Procurement Efficiencies: Monitoring and Evaluation of Devanha Phase 2

12 Local Authorities

12.1 Introduction

Local authorities have been strategic partners in delivery of affordable housing since before the inception of Devanha. Moreover, the strategic and delivery roles of local authorities throughout Scotland have grown significantly over the period in which Devanha has operated, with the growing importance of the Strategic Housing Investment Plan (SHIP), including changes in the current year. Devanha operates over three separate local authority areas: Aberdeen City, Aberdeenshire and Moray.

12.2 The relationship between Devanha and the three local authorities is important to the success of the initiative and has been explored through interviews with senior local authority staff and in consultations with the Devanha Board. Data collected also examined how delivery had compared with the initial intentions of the Devanha Offer of Grant.

Devanha Objectives

12.3 The local authorities did not feel involved in setting Devanha's objectives and saw it as a bulk procurement initiative which sought to achieve cost and grant efficiencies and quality improvements. Their experienced was coloured by a lack of external coherence on the part of Devanha and a feeling that individual RSLs continued to work to their own rather than Devanha's agenda. In those local authority areas where the majority of the programme was centred - Aberdeenshire and Aberdeen City - there was a general feeling that Devanha had been positive in delivering a large programme. For reasons discussed below, the impression held by Moray was less positive, although Moray representatives were a little more positive about Devanha by the end of the programme.

12.4 The lack of external cohesion of Devanha was a recurrent theme for all authorities and contact had been largely with individual RSLs rather than Devanha. An interviewee asked, "What is Devanha? Is it anything?" a view which did not really change over the period of the programme. Nevertheless, local authorities did engage with Devanha through its member RSLs, providing significant support in the form of grant funding and, in one authority, the existence of a large Devanha programme had allowed a more strategic view of land allocation.

Delivery Issues

12.5 A multi-year, multi-area programme such as Devanha required co-ordination of the programme and had to meet the differing housing needs and objectives of three different authorities. This inevitably created more complexity than a traditional one year Affordable Housing Investment Programme (AHIP) in a single area. Communication and control over the timing of delivery have therefore been of particular importance. For reasons within and outwith its control, Devanha has not performed well in either of these respects.

12.6 The programme was not split evenly across the three local authorities. At the end of the first year delivery was skewed towards Aberdeenshire and to a lesser extent to Aberdeen City although by the time the programme was complete this had evened out to be nearer the programme target as shown in table 12.1.

Table 12.1: Projects at Scheme Validation Stage

Local Authority	June 2008	Final Split
Aberdeen City	6	15
Aberdeenshire	10	28
Moray	0	8

Source: M&E Round 1 & Round 3 Data Capture Forms plus additional data supplied by Devanha

12.7 The programme's slow start exacerbated the sense of unfairness and led to an underspend on the AHIP in Moray. Lack of communication between Devanha and the local authorities over the programme delays created further tensions.

12.8 A stronger and more engaged external face to Devanha would have improved its image and helped it to manage these difficulties. However, Devanha's final performance in managing the programme across the three local authorities was very good, with the proportion of final unit output close that agreed at Offer of Grant stage as shown in table 12.2.

Table 12.2 Proportional Split of Unit Output by Local Authority

	Aberdeen City	Aberdeenshire	Moray	Total
Offer of Grant	43%	44%	13%	1563
Validation	41%	47%	12%	1383

Source: M&E Round 1 & Round 3 Data Capture Forms plus additional data supplied by Devanha

12.9 A strong perception emerged that Aberdeen City and Shire were the focus of the programme. The programme was much smaller in Moray and started later. Moreover, the overwhelming majority of the Devanha programme in Moray was delivered through the Moray Volume Procurement Initiative (MVPI3). Although MVPI3 was delivered by one of the Devanha RSLs, it was not part of the Framework Agreement but, rather, a series of section 75 projects which had been negotiated with a single developer.

12.10 The loss of units from the original target, around 40 from an original expectation of 209 was a larger proportion of the original local authority level programme and was more keenly felt in Moray than in the other local authorities. This resulted in a lower level of satisfaction with the overall Devanha experience. Although this is perhaps inevitable given the nature of the programme, it could have been handled better by strong strategic leadership from Devanha. This is an additional area where the appointment of an MD could have prioritised a vulnerable area of Devanha's business. Integration with SHIP

12.11 Over the period of the Devanha programme the role of local authorities at a strategic and delivery level has increased and the SHIP has taken a central place in strategic decision making. Devanha pre-dated the SHIP but local authorities found Devanha to be a useful tool in meeting housing need, particularly through the use of nominations to housing produced through the programme. In Moray the MVPI3 was well integrated with the SHIP but the authority did not consult with Devanha on the MVPI3 and Devanha was in many respects "just a badge" for delivering MVPI3.

12.12 A clear message is that local authorities and their delivery partners should communicate more fully in the development of a strategic programme for delivering affordable housing. Given the changing roles of authorities and RSLs and the more complex and challenging funding environment this is even more the case than in the past, bringing into focus Devanha's ability to communicate and present a strong and cohesive face to its external partners.

Communication

12.13 Local authorities felt that they had not been involved sufficiently in initial decisions about setting up Devanha and its programme. Latterly, local authority influence increased to some extent. However, local authorities continued to have little influence over the detail of the Devanha programme at a project level.

12.14 All of the local authorities considered that communication had been a negative aspect of Devanha. One noted that it was "was only consulted when a problem arose and where Scottish Government insisted that Devanha had our agreement before Scottish Government would agree to a change. There was generally a lack of early and open discussion….we were expected to agree with whatever Devanha proposed… [for example] where the RSL wanted to change the tenure mix." This was typical of the way Devanha interacted with local authorities. Devanha lacked strong leadership and so could not engage strategically with local authorities but instead addressed issues on a scheme by scheme, problem solving basis.

12.15 Outwith the tripartite meetings of the local authority, Scottish Government and Devanha, communication tends to be with individual constituent RSLs. Relationships with the RSLs were generally good, although it is not always clear if the RSL is representing itself or Devanha.

"There wasn't really a day to day relationship with Devanha, to a large extent this continued to be with the individual RSLs".

"There were irregular meeting with Devanha and all three authorities tried to have more meetings. But Devanha's involvement didn't bring anything new to the meetings"
(LA consultation, 2012)

Local Authority Support for Devanha

12.16 Throughout the programme, LAs demonstrated their support for Devanha through making funding available, transferring land to Devanha RSLs and Moray included Devanha as the agent for delivery of the Moray Volume Procurement Initiative (MVPI 3). Local authorities, in some cases reluctantly, supported Devanha decisions in order to allow schemes to remain viable. For example, they agreed to a change of tenure, even where a change to shared equity ran counter to the local authority's views on the appropriate mix, in order to allow a scheme to proceed.

12.17 This and other examples show that, despite reservations about their lack of involvement, authorities remained as supportive partners of Devanha throughout the programme. The authorities all welcomed the continuity which Devanha had brought to the construction industry in their areas. This was seen as beneficial not only to the three framework contractors but also to local suppliers.

Overall satisfaction

12.18 All of the local authorities were positive about some aspects of Devanha; Devanha was seen as a good opportunity to work collectively to meet needs of the area. The main negative comments related to poor communication and to the fall in number of units delivered in comparison to original estimates. There was some concern that decisions about reducing numbers of units or moving resources between the local authorities had not been discussed sufficiently with the authorities.

12.19 Aberdeen City commented that Devanha had been successful in pulling together sites where previously RSL access to sites had been very difficult. It had delivered a significant programme over a five year period. A particularly positive view in Aberdeenshire reflected the facts that delivery here had started early and the total number of units provided fell proportionately less than in other areas.

12.20 In Moray the successful delivery of the MVPI programme was welcomed. This was put down as a success in partnership working with the individual RSL. Devanha's involvement was seen as marginal. Devanha was thought to have been more interested in delivery in other areas than in Moray.

How Could Devanha have been Improved

12.21 From the LA perspective, Devanha was a complicated organisation without clear objectives.

12.22 All of the local authorities believed that Devanha needed improved communications. One summed this up as a need to show that "Devanha actually exists". Local authorities were aware of tensions between Devanha members.

12.23 Governance was seen as a problem, with RSLs unwilling to give up power and responsibility. This would have been improved by Devanha working more collectively. Authorities would have liked Devanha to explore the possibility of a single development team where shared skills and knowledge could have supported and strengthened all of the RSLs. One authority commented that the individual RSL staff were very professional but that it was not clear if being part of Devanha assisted or constrained them in their work.

12.24 The problem of relationships extended beyond Devanha to its partners in local authorities. Greater input from local authorities in setting up the initiative and in setting its goals would have been welcomed.

The Future

12.25 Looking to the future, all local authorities saw uncertainty in the coming year. Budgets would be small and the ability to start new projects very limited. The authorities would try to maximise the use of capacity which existed amongst all potential partners including local authority building, RSLs and the private sector.

12.26 Local authorities have concern about where the new affordable housing will come from this year. There may be opportunities for the authorities to continue council house building. The capacity of organisations to build, based on assets and liabilities is now a key consideration. There are very few RSL projects in the pipeline with ownership and planning permission in place and an organisation such as Devanha could play a part in pulling together sites. There was a concern a return to individual RSL programmes may be a backward step in this respect.

12.27 The local authorities were supportive in principle of a collaborative approach to delivering new affordable housing. It was suggested that this could increase capacity in comparison to individual RSLs, some of whom have little or no capacity. In this context there could be negotiations over a future role for a Devanha-like organisation. However, there had been no approach to any of the local authorities from Devanha for inclusion in the local authority SHIPs which were being prepared at the time the local authority interviews were being carried out in late February and early March 2012.

12.28 Looking to the medium term, the local authorities welcomed their increased strategic role in delivery of affordable housing. They saw a more co-ordinated approach, where they could bring together resources from across the public, RSL and private sectors as potentially beneficial. This could open up options for involvement but "no-one was speaking for Devanha".

12.29 A local authority suggested that there was potential for developing a grouping, including a local authority in a co-ordinated approach. The local authority could take a lead strategic role but could be involved as an equal partner in delivery. In such a situation it was suggested that Devanha could conceivably work as a lead developer or preferred partner. However, it was emphasised that such an approach would be "very much dependent on getting governance right".

12.30 Another authority suggested it could not deliver the whole programme over the next three years. It would look at all delivery options including a preferred developer or site by site competition. The council did not rule out Devanha's involvement in such an approach.

12.31 Devanha's good reputation in delivering quality is a factor in opening up possible future opportunities. Notably, Aberdeenshire Council has been running a demonstration in building new local authority housing: developing with the Devanha spec, developing with a council architect spec and a private developer spec. This demonstrates possible advantages of the council working collaboratively with others, such as Devanha, in delivery in the new affordable housing system.

12.32 The Aberdeen City interviewee believed that there was a continuing role for an RSL collective whether that was Devanha or something else completely. The City was concerned that the local RSLs may be too small to raise finance individually but hopeful that they may have greater capacity if working together. Devanha had demonstrated that bigger sites, such as Arran Avenue with around 100 units and Donside with over 200 units, could be developed where two RSLs worked together. On the other hand, Devanha was not the only possibility and, without expressing a preference for this, the interviewee noted that national RSLs may be able to develop bigger sites alone, possibly with local RSL management.

12.33 The Moray interviewee considered that whether Devanha would be involved would depend to a large extent on the criteria the council establishes for partnership working. Devanha has some advantages in having housing management infrastructure in the area already. This could be preferable to involvement of an outside organisation which has no existing stock in Moray.

12.34 This should be balanced by the view that Moray had felt peripheral to Devanha. It was noted that, ideally, if repeated, a bulk procurement initiative would be based in Moray only although the council understood that may not be practicable because of size of programme not being large enough. Future involvement of Devanha would have to address this issue.

12.35 In Aberdeenshire it was stated that consideration can be given to working with Devanha in future. Devanha had experience of collaboration which could be tapped into and be beneficial in meeting the council's strategic objectives through partnership. Devanha could be involved but it will need to reconsider its operation, governance and financing and work beyond just new housing in, for example, in stock improvement, retro-fit and energy efficiency in existing stock.