Report on the work of the 2021 Affordable Housing Investment Benchmarks Working Group

The current Affordable Housing Supply Programme is delivered by over 100 organisations using a number of different approaches and contractors.  However, despite the significant level of overall investment in the Programme, the Scottish Government highlighted that there is currently no sector-wide system in place to consider what is working well, where improvements could be made, how the approach of one organisation compares to another etc.  

The group agreed that this needs to be addressed in order to demonstrate and improve value for money – noting that it is essential that the sector can measure its performance, identify opportunities for improvement and ensure that investment is achieving the intended high quality and value for money standards.  In this context, local authority officers highlighted (a) the existing legal requirement of councils to make arrangements which secure best value and (b) the accountability to tenants and their wider community in terms of both affordability and the quality of new homes.

Information submitted by the Scottish Government to the first meeting of the group included a section on continuous improvement – this suggested some new ideas for discussion but was underpinned by two programmes that had been in development over the past five years:

• A ‘Value for Money in New Affordable Homes Tool’ to measure and improve performance in housing development – this had been developed by councils and housing associations through Scotland’s Housing Network[1] over the period since 2016 and allows the cost, quality and speed of delivery of new build projects to be evaluated and compared (see below).
• A programme of procurement support for housing associations – this was delivered by Scotland Excel between 2016 and 2019, and had been funded by the Scottish Government.  The work was paused however in early 2020 due to the pandemic (see below).

During the review, Scottish Government officials proposed that (a) both of these programmes should to be adopted universally across the sector (for the reasons given below) and (b) participation in both of these programmes would become a condition of receiving grant funding for the delivery of new affordable homes (the procurement support programme would apply only to housing associations as councils already participate in the local government scheme).  Prior to any implementation of that condition however, the Scottish Government confirmed that it would work collaboratively with appropriate organisations and their representative bodies to ensure that these requirements are implemented in the most effective and useful way. 

While RSL sector representatives made it clear that they had concerns about the evidence base for – and the efficiency and effectiveness of – either tool, as well as the mandatory element, the Scottish Government did not share that view.

Value for Money in New Affordable Homes Tool

The Scottish Government noted that above tool was developed with councils and housing associations and that it had been hoped that most of, if not all of, Scotland’s Housing Network members would participate.  It was noted however that there are two main reasons why some members have been reluctant to take part:

• The tool requires data to be submitted to Scotland’s Housing Network for individual projects – this is data about costs, time and quality.  Much (but not all) of this data is already held on Scottish Government systems and Scotland’s Housing Network members were keen to avoid submitting such data twice.  (Scotland’s Housing Network has convened a group of its member which is reviewing the quality measures and would expect to adjust these in light of experience.)
• The tool also requires a face to face interview with tenants, one year after occupation.  Many members of Scotland’s Housing Network already survey tenants of new homes and were reluctant to move away from their local approach.  Some also cited costs as a concern though at approximately £30 per survey (set against the total cost of delivering a new RSL social rented home in 2019-20, for example, of nearly £160,000) this was not considered to be a major issue by the Scottish Government.

The Scottish Government noted that it believes that the tool needs to be universally adopted to ensure that the findings are reliable and meaningful across Scotland.  Without this, the Scottish Government highlighted that it would not be possible to provide evidence of performance and quality improvement at a national level to reflect the Affordable Housing Supply Programme as a whole.  Experience in housing management demonstrates the value of comparing results and working practices across landlords in order to identify and share best practice – with the Scottish Government being of the view that a similar approach is needed for housing development.

Procurement support programme

The Scottish Government noted that the procurement support programme was made available free of charge to all housing associations, but was only taken up by 53 associations (about one-third of the sector).  During the review, the Scottish Government referred to evidence previously shared with sector leaders which showed the procurement capability across the sector.  Before the programme began, typical scores were below 20% and rose to a median of 46% following the support being provided – demonstrating that there is scope for improvement.  The programme also highlighted compliance issues and scope for financial savings (across most areas of activity).  Given these results, the Scottish Government noted that it believes that the programme needs to be adopted by all associations and (as is already the case with councils and other public sector bodies) run for a period of years in order to drive up performance.  It was proposing therefore that the scheme continues in a similar mode to the previous programme – delivered by Scotland Excel using the PCIP ‘lite’ tool (Procurement and Commercial Improvement Programme).

In order to highlight the need for the programme to be universally adopted and participation made a condition of grant, the Scottish Government advised that even when the scheme was free to all associations, only a third or so took part despite a range of measures to stimulate participation (including two letters to all chief executives, many conference and forum presentations and press articles).  While RSL representatives on the group noted that this lack of participation to some extent indicated concerns from members about the programme (as evidenced from surveys), the Scottish Government noted that following conclusion of the programme the majority of those RSLs that gave feedback commented positively about their experience and would recommend the programme to others.

Local government response

While ALACHO commented positively about its experience working with Scotland’s Housing Network, local authority officers did not comment specifically on the proposal regarding making participation a condition of grant.  In this respect, local authorities are already required to make arrangements which secure best value, and decisions are made and scrutinised by local Elected Members.   

Housing association response

In acknowledging the sector’s commitment to evidence-based continuous improvement, housing association representatives on the group had sufficient concerns about the Scottish Government’s proposal to provide a counter-proposal.  While completely agreeing with the principle of continuous improvement, specific concerns were raised in relation to (a) the lack of time to take a holistic approach on continuous improvement (b) insufficient consultation with the sector and (c) insufficient evidence that the two proposed tools would achieve the desired evidence of continuous improvement.  To that end, housing association representatives on the group proposed that an initial one-year exploratory phase be implemented covering the following elements:

• a shared definition of continuous improvement, best value and value for money to frame research, with agreed principles which underpin the work
• a mapping of current continuous improvement activity, systems, programmes etc by RSLs and their key partners, such as the Scottish Government and the Scottish Housing Regulator
• a scoping of continuous improvement activity, systems, programmes etc across the UK RSL sector and in other related sectors
• a gap analysis to identify where further continuous improvement could be focused, looking particularly at procurement and development (the ‘Value for Money in New Affordable Homes Tool’, and the PCIP, would form part of this)
• a programme to involve and consult with the sector to ensure that user intelligence, expertise and experience informs the outcomes and outputs, and
• interim and final reporting with specific recommendations on the extension of continuous improvement in the sector.

In noting this position, the Scottish Government believed that the two programmes that it had proposed would form a strong foundation to allow the continuous improvement programme to commence.  It fully recognised that the continuous improvement programme would evolve, and that this would allow the housing association sector’s comments to be addressed over time.