As part of this drive for efficiency and stability, Senior Management Team posts, previously filled through the use of interim contractors, have now successfully been replaced with permanent appointees either during the last two years or immediately following this year-end. As the business and our partners commence a return towork at the StratfordHub, wewill continue tomonitor the running costs of this facility as, firstly, our administrative business centre, secondly, the base fromwhich our partners can operate and importantly also part of our social purpose in forming a relationship with our migrant and refugee clients. The revision of the useful economic lives of this prime asset has been a key part in establishing the appropriate operating cost of this vital social and administrative facility. Our social housing cost per unit and therefore our operating margins have benefited from the changes made against our operating costs a year earlier and reflects a stabilising of the business and its senior management team. When combined with the net increase in our ongoing resident income, our operating margins have been improved considerably. As the Board of a responsible social landlord, we are cognisant of the impact that increasing household costs, including rent and service charges, has on our residents. We are also mindful of our obligation to invest in the health & safety of those residents and the requirement to continue to invest in our properties to deliver on that obligation. After careful consideration and debate the Board of Arhag agreed to increase rents in line with government limits of CPI plus 1.0%. Arhag is committed to demonstrating value for money so that our residents, lenders and other stakeholders are satisfied that expenditure on our existing properties and service charges ensures our stock is of a good standard, and that we have the financial strength to grow in the future. The new Senior Management Team at Arhag has identified that there is potential to drive efficiency and effectiveness improvements via a comprehensive review of our supply chain of service delivery and to this end we are engaging with the South-East Consortium to re-procure our routine and planned maintenance services. Alongside this re-procurement, Arhag has invested significantly in gaining a better understanding of the completeness and accuracy of the data we hold on the condition of our properties in order to drive the decisionmaking on when and where we need to be investing our available capital funds over the life of those properties. Despite coming down by 9% in the year, our social housing cost per unit remains high and against the whole of the social housing sector, as measured by the Sector Scorecard, we remain below median but have moved from the 4th quartile up to the 3rd. Whilst we would wish to see this figure decrease significantly year-on-year, and long-term this remains our objective, for the year to March 2023 we have budgeted for an increased investment in the repair and maintenance of our homes. The main factor behind this increase is providing sufficient budgetary provision for maintaining expenditure levels on the ‘front-line’ costs of routine and planned maintenance and potential additional reinvestment in new components of our residents’ homes resulting from the stock condition surveys currently being undertaken. To mitigate the adverse impact of this, our underlying operating cost per unit is set to change in the coming year as follows: • Through the full-year impact in the stabilisation of the senior management team driving out the historic additional cost of senior interim managers • Better operational controls to obviate the legacy issues of disrepair cases and potential compensation payments that have resulted previously • Work on changing the way in which we plan and procure our component replacement, compliance, and responsive repair programmes, so that our work is more effective and preventative rather than reactive, and overall enhances the quality and value of our stock • We want to ensure that the difficulties faced by a smaller organisation in terms of economy of scale do not deter us from providing a good standard of service delivery and compliance, and that we are in control of the resources we employ to manage our organisation. Our social housing and overall operatingmargins will benefit in the longterm from the stabilisation of the business, the reprocurement of services and a reviewof our social housing operating costs. Additionally, the senior management teamhas been discussingwith existing and potential newpartners changes to themodel of occupation of the available space at Stratford to enhance its potential as a migrant and refugee hub and improve the financial efficiency of the facility. 34 ARHAG
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