Approved by Board March 2017
We are a financially sound and viable business that supports the financial well-being of our tenants and communities
Our economic stability relates to three key areas namely:
Our Tenants & Leaseholders;
Communities & Partners; and
Economic stability is a core part of our business and our progress within this area has been significant.
We are a financially viable business given the confidence of our funders and their approval of the current 30 year Business Plan. We are monitored by Welsh Government to safeguard the business and its continued viability and we are audited by independent experts to make sure that our financial management controls are robust and that we are compliant.
We provide homes for social rent at affordable rates which are well within the Target Rent Band set for our area by Welsh Government. We have undertaken a significant piece of work to split our service charges from our rent, ensuring that tenants know what they are paying for, which helps us demonstrate that there are no hidden increases.
We have helped our tenants to maximise their income and manage their spending by providing financial advice and support. This has been particularly important with Welfare Reform, especially in relation to the introduction of Universal Credit across Neath Port Talbot, the benefit cap and the forthcoming Local Housing Allowance cap. Moving forward we need to work hard to continue to understand the likely impact of these changes and to manage any risks to the organisation and its tenants.
In terms of creating wealth in communities, NPT Homes employs just over 500 staff, of which 76% live in the Neath Port Talbot Borough and received £7.3m in pay. By working with our major works contractors through the WHQS programme we have created 121 contractor jobs and 46 contractor apprenticeships. For every £1 that is spent by NPT Homes on its Welsh Housing Quality Standard (WHQS) Programme, £1.99 is re-invested back into the community. In addition, our major works contractors have worked with us on our Community Challenge, contributing their workforce’s time to carry out repair and improvement works. 8 community projects benefitted from this during 2016.
Work on our approach to Value for Money (VfM) in delivery and procurement has progressed, Commerciality (of which VfM is a significant part) being one of our top 10 corporate projects over the last three years) and efforts will continue to be made over the forthcoming year by working with other housing associations in Wales to further develop our approach.
What difference do we want to make? (Main Outcome)
Facts And Figures
We increase wealth within communities by supporting local businesses and by creating and sustaining local employment and training opportunities
Increasing Wealth within Communities by Supporting Local Businesses
Over the last 5 years we have used a tool called the Local Multiplier 3 (LM3) that measures the amount of money that is reinvested back into the community for every £1 spent by NPT Homes on its WHQS programme. This is because we use contractors and suppliers that are based in Wales. The maximum level of reinvestment is £2.
The results are:
During 2016/17 our major contractors spent £3.4m with businesses in Wales and £4.3m was spent on people living in Wales who are/were employed as a result of the contracts.
The same exercise will be carried out on the anniversary of other contracts issued including the external wall insulation and fabric programme
Creating and sustaining local employment and training opportunities
By working with our major works contractors through the WHQS programme we have created 121 contractor jobs over 5 years. During 2016/17, the major works contractors employed 10 people living in Wales who were previously unemployed, 2 work trials were completed, 2 people undertook 2 week’s work experience, 4 NVQs were completed, 14 apprenticeships were awarded (5 were completed) and 1 traineeship was awarded.
In addition, 46 apprenticeships have been created over 5 years which equates to 174 apprenticeship weeks.
Here are some quotes from our contractors and apprentices:
"Training and providing opportunities is paramount to us here at Contract Services and it is something we pay continuous attention to. Therefore we are pleased to be able to assist NPT Homes in providing their apprentices with site based experience whilst working alongside our own trades and apprentices.”
Andrew Collins, Operations Manager of Contract Services Group
“It’s a great opportunity for me to work on the Tŷ Gnoll Newydd project. My background is in plumbing but being on the NPT Homes multi-skilled apprenticeship programme is giving me an insight into trades that I wouldn’t normally get a chance to experience. So far I’ve learned some new carpentry skills and look forward to gaining more experiences over the coming weeks.”
Tomas Grace, Apprentice
“I applied to the apprenticeship scheme with NPT Homes as I wanted to gain that hands on experience in a working environment. It’s a bonus that I’ve managed to have such a great opportunity so close to home. Once fully qualified I would love to gain a full-time position within NPT Homes so I can continue to develop.”
Calum Powell, Apprentice
“We are delighted to be offering Junior, Calum, Morgan, Rory and Louis this fantastic apprenticeship opportunity. They will be able to earn while they learn in a diverse sector gaining a real qualification and a real future. As an organisation we are proud to be investing in construction talent locally.”
Andrew Carey, Deputy Director of Assets
NPT Homes employs 506 staff of which 76% live in the Neath Port Talbot Borough, receiving 74% of our wage bill, or £7.3m.
Since transfer 285 permanent and129 temporary staff have been hired and 80 trainee positions/apprentices have been taken on.
Here are some quotes from one of our apprentices and our Deputy Director of Assets:
“Since joining NPT Homes I have been able to put the theory I have learnt at college into practice through some fantastic on the job training which has provided me with a wide range of building maintenance skills. Recently I have been lucky enough to have been taken on as a multi trade Maintenance Operative following the completion of my apprenticeship and I’m looking forward to my career with NPT Homes.”
Josh Greenwood, Apprentice
“I’ve been working in construction for 6 years and when I saw the multi-skilled opportunity with NPT Homes I jumped at the chance to join the organisation. I’m looking forward to developing my skills further over the next 18 months and seeing how successful former apprentices have been with the organisation has really given me something to aim for.”
Fraser Richards, Apprentice
Local Councillor Survey
In November 2016 we undertook a survey of Local Councillors and asked them about what impact they think NPT Homes has had on the local economy.
Here are some of their responses:
NPT Homes’ Chief Executive attends the Council’s Scrutiny Committee every 6 months to provide an update on progress with the delivery of the promises made to tenants on transfer (set out in the Offer Document), giving local councillors the opportunity to share and discuss all types of feedback, including positive and negative she is also a member of the Public Service Board representing social housing within the Borough. In addition, NPT Homes’ Chief Executive and the Council’s Head of Housing Strategy and Public Protection meet regularly to discuss progress in more detail.
Copper Foundation direct labour market intervention programme
NPT Homes is currently developing an innovative scheme called The Copper Foundation. The plan is to utilise a percentage of the environmental works programme (external work to the properties which includes fencing, paving, groundworks) to create 12 month job opportunities for those who are long term unemployed or who have never been in employment.
A considerable amount of research has taken place to establish the feasibility of the original concept. The research has included an in depth study visit to Catrefi Conway and CREST Co-operative, a social enterprise who have set up a similar organisation in North Wales, in depth discussions with Neath Port Talbot Group college concerning training opportunities and a workshop discussion and initial discussions with alternative funding sources (Wales Union Learning Fund and Welsh Government).
We are planning to initiate the programme in Spring 2017 with one delivery team of 5 or 6 new employees, an established manager and supervisor in the communities of Croeserw and Glyncorrwg The environmental works programme shows that the necessary work can sustain a team with work for up to 12 months.
The DWP, LIFT and Communities for Work teams are currently recruiting to these positions. The benefit of utilising these agencies is that they can access barrier funding which can support individuals into work. Partners are paying for the ability of all participants, whether they are successful in securing a final position or not, to gain a Construction Skills Certificate Scheme card and to gain experience in the selection and interview process.
When the contract comes to an end there is potential to trigger community benefit clauses which will require our contractors to offer opportunities for employment.
Dependent upon the success of the programme, the initiative will be rolled out across the Borough.
We improve the financial well-being of our tenants through support and advice, keeping rents at an affordable level and ensuring that there are no hidden increases for tenants and leaseholders
As a Registered Social Landlord operating in Wales NPT Homes is required to follow and implement the guidance and policy issued by Welsh Government. Each year RSLs are permitted to increase their rents in line with a prescribed formula; NPT homes has kept the annual rent increase in line with this and average rents are well within the target rent band for our area. This helps to ensure that rents remain at an affordable level for tenants.
In 2014 the Welsh Government Social Rent Policy set out that where a social landlord pools (i.e. combines) rent and service charges from April 2016 they must show these charges separately. This process is known as rent de-pooling.
The requirement to de-pool rents and service charges only affected NPT Homes’ tenants who moved into a flat or Haven Housing scheme before 1st April 2012 and who benefit from communal areas or shared facilities that are maintained by NPT Homes. The rent account of tenants who moved in after this date already identified separate service charges. In order to complete this task a project group was established and an extensive consultation exercise undertaken with tenants; all tenants had the opportunity to comment on the changes through the consultation exercise by either completing a Comment Form or speaking to our dedicated member of staff direct during visits to each block of flats and Haven Housing schemes.
Improving the financial well-being of our tenants through support and advice
Our Financial Inclusion Team helps improve the financial well-being of our tenants through the provision of support and advice. The outcomes of this work are described in the Sustaining Tenancies Storyboard.
Universal Credit (UC) presents as a risk to NPT Homes as the new benefit includes housing costs which is paid to the tenant whereas previously it was paid direct to NPT Homes. A substantial amount of work has been undertaken to ensure that tenants understand their new benefit and that they need to pay their rent from the total amount they receive.
As at 8th March 2017, 100 tenants were claiming UC. The table highlights the financial position for those tenants and what they have paid against what was due. The current rent collection rate is 96%.
Local Housing Allowance Cap
Local Housing Allowance (LHA) rates are currently used to calculate housing benefit for tenants renting from private landlords. LHA rates relate to the area in which a tenant makes their claim and are based on private market rents being paid in the area. As part of the Government’s Welfare Reform changes, LHA rates will become applicable for tenants that rent from social landlords. NPT Homes has produced a flow chart to show the impact that this will have on tenants and who started their tenancy after 1 April 2016. Tenants whose rent is higher than the LHA cap will have to pay the difference between the benefit they receive and their rent. This will expose NPT Homes to an increased risk of rent arrears and non-payment while at the same time increasing the pressure on tenants who may be ‘just about managing’ and forcing them to make difficult choices about whether to pay their rent in full or buy food and other essentials.
The table shows the 2017/18 Local Housing Allowance rates for the Neath Port Talbot area compared to 2016/17.
We are already taking the actions below in order to mitigate the impact and safeguard the income of the organisation:
We have undertaken an extensive exercise to accurately cost the services provided to tenants
All tenants who have signed a new tenancy agreement from April 2016 have had the pending change explained and been provided with written information regarding the LHA cap
A co-design session has been held with NPT Homes and Coastal Housing tenants to look at the options available for mitigating the impact of the LHA cap to be applied to single tenants under the age of 35 many of whom will only be eligible for the shared accommodation rate
Training is being delivered by Financial Inclusion Team (FIT) and Universal Credit (UC) officers to housing application assessors and Income Officers to make them aware of the implications of welfare reform changes. Plans are in place to roll this out to all housing staff
Applicants aged between 18-21 and those aged under 35 who are being rehoused receive FIT and UC assessments to ensure the property is affordable (now and after the changes are implemented).
We will be undertaking a joint review of the Shared Lettings Policy with NPTCBC. This will take into consideration the changes required as a result of welfare reform.
Assessments of the mitigating circumstances, e.g. disabilities, which might apply to certain tenants are being undertaken so as to ensure that they will receive sufficient Housing Benefit or UC to pay their rent in full.
We generate income which is re-cycled back in to the business to improve tenants’ homes and communities
There are a number of examples where we generate income which is re-cycled back in to the business to improve tenants’ homes and communities, two of which are shown below:
Solar PV Panel Feed-in Tariff
We have installed solar PV panels at our Head Office and our Haven Housing properties. This generates a feed-in tariff of £40k every year. This reduces the service charge payable for Haven Housing tenants as the electricity generated is used in the communal areas. The feed-in tariff income is to be used to train and support tenants to become energy advisors, enabling them to give advice to tenants in their own area on how to combat fuel poverty.
During 2016, our major contractors successfully completed 8 Community Challenge projects; contributing their workforce’s time to carry out repair and improvement works.
The projects included the refurbishment of a community hall and its kitchen, installation of another new kitchen in a local church and the improvement of 3 school playgrounds.
NPT Homes’ staff also volunteered on a number of the projects. As a result almost £18,000 of in-kind labour and materials were donated by the organisation and its contractors.
NPT Homes grants all staff up to five days paid leave to undertake approved volunteering each year.
Here are some quotes from this year’s Community Challenge winners, contractors and NPT Homes’ staff:
“The work completed by NPT Homes and their partners has been wonderful. The new kitchen we received has given the church a new lease of life and means that we can now become a hub for many community activities.”
Peter Davies, Sandfields Methodist Church
|“We are absolutely delighted with the difference the community challenge has made to our school. Our autistic pupils can often find the unstructured nature of play time quite unsettling and stressful and this can then lead on to issues with their behaviour and emotional well-being. Providing them their own specific play area will see their behaviour and self-esteem improve and give a focus to their playtime.”
Debra Bartoszewicz, Waunceirch Primary School
|“As a school we are always looking to give our pupils the best environment and resources that we can and by taking part in NPT Homes’ Community Challenge we were able to do just that. We are pleased to see the finished product and the children are thrilled with their new facilities.”
Blaenbaglan Primary School
|“As a school, we are thrilled that we were selected for the NPT Homes Community Challenge this year. The children have been fully engaged in the process and came up with some of the ideas themselves. The yard is now looking great and it will benefit them immensely to have a more engaging and interactive place to play and learn.”
Claire Jones, Rhos Primary School
|“Being part of the 2016 Community Challenge has been really beneficial for us. The work carried out has cleared the side of the building of overgrown weeds and brambles and has transformed it into an area that can now be used by members of the community.”
Sarah Deeley, Cymmer Afan Library
|“It’s fantastic that NPT Homes allow us to take time out to give something back to our community. The vast majority of staff live locally so it makes it all the more meaningful.”
Sarah Hubbard, NPT Homes Ltd
We are adequately resourced to meet current and future business and financial commitments
The 30 Year Business Plan is prepared annually and informs the Board and our funders that we have the finances in place to deliver our strategic objectives and meet key constraints such as our loan repayment deadlines. It is based on the needs of the organisation’s individual service areas and capital works programme over the short, medium and long-term.
The funders assess our assumptions for appropriateness and reasonableness as part of the annual update of the 30 Year Business Plan. Sensitivity analysis is also undertaken which is based on scenarios proposed by the organisation and the funders, including analysis of the impact of strategic risks, such as the LHA cap and changes to key assumptions, such as the rate of inflation. Mitigation actions to reduce costs and safeguard income are also considered where the cumulative impact of risks could challenge the organisation’s long term financial viability.
Based on the Business Plan and other information provided to them (such as our quarterly management accounts), the Welsh Government produces an annual financial viability judgement (FVJ) report for each housing association, which sets out whether the association has adequate financial resources in place to meet current and forecasted future business and financial commitments to protect the interests of tenants.
There are three categories of financial viability judgement:
pass with closer regulatory monitoring or
Since NPT Homes was established we have received a ‘pass’ rating every year. A copy of our latest FVJ can be found on our website (http://gov.wales/topics/housing-and-regeneration/services-and-support/regulation/financialviabilityjudgements/fvj-npt-homes-2016/?lang=en)
Financial management is accurate and properly controlled
Financial Reporting Cycle
The annual financial reporting cycle is identified below;
The budgeting process provides a system of planning, co-ordination and control for the organisation to ensure services are delivered and value for money obtained. The Budget is reported to Board in advance of the financial year and is updated twice during the financial year (Mid-Year Forecast and Final Year Forecast) and reported to Board for approval. Management accounts are prepared on a monthly basis and reported to the Audit and Risk Committee and the Board on a quarterly basis to set the financial performance of the organisation compared to its budget and forecasts. This gives the opportunity for any necessary actions to be taken to ensure that the organisation meets its financial targets.
An independent audit of our financial statements is conducted each year, Mazars are the current external auditor who were appointed by the Board. The audit findings and audit opinion that the financial statements are a true and fair view are reported to Board annually. Our audited annual report and financial statements for the year ended 31st March 2016 can be found on our website (https://issuu.com/npthomes1/docs/2016_npt_homes_limited_-_signed_fin)
Internal Audit Report (Key Financial Controls)
An internal audit review of our key financial controls is completed annually to ensure that all transactions are recorded accurately and on a timely basis. The most recent report was issued to Audit and Risk Committee in June 2016 and gave reasonable assurance, the second highest level of assurance that internal audit provide. This is regarded as positive assurance as the organisation has controls in place to manage this risk that are suitably designed, consistently applied and effective. However, some minor control improvements are required to help ensure the continuous and effective mitigation of risk. The control improvements identified in the audit are being made and progress is regularly reported to the Audit and Risk Committee.
We achieve value for money in delivery and procurement to make the best use of resources
Value for Money in Delivery and Procurement
Our financial planning, monitoring and reporting cycle assists in ensuring value for money (VfM) through budgets, forecasts and management accounts which are reviewed by our Senior Management Team, our Audit and Risk Committee and Board. We have explained the three E’s which ensure VfM in presentations to all our staff.
Our approach to VFM is supported by:
Procurement Strategy and Policy which is being embedded in the organisation through the roll-out of new procedures supported through training by our procurement team
Strategic Performance Indicators are provided to Board each quarter
New contracts awarded over the past two years for gas servicing, roofing materials, uPVC windows and doors, printers and insurance will save the organisation more than £1m over the life of the contracts.
Please click here for a more detailed example of procurement savings.
Following extensive consultation, Community Housing Cymru and Housemark, an organisation that provides social housing data and insight, have produced the publication Maximising Our Contribution: A practical guide for Welsh Housing Associations on how to define, deliver and demonstrate VfM.
The publication contributes to the developing debate on VfM at government, housing association and community level and provides practical guidance on approaching and demonstrating VFM. Following on from this document has been the development by CHC’s Finance Forum of a set of 10 financial indicators to assist Housing Associations with measuring VFM. Further work is planned to assess the social benefit of the work of housing associations in order to provide a balanced evaluation of value with the financial indicators (the ‘money’ element).
NPT Homes is represented on the Forum and will be using the 10 VfM measures to consider its own performance in comparison to those of other organisations and average figures for all Welsh housing associations.