This week’s publication by the Regulator of Social Housing (RSH) of its annual review of the Value for Money (VFM) metrics and VFM reporting reiterates a familiar theme: for many providers, VFM reporting just isn’t up to scratch. Whilst this is consistent with previous annual reviews published by the RSH, both the tone used to communicate this is becoming more strident and the wordcount significantly longer.
The section, which reiterates reporting expectations and comments on reporting, is significantly longer than in previous years. The regulator would only make these changes to signal a clear message to the sector that its reporting requirements aren’t being met.
The strident tone suggests that after the fourth year of noting inadequate reporting, the regulator may be contemplating sanctions against providers which consistently fail to meet reporting requirements.
It’s worth a quick recap on what the regulator expects from providers’ VFM reporting. VFM reporting should make the following clear:
- What are you trying to achieve?
- How much are you trying to achieve and when?
- How did you actually perform, and how did this compare to peers?
- Did anything not go to plan? And, if so, what are you going to do about it?
- What non-social housing activity are you undertaking? Why? How is it performing?
- Anything else relevant to VFM for your organisation
This year’s review notes particular problems with the following reporting issues:
- Unclear relationship between provider’s own measures and their strategic objectives
- Providers not calculating the RSH’s VFM metrics correctly
- Providers not publishing targets
- Providers not explaining what they planned to do when performance hadn’t met targets
- Weak reporting about the purpose of non-core activities and how surpluses generated were reinvested
- Poor selection of peer comparators with little explanation for the reasons for selection
- Not being candid about areas of underperformance
The good news is that, at a practical level, these shortcomings are not difficult to put right.
We must also remember that the sector is going through exceptionally challenging times. Inflation hasn’t been this high for over forty years, interest rates have returned to 2008 levels, there is, rightly, unprecedented attention on the quality of social homes and repairs services, and providers are having to divert resources from other activities to deal with these. Providers are grappling with tough choices in a very uncertain environment.
The Value for Money lens gives providers a valuable tool to navigate the challenges of the world we find ourselves in and make decisions in line with what’s important to their organisations and their stakeholders.
We would urge all registered social housing providers to read the review very carefully before starting work on their VFM reporting for their 2023 annual accounts.
Pennington Choices can support you in all aspects of Value for Money, including VFM reviews, reporting reviews, and options appraisals. Our detailed VFM reporting reviews are made up of three parts:
- A clear statement of the regulator’s current expectations
- A detailed forensic review of either the 2022 reporting or the 2023 draft reporting against the regulator’s requirements
- A list of actions required to ensure full compliance with the reporting requirements
For more information, or if you have any questions, please contact us below.
