A new survey of 500 landlords by auditor Baker Tilly states that half of all housing associations either reduced back office staff numbers in 2011, or are planning to do so in the next 12 months as they prepare to comply with the new regulatory framework. The survey showed 30 per cent of landlords surveyed had already reduced headcount, while a further 20 per cent plan to do so. Is this response to the new VFM standard proportionate or inevitable?

Statutory Consultation: What does it say on VFM?

Why revise the standard? What is the proposed change?
The Government's review of social housing regulation recommended that the regulator should be more proactive in its approach to regulating value for money. The Localism Act gives the regulator the power to set an economic standard (under section 194), applicable to private registered providers only, concerning their efficiency in carrying out their financial and other affairs.

The current Value for Money standard was framed under section 193 of the Housing and Regeneration Act 2008. The revised Value for Money standard has been developed to reflect its place amongst the economic standards and an expectation that it will be subject to proactive regulation. It is substantially different to the 2010 standard.

The proposed standard has been set with the objective of ensuring providers' boards maintain, and are transparent about, a view in the round of the optimum sustainable performance of all their assets - including for example financial, social and environmental returns - in the context of meeting their organisation's purpose and objectives.

The Proposed Revised Value for Money Standard

Required outcomes

Registered providers shall articulate and deliver a comprehensive approach to achieving value for money in meeting their objectives, taking into account the interests of and commitments to stakeholders. This means managing their resources economically, efficiently and effectively to provide quality services and homes, and planning for and delivering year on year improvements in value for money.

Specific expectations

1. Registered providers' boards shall maintain and, on an annual basis, publish a robust self assessment of the provider's performance. This will set out in a way that is transparent and accessible to stakeholders, how they are achieving value for money in delivering their purpose and objectives.
2. In reaching their assessment, providers' boards shall demonstrate to stakeholders:

• An understanding of the cost of delivering specific services, which underlying factors influence these costs and how they do so, and how costs relate to appropriate benchmarks
• The efficiency gains that have been and will be made and how these have and will be realised over time
• A robust approach to making decisions on the use of resources to deliver the provider's objectives, including an understanding of the trade offs and opportunity costs of its decisions. There will be clear evidence of delivery which may include: new supply, improved services, housing stock, and neighbourhood and community investment
• An understanding of the return on its assets, and a strategy for maximising the future returns on assets, measured against the organisation's purpose and objectives
• That its performance management and scrutiny functions are effective at driving and delivering improved performance, with outcomes and outputs clearly demonstrated
• A rigorous approach to assessing options for value for money improvement, including where there are potential benefits in alternative delivery models that may involve partnerships, mergers and/or contracting with third parties
• How they have gained assurance in reaching their view on value for money.

Cost reductions in themselves do not bring improved Value for Money.  Similarly we are aware that in looking at VFM organisations often rely too heavily on benchmarking themselves against others in their benchmarking club.  We don't believe this is the real way to establish VFM. That is why it is the topic of out conference on 9th February  2012.

Rather than just cut staff costs, the organisation's VFM strategy should take an holistic approach and review procurement and costings as well as processes. This is so that the board and councillors,  in consultation with tenants in a co regulatory partnership and other stakeholders, can make optimal decisions for the organisation based on the organisation's purpose and principles set out in the business plan. As well as considering the social impact of redundancies on their wider communities.

For more information about how to undertake a holistic VFM review contact This e-mail address is being protected from spambots. You need JavaScript enabled to view it .