Proposed East Kent Housing Improvement Plan

 

1.         Introduction

 

The four client councils have raised concerns about a number of key areas of the services provided by East Kent Housing. These concerns have arisen as a result of a number of factors including the performance of East Kent Housing, constraints on inflationary increases in the management fee paid by the four councils over time and emerging pressures on the service as a result of welfare reform and increases in homelessness.  The 2016/17 Housemark benchmarking data showed that East Kent Housing provided their services at a lower cost than all others in their peer group. It also showed strong performance in areas of rent collection and void management.

 

However the Councils and East Kent Housing recognise that there are areas of weakness that they have been unable to resolve, and the key areas of concern relate to:

     Procurement of key contracts for the delivery of the council’s planned maintenance and capital improvement programmes.

     Contract management of a number of key contracts.

     Rent collection, particularly in relation to tenants in receipt of Universal Credit.

     Single System implementation.

     Organisational health and sustainability

 

The four councils and East Kent Housing have therefore developed a draft improvement plan, setting out the actions needed to improve performance in these key areas, the resources required and the proposed outcome measures. The improvement plan covers a period of 18 months from 1 April 2019 to 30 September 2020 to allow time for investments and changes to be made and improved outcomes to be embedded in the organisation and services provided. Detailed 6 monthly reviews will be completed during this period to monitor progress and ensure focus is maintained on the delivery of the plan by East Kent Housing and the four client councils.

 

East Kent Housing were initially asked to prepare a position statement, setting out improvements needed, priorities for intervention and the resources required, which is incorporated into this plan.

 

The improvement proposals submitted by EKH included a new role of Acquisitions and Development Officer to work alongside project officers in each council delivering local programmes. This proposal is not supported. It is considered that the proposed activity forms part of EKH’s core role and the current programmes are largely only replacing stock lost through the right to buy. In the event that these programmes significantly increase in scale or include temporary accommodation (with more complex management requirements) this request could be revisited.

 

2.         Improvement Plan

 

Table 1 below sets out the proposed improvement plan. It details the improvements required, proposed actions, investment required, required outcomes and timescales. The improvement plan is also supported by a series of Key Performance Indicators set out in table 2 below.

 

Improvement Required

Proposed Actions

Investment Required

Measurable Outcomes

Timescale

(end of month)

1.

Improved Procurement

 

The overall procurement function within EKH has been problematic over the last few years.  EKH continues to struggle to gain the confidence of the partner Councils.  The Councils have already provided £38K p.a. to fund a procurement manager post within EKH.

 

There are currently 52 outstanding procurements (74 contracts) to be delivered, with a further 22 contracts due for reprocurement prior to 2022.

 

Key areas of concern are:

● The production of detailed specifications of work and contract documentation, with previously poorly constructed documentation impacting on contract management.

● Procurement project management.

 

 

Recruitment of an additional procurement officer to improve project management and to focus on the completion of key procurement projects.

 

Agree reviewed service level agreement between councils and EKH setting out EKH’s role and responsibilities in preparing procurement and contract documentation.

 

Improved, timely and accurate production of technical specifications and tender documentation.

 

Compilation and agreement of detailed programmes of work for each area.

 

 

£35k

 

 

Actual costs of external writing of specifications and tender documents, up to a maximum of 2% of the capital cost, for works without a current contract in place (See table 4).

 

 

Detailed Asset Management Strategies and Procurement Plans agreed with client councils setting out timescales for all procurement projects.

 

Completion of all outstanding procurements in a time frame that enables the delivery of the 2018/19 and the 2019/20 capital programmes to be delivered in full by March 2020.

 

95% completion of the agreed capital projects for 2018/2019 and 2019/20 by 30 March 2020.

 

Planned programmes of work for areas communicated with residents.

 

KPIs achieved

 

 

January 2019

 

 

 

 

 

September 2019

 

 

 

 

 

 

March 2020

 

 

 

 

March 2019

 

 

 

 

March 2020

2.

Improved Contract Management

 

There have been a number of evidenced poor practice in contract management arrangements, most recently set out in a draft audit report into the management and supervision of planned maintenance contracts (October 2018).

 

Concerns include contractual procedures not being followed and supervising officers not being aware of the contractual arrangements. This has caused difficulties in approving programmes of work, evaluating costs, signing off works and processing invoices.

 

 

 

Implementation of the audit report action plan in full, which aims to embed best practice in contract management within EKH.

 

Interim use of external consultants to ensure immediate and sustained improvements in contract delivery and compliance and to provide assurance of value for money and probity for existing contracts.

 

 

 

None - existing resources

 

 

 

 

£120k

(£40k capital and £80k revenue)

 

 

 

Sustained improvements in  assurance ratings achieved, with no ‘limited’ or ‘nil’ assurance ratings, on follow up audit of contract management.

 

KPIs achieved.

 

 

 

 

March 2019

 

 

 

 

 

 

March

2020

3.

Rent Collection

 

Although the performance of EKH in collecting rent and reducing arrears has been strong in most areas, the introduction of Universal Credit has had a significant impact on overall performance. As a result rent arrears levels have been increasing.

 

 

 

Recruitment of 8 additional Income Officers and 4 additional Benefit and Money Advisors.

 

Ensure all relevant rechargeable works and miscellaneous charges are raised as a liability and the agreed collection process is followed.

 

 

£444k

 

 

Achievement of upper quartile performance for both UC and non-UC tenants.

 

KPIs achieved.

 

Increased income from rechargeable works orders and miscellaneous charges.

 

 

March 2020

 

 

 

 

March 2020

 

March 2020

4.

Single System Implementation

 

The single IT system project is considered to be critical to the long-term delivery of the services provided by EKH. The system will enable more flexible working, enhance online services for residents and unlock efficiency savings.

 

Full implementation across all council areas is critical.

 

 

 

Effective management of the implementation of the new software and associated processes in all areas.

 

Development and completion of system testing plans.

 

Implementation of robust project management arrangements, including project plans, risk registers, issues and decision logs and agreed sign-off arrangements.

 

 

 

 

Capital resources already committed to this project.

 

Current system legacy funding to be transferred to EKH on implementation, as per the existing agreement from the Councils.

 

 

 

Full implementation of all key modules in all areas. Modules are:

● Rents and voids

● Planned maintenance and repairs

● Leasehold and service charges

 

Substantial assurance achieved by the Councils and EKH in post implementation audits, by March 2020.

 

 

 

September 2019

 

 

 

 

 

 

 

March 2020

5.

Organisational Health and sustainability

 

Since 2011 increases in the core management fee have been constrained, with only specific new posts funded. There have been no cost of living or inflationary increases.

 

New burdens and demands on the service have added significant pressure and there has been a clear impact on the the ability of the organisation to respond to changing demands over time.

 

Pressures risk  impacting on staff morale and turnover.

 

The service has seen increasing numbers of complaints and enquiries from members, and investment in a new complaints process has seen response times improve.

 

Communications channels are not always clear or consistent.

 

 

 

Award of cost of living increases and incremental pay scales.

 

Funding for pension payments to KCC.

 

Satisfactory staff levels maintained throughout the period of the improvement plan.

 

Development of workforce plan/people strategy.

 

Develop new communications plan, including internal communications and communications with client councils and residents.

 

 

 

Cost of living increases

- £85k (1.5%)

 

Pension contribution increases

- £18k

 

Incremental pressures

- £67k

 

 

 

 

Support from CCC to develop an organisational communications plan

 

 

 

 

Sustainable levels of staff turnover and reduced used or interim/temporary staff,

 

 

 

Workforce plan/people strategy in place.

 

Retained earnings reserve to be maintained at a sustainable level (5%) and medium term financial plan to be put in place.

 

New arrangements to monitor resident satisfaction in EKH

 

Evidence of learning from complaints

 

Implementation of new organisation communications plan.

 

Table 1: Improvement Plan

 

Key Improvement

Key Performance Indicator (KPI)

Target

Frequency

1.

Improved Procurement

Specifications produced to timeframes agreed with Council procurement officers (average 20 working days)

20 days

Quarterly

95% expenditure of agreed capital projects delivered

95%

Quarterly

95% of agreed capital projects delivered

95%

Quarterly

99% of properties will meet the Decent Homes Standard

99%

Quarterly

Respond to all procurement enquiries within a maximum of 5 working days

100%

Quarterly

2.

Improved Contract Management

100% pre-inspection of all heating installations

100%

Quarterly

100% post inspection of all heating installations

100%

Quarterly

10% post inspection of all repairs

10%

Quarterly

4x Contract core group meetings (involving resident representation) per annum for agreed key contracts

4 per annum

Quarterly

99% of invoices checked and validated and paid on time

99%

Quarterly

3.

Rent Collection

Tenants will receive either face to face or telephone contact within 1 week of EKH being notified they are moving onto Universal Credit

100%

Quarterly

Current tenant arrears (non UC) as a percentage of rental income

1.25%

Quarterly

Current tenant arrears (UC) as a percentage of rental income

3.3% or

Upper quartile performance

Quarterly

Garage arrears as a percentage of rental income

0.39%

Quarterly

Rechargeable works and miscellaneous charges:

     Charges raised as required

     Amount collected as a percentage of the charges raised

 

100%

50%

Quarterly

4.

Single System Implementation

Key milestones, ongoing system servicing and go live dates met by the Councils and EKH

100%

Monthly

Key project management documentation maintained

100%

Monthly

 

5.

 

Organisational Health and sustainability

Proportion of complaints responded to within 10 working days.

95%

Monthly

Resident satisfaction in EKH services (82% in 2016/17)

82% or better

Annually

Proportion of staff who see themselves working at EKH in two years time

(2018 - Disagree/Strongly Disagree was 14%)

<14% disagree/strongly disagree

Annually

Proportion of permanent staff in the organisation

93%

Annually

Table 2: Key Performance Indicators

 

 

 

 

 

 

 

 

 

3.         Resourcing the Improvement Plan

 

The current cost of the EKH management fee, across all four districts is £8.425m. This is apportioned between the client councils as follows:

Council

2018/19 Management Fee

Current rented stock numbers

Management fee per dwelling

Canterbury

£2.899m

5,128

£565

Dover

£2.197m

4,287

£512

Folkestone and Hythe

£1.984m

3,365

£590

Thanet

£1.346m

3,021

£446

Table 3: Management Fee

 

The apportionment of the management fee is historic and based upon the level of resourced transferred into EKH at its inception in 2011. The proposals to provide a percentage of the capital programme for the preparation of specifications and tender documents is an initial step towards a longer term mechanism for apportioning costs on an activity basis. It is acknowledged that there are differences in the way on which services are provided between districts, the profile of the housing stock and the needs of residents that complicate alternative options for the apportionment of costs. Over this period overall rented stock has reduced by around 2% from 16,204 to 15,891 (as at 1 April 2018).

 

The total cost of the package of improvements proposed is £729k revenue, representing 8.7% of the 2018/19 management fee and up to £324k capital (representing 0.9% of the current approved capital projects for 2018/19 and 2019/20). The table below sets out the proposed apportionment of the these costs across the four client councils.

 

 

 

 

 

 

Council

Current Management Fee

Total Capital Programme

(2018/19 approved & 2019/20 draft)

Capital programme value to be procured

(2018/19 & 2019/20)

Annual revenue cost of plan

Maximum capital cost of plan

(Up to 2% plus £40k)

Revenue cost as a percentage of the management fee

Capital cost as a percentage of total programme

Canterbury

£2.899m

£14.651m

£5.689m

£182,250

£124k

6.3%

0.8%

Dover

£2.197m

£7.067m

£1.571m

£182,250

£41k

8.3%

0.6%

Folkestone and Hythe

£1.984m

£7.655m

£2.561m

£182,250

£61k

9.2%

0.8%

Thanet

£1.346m

£8.346m

£4.386m

£182,250

£98k

13.5%

1.2%

Total

£8.426m

£37.719m

£14.207m

£729,000

£324k

8.7%

0.9%

Table 4: Funding request

 

The client councils propose to provide this additional funding initially for the period from 1 April 2019 to 30 September 2020, on a pro-rata basis. In return EKH will deliver the outcome measures set out in this improvement plan, and report progress against the suite of key indicators.

 

4.         Implementation

 

This improvement plan is for the the period from 1 April 2019 to 30 September 2020 and outcome measures and key performance indicators will apply during this period.

 

The £729k p.a. revenue funding set out in this plan will be made available for the financial year 2019/20 (full year effect) and for the financial year 2020/21 (pro-rata). Recruitment for proposed new roles will need to commence during 2018/19.

 

Capital funding will be provided to cover the actual costs of external writing of specifications and tender documents, up to a maximum of 2% of the capital cost of works due in 2018/19 and 2019/20 which do not have a current contract in place, plus a contribution of £40k towards additional contract supervision.  This will ensure that tendering activity can commence during the current financial year for key contracts so that works can start promptly in 2019/20 and be completed by 31 March 2020.

 

EKH will put in place a comprehensive implementation plan setting out the activities that will be required to implement this plan in full.

 

5.         Monitoring and Review

 

The outcomes and indicators in this plan will be closely monitored throughout the period. Monitoring arrangements will include:

     A quarterly report to client officers setting out performance against key indicators and progress towards specified outcomes.

     A bi-annual progress report to the Chief Executive Forum.

 

The East Kent Housing Board (which contains Councillor representatives) will also be monitoring performance against the improvement plan and will lead on ensuring that EKH deliver the actions set out in this plan. The EKH Board will monitor the improvements at each of its meetings, and their Performance & Improvement Committee (chaired by a council representative) will have responsibility for detailed oversight of the plan.

 

A thorough review of the impact of this improvement plan will be completed by EKH, in collaboration with the council client officers during the last 6 months (1 April 2020 - 30 September 2020). The review will set out the progress made in achieving lasting improvement and make recommendations for funding and for any further council interventions beyond 30 September 2020.