The Value for Money Standard: Snog, Marry, or Avoid?

Jon Slade, Director at Campbell Tickell discusses the new Value for Money (VfM) standard in the updated Regulator of Social Housing’s (RSH) document.

Should you try to snog, marry or avoid the RSH’s new VfM standard? My view is that snogging will be the most beneficial, and I will tell you why.

 

 

First let’s talk about the new code. To the sound of a collective sigh of relief the VfM Self-Assessment is no more. It became an annual driving test. The passing of this implied only the ability to pass the test, which many did, while failing to drive VfM into the core of their business. As such it satisfied no-one. Not good VfM performers, who are good at VfM without the impulse of a self-assessment. Not organisations who are poor at VfM. They were not persuaded into being better at it by the need to write a self-assessment. And not the regulator, for whom the self-assessments did not deliver the leap forward they want to see.

Ambitions of the new standard

The ambitions of the new standard are similar to the old. Firstly, that your organisation makes economy, efficiency and effectiveness an integral part of your business. Secondly, that you understand the relationship between your delivery mechanisms and corporate objectives, as well as comparing yourself to others.

One noticeable change is the increased emphasis placed on Board engagement with the subject. This is a good clue as to how the RSH will pursue the issue.

On the one hand the annual regulatory burden of VfM reporting is less.  The VfM Self-Assessment is gone, replaced by a section in your accounts including feedback on the RSH’s key indicators. However, I expect to see the profile given to VfM within In Depth Assessments rise. It will be during these more intense engagements that the RSH will test how embedded VfM is in your business. As well as the extent to which your Board is engaged in strategically controlling your VfM agenda.

Don’t ‘avoid’ or ‘marry’

The best way to attract RSH attention is to try and ‘avoid’ the new approach. The RSH will be on the lookout for VfM statements which are lightweight, misconstrued, or in other ways lacking meaningful engagement with the VfM agenda.

At the other extreme I don’t recommend ‘marrying’ the RSH approach. By which I mean if you slavishly repeat their key phrases and messages, then your superficiality may bring unwanted outcomes.

Meaningful engagement

So, you should ‘snog’ the new code. You should meaningfully engage with its requirements. The RSH wants evidence of meaningful consideration of economy, efficiency and effectiveness in every part of your business and at all relevant layers.  They don’t want a VfM story wrapped around an inefficient business.

Starting from whether there is a strong business case for you remaining independent, you need to work through layers such as your service model and operating geography. And going forward, you need to look at the design specifications and operating costs. Piecemeal stories of occasional savings on contract relets will not cut it.

Internal operational efficiency

With a return in 2020 to inflation linked rents the new VfM Code is the RSH’s strongest available tool in persuading organisations to engage vigorously with the subject of internal operational efficiency. We should expect the RSH to pursue the issue energetically and therefore we should expect some downgrades to follow.

The perennial problem for the regulator is that the code is just a lens through which to view a business. What really matters is not what the lens shows, but the unfiltered reality of what is going on in the business. As a sector we are behind many others in our journey towards digital service. In a future blog I will talk about why that is and what we can do about it.

 

To discuss any issues raised in this article, please contact Jon Slade on jon.slade@campbelltickell.com

Read also Sue Harvey’s blog on the subject with a mark-up PDF of key changes.