Learning Improvement Network Priory View, Church Street, Dunstable Making Extra Care Pay – whole value assessment Tony Keaveney, AD Housing, Central Bedfordshire Council 8th November 2016 1

Last Time Buyers “…. The UK Housing Market Remains mired in crisis largely because we are not building enough houses. Creative thinking is therefore needed to free up supply and one area that we think deserves much closer scrutiny is the ‘Last Time Buyer’s’ Market. Moreover, with over 11.4 million homeowners aged 55 or over (in the UK) older buyers could hold the key to alleviating the challenges that others are facing across the property chain by freeing up houses for growing families..” Legal & xxxxx

Aston Research Centre for Healthy Ageing (ARCHA) & Extra Care Charitable Trust, Holland et al 2015 Page 29, para 6.3 with specific regard to NHS savings – “…This equates to an average saving of £1,114 per person per year, illustrated in Figure 3…” Conclusions – pp 12/13 NHS costs – GP visits, practice & district nurse visits; hospital appointments/admissions – reduce by 38% for Extra Care residents who were in the sample across the period. NHS costs for ‘frail’ residents had reduced by 51.5% after 12 months Cost of providing lower level social care using the Extra Care model was £ 1,222 less per person (17.8 % less) per year than providing same level of care in the wider community Cost of higher level social care was £ 4,556 less (26% less) per person per year. Significant reduction in the duration of unplanned hospital stays, from an average of 8-14 days to 1-2 days.

Prevention Pre-frail states are malleable – a significant number (19%) of Extra Care residents designated as ‘pre-frail’ at baseline had returned to a ‘resilient’ state 18 months later. A frail person’s average annual care costs were £ 4,720.96 at the 12 month point, as compared to £61.40 for a pre-frail resident (most receiving no formal care), underlying the importance of preventative interventions to reduce the likelihood of a person becoming frail. New residents had more difficulties with cognitive functions, independence, health perceptions, depression and anxiety than controls, but after 3 months these differences have reduced and some have disappeared, with significant improvements in psychological well-being, memory and social interaction Falls reduction – 2 out of three people would have been expected to have had a fall over the last 12 months at Baseline, but this was only just a little more than 1 out of 3 by 12 months later.

‘Whole value assessment’ – what do we mean? Building – ‘Whole life costing’ techniques (WLC) Powerful tool for calculating the lowest cost options for the entire commercial life of a building. WLC encourages the use of best value building designs; reduces the costs and disruption of unplanned repairs and maintenance. Investment decision is based on a long term view. Think – “whole life”. Procurement increasingly driven on the basis of life cycle cost appraisal. Beginning to embrace wider environmental impact value issues. Building Performance is intrinsically linked to the initial selection of materials/systems. When building components are replaced, there are financial and environmental costs. Value engineering – avoid taking an approach other than “whole life”. Learning – do not separate the “Build work-stream” from the “operating model”. Whole scheme costs & benefits – i.e. ‘scheme’ within the whole system Potentially, ‘factor in’ financial savings within the Health, Social Care & Housing systems CBC – specifically factor in reductions in ASC Budgets (original financial appraisal) Savings in year 1-5, we have [now] taken a view they will not materialise.

Priory View – facts and figures (1) Rents – per week 2 bed – £ 182 – 1 bed – £ 157 Sales values – – 2 bed range between £216,000 and £226,000 – 1 bed range between £184,000 and £191,000 31 shared ownership apartments – grant of £13,000 per unit 52 affordable rented apartments – grant of £25,000 per unit (£1.703M total grant) – 22 sold at 75%; 4 sold at 50%; 2 sold at 25%; 1 sold at each of 65%, 45% & 33% – total forecast sales receipts £ 4.2M Service Charges – £39 per week (leaseholders) Reserve Fund – £39 per week (leaseholders) Revenues – Commercial opportunities (per annum) circa £70K

Priory View – facts and figures (2) Brownfield site clearance, demolitions; clearance – £ 0.3M Build cost – £ 15.753 M Interior design and other non build related costs – £ 0.489 M Land cost – £ Nil agreed through negotiation Professional fees (architect, engineers, Planning, Project Management, Marketing) – £ 0.975 M Total scheme costs – £ 17.517 M Less sales & HCA Grant – £ 11.914 M Cost of finance (interest & principal) year 1 £ 0.657 M

‘Whole value assessment’ compared with a traditional appraisal model ‘Traditional’ appraisal – Housing Investment decision assumptions Revenues, Management and Maintenance over 45 years; Cost of Finance % – Net Present value £ 0.3 M – Deficit after 45 years £ 1.7 M Would you invest? True ‘subsidy requirement’ (additional to 1.703M secured from the HCA) = £0.4M (2.103M) Or, value engineer – reduce cost by 0.4M – mindful of potential impact on rents/sales values. Whole value assessment – for Central Bedfordshire Council Factoring in savings (i.e. budget reductions) within ‘adult social care budgets’ Not factoring in health and wellbeing, community and ‘ageing well’ benefits (£) even though we recognise they exist. Also, not factoring in the benefit of housing that is made available as a result of ‘Rightsizing’ (reducing under-occupation).

‘Whole value assessment’ perspective Savings (ASC budget reductions) per annum – £280K – savings years 1-5 assumed to be nil. Savings factored in years 6-45. Revenues, Management and Maintenance over 45 years; Cost of Finance circa 3.5% – Net Present value £ 9.8 M (after 45 years) – Surplus after 45 years £ 27.7 M – scheme ‘pays back’ after 26 years Whole value assessment – a good use of resource for Central Bedfordshire Council From a ‘whole system’ perspective, were you to factor in NHS, wellbeing, community, Housing savings – the investment decision makes complete sense. When seen in the light of demographic change, there is a compelling financial argument to provide more. In addition – How do you put a price on happiness?

Independent Living

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