
The 'Chocolate Snowman Appeal' is an amazing initiative that Anthony Collins Solicitors' (ACS) employees take part in every year.
The revised Standard replaces the old self-assessment model with a more structured mechanism that places VFM at the heart of the business and involves reporting against a set of VFM Metrics. The Regulator of Social Housing (‘the Regulator’) has ultimately concluded that the proposed metrics remain broadly the most appropriate set of measures to capture performance across the sector. The Regulator has also published a VFM Metrics Technical Note to assist in interpreting the Metrics and how they will apply in practice.
The new Standard and Code do not deviate substantially from the draft Consultation documents, but there are some key changes to note that we discuss in further detail below. For a brief refresher on the Consultation document proposals, please see our September e-briefing.
Changes to the Standard and Code
A number of concerns were raised about the Standard and Code being too financially focused, as some RPs felt that they did not reflect the social value or impact of the sector. The Regulator has defended the Standard stating that, in order to set a Standard that is applicable across the whole of the sector, it was not appropriate to widen the scope of the metrics into these more subjective and contested measures. The feedback did, however, result in an amendment to the Code as outlined below:
As part of the consultation, concerns were expressed that publishing the VFM Metrics in the accounts would not lead to transparency for stakeholders. Many RPs felt that there would still be a need for narrative reporting of VFM that would be too detailed for accounts. The following changes were made to the Code to reflect this:
The only change made to the Standard itself was to paragraph 2(c), where it has been amended to clarify that where RPs invest in non-social housing activities, they should specifically consider whether this generates returns commensurate to the risk involved, and be able to justify where this is not the case.
Small RPs
The Regulator has emphasised that smaller RPs (those with less than 1,000 units) will still be expected to comply with the Standard, but the regulatory approach and level of engagement will reflect the size and risk profile of those organisations. The regulation of the VFM Standard will be proportionate and in line with the Regulator’s existing approach to regulating smaller RPs. The Regulator has confirmed that it does not intend to place any new requirements on small RPs to submit an FVA.
Changes to the VFM Metrics
The draft VFM metrics were initially published in September 2017 and drew on the Sector Scorecard exercise piloted by a number of RPs. The draft metrics have been amended following feedback from 84 respondents and to reflect the latest FRS102 reporting requirements. The changes are a refinement of four of the VFM metrics, namely:
Reporting against the metrics
RPs will be expected to report on the metrics across their whole group structures (not just core social housing activity within the RP(s) in the group) and should broadly categorise activities into “social housing activities” and “other”. It is, therefore, important to note that the metrics do not differentiate between other charitable and commercial activities carried out within a group structure and this will directly affect the results showing performance against the metrics. There is the possibility that this could lead to league tables that would not accurately reflect the diversity of the sector and differences in geography, structure, stock make-up, proportion of supported housing and organisational objectives.
The Regulator has acknowledged these concerns but still feels that it is important that comparisons can be made across the sector. It is unclear how this information will be interpreted by the Regulator and what, if any, action may result from a ‘poor’ performance.
Greater transparency?
It is to be hoped that the new Standard and Metrics will lead to greater transparency and easier comparison over VFM reporting within the sector. Our view is that it will certainly see a number of RPs looking to “sharpen their pencil” and assess the extent to which their current structures and plans remain fit for the future.
For more information on the new VFM standard, please contact us.
The 'Chocolate Snowman Appeal' is an amazing initiative that Anthony Collins Solicitors' (ACS) employees take part in every year.
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