Business Plan 2016 - 2020 - Impact Housing · Cont . Business Plan 2016 - 2020 Im. pact Housing Association . . Tel: 03448 736290

Cont

Business Plan 2016 - 2020

Impact Housing Association

www.impacthousing.org.uk

Tel: 03448 736290

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Contents Executive Summary ........................................................................................................ 3 Mission & Blueprint.......................................................................................................... 5 Blueprint 2015 – 2020 ..................................................................................................... 6 Business Plan Priorities 2016 .......................................................................................... 7 The Strategic Planning Context ..................................................................................... 16 Risk and Business Development ................................................................................... 17 Medium Term Financial Plan ......................................................................................... 19

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The Direction Executive Summary These are challenging times. For Charitable Housing Associations like Impact, there are a number of very significant issues facing all of us, each bringing different challenges. Challenge 1: Our Relationship with Central Government Since the Conservative Government was elected in May, it has become clear that they have ambitious plans for our sector. In the first 6mth, we have had implemented or suggested

o Compulsory cuts in rental income over at least the next 5yr, o Extension of Right to Buy to all of our tenants, o Shift of the development programme to Home Ownership, o Higher rents for tenants on middle incomes and above, o Fixed term tenancies, o Reclassification as public bodies, o End of s.106 purchases from developers, o Sale of our govt loans to the private sector

Also, Government clearly sees us as having an important role in increasing the total supply of new housing across the Country. Only time will tell whether we are able to achieve their ambitious expectations at the same time as having our finances constrained in this way….. and, what effect their intentions for us will have on our independence and our fundamental ethos. Challenge 2: Our Relationship with Local Government Clearly the statutory sector can no longer do the old things in the old ways. There may be opportunities for efficient and effective locally based third sector organisations to help. However, for our housing association sector, with the budget constraints imposed on us by central government (see above), there would seem to be less and less opportunity for us to assist the local statutory bodies to carry out their statutory duties. Challenge 3: Funding i) Revenue Funding There have been severe cuts in central and local government services over the last 4 years. These are still working their way through to local organisations, local families, and local communities. The next Spending Round will bring further cuts (2016-2020). By that time, poor families will be 30% poorer than they were in 2010. Reduced revenue support to the most vulnerable may put lives and wellbeing at risk. Our position is very clear and very focused: our primary commitment is to our tenants, our second is to the communities in which they live, and our third is to our wider operating environment of Cumbria and North Lancashire. ii) Capital Funding It would seem that receipts from the new Right to Buy programme will be put to developing new homes for first time buyers. Commercial lenders still seem keen to lend to Impact (and to our wider sector) as we are seen as a sound and low risk investment. However, the amount and rate of future finance will depend on our freedom to generate the rents and other income that will cover repayments and covenants.

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Challenge 4: Regulation Our Regulator is part of the Homes and Communities Agency (“HCA”) and has a “light touch”, with an emphasis to date on good governance, financial competency and value for money. We are regarded by them as a strong organisation with robust financial controls (a view reflected by lenders). Our financial strength and credibility put us in a unique position to contribute to local communities and local partnerships for service delivery. The Regulator brought out a new Code in April 2015 but it is already out of date. It is still unclear what effect the new Housing and Planning Bill will have on our sector (with its talk of “deregulation”). These challenges will also bring opportunities for organisations like ours. This Business Plan attempts to interpret the fast changing external environment in a way that will allow us to set ambitious targets within a flexible framework for the future.

Our Business Plan both reacts to these challenging times and sets out a positive agenda for change.

Mike Muir Mark Costello Chief Executive Chairman

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Mission & Blueprint Mission Our strapline in our logo “Impact Improvement through Action” is one that everyone knows, internally and externally. It has stood the test of time since 1975 and still reflects what we are about.

IMPROVEMENT THROUGH ACTION Hierarchy There is a hierarchy of strategic documents which include our Mission and our Blueprint which incorporate our key purposes.

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Blueprint 2015 – 2020 The Blueprint sets out our ambitions and vision for the future.

2015 - 2020

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The Issues

We work with a number of people who without our help would struggle with day to day living. These include our supported housing tenants, young people learning to live independently, domestic abuse clients and volunteers looking for work. Mainly people who want some support to move their lives forward. The Actions We work with over 2,500 people every year to help them identify realistic goals and support them to realise them. We measure and define our success by what those individuals achieve against the goals they initially set.

The Issues Many people only require good quality, affordable housing to keep their life on track. Housing is the core of our offer and central to what we do. It is often a way to identify other issues which we can offer guidance and advice to address. The Actions We provide over 2,600 houses, flats and bungalows to people who do not need high levels of support. We maintain our properties to a high standard and have 98% tenant satisfaction. We develop 40-60 new properties every year to meet additional needs.

The Issues Many of our tenants and clients have low educational attainment, below average incomes and, where this is measurable, low aspirations. Many have talents and skills and this is a wasted opportunity for those individuals and for our society. The Actions We have a dialogue with all who come into contact with us and we have an offer of support for them all. We already have an explicit commitment to many of our supported tenants, our volunteers and our various clients. Now, with the development of our Community Hubs and neighbourhood and community offers, we are extending that service to all of our tenants and the communities in which they live.

The Issues Incomes in Cumbria and especially in many of the areas that we work are well below the national average; and, incomes are reducing relative to rents and other living costs. The Actions We work with our applicants, tenants and clients to ensure they have the information required to maximise their income; we support them to build up their resilience and self-confidence; we assess costs in use to ensure our properties are as affordable as possible and advise tenants on how to best use them. These are only few examples of the work we do with over 600 new tenants and households every year.

Poverty

Reduction

Transformational

Services

Great Homes

Raising

Aspirations

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Business Plan Priorities 2016 Our 14 key priorities are set out below. The main part of the Business Plan sets out the context for and the detail of these priorities. 1. Maximise all of our rents on relet - We have a substantial task ahead of us to understand

all of the Govt’s sometimes contradictory expectations on us; however, within those, we have a duty to maximise our rental income so that we can make conscious decisions on how to best use that income to further our Objects

2. Look closely at all aspects of our cost base - We are having to make unprecedented

cuts in our budgets and in areas of our service. There can be no stone unturned in our drive for efficiency and Value for Money

3. Plan for Right to Buy - We do not yet know the terms of Govt’s new requirement, nor the

timescale. However, we need to make detailed initial assumptions (“scenario planning”) and make decisions on which high demand properties we would wish to retain

4. Manage changes to Supporting People funded services - We will need to close some

schemes and transfer staff to new providers, remodel others into new services, and make savings in central overheads

5. Explore new income sources - We will explore 3 areas of potential funding- new Govt schemes, further Charitable funding and links to Employers

6. Investigate widening our lettings criteria - Changing Govt expectations on us, changes to our rent levels and changes to local markets will all influence who we house

7. Renegotiate leases with our managing agents - Letting of new SP contracts in April is

the opportunity for us to review all of our arrangements with the organisations that may lease properties from us

8. Remodel our development programme - Changing Govt expectations on us, changes to grant rates and rent levels and changes to local markets will all influence what and where we develop

9. Review our loan portfolio - Traditional lending routes may be drawing to a close and our long term financial profile is definitely changing; it is crucial that we review our current and future borrowing

10. Explore joint working with the other local housing associations - There are clear similarities between us and several other local independent housing associations; we will be exploring closer links to reduce costs and mutually benefit our tenants

11. Explore alternative legal structures to safeguard our assets - Because of continuing

uncertainty over what Govt intends for our sector, we will explore setting up additional new legal structures which reflect the diversity of our activities

12. Renew contracts for asset management - As existing contracts come to an end, efficient

recommissioning will be crucial to our future efficiency

13. Implement new pensions choices - Major changes are being imposed on us through changes to Govt approaches to pensions and revaluation of our own pension scheme

14. Develop new model for our social enterprises - Both funding and markets are changing

and it is time to review the business plans of our various enterprises

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Operational Context Our Local Community Cumbria is a County of great contrasts. Indeed, there are almost 3 Cumbrias, each requiring a different approach from us:

1. The West Coast and Furness is a post-industrial economy with high indicators of deprivation (health, education, employment, aspiration). It has a poor quality stock with a significant amount of low demand ex-council housing. Since the big industrial employers disappeared, young people have been largely faced with less well paid, more insecure and, in their eyes, lower status employment opportunities. The economy is significantly dependent on Sellafield which directly and indirectly is responsible for 16,000 jobs. However, there are now major new growth plans for BAE Systems in Barrow, GlaxosmithKline in Ulverston and the new nuclear power stations planned around Sellafield. These significant investments will require a well qualified and flexible workforce, in numbers that are unheard of in recent years. Issues for Impact are around: upgrading our stock, dealing with low pay, low aspiration, poor educational attainment, fuel poverty and potentially declining demand for our properties. It contains the Districts of Allerdale, Copeland and Barrow.

2. The National Park is a highly protected landscape in Central Cumbria. Because there are limited opportunities for economic growth, and huge tourism pressures, it is faced with issues around housing, affordability and sustainability. Issues for Impact are around: fuel poverty, sustaining fragile rural communities and the high cost of new development. More recently, concerns are around the terms of the govt’s new Right to Buy programme, which may deplete our affordable housing stock in areas where we will never be able to replace it. It contains parts of the Districts of Eden, South Lakes, Copeland and Allerdale.

3. The Carlisle-Penrith-Kendal-Kendal (M6) Axis is the area of Cumbria and North

Lancashire that is most like the national picture, with the best prospects in terms of economic growth and sustainable communities. Issues for Impact are around filling in gaps, particularly in respect of supported housing, specialist services and local rural issues. We see this area as being the main growth area of Cumbria over coming years, with the deregulation of planning rules and other national and regional restrictions. It is the area where the govt’s aspiration for more housing for first time buyers is most likley to succeed. It includes the Districts of Carlisle, Eden and South Lakes and their respective rural hinterlands.

With the continued decline of opportunities funded through central and local govt., we are looking to shift some of our activities- remodeling and reusing (or disposing of) some of our existing stock and nurturing new relationships, with private developers, with local employers and so on. The continuing economic downturn may be with us until 2020 and possibly longer, depending on the effectiveness of the government’s austerity measures and wider, world economic factors. Further major cuts in public funding are already set out and will affect both our core services and the lives of our tenants. We cannot rule out the possibility of further govt.-imposed constraints on our budgets. Now more than ever before, we need to ensure that we are making creative and ambitious use of our limited resources. The vast majority of our tenants will get significantly poorer over coming years. There are some things that we can do to assist those individuals and the communities in which they live.

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Indeed, given our core charitable object of the Relief of Poverty, we have perhaps a duty to explore new ways of delivering services. Our Local Administrative and Political Structures Cumbria consists of 6 District Housing Authorities, the County Council and the National Park. It is a “two tier” area with individual authorities led by a number of different political coalitions. This means that it is difficult for a relatively small organisation like us, working throughout most of the County in a wide range of niches, to maintain a high profile in all areas. Lancaster City Council is a housing authority in Lancashire County, where we have completed our second scheme (10 houses for rent at Carnforth and, more recently, a scheme of houses and flats for people with physical disabilities in Lancaster). Govt. is encouraging local authorities to form alliances around local devolution of power. Whils the 7 Cumbrian authorities have submittes a joint bid, it is unclear at this point what the outcome or implications will be. Impact is controlled by its membership and its voluntary Board and Committees. It has no political links and relies on strong partnership working and strong personal and organisational relationships to deliver an effective range of services. Our Customers, Clients, Tenants, Residents, Service Users: a Profile The title of this section indicates the wide range of people and communities we work with. Over 64% of our tenants are in receipt of housing benefit (some of those of course working) and a higher number are in receipt of some state benefit (including pensions). Whilst Cumbria is an area of limited ethnic diversity, it does have a wide range of communities and needs. It is crucial to us that we have a clear profile of our communities and of our existing customer base so that we can target resources at areas of inequality or discrimination. We have a detailed knowledge of all of our customers – household size, background, financial circumstances etc. - that is enhanced by the close personal contact that our Neighbourhood Coordinators and others have built up over a long period and that is a fundamental part of our approach to our customers. It is this close relationship that has enabled us to work with our tenants to address the govt.’s welfare reform programme. Whilst we provide a wide range of services to meet those diverse needs, almost all of them are under extreme pressure at the moment-

• A number of our supported housing services will close due to reductions in funding through Cumbria County Council; similarly under threat are a number of the schemes that we lease to other third sector bodies to provide support to vulnerable tenants

• Changes to govt funding of University places has resulted in the remodeling of our Carlisle Halls of Residence

• Our Furniture Stores are under threat from withdrawal of Recycling Grant by the County Council and by changes in the market

We have advanced plans to remodel those various services to meet our changing circumstances and we will be rolling them out in th early months of 2016. We do see new opportunities arising through our increasingly strong links with local employers.

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Key Data We provide housing throughout Cumbria and in Lancashire designed to meet a wide range of housing needs. This includes general rented accommodation, new homes for sale, specialist extra care elderly schemes, supported housing and student accommodation. The following graph illustrates the numbers and geographical spread of all of our social rented accommodation.

The major element of this is general needs housing for rent, although 18% is supported accommodation. In addition to this we have 120 care home spaces and 200 units of student housing plus smaller amounts of Equity Share housing and commercial property.

We currently provide support either directly through our Positive Impact and Let Go Safe Space services, or through specialist agencies. The support needs we meet in our supported housing is wide:

Through the Supporting People contracts we have, we also directly and indirectly support additional single homeless people, young people, and those escaping domestic abuse.

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Families with Children

45%

Elderly15%

Single Adults28%

2 + Adults12%

Who we let to - New General Needs Tenants 2015

We continue with a forward looking development programme, which has typically aimed to provide 30 new homes a year. During 2015 our Development Team completed 32 new homes, but over the three year period 2015 to 2017 we expect to provide a total of 214 new homes. This includes more general social rented housing, elderly extra care, low cost for sale, and the Whitehaven Foyer. On top of this we expect to carry out a major remodelling of different elements of our stock. This could apply to 70 current units during 2016, depending on funding and demand, and is likely to include shared general needs housing in response to a changing housing and welfare environment.

Who we let to now and in the future is subject to change. We make over 300 general needs lettings a year, in 2015 the household makeup of who we let to was:

We are seeing a change in who we let to; just a few years ago the largest group of new tenants would have been single adults, the shift has been towards housing people with children and multi adult households. For people receiving housing benefit or Universal credit size of property and affordability is increasingly a real issue, with Welfare Reform changes setting limits and restriction.

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Our Profile as an Organisation We are a diverse organisation with a wide range of activities that makes it difficult for us to be easily categorised. Despite being a Registered Provider and a Charitable Housing Association, we have a significant additional income from those other activities. Indeed, over 20% of our income is generated from contracts and our community businesses. We are projected to achieve a surplus of £1m. on a turnover of £17m. Ensuring that we achieve the minimum that our lenders require. Of course, that surplus is ploughed straight back into the business and spent, 95% on purchasing local services from local suppliers and contractors. Some organisations with our profile have rebadged themselves as “Social Enterprises” but no simple definition illustrates the range of activities that we carry out in pursuance of our Charitable Objects. This difficulty of characterization is perhaps more profound than at any time in the history of housing associations. Out of 1,700 providers across England Wales, there are just over 100 that are broadly like ourselves (as described above); we are loosely affiliated into a group called Placeshapers. Then, at one end of the spectrum, there are a large number of very small charitable housing associations that have very few properties, employ no staff and have been in independent existence for a long time- for example, medieval almshouses- indeed, there are 4 of these organisations in Cumbria alone. At the other end of the spectrum, the largest housing associations operate with multi-million pound surpluses and massive development programmes, mainly in London and the South East of England- the largest of these associations, alone, has 100,000 properties and last year spent £300m of its own money developing 3,000 new properties. At Impact, with 200 staff and over 50 volunteers, training and development is a huge responsibility. We try to develop staff who are flexible and creative- who can adapt their ways of working to the changing needs and aspirations of our customers and the changing requirements of our various funders. It is a key fact that over a third of our staff are dependent on external contracts or the success of our commercial ventures. We aim for Impact to be the “Employer of Choice”. With an intensive service, meeting often quite challenging needs, that is dispersed over quite wide geographical areas (it can take 2½ hours to travel from one of our offices to another, and still stay within Cumbria), costs are high. We have 28 workplaces, including, now Lancaster. However, as far as possible, we provide a holistic service. Customers and tenants often use a number of our services- we may work with a young person in their secondary school, through into one of our supported housing schemes or Foyer at 16, through into independent living at 18/19; of course, they may also have bought our furniture to furnish their first flat. Our services are most effective where we can provide this “joined up” and seamless approach, either through the services that we provide ourselves or the links that we can provide to partner agencies. It is convenient to break our services down into a small number of key areas as follows: 1. Asset Management: Maintaining, upgrading (and where appropriate replacing) our

existing stock of housing and offices. Developing new housing. We have a clear Asset Management Strategy for our housing stock which sets out our plan for each of our properties and allocates long term funding based on a detailed stock investment programme that is sustainable within our 30yr financial plan. It is clear that, as aspirations increase and fuel prices increase relative to incomes, we will be faced with increasing numbers of properties which are not worth upgrading.

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We are developing our Asset Register, with 5 key elements 1. List of properties owned or leased 2. Leases, charges, planning restrictions 3. List of Components for planned maintenance and component accounting 4. All inspection reports (and actions from them) 5. Matrix showing intentions- “keep, upgrade, dispose”

We believe that our stock is in good condition, based on our detailed knowledge of every property, our feedback from our existing tenants and the high demand for most of our vacant properties. However, equally important to us is that those properties continue to be affordable to our tenants, which is why we give all new tenants a calculation of typical costs, including both rent and utility bills.

2. Development: Because of the govt’s recent imposed cuts in our rental income, we are having to make huge cuts in our budgets over the next five years and it is currently uncertain how large a new development programme we will have in future. Govt grants have almost disappeared, local authorities have little resources to top them up, and we have now hardly any capacity to cross subsidise. Off-the-shelf purchases from private developers (an important part of our stock replacement programme in recent years) is likely to disappear with the anticipated end to s.106 “planning gain” on new private developments. In recent years, we have concentrated on large schemes for the elderly and the young, but it is still unclear when or indeed whether we will be able to continue. We have a Young People’s Foyer on site in Whitehaven (through the Whitehaven Foyer Company, in conjunction with Howgill Centre) and an Extra Care Elderly Scheme in Brampton. Whilst we will have some income from Right to Buy sales, it may be that govt will expect these to focus on a Home Ownership programme, rather than on our traditional vulnerable client groups.

3. Housing Services: Some would say that the core function of housing associations is to

manage their stock and tenancies- letting, maintaining and dealing with tenancy issues. Most would accept some responsibility for wider community issues, including anti social behaviour. A small number also provide (or enable through third parties) supported housing. With the current imposed cuts in our budgets, many associations have become less involved in meeting the needs of a low income tenant base (focusing less on, say, affordable warmth, disabled adaptations and financial inclusion activities). For us, all of these services are integral parts of who we are as an organisation.

Key Developments 2016-20 o Renew leases with managing agents and dispose/remodel any surplus

suppored housing properties o Enter into new relationships over joint service procurement o Extend lifetime appraisal to all of our stock

Key Developments 2016-20 o Reassess the business case for all of our forward programme to check its

continuing viability in light of the current changes in our external world o Explore sharing resources/procurement with other local housing

associations o Explore a home ownership programme (incl. leasehold for the elderly) o Remodel programmes in the light of sales receipts from Right to Buy sales

and other property disposals

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It is clear that housing associations are increasingly unable to assist statutory bodies in fulfilling their own housing-related functions- with the homeless, with vulnerable groups, and so on. It feels as if, nationally, that relationship between housing associations and central and local govt is in the process of being rewritten.

4. Community Services: We have key specialisms in Domestic Violence (e.g. women’s

refuge, a counseling service), Young People (e.g. transitional support, excluded groups in school, youth activities, and training), Vulnerable Adults (e.g. single men and women moving back into mainstream life), Worklessness (eg training, placements and volunteering) and, increasingly, specialist Elderly provision. All of these areas are funded through public sector contracts or charitable funding, all currently under threat. It will be difficult over the next few years to sustain a wider community role, beyond that affecting specifically our own tenants.

5. Value for Money: This area is important enough to identify separately- the need to make best use of our resources through efficient working, prudent financial management, and effective procurement and so on. Our approach is to reinvest our annual surplus in key activities. We believe that small, locally based organisations like our own can deliver services far more effectively and with higher levels of customer satisfaction than larger, more distant, ones- a view borne out by independent benchmarking. Nevertheless, we have recently started discussions with the other 3 local, Cumbrian housing associations to explore joint working and shared provision of services. For a relatively small organisation, we have a valuable asset base and a significant loan portfolio (on our continuing capital programme); loan repayments are a significant part of our annual outgoings and effective reprocurement in this area will have the single largest effect on our cost efficiency in coming years.

Key Developments 2016-20 o Maximise all of our rents on relet o Widen the marketing of our vacant properties (including shared use) o Explore sharing resources/procurement with other local housing

associations

Key Developments 2016-20 o Remodel our support services to single people to support lower needs o Remodel our Foyers away from youth homessness and strengthen links

with employers

Key Developments 2016-20 o Renegotiate our loan portfolio o Investigate joint procurement of services

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6. Environmental: Our 6 furniture/recycling centres are effective in their environmental role- they divert good quality furniture and white goods from landfill, we provide affordable products for tenants and local communities under stress and we provide training and volunteering opportunities for our tenants and others. However, ending of the Recycling Grant by the County Council during 2015 has meant that they are no longer financially viable in their current form and we are currently exploring alternative models for the future.

7. Staffing: These are difficult times for staff, with severe financial constraints on the

organisation, with remodeling of services and in some cases significant reductions in our workforce. When the majority of our Cumbrian Supporting People funded contracts come to an end at end-March 2016, we hope that current staff will move to new employers. Whilst we will be remodeling a number of services, this will offer only limited opportunities for career enhancement. And, finally, with the growth of the well-paid Sellafield economy, we will face increasing competition for our higher qualified staff.

The Strategic Planning Context Housing Associations are not really public bodies1 yet we are publically accountable. We are regulated by the Homes and Communities Agency) and the Financial Conduct Authority and come under the jurisdiction of the Housing Ombudsman for complaints. We are the government’s main provider of additional affordable housing and borrow extensively on the commercial market to top up capital grant. In return, we are required to develop new properties to a far higher standard than the private sector and our rents are set by a government formula (thus restricting our ability to borrow at higher levels). Associations are non-profit-distributing organisations (most are charitable) run by voluntary Boards, appointed by a shareholding membership. Members hold a £1 share which is non-redeemable and which generates no return. We are free to engage in as wide a range of activities as are compatible with our Objects (i.e. a charitable housing association cannot engage in commercial activities, it would need to set up a non-charitable company or subsidiary) as long as the government’s investment in our affordable housing is safeguarded. Our Association has always taken the view that, as well as providing affordable housing, we will provide as wide a range of services as possible to assist our tenants and residents and the communities in which they live. Our funding thus comes from a number of statutory, charitable and commercial sources, each of which will have their own funding criteria.

1 Having said this, the ONS has recently reclassified us as public bodies because of the level of govt influence over us, but we have assurances from govt that deregulation will follow which will allow us to be declassified again.

Key Developments 2016-20 o Reodel our furniture stores away from their main focus on recycling furniture

and towards training and employment opportunities for our tenants and communities

Key Developments 2016-20 o Remodel our Pension packages o Continue to develop our staff and position them for when our sector

improves

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Government policy is driving Housing Associations towards higher rents as a way of funding a national programme of new housing supply and reflecting the increasing numbers of people who until recently aspired to home ownership but who now are likely to require rented accommodation. There is an implication in this that the supply of “affordable” rented accommodation to the poorest in our society will diminish over time. It is worrying that govt is keen to involve itself increasingly in the detail of the services that we provide- such involvement may ultimately threaten our fundamental independence and, thus, our effectiveness. Clearly, Housing Associations will continue to be a valued partner of Central Government – both in the provision of affordable housing and support to indivduals and communities under stress. We will be under increasing pressure based on the increasing poverty of our tenants and their communities. We have reflected this shift and concern in our SWOT and PEST analysis and our Risk Chart. As an opportunistic and entrepreneurial organization (operating far more widely than a traditional housing association), we will continue to look actively for new ways to make a difference to people’s lives. At the end of the day, all housing associations are faced with the same balancing act:

• Keep rents affordable • Keep stock in good and lettable condition • Provide support services to tenants • Continue to develop • ……and, balance the books.

Risk and Business Development We have a Risk based approach to assurance. What this means is that we look at all of our activities rigorously to see what risks they pose to our business and what we can do to mitigate them. Importantly, the approach regards inaction or indeed a superficially low risk attitude as being equally risky. Often, the schemes which we develop (eg Young People’s Foyers, Extra Care Elderly Schemes or homelessness schemes) will seem, to other organisations, to bring high risk; however, we have a clear niche where we have a clear understanding of cost and risk and we have robust financial systems for appraisal and scheme monitoring. Because of the continuing stress on our local tenants and communities, we will continue to have an appetite for new developments, new projects, new local partnerships….. to support and grow local resilience. Having said all this, however, we acknowledge that we are likely to be developing less properties in future and we will need to be even more rigorous than ever in considering the various capital risks, the borrowing levels, the certainty over rent levels and, where appropriate, the certainty over longer term revenue support. For us, our greatest risks will always be from those areas over which we have least control. At the moment, those key risks are around changes that govt. plans for our sector. We expect our turnover to reduce over the next few years, with significant cuts in some of our services and growth in some others. However, our approach of developing on a number of parallel fronts (commonly described as “not putting all of our eggs in one basket”!) will continue to stand us in good stead.

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Some of our 2015 achievements are outlined below: 100% of our properties requiring a gas service had one on time and our Gas Servicing

Contractor, AFM, achieved top ranking nationally for the quality of their work. This shows the commitment Impact and our Contractors have to ensuring the safety of our tenants.

In the first 3 full months of monitoring activity in our HUBs, set up to improve access for

tenants to our services and deliver The Vision, we recorded 6523 visitors. We know that 74 visits were for tenants to get help with training and employment, and 58 to improve their IT skills.

Raised the profile of the Oval Gym, won £3000 for 2 new treadmills, got more people –

all ages – interested in keeping fit, with a much wider range of activities including Door Step Club for 14- 16 year olds, walking sessions, boxercise, plus the usual (“circuit training was fantastic”). To crown it, our Gym Instructor, initially a Foyer resident, won Inspiration of the Year Award 2015 at the Cumbria Sports Award.

Our IFS store in South Lakes celebrated its 10th year of operation in 2015. Maxine, the

store Manager, reckoned that over the years the site had saved 987 tonnes of furniture from landfill, the equivalent size of 3 minis every week.

We continued to encourage tenants to “Switch and Save” on their energy bills. By the

end of the year we expect 60 tenants to have made savings through switching this year, saving on average £11 per month, although some will save over £20 per month.

Staff across Impact have been energetic getting grant and other funding for all sorts of

benefits and activities for our customers. Examples include Children in Need Funding that will enable us to provide Parent and Family session in 2016, and money from Kendal Town Council to run the “Oscars” for young people in Kendal, again in 2016.

Twelve of the new homes completed this year in Lancaster are for people with learning

and/or physical disabilities. They have been especially designed to suit individuals with different needs and all have level access, level access showers and kitchens which are quickly and easily height adjustable.

Performance with current arrears continued to be good at around 1.8% of Gross Rental,

and below our own targets. To help us understand the impact of Universal Credit on our Tenants and our own income, staff completed a Direct Payment Pilot with 50 volunteer tenants. 37 of those taking part actually managed to reduce arrears overall which was fantastic. We also learnt a lot about good ways to help support tenants faced with paying their rent direct, such as the use of Jam Jar accounts.

Over 700 people were assisted by our Money Matters Team who aim to help and

signpost tenants and applicants regarding budgeting, income, benefits, and debt management. As one tenant put it “Your help has made a huge difference to our lives”. This tenant had previously failed medicals for disability benefits even though supported by their GP. Money Matters enabled the tenant to turn this around and obtain Personal Independence Payment, Employment Support Allowance and Carers Allowance.

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Financial Plan & Risk Management

Medium Term Financial Plan The medium term financial plan is designed to support the overall business purposes. The annual budget setting process aims to ensure that resources are prioritised to maximize the benefits to customers. The detailed allocation of resources contributes to ensuring a financial strength that allows for future growth and development whilst meeting the external requirements of funders and regulators. The Financial Plan for 2016 and beyond has incorporated a number of major changes in the finances of the organization including: the implications of the 8th July 2015 Budget on future rent levels; the decision not to bid for Supporting People Funding; the potential impact of the Right to Buy changes; the remodeling of Impact Furniture Services and the additional costs from the review of pensions. In addition we are currently reviewing the model for providing accommodation and support within Impact’s existing Foyers and will appraise the future use of the Old Brewery student accommodation. In 2016 Impact will continue to prioritise the monitoring and management of the impact of the Welfare Reform changes. Impact is committed to an ongoing development programme throughout Cumbria and Lancaster. Impact has a sound asset base on which the organisation can build. Demand for properties is strong and customer satisfaction levels are high. Properties are well maintained and financial investments in community development projects are well managed. Impact will continue its efficiency reviews of every aspect of its business. Devolving budgets to managers ensures that they have the resources to deliver cost effective local services. Impact has an existing undrawn loan facility available through Barclays Bank and in 2016 it will continue to ensure the most competitive terms are achieved on its loan portfolio and will prioritise a review of its loan portfolio. Where opportunities arise Impact will seek to achieve efficiencies in loan and cash flow management. This will be achieved through effective interest rate management, the negotiation of additional loan facilities and where appropriate the renegotiation of existing loan facilities. Impact will work closely with external funders and regulators to demonstrate its effectiveness and its capacity to grow further, founded on a strong financial base.

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The Financial Projections for the organisation for the next five years are below:

2016 2017 2018 2019 2020Income £’000 £’000 £’000 £’000 £’000

Rents 13,647 13,849 13,989 13,766 14,277Supporting People 283 0 0 0 0Other Grants 250 253 255 258 263Other 1,652 1,668 1,684 1,700 1,733

15,833 15,771 15,929 15,725 16,273

Expenditure

Salaries 4,862 4,602 4,542 4,482 4,594Property Costs 4,106 4,162 4,196 4,165 4,145Service Costs 1,222 1,222 1,222 1,222 1,244Staffing Costs 383 372 372 372 379Other Costs 1,637 1,637 1,637 1,637 1,668Loan Interest 2,960 3,049 3,242 3,170 3,107

15,170 15,044 15,210 15,049 15,137

662 727 719 676 1,136

Interest Cover 1.15 (minimum) 1.22 1.24 1.22 1.21 1.37

Gearing 75% (maximum)

69.3% 68.7% 68.8% 66.8% 64.9%

Surplus/Deficit for the year

Impact Budget in 4 Business Centres

Turnover £13.6m

Affordable Housing: Government invested

Turnover £1.7m

Commercial: Furniture Services; students, private

rented

Turnover £0.5m

Contracts: SP, DV, YP

Expenditure £1.6m

Overheads;

Central

Impact’s 40th Anniversary Whilst the low points of 2015 have been the slow erosion by govt of our sector’s independence and the increasing poverty of many of our tenants, the high point was definitely our 40th Anniversary Day for a 1,000 of our tenants and families. For many, it was the only affordable day out in a very bleak year.

“Had an absolute brill day with my family at the fun day today thank u so much enjoyed it all” Suzette Hunt “We all had great fun thank you for a fab day, mum said it was like being at Butlin’s for the day” Victoria Louise “Thank you very much for a lovely day at Carlisle Race Course, we all had a wonderful day!” 7 Walker Road “Brilliant Family Fun Day to celebrate Impact Housing’s 40th Anniversary. Fantastic family entertainment provided, Wendy our PPM mascothad fun!” PPM “What a lovely day me and my friends had on Saturday. We really appreciate all the work that the organisation put in and we had a very nice time.” Mrs Footit “I would just like to say a big thank you for all the hard work that went into the fun day on Saturday 22nd. It was a lovely day enjoyed by all. Thank heavens the rain held off in the end too :) Thank you all so very much” Frances Smith