Delivering value for money

Despite the increasing financial pressures on social housing providers and our customers, our underlying approach to value for money (VFM) remains unchanged – it’s embedded in everything we do. Our three objectives are to ensure:

Our core strategies and transformation programme deliver better homes and services to customers, smarter ways of working and good value over the long term
The principles of ‘better for customers, smarter for colleagues, good value for everyone’ are embedded in our operational plans and ways of working
We understand our performance in relation to value for money and where we can improve.

These objectives are underpinned by the principles of:

Effectiveness: Better for customers: the extent to which objectives are achieved and the relationship between intended and actual impacts
Efficiency: Smarter for colleagues: the relationship between the output from goods or services and the resources to produce them
Economy: Good value for everyone: minimising the cost of resources used while having a regard to quality.

Business health
- Our overall operating margin was 17.7% (2021/22: 20.2%)
- Our social housing lettings margin was 24.6% (2021/22: 33.8%)
Historically, we’ve had higher margins than our peers on core activities. This year, our margin was significantly impacted by the higher inflation and energy cost increases, and additional costs invested to tackle the quality of our homes, including damp and mould.
Customer

Customer satisfaction with our services was 79%; slightly lower than last year. This was due partly to service pressures on ourselves and key suppliers. We’ve implemented a number of initiatives to improve services, including setting up an Operations directorate and piloting a new neighbourhood model to deliver joined up services; and investing in digital tools for customers.

We continued to provide support to customers and communities, investing a further £2.6m in 2022/23. Plans are in place to further increase our social impact work in the coming years, to help support our customers and the places in which they live.
Asset management

Our reinvestment for the year was 5.1% of the total value of our stock, which was higher than last year, as we continued to invest in homes that are safe, decent and energy efficient.

Our occupancy rate for the year was 99.4% (2021/22: 99.5%). This shows the success of our strategy of increasing customer mobility, giving more customers the opportunity to find new homes.

Return on Capital Employed was 3.0% (2021/22: 3.2%), slightly lower than last year and target, however it remained above the 2021/22 G15 median.

Our ratio of responsive repairs to planned and major repairs increased to 62.3%, which is still higher than our target. This is an area we’re focused on improving, through our planned maintenance programme and reflects our increased costs in responding to our customers’ needs during the year.
Funding

Gearing measures the level of net debt, compared with the carrying value of our housing properties. Gearing was 45.5% (2021/22: 44.7%), reflecting ongoing work to reduce our net debt and stable treasury management.

Our interest cover ratios of 112.3% and 110.8% (2021/22: 130.1% and 163.9%) remained strong compared to the rest of the sector, driven by our lower interest payments resulting from the successful debt refinancing strategy we’ve undertaken over the last few years.
Social housing and lettings

Our headline social housing operating cost per home increased to £5,172 (2021/22: £4,464), consistent with the significant cost increases we’ve experienced during the year, due to inflation and energy cost increases, and our ongoing investment to ensure our homes are safe and of the right standard.

Property management costs increased to £1,733 per home, service charge costs increased to £838 per home, maintenance costs increased to £1,515 per home and major repairs costs reduced slightly to £826 per home.

Income collection performance increased to 101.6%, despite the cost-of-living crisis impacting our customers, demonstrating our support provided to them to help manage their finances.
Development

We completed 625 new homes (excluding through joint venture entities); 69% were social rent and 31% were outright sale. Our social rent handovers were slightly higher than 2021/22, broadly aligned with our targets, which were impacted by some handover delays towards the end of the year.

We expect our development activity to increase further in future years, with 2,105 starts on site in the current year.

By 2025, we aim to be building an average of 2,000 homes per year including through our strategic development partnerships