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Value for money reporting weaknesses could affect regulatory judgements, warns regulator
The Regulator of Social Housing (RSH) has warned housing associations that regulatory judgements could be adversely affected if landlords are found to incorrectly record data for their value for money (VfM) reports.
In its annual report on VfM metrics and reporting, published today, the regulator said the quality of reporting within housing associations this year was “mixed” with other issues, including a lack of targets and limited or non-specific information on investment plans and decision-making.
The regulator also said it had identified cases where providers had adjusted information from year to year and a number of instances of “inconsistent reporting”. The most notable example of this saw associations taking costs that relate to social housing activities and recognising these costs for non-social housing activities. The regulator said it had also seen associations reclassifying homes between different categories in their reporting.
This created “a suspicion of manipulation to create better results” in instances where the adjustments were not supported by adequate explanation.
The regulator warned registered providers that reporting undertaken in future accounts must meet requirements and said year-on-year reporting weaknesses will be reflected in regulatory judgements.
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A revised Value for Money Standard was introduced by the regulator in 2018 in order “to encourage providers to optimise the use of their assets and resources and improve the efficiency, economy and effectiveness”.
The regulator’s analysis of the 2019 figures found that the sector’s median overall operating margin was 25.8%, down 3.1% from 28.8% in 2018.
The sector’s median return on capital employed was 3.8%, down 0.3% from 4.1% in 2018.
Meanwhile, the average social housing cost per unit was £4,118, up 5.1% from £3,919 in 2018.
According to the regulator, the falling margins “largely reflect increasing reinvestment in existing stock across the country and lower receipts from first tranche sales in London and the South East, combined with the ongoing rent reductions”.
Fiona MacGregor, chief executive of the RSH, said: “It is essential that boards and executives ask themselves the right questions to ensure that their organisation’s assets and resources – including those subsidised by the taxpayer – are used efficiently and effectively.
“Reporting on VfM not only makes the sector more transparent and accountable to its tenants and other stakeholders, it also helps them understand the competing pressures on resources that may impact on a provider’s outcomes and how decisions are made.
“The report highlights that some providers have not met the requirements of the new standard first time and need to improve their VfM targets and reporting.”
