new EU Procurement Directive 2014/24/EU and the Public Contracts (Scotland) Regulations 2015. We will update our procurement policy and practice accordingly.

7.35. Our Procurement Policy ensures that works/services contracts with a value of £50,000 or more are accordance with current legislation and best practice methods.

7.36. As noted in Chapter 6, the Association will need to be alert to future trends in construction pricing and repairs costs due to external factors such as the cost of imported goods and potential impacts of Brexit. We will monitor both closely.

Scottish National Standards Accreditation for Information and Advice Providers

7.37. PHA secured Scottish National Standards accreditation for information and advice providers in 2010. We successfully re-accredited in 2018. PHA is a Type I Agency which provides: Active Information, Sign-posting and Explanation. Accreditation ensures our tenants and service users receive the best possible information and advice.

7.38. Technical Staff provide information either orally or in writing, sign-posting or referring tenants or service users to other available resources or services, plus explaining technical terms relevant to Technical Services competencies within the quality assurance framework of the standards.

7.39. Specific National Standard competencies relevant to Technical Services are:

Housing Specific Competencies Reference

Disrepair in Rented Housing 2.4 Statutory Tenancy Rights 2.14 Repair and Improvement Grants 2.15

8. Housing Services Services Provided by the Association

8.1. PHA’s tenancy, property and neighbourhood management services include:

 Resident communications and relationships

 Housing applications and lettings

 Rent collection

 Responsive and void repairs

 Estate management inspections and follow-up actions

 Visits to new tenants to help them settle in to their homes

 Visits to existing tenants to carry out a property inspection plus raise awareness of issues like house contents insurance and highlight the range of services provided locally

 Tenancy management and sustainment, including dealing with tenancy permission requests, breaches of tenancy conditions, antisocial behaviour and pursuing rent arrears

 Welfare Rights, financial inclusion, money advice and information

 Promoting tenant participation and involvement

 Working with other service providers to maintain and the quality of the local environment

 Liaising with service providers working with tenants who have care or support needs

 Property factoring

 Customer complaints and follow-up actions

Lettings and Demand

8.2. PHA has been successful in sustaining good levels of demand for our housing, as shown below:

2015/16 2016/17 2017/18

Annual Turnover of Houses (tenancies ended as % of all houses) PHA 7% 6% 5% Easterhouse Average 8% 6% 5% National Average 9% 9% 9% Average Number of Days to Re-let Empty Properties PHA 7 days 4 days 7 days Easterhouse Average 10 days 10 days 11 days National Average 35 days 31 days 30 days

8.3. The table shows that:

 PHA tenancies given up each year have been below the national average level for all social landlords in each of the last 3 years, and is reducing, confirming that Provanhall is a relatively stable neighbourhood

 PHA performs very strongly in re-letting empty properties quickly compared to both the average for EHRA landlords and national average for all social landlords, demonstrating that we have good levels of demand for our housing

8.4.1 For all lets made by PHA in the 5-year period from 2014/15 to 2018/19:

 An average of 55% of lets per annum (internal transfers and the housing list) were made to Provanhall residents.

 The proportion of lets to Provanhall residents since 2011/12 up until 2017/18 has remained fairly similar with an average of 57%. However lets to Provanhall residents reduced to 36% during 2018/19 as many of our internal transfers opted to wait until Phase 13 new builds and domino effect voids due 2019/20.

8.4.2 In relation to refusal of offers, a verbal acceptance of an offer will always precede a written offer. Therefore ARC figures for comparison are no longer relevant as includes only refusal of written offers and not refusal of verbal offers. For example, PHA ARC figures for ‘percentage of tenancy offers refused during the year’ for both 2017/18 and 2018/19 are 0%. For this reason, it is important for information and monitoring purposes we continue to report to Management Committee refusals of verbal offers information and reasons. During 2018/19:

No. of Verbal Tenancy Offers 41

No. of Verbal Tenancy Offers Refused 13 % of Verbal Tenancy Offers Refused 32%

Refusal Reasons during 2018/19:

Refusal Reasons No. of Refusals Too small 1 Not ready to move 1 Section 5 refusal 2 Failed to attend sign-up 1 Unable to move currently 1 Wants particular house type 1 Condition of Close 2 Too much décor required 2 Road too busy 1 Not interested 1 Total 13

Some of the reasons in the table on the previous page are outside PHA’s control. House, close or street condition refusals are more common in certain blocks of tenement housing purchased from GHA.

8.4.3 There continues to be issues with Section 5 referrals being made to the Association for homeless households who have either not selected Provanhall as an area choice or are not particularly interested in Provanhall. This can have a significant impact on whether offers are accepted and, if so, prospects for tenancy sustainment.

8.5 In relation to tenancy sustainment, PHA ensures that all termination reasons are properly recorded, monitored and actioned as required. These can provide an early warning of any emerging changes in demand. From 2006/07 to 2018/19, our analysis provides the following consistent picture:

Tenancy Terminations Tenancy Terminations Most Frequent Reasons Least Frequent Reasons

% of All % of All Reason Terminations Reason Terminations Problems with Transfer 18.6% neighbour 2.8%

Move to other area 16.4% Tenancy Problems 2.8% Fleeing violence/harassment 11.9% Bought / Buying 2.8%

Deceased 11.19% Eviction 2.3% Medical reasons 6.8% No reason given 2.1% Moving in with family/friends 6..6% Move to larger home 1.7% Other 4.5% Move to smaller home 1.1%

Debt Problems 3.6% Overcrowding 1.1%

Abandonment 3.4% Aspirational 0.4%

8.5.1 The following table provides details of the reasons for Internal Transfer tenants moving home between 2012/13 and 2018/19: Internal Transfer Termination Reasons % of All Reasons Terminations

Neighbour/ASB reasons 12.3%

Medical 29.8%

Aspirational 17.5% Overcrowded 12.3%

Under-occupying 15.8%

Bedroom Tax 12.3% TOTAL 100%

PHA’s rate for sustaining new tenancies is consistently better than the average for all Scottish landlords:

2015/16 2016/17 2017/18

Tenancy Sustainment Rate PHA 83% 94% 96% Easterhouse Average 90% 94% 93% National Average 88% 89% 88%

8.5.2 Termination reasons can often be positive for tenants such as moving to a ground floor property for medical reasons, an aspirational move to have a garden for children or to move in with a partner or to buy a home etc. Unfortunately such termination outcomes for the tenants involved is not recognised in the method for reporting tenancy sustainment in the ARC.

8.6 Overall, PHA has good levels of demand for its housing. We will continue to give priority to managing the housing stock and the local environment to a high standard in order to sustain this.

Service Delivery Performance

8.7 Appendix 4 shows PHA’s performance across a wide range of service delivery measures, comparing our results with other housing associations in Easterhouse (EHRA members); with GHA (which also owns housing in Provanhall); and with the average performance for all social landlords in Scotland (local authorities and RSLs).

8.8 Overall, the results show that PHA is a top performer in most aspects of service delivery, with our 2017/18 ARC results in the top quartile (top 25%) for all social landlords in Scotland for 75% of performance areas tested (see Chapter 10, Value for Money).

Tenant Satisfaction

8.9 PHA’s most recent tenant satisfaction results (2018) are described in detail in Chapter 10, Value for Money. PHA is in the top quartile of all social landlords in Scotland for all 9 satisfaction measures reported on in the 2018 ARC.

8.10 While there has been a reduction in satisfaction in some areas, PHA’s results are generally substantially better than the average performance being achieved throughout the housing sector as a whole.

8.11 Housing Costs

8.12 72% of PHA tenants received help with their rent through either Housing Benefit or Universal Credit during 201718. 28% of PHA tenants received no help with their housing costs.

PHA Tenants Receiving Housing Costs 2017/18

% of Tenants NOT receiving Housing Costs

% of Tenants receiving Housing Costs

0% 10% 20% 30% 40% 50% 60% 70% 80%

8.13 The following graph illustrates the level of tenants receiving help with their housing costs in 2017/18, compared with the average for all 8 EHRA members and GHA.

Tenants Receiving Housing Costs 2017/18

% of PHA Tenants

% of EHRA Tenants

% of GHA Tenants

50% 55% 60% 65% 70% 75% 80%

8.14 In December 2018, 81 PHA tenants (16%) had their Housing Benefit or Universal Credit reduced by 14% or 25% as a result of the Bedroom Tax. 71 of these 81 tenants (88%) were under-occupying by one bedroom and had a 14% reduction. 10 of these 81 tenants (12%) were under-occupying by two bedrooms and had a 25% reduction. Scottish Government funding continues to protect all affected tenants.

8.15 The UK Government’s Welfare Reform measures will continue to be a threat to PHA’s rental income stream by affecting tenants’ ability to pay their rent and potentially sustain their tenancy:

 Benefit freeze - working age benefits frozen at 2015 rates for 4 years from 2016 until 2020.

 Benefit Cap – in December 2018, 3 PHA tenants were affected by the Benefit Cap.

 Two-child limit – child element benefit payments restricted to the first two children for children born after 6th April 2017.

 Universal Credit initial payment - claimants continue to wait for a period of 5 weeks after making a claim before receiving their first payment of Universal Credit. Bad publicity regards the effect on claimants and correlation in increased foodbank use, forced the government to make the following changes in 2018 and 2019: extension of Housing Benefit for an additional 2 weeks, increasing the level of advance payments up to 100% of estimated entitlement, extending

repayment period for advance payments to 12 months, reduction in maximum repayment deduction rate for advance payments down to 30% and increasing work allowances.

 Universal Credit housing element – paid direct to the tenant unlike housing benefit which was paid direct to the landlord

 Universal Credit Full Digital Service - was extended to all of Glasgow in December 2018. All claimants of existing benefits affected will migrate to Universal Credit by December 2023.

 The most direct risks to PHA’s rental income stream are the Bedroom Tax (currently mitigated by the Scottish Government); any further capping or reducing of Housing Benefit; government intervention to reduce rents on an arbitrary basis (as has occurred in England); and payment of the housing costs element of Universal Credit to the tenant.

 Universal Credit Scottish Flexibilities - the Scottish government introduced mitigation choices for Scottish claimants including fortnightly payments and direct payments to landlords.

8.16 The Scottish Government introduced mitigation choices for Scottish Universal Credit claimants and landlords in 2018. These choices include fortnightly payments to claimants and direct payments of housing element to landlords.

8.17 Welfare Rights and Financial Inclusion Services

8.18 PHA attaches the highest importance to ensuring that tenants have access to local and readily accessible welfare benefits and financial inclusion services.

8.19 PHA, along with Blairtummock HA and Gardeen HA, directly funds an Income Advisor post provided by Connect Community Trust. The Income Advisor is based two days per week in the office providing money and benefits advice services.

Tenant and Resident Involvement

8.20 PHA’s primary methods of tenant engagement are via the newsletter and public consultation events held for major policy reviews. We are also working with a Youth Sub Group, with the aim of embedding this in our formal committee structures.

8.21 In PHA’s 2018 tenant satisfaction survey, 98% of respondents said they were satisfied with the Association’s performance in keeping them informed and with the opportunities provided for participation.

Scottish National Standards Accreditation for Information and Advice Providers

8.22 PHA secured Scottish National Standards accreditation for information and advice providers in 2010. We successfully re-accredited in 2018. PHA is a Type I Agency which provides: Active Information, Sign-posting and Explanation. Accreditation ensures our tenants and service users receive the best possible information and advice.

8.23 Housing Services staff provide information either orally or in writing, sign-posting or referring tenants or service users to other available resources or services, plus explaining technical terms relevant to Housing Services competencies within the quality assurance framework of the standards.

8.24 Specific National Standard competencies relevant to Housing Services are:

Housing Specific Competences Reference

Rent Arrears 2.1 Universal Credit for housing costs and Housing 2.3 Benefit Advisor competencies Housing Options 2.5 Discrimination in Housing 2.6 Eviction 2.7 Antisocial Behaviour 2.8 Harassment and Illegal Eviction 2.9 Homelessness 2.10 Relationship Breakdown 2.11 Rent: Private Sector 2.12 Security of Tenure 2.13 Statutory Tenancy Rights 2.14

Money and Welfare Benefits Related Advice Reference Competences – Foundation Knowledge

Administrative Structure of the Benefits and Tax 3.1 Credits Systems National Insurance Scheme 3.2 Claims and Backdating 3.3 Decision-Making, Disputes and Appeals 3.4 Benefit and Tax Credit Overpayments 3.5 Assessment, Initial Decision-Making and Holding 3.6 Activity in Debt Cases

Money and Welfare Benefits Related Advice Reference Competences – Specialist Areas

Means-Tested Benefits 4.1 Universal Credit 4.2 The Social Fund and the Scottish Welfare Fund 4.4 The Impact of Work on Benefits 4.5 State Retirement Pension 4.7 Personal Independence Payment, Disability Living 4.8 Allowance and Attendance Allowance

Jobseeker’s Allowance 4.13 Financial Statements 4.20 Identifying and Agreeing Options in Debt Cases. 4.22 Bankruptcy and Trust Deeds 4.25 Utility Debts 4.28 Rent Arrears 4.30

Housing Services: Business Plan Priorities 2019/2020

Welfare Reform

8.25 Priority action during 2019/20 will include:

 Ongoing implementation of PHA’s plans to manage and mitigate the effects of Housing Benefit and Welfare Reform changes

 Developing further mitigation measures and maximising agency referrals to protect tenants’ income and financial resilience.

 Increasing the number of partners PHA works with - looking at prevention of debt and money management in particular.

 Monitoring the wider policy and legislative environment, UK Government policy announcements, and the Scottish Government’s detailed provisions for payment of housing costs direct to social landlords under Universal Credit.

Access to Housing

8.26 Priority actions during 2019/20 will include:

 Maintain Lettings Plan percentage of Section 5 referral applicants rehoused  Work in partnership to implement and review Rapid Rehousing and Housing First to help reduce and end homelessness

Income/Benefit Maximisation and Financial Inclusion

8.27 Priority actions during 2019/20 will include:

 Ensuring provision and/or referral to money and benefit support services to maximise benefit entitlement and protect tenant incomes via Connect Income Advisor & Peoples Gateway Officers (job club, UC surgery), GCC support (local UC hubs), DWP support (PBS support etc.), Fairer Together (money & debt management). Rent Management and Debt Recovery

8.28 Priority actions during 2019/20 will include:

 Ensuring no increase in tenant rent arrears, or to further reduce if possible after reduction in 2018/19, following UC Full Service roll-out in December 2018 and continuing migration to UC

 Reducing former tenant arrears through effective repayment management and pro-active and efficient use of debt recovery services Local Environment

8.29 Priority actions during 2019/20 will include:

 Assisting Technical Services to assist in implementing Auchinlea Action Area improvements

 Finalise transfer of remaining two GCC retained sites within PHA area of operation

. 9 Wider Role Activities

Inequality and Lack of Opportunity in Provanhall

9.5 Provanhall is a relatively stable neighbourhood, with a good sense of community. However, poverty, welfare reform impacts, addictions, poor health and social inequalities affect many people living in the area.

9.6 Data from the 2016 Scottish Index of Multiple Deprivation (SIMD) provides powerful evidence about many of the issues that need to be tackled to reduce inequality and to improve opportunity and wellbeing:

27% of working age adults in Provanhall are “employment deprived”, while around one-third of all Provanhall residents are “income deprived” (1)

 Provanhall has among the worst levels of employment and income deprivation in the whole of Scotland.

 One of Provanhall’s two SIMD datazones is in the 5% most deprived datazones in Scotland for both employment and income, while the other Provanhall datazone is ranked in the 10% most deprived for both measures.

 Many Provanhall residents who are in work are in low-paid and often insecure jobs.

Provanhall is in the 5% most deprived of all small areas in Scotland for the SIMD education domain

 Provanhall has poor results for school pupil attendance and attainment.

 The area has a high number of adults with no qualifications, and low numbers of young people enrolling in full-time higher education.

 Over 20% of young people aged 16-19 in Provanhall are not in education, employment or training.

(1) The SIMD calculates “employment deprivation” using an area’s population, the unemployment claimant count for the last year, and the number of people of working age receiving certain benefits such as Incapacity Benefit, Employment and Support Allowance and Severe Disablement Allowance. “Income deprivation” is based on the number of people receiving income-based benefits and tax credits, and takes account of the number of children living in income-deprived households.

Provanhall is in the 5% most deprived of all small areas in Scotland for the SIMD health domain

 Provanhall’s two SIMD datazones have Comparative Illness Factor scores of 270 and 220 respectively (1). This indicates that a high proportion of residents receive disability- or sickness- related benefits. In contrast, the median CIF score for all datazones in Scotland is 90.

 One Provanhall datazone has a high level of hospital admissions relating to alcohol and drug misuse. The second datazone is well below the Glasgow average for alcohol-related admissions but well above the city average for drug-related hospital admissions.

 Both Provanhall datazones have high levels of people being prescribed medication for anxiety, depression or pyschosis (29% in one Provanhall datazone, 25% in the other datazone). The average (median) result for all Glasgow datazones is 20%.

 The SIMD results reinforce PHA’s own knowledge of poor health among our tenants. In our 2018 tenant survey, 42% of PHA tenants told us that they or a member of their household had a long- term health problem or disability that limited their daily activities or the work they could do.

 PHA has an above average proportion of older tenants and will – along with all other providers of public services – face new challenges in the future as a result of an ageing population.

PHA’s Wider Role Work in the Community

9.7 Alleviating these issues for our tenants and residents is a key purpose of our wider role work, and also makes sound business sense for PHA. Creating a stable, sustainable community where people have access to services and opportunities is critical to the continued success of PHA’s primary role as a social landlord.

9.8 “Wider role” refers to activities by PHA that go beyond housing provision and management and seek to improve the social and economic circumstances of the Provanhall community. PHA’s wider role remit is to support, promote and instigate regeneration and community development activity, working for the benefit of the entire community. In fulfilling this remit, PHA seeks to complement rather than replace the role of statutory service providers.

9.9 PHA is well-placed within the area to act as a catalyst for attracting investment and for supporting the development of services that meet the needs of the community. Recent examples of activities we have supported or enabled in this way include:

 Increasing the uptake of benefits

 Debt management advice

 Fuel poverty advice

 Supporting flat pack meals

 Reducing worklessness, through a local Job Club

(1) The Comparative Illness Factor is a combined count of the total number of people receiving one or more of Disabled Living Allowance (DLA), Attendance Allowance, Incapacity Benefit (not receiving DLA), Employment Support Allowance and Severe Disablement Allowance.

 Improving financial capability for low-income households

 Increasing the number of people taking up volunteering opportunities

 Improving digital inclusion

 Youth clubs

 Supporting furniture recycling project.

 Reducing social isolation

Business Plan Priorities 2019/20

9.10 As a mature organisation with professional staff, office resources, relationships with partner organisations and a strong management committee of local people, PHA is well placed to further develop our existing wider role activities to help improve services for local residents.

9.11 We are a small organisation whose primary responsibilities are delivering housing and related services to our tenants. For this reason, we envisage that PHA’s wider role contribution will continue to be based primarily on supporting others to develop and deliver services (for example, by helping to raise funding, or by providing organisational and capacity building support).

9.12 One of our priorities during 2019/20 will be to review PHA’s current Wider Role Strategy to make sure the strategy is aligned with:

 Maintaining PHA’s existing commitment to tackling child poverty and social isolation

 The views of the community (following on from 2018 TSS survey)

 The priorities set by Community Planning and the City Council

 The priorities of potential funders, such as the People and Communities Fund and Big Lottery

 The views of partners working on the ground in Provanhall, including voluntary organisations.

9.13 In developing the new Strategy, we anticipate that:

 Tenants and other residents will continue to have access to local services for welfare benefits advice, debt advice and wider financial inclusion services.

 PHA will support other local groups and charities able to assist us in achieving our aims and preferred outcomes for Provanhall.

 The Management Committee will set an annual budget to provide modest levels of direct financial support for local activities and groups (budget £20,000 for 2019/20).

 PHA will continue to work with Connect Community Trust to deliver a programme of local initiatives and services.

9.14 Another priority during 2019/20 will be to forge closer relationships with public sector partner agencies, with the aim of bringing their service delivery closer to local people in Provanhall.

9.15 One possible option we will explore is developing PHA’s office to become a neighbourhood hub,

enabling other agencies to have a part-time physical presence in Provanhall which will also provide better access for local residents wishing to use their services. We have held initial discussions with the City Council and others about how joint working could enable pressured budgets to be used to best effect, and we will develop these conversations further in the year ahead.

9.16 We will also seek to address social isolation amongst our older population as a priority. We foresee this as being an enabler role rather than the Association being a direct provider of services, this is due to the large number of services/facilities that already exist in the area.

10. Value for Money

10.1. PHA’s approach to achieving Value for Money (VFM) is based on:

 Providing our tenants with affordable, high quality homes and services.

 Working efficiently, so that we make the best use of our assets and resources and can maintain rents at an affordable level without having cuts to service levels.

Current Performance: Costs and Resources

10.2. PHA has maintained last year’s achievement of having lower management and maintenance costs than our EHRA peer group and GHA.

10.3. We spent less on essential planned maintenance in 2017/18 than in the previous year (£223 per unit, compared with £293 per unit in 2016/17). This is simply a reflection of when planned works were due to take place, rather than any other factors.

10.4. In contrast, year on year comparisons are relevant for reactive repairs and for the Associations own management costs. Our reactive repairs spend rose in 2017/18. 10.5. Per Unit Management and Maintenance Costs 2017/18

Provanhall EHRA Glasgow RSL National

HA Median HA Average Management & maintenance £988 £1198 £1184 £n/a admin. (£) Planned maintenance (£) £223 £347 £408 £n/a

Reactive maintenance (£) £369 £397 £718 £n/a

Total direct maintenance (£) £592 £744 £1126 £n/a Total management & £n/a £1580 £1942 £2310 maintenance (£)

Source: Scottish Housing Regulator, Report on Audited Financial Statements Returns for 2017/18 EHRA median only uses data for 7 of the 8 members as one Association’s data was unavailable.

10.6. Compared with our peers, PHA has low staffing costs. The following graph shows staff costs as a

percentage of PHA’s turnover in 2017/18. PHA’s results compare very favourably with the EHRA peer group, GHA and all RSLs in Scotland. The same conclusion applies to the net surplus that PHA generated in relation to turnover, also shown in the graph. PHA comfortably achieved the optimum result of low staff costs accompanied by a high operating surplus.

35 30 25 20 15 Staff Costs to turnover 10 (%) 5 Net Surplus/(defecit) (%) 0 Provanhall EHRA Glasgow RSL -5 HA median HA National -10 Average -15 -20

Provanhall EHRA Glasgow RSL National HA median HA Average Staff Costs to turnover (%) 17.4 18.57 31.1 Net Surplus/(deficit) (%) 14 18.15 -13.5 Source: Scottish Housing Regulator, Report on Audited Financial Statements Returns for 2016/17

10.7. PHA also manages its houses with fewer office-based staff per house, further illustrating the efficiency of our service delivery. 10.8. Number of homes managed, per member of office based Staff:

Source: ARC database 2017/18 (total self-contained units, divided by number of office-based staff)

Value for Money in Providing Services

10.9. Appendix 4 contains a 3-year analysis of PHA’s performance for the period 2016/17 to 2018/19 as well as a Value for Money Scorecard for 2018/19.

10.10. The Scorecard compares PHA’s performance on a wide range of value for money indicators with other EHRA members, GHA and all social landlords in Scotland. The Scorecard addresses the following aspects of value for money:

 Value for tenants and service users  People measures  Business and financial measures  Process measures.

10.11. To summarise the 2018/19 Scorecard results, PHA’s performance was:

 Better than the national average for 36 out of 37 measures reported on (97%)

This pattern is very similar to the previous two years, with PHA demonstrating consistently showing strong performance over the period.

10.12. The Scorecard results indicate that PHA’s performance is particularly good in the following areas:

Tenant satisfaction Low staffing numbers Low rents which Average rent with PHA overall and relative to number of tenants regard as increases in each of with all major service houses owned and good value for money the last 3 years areas managed

PHA communications Speedy and Empty houses let and opportunities to Tenants satisfied with responsive repairs quickly, with minimal participate meet their homes service that is valued loss of rental income tenant expectations highly by tenants

High standards of All existing housing Complaints handled neighbourhood Low levels of evictions meets the SHQS promptly management

10.13. Overall, Provanhall Housing Association is achieving a very high level of performance in comparison with our peers and with all Scottish social landlords. When set alongside the financial data about our service delivery costs and the 2018 Tenant Satisfaction Survey results, PHA’s value for money profile is one of excellent performance, low costs and high value for tenants.

Improving Tenant Satisfaction

10.14. The following table shows the headline results from PHA’s most recent full tenant satisfaction survey in 2018, compared with the results of the previous survey in 2015.

2015 2018 Improvement Overall satisfaction with PHA services 96% 94 % -2%

PHA performance in keeping tenants informed is 100% 98% -2% good or very good

Satisfaction with opportunities to participate 100% 97 -3% provided by PHA

Satisfaction with quality of home 97% 89% -8%

Satisfaction with repairs and maintenance service, 97% 95% -2% among those who had reported a repair in last 12 months

To what extent does rent represent good or very 91% 88% -3% good value for money

Satisfaction with PHA’s management of the 99% 98% -1% neighbourhood

10.15. While there has been a reduction in satisfaction in some areas, PHA’s results are generally substantially better than the average performance being achieved throughout the housing sector as a whole. The results also raise some questions, for example in deciding how satisfaction results at or approaching 100% can be sustained or improved upon, and whether resources should be targeted to achieve this.

10.16. PHA is now implementing an action plan in response to the survey findings, with the main actions shown below.

 Satisfaction with the quality of the home

 Value for money of the rent charge

 GCC action on problems with the neighbourhood.

Rents and Affordability

Guiding Principles

10.17. The Association’s approach to rent-setting is based on:

 Keeping rents affordable to tenants who pay some or all of their rent themselves (e.g. working households and pensioner households receiving occupational pensions)

 Keeping rent increases to the minimum needed to provide high quality services and homes, in line with tenants’ expectations

 Comparing our rent levels with those of other housing associations

 Making sure PHA has sufficient income to meet its obligations to tenants and funders, as well as headroom to manage future financial and economic risks.

Current Rents and Rental Comparisons

10.18. The following table shows 2018/19 average weekly rents for all EHRA members. The last 2 rows show the EHRA average (median) rent for each house size and PHA’s ranking among EHRA members.

1 Apt 2 Apt 3 Apt 4 Apt 5+ Apt

Blairtummock HA £43.15 £64.44 £71.46 £82.32 £88.91

Calvay HA £51.22 £66.94 £71.05 £77.93 £94.06

Easthall Park HC £40.52 £64.84 £67.30 £81.76 £89.22

Gardeen HA NULL £60.55 £69.58 £74.94 £89.97

Lochfield Park HA NULL £67.90 £75.15 £84.86 £92.44

Provanhall HA NULL £60.45 £66.36 £80.15 £90.03

Ruchazie HA NULL £65.91 £71.92 £74.47 £82.89

Wellhouse HA NULL £66.04 £71.68 £80.93 £91.48

EHRA Average (Median) £44.96 £64.63 £70.56 £79.67 £89.88

PHA Rank in EHRA (1 to 8) n/a 1 1 4 5

10.19. PHA average rents are lower for 2 apt and 3 apt house sizes (78% of PHA stock) than those of EHRA members (median). So 78% of our tenants pay less rent than other EHRA landlords. PHA average rents for 2017/18 are also lower for all our stock than those of GHA (also a landlord in Provanhall) and the national average for all social landlords in Scotland:

2017/18 Rents GHA Scottish Average PHA weekly rents lower by PHA weekly rents lower by 2 apartment £14.85 £14.79 3 apartment £14.86 £10.62 4 apartment £15.09 £3.77 5+ apartment £14.61 £3.26

Average rent levels at 31/03/2018 (2018 ARC) 100

60 Provanhall HA 50 EHRA median 40 Scottish Average 30

0 2 apt 3 apt 4 apt 5+ apt

2017/18 Rents 2apt 3apt 4apt 5+ apt

Provanhall HA 58.55 64.33 77.62 87.11

EHRA median 62.66 68.03 76.80 88.12 Scottish Average 73.34 74.95 81.39 90.37 10.20. PHA rents are also considerably lower than local private sector rents, with PHA also providing a higher standard of accommodation and management. The local private rented market in Easterhouse frequently involves very poor property and management standards, as is seen in our own area of operation in Balcurvie Road. Recent advertisements indicate that rents in Easterhouse for 2 bedroom flats have been in the range £425 to £595pcm, while 3 bedroom flats were in the range £470 to £500+pcm.

10.21. Overall, PHA has given high priority to restricting rent increases, while also continually improving services and investing in tenants’ homes. Maintaining this balance will continue to be a priority, with new challenges to be met as a result of rising inflation and the uncertain economic outlook stemming from Brexit and other factors.

Affordability Assessment

10.22. Historically, the Association used the SCORE system to gather data and test affordability. The SCORE definition of affordability was that households with a member in full-time work should not require Housing Benefit to pay their rent. The Association consistently achieved 100% compliance with this measure. More recently, the Association has used The Scottish Federation of Housing Associations’ ‘Affordability Tool’ which measures both income and rent levels for every local authority in Scotland. Based on the moderate income of different household types in each area, this tool assesses the % of income different households spend on rents in each area. Based on Glasgow City measures, we are pleased to report 100% of our rents for all different household types and sizes meet the most affordable measure; less than 25% of income being spent on rent. Affordability is now a major issue for the working poor on low wages and/or uncertain hours. Many are unable to afford rent without access to benefits and tax credits.

10.23. The Scottish Government publishes projected social rent benchmarking assumptions each year. For 2018/19 this was £80.94 per week, based on a 3 bed spaces. PHA rents are below this level, for both 2 and 3 apartment homes. During 2018/19, PHA’s average weekly rents were £60.45 (2 apartment) and £66.36 (3 apartment).

10.24. To further test affordability, the Association has modelled its proposed rents for 2018/19 for 10 common household types, including 6 working household types and 4 pensioner household types. The results are shown in the table overleaf.

10.25. This analysis suggests that affordability ratios based on 2018/19 rent levels are within reasonable limits (below 25%) for all of the household/income scenarios shown, except for the two single person household types.

10.26. 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.

10.27. Further challenges lie ahead for households who are not in work, due to UK Government measures that will make real terms cuts to some types of benefits and cap help with housing costs for single people aged under 35 with no dependents to the LHA rate for a single room in shared accommodation (from 2019).

Rent Affordability Tests, Based on Proposed PHA Rents 2018/19 Analysis shows household income and rent left to pay after any Housing Benefit payable

The Scottish Federation of Housing Associations’ ‘Affordability Tool’ measures both income and rent levels for every local authority in Scotland. Based on the moderate income of different household types in each area, this tool assesses the % of income different households spend on rents in each area. Using a traffic light report: green (less than 25% of income is spent on rent) amber (between 25% and 30% of income is spent on rent) red (more than 30% of income is spent on rent)

Based on Glasgow City measures, 100% of our rents for all different household types and house sizes are assessed as: green (less than 25% of income is spent on rent).

Our individual assessments are even more affordable; the % of income different households spend on our rents range from just 10.5% to a maximum of 23%:

Bedroom Size Household Type % of Income Spent on Rent 1 bedroom Single Person 20.90% 1 bedroom Couple 13.90% 1 bedroom Couple 2 x FT 10.50% 1 Bedroom Pensioner 19.00% 1 Bedroom Pensioner Couple 13.90% 2 Bedroom Single Person 23% 2 Bedroom Couple 15.30% 2 Bedroom Couple 2 x FT 11.50% 2 Bedroom Pensioner 20.90% 2 Bedroom Pensioner Couple 15.30% 2 Bedroom Single Parent & 1 Child 17.70% Single Parent & 2 2 Bedroom Children 14.40% 2 Bedroom Small Family (2 children) 10.90% Single Parent & 2 3 Bedroom Children 17.30% 3 Bedroom Small Family (2 children) 13.20% 3 Bedroom Large Family (3 children) 11.50% Single Parent & 2 4 Bedroom Children 19.40% 4 Bedroom Small Family (2 children) 14.80% 4 Bedroom Large Family (3 children) 13.00%

Based on Moderate Incomes (ASHE 30th).Moderate incomes are calculated based on the 30th percentile for each local authority, which is above housing benefit eligibility.

Tenant Feedback on Value for Money

10.28. Compared with other landlords locally, and with the national average, PHA tenants have more positive views about:

 Whether their rent represents value for money  The overall service provided by the Association.

Percentage tenants who feel that their rent offers value for money.

89% 88% 88%

87% 86% 86% Provanhall Housing 85% Association EHRA 84% 83% 83% Scottish average

82%

81%

80% Provanhall Housing EHRA Scottish average Association

Future Value for Money Priorities

10.29. PHA’s priority areas during 2019/20 for reviewing and if possible improving value for money are as follows.

2019/20 VFM Priorities Value for Tenants and Service Users

Minimise future rent increases  Conduct tenant consultation on 2020/21 rent increase

 Benchmark PHA rents locally and nationally Maintain investment in tenants' homes and  Assess the impact that rent review proposals neighbourhoods/current will have on different household types services  Track wider economic factors, for example if rents, food and energy costs rise more quickly than income levels Sustain resident satisfaction  Continue to implement Tenant Satisfaction Survey Action Plan

Promote resident involvement

2019/20 VFM Priorities Business and Financial  Further develop asset management planning, based on 2016 stock condition survey and other data Asset management  Further strengthen linkages between maintenance planning and financial planning

 Viability and VFM assessment of undertaking Agency services: finance an additional development phase.Conduct spending reviews in selected business areas where improvements in service quality and/or reductions in costs may be achievable (e.g efficiency of landscape maintenance; New development decisions about welfare/money advice service)

Spending review: procurement

11. ORGANISATIONAL RESOURCES AND DEVELOPMENT

Location & Premises 11.1. The Association occupies premises in Conisborough Road, in the heart of our area of operation. This helps ensure that our staff have a high level of contact with tenants and what is happening in our housing stock and the local community.

11.2. The building is fully compliant with the Disability Discrimination Act, and will meet the Association’s requirements well into the future.

Human Resources 11.3. Staffing numbers are shown below, with the full staffing structure shown in Appendix 1.

Number of Staff Full Time Equivalent Posts 9 8

11.4. The Director is responsible for ensuring consistent HR management standards throughout the organisation, in relation to recruitment, absence management, training assessment and provision, health and safety management, staff performance management, discipline and grievance. The Housing Services Manager and Technical Services Manager assist with the implementation of these tasks.

11.5. The Director also advises and supports the Management Committee, in its role as employer.

11.6. The Association is a full member of EVH, operating in accordance with EVH Terms and Conditions.

Learning and Development 11.7. The Association uses a Staff Appraisal process to review, support and develop staff performance. The Association has a longstanding commitment to learning and development.

Staff Remuneration 11.8. Salaries are based on the EVH salary scales, set through collective bargaining between EVH (as the body representing employers) and the trade unions.

11.9. The Association is a member of the Scottish Housing Association Pension Scheme (SHAPS), with final salary pensions currently offered to all employees. 8 staff are in the SHAPS pension scheme. 4 staff joined the SHAPS DC scheme, while 4 are in the final salary DB scheme.

11.10. Total employer contributions to the pension scheme are factored into the Association’s future cashflows (Appendix 2 of the Business Plan). This includes Past Service Deficit (PSD) payments in respect of SHAPS, which are assumed to continue until 2022. The Association’s total future liabilities are stated in the audited accounts.

11.11. The short-term risks associated with continued membership of SHAPS have reduced considerably, following the 2015 actuarial review. The scheme deficit has reduced substantially since 2012, enhancing affordability of the scheme to the Association and reducing the risk of other scheme

members leaving. The Management Committee will continue to fully assess the risks and options available to it in respect of the SHAPS scheme, with independent advice and support from EVH or an independent pension’s specialist.

ICT Systems Hardware 11.12. The Association updated its IT hardware in 2016. The main server was replaced in 2014 and is replaced of a regular basis to deal with the demands of our systems. Senior Staff have access to Ipads for remote and on site working. The Association uses SDM and Kypera housing software and internet banking. A contract for software support and IT back up is in place.

Disaster Recovery 11.13. As part of its business continuity plan, the Association has appropriate disaster recovery options in place. These include agreements to use the offices and ICT equipment of neighbouring housing associations, in the event that our office or systems cannot be used for any reason.

Procurement 11.14. The Association seeks to obtain value for money in its procurement of goods and services while complying with all relevant legislation.

11.15. Our obligations have recently changed as a result of the commencement of the Procurement (Scotland) Regulations 2016, the new EU Procurement Directive 2014/24/EU and the Public Contracts (Scotland) Regulations 2015. The Association will ensure that it complies with these new obligations, and will take steps to ensure that our procedures and practice minimise the risks of challenge by potential contractors or suppliers.

Business Plan Priorities

11.16. The Association’s main priorities during 2019/20 will include:

 Assess and develop our use of mobile IT solutions, to make the best use of staff time and resources  Feasibility study for phase 14  Develop our Tenant Participation and wider role work in the area, with partner organisations  Look at social isolation  Asset Management  Succession Planning  Community grants for local youths to promote further education/training.

12. Strategic Risk Assessment

12.1. The Strategic Risk Register (see Appendix 5) describes the major risks that may affect the Association’s overall strategy and priorities.

12.2. The Register follows HM Treasury guidance by quantifying each risk in terms of inherent risk (the 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.

12.3. The following table describes the 10 strategic risks we have scored most highly during the business planning process (residual risk score of 35 or more). The Strategic Risk Register provides a full description of the controls that are already in place and of the additional measures to be implemented in future.

Strategic Risk Residual Risk Rating and Score 1) Loss of rental income due to Welfare Reform measures or housing High benefit changes (56) 2) e.g. leading to higher arrears; increased rent collection costs and/or slower rent collection; reduced affordability; increased void losses or tenancy failure; reduced services 3) Impact of forecast or unforeseen increases in inflation on PHA High operations and Business Plan (48) 4) GHA new build adjacent to PHA area of operation reduces High demand for PHA stock and/or complicates effective (42) neighbourhood management Downward pressure on PHA rents as a result of external pressures High (eg Housing Benefit caps, SHR) (42) Increasing proportion of existing and prospective tenants find rent High levels are unaffordable (42) Major health and safety or housing stock disaster incident (e.g. Medium fire, flood, storm) (36) (Categorised as a strategic risk because of potentially high adverse reputational impact) Employer pension contributions continue to increase and become Medium unaffordable (36) Major Repairs costs increase significantly above levels allowed for Medium in Business Plan (e.g. due to increased inflation or post Brexit (36) risks) Proposed PHA development partnership with Wheatley Group is Medium not fundable or threatens PHA solvency (36) Failure to meet tenant expectations Medium (35)

12.4. The Association also maintains operational risk registers across its main business areas. Appendix 5 provides a snapshot of the most highly ranked operational risks at the time of preparing the Business Plan. This is important since the dividing lines between strategic and operational risks are not always clear-cut, for example, a failure to manage operational risks such as tenant or staff safety can become a significant strategic risk if the Association’s reputation is damaged.

12.5. The Management Committee will keep the Association’s risk exposure under regular review. This is of particular importance since many of the strategic risks we must manage must take account of wider political and economic factors (not least Brexit and the resilience of the UK economy to the many uncertainties this raises) and the actions of external parties.

12.6. The Management Team will prepare a six monthly report for the Management Committee, to confirm that the Strategic Risk Register has been reviewed and to advise of any material changes to existing risks and if any new strategic risk areas have emerged. In addition, sub-committees will monitor the most significant risks set out in the operational risk registers maintained for major service and business management areas.

12.7. External assurance on risks will be provided by the external and internal audit programmes. For internal audit, the Management Committee will decide the audit strategy and programme and consider all reports.

13. Financial Plans and Projections

13.1 This chapter provides an overview of the Association’s financial plans and projections. It is based on the financial documentation in Appendix 2 of the Business Plan, which should be referred to for a comprehensive statement of the financial aspects of the Business Plan.

Base Case: Assumptions and Outcomes

13.2 The main assumptions used in preparing the 30-year financial projections are shown below. The assumptions:

 Allow for operating in a harsher and less certain financial environment.

 Allow the Association to continue to generate surpluses and to meet the covenant ratios set by Royal Bank of Scotland.

 Provide headroom to manage future risks and adverse financial impacts. Provanhall Housing Association Business Plan 2019: Base Case Assumptions

Inflation 2.5% to Year 5, and 2% year 6 to year 30.

Rents Increase of inflation plus 1% from year 1 to 30.

PHA rents are below Easterhouse average, GHA and national average rents. Business Plan assumptions seek to close these gaps in a gradual way, to help safeguard affordability for tenants.

Rent Collection and Void losses: 0.5% of rental income in year 1; 0.2% from year 2 to 20 and impacts of Welfare then to 1% from year 21 onwards. Reform Bad debts: 1.5% from year 1 to year 30.

Rent arrears: Business Plan assumes arrears will increase (in the range of 5% to 8% per annum) until year 9, then reduce from year 10 onwards to 5%. These allowances assume slower rent collection following the rollout of Universal Credit payments.

Maintenance and Reactive repairs profiled to include a real terms increase of 1% rising to Major Repairs 1.2% per annum over the full period of the Business Plan.

Cyclical maintenance costs have been profiled in accordance with the Association’s 2016 stock condition survey.

Major repairs expenditure is also profiled in accordance with the 2016 stock condition survey

Real increases of between 1 and 1.2% included for all maintenance costs for the full 30 years.

Development Based on the ongoing new build scheme (Conisborough Road/Auchinlea

Provanhall Housing Association Business Plan 2019: Base Case Assumptions

Programme Road), scheduled for completion in 2020/21.

The Association continues to investigate other opportunities in the area, but no additional projects are included in the Business Plan at present.

Interest Rates and Loan interest rates: rise over time to 4% pre-margin. Treasury Management Assumed major repairs and the remainder of the development costs will be funded from reserves.

Management Costs Salaries increased by 0.5% for the full 30 years of the Business Plan

Pension costs Include SHAPS final salary and auto enrolment defined contribution costs, plus payments for Past Service Deficit (PSD)

13.3 The overall trend in the cumulative surplus over the next 30 years is as follows:

Base case cumulative surplus/deficit:

5,000,000

4,500,000

4,000,000

3,500,000

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

500,000

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 26 27 28 29 30

13.4 The overall trend in the cumulative surplus over the next 30 years is as follows:

 The Association is projecting that cash surpluses will be made for 21 out of the 30 years.

 Cumulative cash balances are positive throughout the 30-year period, with scope for further increases (e.g. if inflation increases, or if the Association chose to increase rents above the levels assumed in the base case).

Testing the Business Plan

13.5 To assess the risks to the Business Plan and its resilience to withstand these, the Association has carried out a detailed assessment of risks and possible future scenarios. The factors tested are shown below, followed by graphs showing the impact on the Association’s future cash flows. Detailed figures are provided in Appendix 2 to the business Plan.

TEST FACTORS WITH POSITIVE IMPACT ON BUSINESS PLAN 1 Reduce bad debts by 0.5% 2 No real cost increases on planned maintenance 3 Major repair costs savings of 5% 4 Reduction in variable interest rates by 0.5% 5 Inflation increase by 0.5% per annum FACTORS WITH ADVERSE IMPACT ON BUSINESS PLAN 6 Increase by 1% in voids and bad debts 7 Major repair costs increase by 5% 8 Increase of 10% in reactive maintenance costs 9 Management costs increase by added 0.5% to Y10 10 Increase in variable interest rates by 1% 11 Inflation reduction by 0.5% per annum SENSITIVITY ANALYSIS: COMBINED SCENARIOS, BASED ON THE FACTORS ABOVE 12 Combine tests 6,7 & 10 above 13 Combine tests 6,7,8,9 & 10 above

Positive Scenarios Positive Sensitivity Analysis Baseline 6,000,000 SA 1-Reduce bad debts by 0.5% SA 2-No real cost increase on planned maintenance 5,000,000 SA 3-Major repair cost saving of 5% SA 4-Reduction of variable interest rates by 0.5% 4,000,000 SA 5-Inflation increase by 0.5%

3,000,000

2,000,000

1,000,000

2027/28 2037/38 2047/48 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2028/29 2029/30 2030/31 2031/32 2032/33 2033/34 2034/35 2035/36 2036/37 2038/39 2039/40 2040/41 2041/42 2042/43 2043/44 2044/45 2045/46 2046/47 2048/49 2019/20

 The Association’s cumulative cash flows remain positive under all of these individual scenarios, cash balances start to dip in Year 6 through to year 9, this is due to planned major component replacements. The Association would have the option, if it wished, of smoothing the major repairs expenditure over a longer period if that proved necessary for any reason. If the works go ahead as planned, the Association still has sufficient cumulative cash reserves to operate, and these reserves continue to increase steadily from year 10.

 The Association will self-fund the remaining building costs for development project Phase 13, all of which are projected in Year 1 of the baseline figures shown in the graph above.

Adverse Scenarios

5,000,000 Negative Sensitivity Analysis

4,500,000 Baseline SA 6-Increase voids and bad debts by 1% 4,000,000 SA 7-Major repairs costs increase by 5% SA 8-Increase of 10% in reactive maintenance costs 3,500,000 SA 9-Management costs increase by added 0.5% to Y10 SA 10-Increase in variable interest rates by 1% 3,000,000 SA 11-Inflation reduction by 0.5% per annum

2,500,000

2,000,000

1,500,000

1,000,000

500,000

2027/28 2042/43 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2028/29 2029/30 2030/31 2031/32 2032/33 2033/34 2034/35 2035/36 2036/37 2037/38 2038/39 2039/40 2040/41 2041/42 2043/44 2044/45 2045/46 2046/47 2047/48 2048/49 2019/20

 The Association currently faces a number of external risks and uncertainties, for example as a result of Brexit, the future performance of the economy, and Welfare Reform. The sensitivity analysis has therefore examined factors such as increases in voids and bad debts, rising repairs and major repairs costs due to volatility in sterling exchange rates, and interest rate increases.

 Increases in voids and bad debts has the largest adverse impact on cash reserves, as shown in the graph above, reserves would fall below £350,000 in year 9. As large component replacements are planned in years 6, 7, 8 and 9, it would seem that the cash reserves would be inadequate to cover these, and the impact of an increase in bad debts or reactive costs.

13.6 Finally, the sensitivity analysis has addressed two further scenarios, where a number of risk factors crystallise simultaneously. This is particularly relevant to the current operating environment, where housing associations are exposed to a range of different risks.

Combined Scenarios

Combined Anlaysis 5,000,000 Baseline 4,500,000 4,000,000 SA 12-Combine scenarios 6/7/10 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000

2026/27 2038/39 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2027/28 2028/29 2029/30 2030/31 2031/32 2032/33 2033/34 2034/35 2035/36 2036/37 2037/38 2039/40 2040/41 2041/42 2042/43 2043/44 2044/45 2045/46 2046/47 2047/48 2048/49 2019/20

Scenario 12 (represented in the chart by the red line) combines the following factors.

6 Increase by 1% in voids and bad debts

7 Major repair costs increase by 5%

10 Increase in variable interest rates by 1%

Scenario 13 (represented in the chart by the green line) combines the same three factors as Scenario 12, plus increasing reactive maintenance & management costs.

13.7 As would be expected, the incidence of a number of risks occurring all at the same time places the future cash flows under greater pressure. As the above graph shows, under scenario 12, the Association would still be in a positive cash position, with the lowest cash position being in year 9 at £250,000. However, under scenario 13, cash reserves drop to £40,000 in that year. The Association would be unable to pay liabilities due in less than a year in either of these negative scenarios, without additional borrowing. The cash at Year 30 is around £3m lower than the base line model.

13.8 Overall, the testing that has been undertaken indicates that:

 The Association can comfortably maintain adequate cash flows and levels of cash balances

throughout the period of the Business Plan. (Assuming Base Model assumptions).  Increases in voids and bad debts and increased costs for repairs and maintenance have the greatest adverse impact on the Business Plan.

 Changing future rent increases to inflation only would reduce future cash flows considerably and reduce risk management capacity at a time of unprecedented external risks. It would also be incompatible with the policy of making gradual increases in rents, since Provanhall’s current rents are low in comparison with other social landlords in Easterhouse, Glasgow and indeed Scotland as a whole.

Covenant Compliance

13.9 The financial projections show that the Association is in a position to meet comfortably the financial covenants agreed with Royal Bank of Scotland throughout the thirty years of the Business Plan. These covenants are as follows:

 Operating Surplus to Debt Service Liability (> 110%)  Debt to Historic Cost (<30%)  Asset Cover - Value of Charged Properties >= 105%

Summary and Conclusions

13.10 The Base Case 30 year projections demonstrate financial viability over the 30-year period of the financial projections. They also confirm that the Association will be able to meet its obligations to tenants and to funders over this period.

13.11 The projections and the sensitivity analysis undertaken allow for operating in a more challenging and uncertain financial environment. The projections show that the Association will need to address insufficient cash balances in certain years by “smoothing” out high levels of planned major component expenditure in year 6 through to year 9. The Association will continue to exercise strong financial discipline and will also track changes in the external risks and uncertainties we face so that these are identified at an early stage and incorporated in future budgets and financial projections.