of compliance with legislation and delivery of the appropriate commercial outcomes, while allowing the appropriate remedies in the event of non-performance by the supplier. Achieving the savings We have a robust methodology for monitoring and validating savings delivered by the organisation to differentiate between different tiers of saving: Tier 1: Actual savings against prevailing costs - A year-on-year difference in price per unit for a commodity, multiplied by the current year volume - A usage saving between current and prior year volume, at consistent pricing, that is attributable to more efficient processes requiring less of the commodity. - A reduction achieved in the asking price of the commodity due to procurement activity for which there was no equivalent spend in the prior year Tier 2: Cost avoidance - The successful avoidance through procurement activity of a supplier-proposed price increase.
24 Anchor Hanover Group Annual Report & Financial Statements 2024 hundreds of suppliers who provide a wide range of goods and services. We aim to ensure that we have formal contractual relationships with our suppliers via a suite of contracts appropriate for the value and/or risk associated with delivery of the particular goods or service. The contracts provide us with both assurance improve our modes of communication and access. • Staff turnover – we continue to face recruitment and retention challenges, particularly within our care services. However, our approach to employing overseas colleagues with a licence to work in the UK is proving successful in mitigating this challenge. • Increasing prices – the economic and political landscape continues to have an impact on the cost and availability of many commodities, and although prices have stabilised, they remain high. We are able to mitigate against some of these costs but in some areas, particularly those relating to resident safety, we simply have to absorb higher prices for a period of time. • Relationships with our suppliers – we have a complex supply chain managing around 1,700 contracts with Case study – Holly Court, Weymouth This property suffered extensive roof damage during Storm Eunice in February 2022, and our strategic review of the property concluded that redevelopment would yield more and better homes, as well as being more efficient. Following extensive consultation with existing residents and the local authority, we achieved a planning consent with no s106 requirements to demolish the existing building and a create a new Independent Living apartment block for 37 social rented homes. Supported by Homes England Affordable Housing Grant funding, construction started in March 2024 with completion targeted for early 2026. The new homes will be on average 30% larger than the existing accommodation. Each home will have its own dedicated outside space through either a patio or balcony with all homes achieving a minimum SAP rating of 87 (EPC B), a substantial increase from the SAP 51 (EPC E) performance of the existing accommodation, with an estimated CO 2 saving of 80%. All existing residents decanted from Holly Court will have the right to return to the new development once constructed. Key challenges we face in our delivery of value for money Knowing how to deliver our value for money targets requires an appreciation of those factors acting against its delivery and then putting plans in place to eliminate or mitigate their impact. Ongoing challenges we are mindful of are: • Geographical spread of our stock – with our rented housing stock we currently operate in more than 85% of local authorities in England. Higher travel costs are therefore unavoidable in some of our harder to reach areas, impacting internal operational support as well as our contractors. We are focused on using technology to
Tier 3: Budget savings
- A reported saving when there is a reduction in the price of the commodity in the current year compared to an estimate set in the budgeting process.
Our whole organisation is collectively accountable for delivering value for money across our services, and our Procurement Team ensure we meet the public contract regulations by demonstrating that we evaluate our pricing on the ‘most economically advantageous tender’. Performance against target The target for savings in the year was £1.5m. Actual savings achieved for the year exceeded our targets, totalling £1.7m for tier 1 and £0.6m for tier 2 (2023: £2.2m for tier 1 and £0.8m for tier 2). Tier 1 savings in the year, being those which are ‘actual savings against prevailing costs’ were generated through a number of targeted areas: • Care services – savings in agency staffing, food and drink supply and cleaning services (£1.0m). • IT – hardware purchases and mobile voice and data services (£0.3m). • Housing services – catering supplies and equipment (£0.1m). • Property – heating and fire safety (£0.3m). Tier 2 savings in the year reflecting cost avoidance were achieved through: • Property – various contracts (£0.6m).
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