Value for money is a judgement of how a business utilises its assets to generate value and achieve its objectives, with assets not only referring to housing properties and other tangible assets but also other valuable resources including people. Boards need to take responsibility for the value for money agenda which covers the whole business including constitutional and governance arrangements; the services that are provided; and how efficiently and effectively they are delivered.
The latest Value for Money Standard focuses on how housing associations optimise value for money in delivering their strategic objectives. There is a clear expectation that housing associations must have a robust approach to decision-making and a rigorous appraisal of potential options for improving performance. The required outcomes extracted from the Standard are set out below:
Registered providers must:
- clearly articulate their strategic objectives
- have an approach agreed by their board to achieving value for money in meeting these objectives and demonstrate their delivery of value for money to stakeholders
- through their strategic objectives, articulate their strategy for delivering homes that meet a range of needs
- ensure that optimal benefit is derived from resources and assets and optimise economy, efficiency and effectiveness in the delivery of their strategic objectives
In common with all the Regulatory Standards, the role of the board is emphasised – with an expectation that housing associations should consider potential value for money gains and that boards must demonstrate full consideration of costs and benefits of alternative delivery structures.
Measurement of performance against strategic objectives is key. Housing associations are expected to identify targets for achieving value for money in delivering strategic objectives. The RSH has identified financial metrics that are extracted from the annual accounts regulatory return (FVA). Smaller housing associations that are not required to submit the FVA will need to calculate them based on the definitions provided by the RSH. However, housing associations are not expected to limit their performance metrics to those identified by the RSH, which may not fully reflect an association’s strategic objectives.
There is no specific requirement for a separate value for money strategy, although housing associations are expected to be clear about their approach – which may form part of corporate strategic planning and be expressed in the corporate plan (or equivalent).
Further guidance on value for money is included in the Value for Money Code of Practice published alongside the Value for Money Standard in April 2018. The Code of Practice provides further detail and guidance on meeting the RSH expectations with a clear emphasis on use of assets, understanding cost and ensuring that returns from non-social housing activities are commensurate with risk.