Housing Corporation Annual report and accounts 2007-08
Delivering today, building for the future
THE NATIONAL AFFORDABLE HOMES AGENCY Housing Corporation Annual report and accounts 2007-08
Delivering today, building for the future
Presented to the House of Commons pursuant to section 7 of the Government Resources and Accounts Act 2000
Ordered by the House of Commons to be printed on 17 July 2008
HC 941
London: The Stationery Office
£25.75 2 Annual report and accounts 2007-08 Contents
3 Chairman’s introduction
4 Chief Executive’s foreword
6 More quality homes
14 Improving landlord performance
20 Making best use of our expertise
24 Developing our can-do culture
28 Our Board
29 Annual accounts at a glance
30 Annual report and accounts
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ISBN: 978 0 10295 7297 3 Annual report and accounts 2007-08 Chairman’s introduction
This annual report gives us the chance to look back at what the Housing Corporation has achieved over the past year – and to look forward to an exciting future.
The past year has been the best maintaining housing association ever for the Housing Corporation. homes – but not at the expense
We’ve exceeded our targets for of the quality of their work. delivering new affordable homes We’re now working to pass forward while staying within budget our regeneration and investment – meaning that we’ve stretched to the Homes and Communities Government money further to help Agency, and are helping to set up even more people to fi nd a home. the Tenant Services Authority, We’ve also acted to protect tenants’ which will take forward the work interests, putting them fi rmly at we’ve been doing to support the the heart of landlords’ priorities, rights of residents, the high-quality and contributed to Government management of their homes and policies that will affect residents the viability of their landlords. and the affordable housing sector This report sets out our positively for years to come. achievements over the past This year, a record number of year. The successes it outlines Peter Dixon homes have met the Decent Home – and the stories from residents Chairman Standard and we’re on target to whose lives have changed for Housing Corporation have housing associations meet, the better – show the strength of or exceed, the standard by the the legacy we will pass on to our Government’s target date of 2010. successor agencies in 2008-09.
And we’ve helped affordable housing providers signifi cantly cut the costs of building and 4 Annual report and accounts 2007-08 Chief Executive’s foreword
This has been a tremendous year for the Housing Corporation, the Government’s national affordable homes agency. I am immensely proud of what we have achieved.
Back at the beginning of the year, forefront of thinking and policy we set ourselves three main tasks. development, and praised for our Firstly, to ensure we delivered contributions by MPs, regional business as usual during a time bodies and local authorities, of change – we did it. Right across amongst others. the organisation. On investment, Thirdly, to prepare for the new we delivered more homes than agencies that will take forward ever before. On regulation, our work during the coming year. our work has meant housing On regulation, we were tasked associations’ performance has with leading on the creation of the continued to improve. And on Tenant Services Authority, working sharing best practice, through our with the Audit Commission Gold Award, our Innovation and and others to help create a new Good Practice programme and our regulator with tenants at the communications activities, we’ve heart of its operation. And on reached more people than investment, we’re working with ever before. Steve Douglas the transition team, Communities Chief Executive Secondly, we wanted to ensure and Local Government and Housing Corporation that we contributed to, or helped English Partnerships to support lead, the Government’s social the creation of the Homes and agenda. We did that too – on Communities Agency. At the end of key issues such as vulnerable 2007-08, the Corporation is in great people, community cohesion, shape to help give both the new worklessness and design and agencies a flying start. quality. We’ve been at the 5 Annual report and accounts 2007-08
108% The proportion of homes we delivered this year against our target 6 Annual report and accounts 2007-08 More quality homes This year we said we’d help provide 47,263 new homes. We delivered on that promise. By the end of year 51,095 high-quality homes had been built in sustainable communities.
James Jacobs is delighted with New homes in Earl Shilton, Julie Creffeld has been able to Peak Valley Housing Association’s Leicestershire, have helped get on the property ladder – and work to replace unpopular 1960s regenerate the town. The Local run a business from home – in blocks with new homes for sale Sustainable Design Forum ensured east London, thanks to a shared and rent in Hattersley. He now that the Orbit Housing Association ownership scheme offered by describes the estate as “Utopia”. homes are well designed and fit Dominion Housing Group. in locally. 7 Annual report and accounts 2007-08
118% The proportion of family-sized homes we delivered this year against our target 8 Annual report and accounts 2007-08
This year the Housing That’s why, as well as delivering To help deliver successful Corporation invested in more homes for low-cost neighbourhoods, we published a 51,095 new affordable homes ownership this year, we’ve also set of design and quality standards increased people’s chances this year that affordable housing – 3,832 more than our target of getting on the property providers must meet if they want and nearly 25% more than ladder by introducing two new our support. These set minimum last year. More people have products under the Open Market quality criteria for things such been able to afford to move HomeBuy scheme. Known as size, accessibility, noise levels into a new high-quality as MyChoiceHomeBuy and and efficient energy use. Ownhome, they offer shared home this year as a result. Our work to deliver more equity loans, which enable And more communities have high-quality homes has helped existing tenants, key workers, been transformed. meet local needs identified by first-time buyers and others to regional housing bodies and has We promised we’d deliver 28,000 buy homes on the open market worked towards cutting levels of new homes for rent this year. for up to twice the amount they homelessness and overcrowding. We delivered 29,419 – 5% more might otherwise have been than the target. And to help more able to afford. This is critically people get on the property ladder, important at a time when, despite we said we’d deliver 19,263 new falling house prices, affordability homes for low-cost ownership. By remains a major concern. the end of the year, we’d delivered Research shows that the design 21,413 – 11% more than our target. of homes can underpin whether Our survey of housing association a neighbourhood succeeds or tenants found that 30% thought fails. Well-designed homes their lives would be better if make an area more visually they could afford to buy a home attractive and can make them – and among black and minority better places to live. They can ethnic communities this figure improve residents’ quality of life was almost double, at 57%. by cutting the opportunities for crime, improving public health and easing transport issues. 9 Annual report and accounts 2007-08
“The best thing about it for me is the stability it provides”
Spending your spare time surfing in He was only able to move back Jamie Hanks Cornwall is an attractive prospect home recently thanks to Fosseway for many, but Jamie Hanks found Housing Association’s Linden Lea he spent more time sleeping on scheme, which includes nine new friends’ sofas than riding the waves. affordable homes for local people in the village. All the homes are built Unable to find accommodation he to a high standard, using Cotswold could afford in his home village of stone walls and slate roofs. Down Ampney in Gloucestershire, Jamie, a qualified fish filleter by “Now I’ve been able to get a one- trade, moved to Cornwall to help a bedroom flat here,” Jamie says. “It’s friend set up a catering business by also much easier for work, which day, while ‘sofa surfing’ by night. is just a short bike ride away.”
“I didn’t want to leave Down Ampney in the first place,” says Jamie. “I grew up and went to school in the village and my family and most of my friends are here – but it’s a very expensive place to live.” 10 Annual report and accounts 2007-08 Our investment at a glance
Number of homes for Number of homes for Total affordable rent low-cost ownership East Midlands 1,785 1,371 3,156 East of England 3,986 2,387 6,373 London 7,619 6,131 13,750 North East 577 118 695 North West 2,268 1,095 3,363 South East 4,948 4,111 9,059 South West 3,036 1,670 4,706 West Midlands 1,675 1,492 3,167 Yorkshire and the Humber 1,153 490 1,643 Brought forward from 2006-07 2,372 2,548 4,920 Other 138 125 263 Total 29,557 21,538 51,095
Homes for low-cost ownership: How much we’ve spent and how many homes we’ve delivered
£187.1 million London 6,131 £93.1 million South East 4,111 £45.2 million East of England 2,387 £30.4 million South West 1,670 £22.1 million North West 1,095
West Midlands £24.2 million 1,492 £23.2 million East Midlands 1,371
Yorkshire and the £13.7 million Humber 490
£2.9 million Total investment in new low-cost ownership homes (in £ million) North East 118 The number of homes delivered for low-cost ownership
Homes for social rent: How much we’ve spent and how many homes we’ve delivered
£682.0 million London 7,619 £295.4 million South East 4,948 £147.6 million East of England 3,986 £144.6 million South West 3,036
£82.3 million North West 2,268 £71.7 million West Midlands 1,675 £63.3 million East Midlands 1,785
Yorkshire and the £57.3 million Humber 1,153
£33.5 million Total investment in homes for social rent (in £ million) North East 577 The number of homes delivered for rent 11 Annual report and accounts 2007-08
69,005 The number of extra homes that have hit the Decent Home Standard this year – the biggest annual increase ever 12 Annual report and accounts 2007-08
Delivering sustainable As a result, we promised we’d We’ve also encouraged housing communities invest in more family-sized associations to help unemployed homes. We set out to support residents onto training or Our survey of housing 7,000 larger homes across the education programmes or back association tenants country this year and to increase into work directly. Our research found that one in the proportion of larger homes for shows that some 50% of people four feels cut off from rent we funded in London from are not in employment, education 26.6% two years ago to 34% in or training when they first move people who own their 2006-08. We kept our word and, in into a housing association home. own homes and almost fact, delivered 8,240 larger homes Over the past five years, housing one in three says that nationally and increased the associations and their partners mixing privately owned proportion of larger rented homes have invested over £209 million we funded in London to 35.7%. homes with social on almost 900 innovative projects housing would be better Of course, housing is only one to tackle worklessness. Of these for tenants. factor in a successful community. projects, 39% address jobs and Good schools, transport and health business and 61% education and That’s why we’ve continued our facilities are also important. And skills development, and 8,000 jobs work this year to deliver mixed people need to feel safe. Housing are created each year as a result – communities that provide for a associations have been working to and that figure excludes jobs in the variety of incomes, tenures and tackle nuisance behaviour – with construction industry, which would housing types, and varying types our backing – and to help make boost the figure considerably. of people and households. communities more inclusive. Tackling worklessness was also As part of this, we’ve worked Our surveys of residents show made the theme of a second set to make sure that people won’t that those who are happiest of our Gold Awards this year. have to move home as their with their local neighbourhood needs change over time. We’ve perceive a greater degree of continued to support Lifetime cohesion, with almost half Homes – which can be adapted agreeing that people do things to suit an occupier’s changing together and help each other. needs – and invested in more larger homes than ever before. This year, we made building community cohesion one of the Housing association tenants told themes of our annual Gold Award. us that although 74% of them are As a result, three associations satisfied with the size of their would each win £50,000 in home, having an extra bedroom 2008-09 to hold events and is one of the top two things they produce material that would help would like if it were possible. other affordable housing providers learn from their best practice. 13 Annual report and accounts 2007-08
“This is a much better prospect for the future”
Jason Bertin has got more than He took the plunge a year ago Jason Bertin a home through his housing after hearing about Catalyst’s association – he’s gaining new construction training scheme skills. Whether it’s getting up to through an open day. He is his elbows in a blocked sink or now a plastering apprentice providing perfectly plastered walls, with the association’s property Jason is learning new trades ‘on the maintenance contractors. job’, thanks to his landlord, Catalyst “At the moment, I’m travelling Communities Housing Association. backwards and forwards across Jason, who lives in Brentford with London in a van with the his mum, used to work in a shoe technicians, doing jobs in Catalyst shop in Brent Cross shopping homes – it might be plumbing centre. He was keen to improve or plastering, whatever needs his career, however, particularly doing,” Jason says. “It takes five as he now has a ten-month-old to seven years to become a fully daughter, Kyah, to support. qualified plasterer, but at the end of it I will have much better “I enjoy this much more and get prospects for the future.” great satisfaction from doing it,” Jason says. 14 Annual report and accounts 2007-08 Improving landlord performance We said we’d help housing associations make efficiency gains of £355 million this year. We delivered on that promise. By the end of the year we’d helped them save a massive £1.2 billion to spend on new homes and better services.
Amanda Ahmad worked with Anti-social behaviour on three Teresa Wesley has seen her fuel Endeavour Housing Association Kemble Housing estates in bills slashed since Rockingham to transform her street in Herefordshire is being tackled Forest Housing Association Middlesbrough. Eight years ago, head-on with a soccer scheme fitted solar panels to the roof 40% of the homes were empty – more than 70 young people of her home in Rushden, but now there’s a waiting list to receive free training sessions Northamptonshire. move in. each week. 15 Annual report and accounts 2007-08
66% The proportion of residents who say their housing association takes their opinions into account 16 Annual report and accounts 2007-08
High-quality housing is These stock transfers, plus new But these savings haven’t been crucial – and so is access development supported by capital made at the expense of the to the best services. grant programmes, have helped quality of services. This year boost the sector by 10.3% in terms we’ve worked harder than ever to Our work involves of its total assets and by 8.7% in encourage housing associations making sure that its turnover this year. Our review to make sure their services meet housing associations of the 2006-07 accounts of larger the needs of their residents. And offer services that associations – those owning more we know that involving residents respond to the needs than 1,000 homes – found that, in such decisions can improve of residents. overall, the sector is financially how services are delivered. sound and continues to grow. Our survey of tenants found that This is all part of our role in It showed that turnover for the 97% think that it’s important for regulating the work of associations. year is £9.1 billion, up £0.8 billion their housing association to take More than five million people on the previous year. At £1.4 their opinions into consideration live in homes owned by the billion, the surplus on operations when making decisions. We’ve 1,879 housing associations we has increased by 11.7% on the continued to work to ensure regulate. So our guidance and previous year’s level, generating that residents are represented advice is important in helping an operating margin of 15.5%. on 95% of associations’ associations learn from best Pre-tax surplus is £300 million, boards with service delivery practice within the housing sector. up 8.4% on the previous year, responsibility by March 2009. Our work to support associations and the gross cost/valuation of Involving residents in decision means that the number of cases housing association properties making can also give them new where we have had to step in to is £77 billion, an increase of skills, increase their confidence provide more intensive support to 10.1% on 2006. We recognise the and help build sustainable those that are struggling to meet potential impact of international neighbourhoods and communities. our requirements is lower than economic circumstances on ever. By the end of 2007-08, the housing associations’ businesses This year, four associations won total number of associations under and are closely monitoring the our Gold Award for excellence in supervision was down to just eight impact on business plans. empowering communities. The – against over 50 four years ago. winners – London and Quadrant Our work to help affordable Housing Trust, sharing an award Housing associations’ reputation housing providers cut costs has with Metropolitan Housing Trust, for good performance has been also helped the sector. In line Poplar HARCA and Willow Park recognised in 20 more local with Gershon efficiency targets, Housing Trust – each received authority areas this year. In each, we worked to reduce costs in the £50,000 to share their best practice tenants have voted to transfer supply of new affordable homes with the rest of the sector. their homes from local authority and in associations’ costs for to housing association ownership, management and maintenance, bringing more than 90,000 capital works and goods and extra homes into the sector. services by £355 million this year. We achieved that target and more – this year they saved £1.2 billion. 17 Annual report and accounts 2007-08
“Our ideas were definitely taken on board – this was a model of consultation”
A whole community has moved Thanks to the residents’ efforts, Mary Huxham out of damp and outdated houses and those of CDS, part of the in Liverpool’s Welsh Streets district PLUS Group, nearly all the 107 and into new homes in Clevedon homes built at Clevedon Park Park, just a few hundred yards away. are now occupied by Welsh Streets’ former residents. Keeping long-term neighbours together was of paramount A mix of house sizes and tenures importance to Mary Huxham have been provided, reflecting and her fellow residents who residents’ aspirations. for seven years have been Mary, who had lived in the Welsh involved in this major housing Streets for nearly 70 years, is market renewal scheme. delighted with her new home. “We took part in design workshops “All the people on the estate are and ‘vision events’ and were on happy with what they’ve got,” she the panel choosing the developer,” says. “Someone said to me that Mary says. “We told them what it’s like being in the country but kind of properties we wanted and in the middle of Liverpool 8.” especially that we wanted the community to stay together.” 18 Annual report and accounts 2007-08
Better, greener homes This year three housing housing association properties associations won the Housing nationally (11.8% of total number Our survey of residents Corporation’s Gold Award for of homes) didn’t meet the Decent shows that 83% say excellence in environmental Home Standard. That’s a cut that energy-efficient sustainability. Drum Housing of over 69,000 from 2006 – the features would play Association, Greenoak Housing biggest annual reduction since a ‘very’ or ‘fairly’ Association and the Places for the standard was introduced. People Group each received £50,000 And associations are continuing important role in the in order to share their approaches to invest heavily in their existing home they would choose with other associations so that homes to ensure they meet if they were to move. they too could make changes. the Decent Home Standard That’s why we’ve continued to Plus, a new tool, known as in time. Investment in 2007 work towards improving the EcoHomes XB, which we on planned and major repairs green credentials of housing supported, now allows associations totalled £2.5 billion, an increase association homes this year. and councils to plan and measure of 10% on the previous year. We want all of them – new and how much benefit potential old – to rise to the challenge improvements, such as solar presented by climate change. panels, would bring. It’s expected to help associations make over two This year we’ve encouraged million homes more sustainable. developing associations to build the kinds of homes that help Having reasonably modern residents to use less energy bathrooms and kitchens and without having to compromise heating that works well, for their lifestyles. The Code for instance, are important too. This Sustainable Homes ranks new year we’ve continued to work with homes according to how well they housing associations to make sure perform, from one to six, where their homes are up to scratch. one is the least friendly to the Though just one in seven housing environment and six the closest association residents is aware of to carbon neutral. This year we’ve the Government’s Decent Home worked towards making affordable Standard, that doesn’t mean housing providers meet at least they don’t expect their homes level three of the code from 2008 to be in a good state of repair. and incentivised developers to come forward with proposals for We’ve been working with homes that perform even better. associations to make sure their homes meet, or exceed, And by 2015, zero carbon the standard by 2010. In 2007, homes will be the norm for all the quality of existing homes properties built by affordable improved. Just over 250,000 housing providers. 19 Annual report and accounts 2007-08 “It’s important that houses are being built to protect the environment for our children”
Every time Emma Hill switches on a The work is being monitored almost Emma Hill light or turns up the heating in her to the minute by the BRE using new Cambridgeshire home she is advanced technology to see which taking part in an experiment that methods can best alleviate housing could influence the way we build shortages and reduce the impact on homes in the future. the environment. Monitoring will continue once residents move in to “It felt very strange to move into a assess energy-saving features. house that represents a new era in construction,” Emma says. “There’s a great deal of information on the television about global Hers is one of the first of 106 warming and I’m proud that my SmartLIFE homes to be built on home will have a minimal impact three sites in March and Chatteris on the environment,” Emma says. last summer. The project puts a range of modern building techniques under the spotlight. The Building Research Establishment (BRE) and Cambridgeshire County Council are the partners driving SmartLIFE while the Home Group is managing the development. 20 Annual report and accounts 2007-08 Making best use of our expertise We said we’d help housing associations learn from best practice this year. We delivered on that promise. We funded groundbreaking research and leading-edge best practice through our Gold Award and our Innovation and Good Practice programme.
A study funded by us this year In an innovative approach to Tommy and June Skuse in their showed that living in social funding , our Cambridge Challenge new home in Newbury, built by housing can affect people’s appointed a single partnership Sovereign Housing Association. life chances. By delivering to provide the affordable homes This year we published a strategy more family-sized homes at key strategic sites within to promote housing that responds we’re giving children more a Government growth area. to the needs of an ageing society. room to do their homework. Cambridgeshire Partnerships is led by bpha. 21 Annual report and accounts 2007-08
64% The proportion of housing association residents who say they’re concerned about the environment – we’ve responded by upping the green credentials of the homes we invest in 22 Annual report and accounts 2007-08
Residents are often of the 2012 Olympics – part at a range of events – and the best placed to say of our requirements from all participants gave the events a what they expect of affordable housing providers satisfaction rating of 92%. Through looking for our backing. They cover a supplement in a weekly trade housing associations. client leadership, procurement paper, a brochure and a CD toolkit, That’s why we made and integration, design, another 20,000 people learned more use of our resident sustainability, a commitment to about the associations’ good work. consultation panel this people and health and safety. An analysis of the impact of the year than ever before. Our investment in high-quality award found that it has quickly The results of these surveys research, data collection and established itself as the most have helped inform our policies. analysis, and our support for coveted and valued annual They revealed, for instance, innovation and best practice, housing award in England. is crucial in informing our that people like feeling part of We received 72 applications approaches to the delivery and a community. Three quarters of across three themes for the 2008 management of affordable homes. housing association residents Gold Award, from associations say that there is a sense of This year we invested a total representing 900,000 homes. community where they live. of £1.8 million in this work, And we carried this approach of which is carried out by our This year we published a sharing good practice through to Centre for Research and Market community cohesion strategy, our Innovation and Good Practice Intelligence, or CRMI for short. which aims to help housing grant programme. All projects associations and their partners, We committed ourselves to supported by us this year have such as local authorities and sharing this information with dissemination plans in place and voluntary organisations, support the sector. Promoting good will carry out impact appraisals. integrated, inclusive communities. practice and fresh approaches The projects cover barriers And our strategy for housing in to problem solving can make a to low-cost home ownership, an ageing society, also published real difference to the way that land availability, responding to this year, aims to help associations housing associations operate and an ageing population, housing work towards being able to support the services residents receive. management services in the 21st century and tackling Respect. older people in achieving greater Our Gold Award is one of most independence. We know that successful means of sharing best Details of all the Housing people would rather continue practice. This year we gave the Corporation’s best practice to live at home, with support, award to six associations – three can be found at: as they age rather than have for their work in empowering www.housingcorp.gov.uk/crmi to move into a care home. communities and three for their We’ve made the 2012 Construction approaches to environmental Commitments – a set of standards sustainability. A knowledge- developed by the industry and sharing programme, funded by the Government for the building us, reached over 500 delegates 23 Annual report and accounts 2007-08
“This place is lovely. It’s like a palace”
When Austin King first moved to Six years after the council’s Austin King Greenham Common 53 years ago, housing was transferred to the village was largely an army Sentinel Housing Association in airbase. Now a £17 million 1995, the association began regeneration project is changing working on a major regeneration the area – and people’s lives. project with the residents. In early 2008, the first 45 of 148 new homes “It was very strange watching the were completed. new houses go up so quickly,” Austin says. Austin moved into the first one, a two-bedroom house. “When I knew He grew up in a farm cottage in which one I was getting, I was very the village but when his farmhand happy,” he says. “It’s lovely – and father was killed by a bull, he and the garden’s easy to manage.” his mother ended up in a disused Nissen hut in a field across from The Housing Corporation the airbase. The local council later contributed £4.2 million towards converted the huts into chalets the project. and replaced them again in the mid-1950s, but the homes didn’t stand the test of time. 24 Annual report and accounts 2007-08 Developing our can-do culture We said we’d make sure we’re satisfying our partners’ needs this year. We delivered on that promise. An independent survey found that 80% thought we were effective at a regional level.
This year we completed our Our commitment to greening the A survey of staff found that 90% Leadership Development way we work was recognised this of our staff say their teams Programme, and Learning year when we were awarded the co-operate to get work done and Champions continued ISO 14001 accreditation. 85% believe the organisation to help us deliver locally respects individuals’ differences. responsive programmes. 25 Annual report and accounts 2007-08
96% The proportion of our stakeholders who say we understand regional issues 26 Annual report and accounts 2007-08
This year we’ve not only And at 51.3%, our operating costs Our Forum Representing Ethnic delivered effectively – are among the lowest of any Minority Staff in Housing (FRESH) we’ve done it efficiently non-departmental public body. is one of the ways we ensure we do this. Launched four years too. Our investment Our staff work hard to deliver ago, FRESH works with senior efficiently. This year we said programme for 2006-08 management on issues such that we’d keep up their morale delivered 33% more as human resources, learning in light of the uncertainty homes for just 15% and development, and policy caused by the move towards and communications. Such is more resources. Our the two new agencies in 2008- its effectiveness that the Chief administrative and staff 09. A variety of communication Executive of the Homes and costs for investment this channels – staff briefings, the Communities Agency has said year represent just 1.15% intranet, conferences, newsletters that he wants to use the FRESH and magazines – were used to of the amount we spent on model in the new agency. delivering new affordable make sure that staff were kept homes – while the informed of progress and issues. Of course, we work with external partners too to deliver more And we saw that these efforts to comparative cost for our affordable homes and drive communicate with and develop regulatory work represents up standards among housing staff are paying off. A staff survey, just 0.03% of the asset associations. That’s why we held in February 2008, found that value of the sector. promised to check with our 90% believe their team stakeholders this year that they co-operates well to get work were happy with how we’re doing. done and 65% believe co-operation An independent survey found between teams is good. that 80% said we were effective The survey also revealed that 85% at a regional level and 96% said of staff believe that the Housing we understood regional issues. Corporation respects diversity. 27 Annual report and accounts 2007-08 Housing Corporation expenditure Expenditure at 31 March 2008
Administration, revenue grant and capital expenditure (£’000)
30,017 Net staff costs
7,839 Other running costs
5,510 Innovation and Good Practice and research grants
5,002 Professional fees
3,547 Software licences and development costs
2,583 Recruitment and training
2,228 Tenant Empowerment grants
1,786 Energy Performance Certificate grants
Total: 58,512 28 Annual report and accounts 2007-08 Our Board
The Board is responsible for ensuring that the Housing Corporation carries out its regulation, funding and promotional tasks effectively.
The chairman and members are appointed by the Secretary of State. A register of Board members’ interests is available for inspection at the Corporation’s head office and the Board has adopted a code of best practice, which is also available to the public. Peter Dixon Shaukat Moledina
Candy Atherton Kate Barker Steven Douglas Sheila Drew Smith
Julie Fawcett Chris Holmes Donald Hoodless Kevin Lavery
Sir Duncan Michael Sandi O’Neill Peter Rogers John Walker 29 Annual report and accounts 2007-08 Annual accounts at a glance
Operating cost statement for the year ended 31 March 2008 2008 2007 £’000 £’000 Expenditure Capital and revenue grants (net) (2,012,785) (1,924,038) Staffing costs (30,103) (28,722) Other running costs (17,278) (16,547) Interest (80) (68) Total (2,060,246) (1,969,375) Income Interest 3,068 1,400 Other income 586 634 Total 3,654 2,034 Other revenue transactions Pension fund – finance costs (700) (560) (Increase)/decrease in provision for bad debts (4) 16 Corporation tax (7) (20) Total (711) (564) Net operating costs for the financial year (2,057,303) (1,967,905) Other gains and losses Pension fund – Actuarial gain/(loss) 14,427 (410) Total loss recognised during year (2,042,876) (1,968,315)
Balance sheet as at 31 March 2008 Fixed assets and investments 9,109 8,510 Current assets 18,782 4,506 Creditors and other provisions (353,200) (170,654) Advance from the National Loans Fund (1,400) (1,400) Provision for pension liabilities (31,540) (45,340) Total liabilities less total assets (358,249) (204,378) Reserves (358,249) (204,378)
A change in the accounting policy relating to 1 April 2006. From that date grant in aid is credited grant in aid received from Communities and Local directly to the Corporation’s General Reserve Account. Government was adopted with effect from
Grant in aid received 1,889,005 1,875,616
These statements summarise our income and Annual report and accounts can be obtained from the expenditure account and balance sheet. A full Financial Accountant, The Housing Corporation, 149 understanding of the Corporation’s financial position Tottenham Court Road, London W1T 7BN. can only be obtained from the Financial Statements, The report and accounts is also available on the which received an unqualified audit report, on Housing Corporation’s website: pages 77 to 112. Further copies of the Corporation’s www.housingcorp.gov.uk 30 Annual report and accounts 2007-08 Financial accounts Contents
Chief Executive’s annual review for the year 77 Operating cost statement ended 31 March 2008 78 Statement of recognised gains and losses 31 History and statutory background 79 Balance sheet 31 The future 80 Cash flow statement 32 Our mission, targets and roles 81 Notes to the cash flow statement 34 More quality homes 83 Notes to the financial statements 38 Improving landlord performance 113 Accounts direction 46 Making best use of our expertise
48 Developing our can-do culture
52 General financial matters
53 Better payment practice code
53 Changes in fixed assets
54 Freedom of information
54 Policy on energy conservation and environmental issues
55 Remuneration report
64 Corporate governance report
67 Going concern
68 Statement of the Corporation’s and Chief Executive’s responsibilities
69 Chief Executive and Accounting Officer’s statement on internal control
74 The certificate and report of the Comptroller and Auditor General to the Houses of Parliament and to the Housing Corporation 31 Annual report and accounts 2007-08 Chief Executive’s annual review for the year ended 31 March 2008
01 // History and 02 // The future In time it is anticipated that the statutory background regulation and inspection of local During the current year we put in authority homes will also become The Housing Corporation is place the foundations for the most the responsibility of the new a non-departmental public body significant investment programme agency. We will ensure that, as we sponsored by the Department in Housing Corporation’s history prepare for the future, our current for Communities and Local for the provision of social housing regulatory regime is maintained Government (CLG). Its first totalling £8.4 billion for the three and implemented effectively constitution was contained in year period 2008-11. This and efficiently to hand over to the the Housing Act 1964 and it programme also sees the number Tenant Services Authority. commenced business in January of outputs increase significantly 1965 to deliver affordable housing both for social rent and low-cost Both these two new agencies are schemes in England, Scotland and home ownership products, rising being created by the Housing and Wales through housing societies, to 84,000 homes in 2011-12, an Regeneration Bill which is later housing associations. increase of 34,000 over the 2007-08 currently being considered in the outputs. House of Lords, with Royal Assent With effect from 1 April 1989 the expected in July. Corporation’s responsibilities were The success of this programme restricted to England. Prior to the lays solid foundations for the Should the Bill receive Royal Housing Act 1988 the majority of success of the Homes and Assent, the creation of these two its funding of Registered Social Communities Agency (HCA), which new agencies will see the end of Landlords (RSLs) was by way of is being created to combine roles the Housing Corporation and repayable loans. Since the 1988 Act of the Housing Corporation’s English Partnerships. However, the majority of its funding of RSLs investment function, English until that time, forecast to be later has been by payment of social Partnerships and some of the in 2008-09, we will continue both housing grants. The Housing Act housing and regeneration delivery our investment and regulatory 2004 extended our powers to pay functions from CLG. It will be the roles to ensure that both agencies grant to unregistered bodies for the largest agency of its kind in Europe commence life in the knowledge provision of social housing. with a budget of over £5 billion that the legacy left by the a year. Corporation gives them the best The Corporation’s constitution is possible start to achieve the contained in Schedule 6 of the At the same time the regulation challenging targets set by CLG. Housing Associations Act 1985. function of the Corporation is Statutory powers are contained going to form the basis of the new in that Act and in the Housing Acts social housing regulator – the of 1988, 1996 and 2004 and in the Tenant Services Authority. This will Local Government and Housing take forward many of the Cave Act 1989. The accounts have been Review’s recommendations for prepared under the Accounts regulation. This will build on our Direction given by the Secretary current regulatory role which of State and dated 30 March 2007. ensures the high-quality delivery This is issued with the consent of services to some five million of the Treasury under Section people living in housing 97(1) of the Housing Associations association homes. Act 1985. 32 Annual report and accounts 2007-08
We will continue to assist in the 03 // Our mission, targets Regulator delivery of other government and roles We are the statutory regulator priorities to tackle crime and for housing associations. We promote Respect, deliver Decent The Corporation has three continue to drive improvements Homes and cohesive communities, principal roles – to finance, in housing association efficiency address the climate change impact regulate and influence the proper and performance and help to of new and existing buildings, performance of RSLs in England. ensure that associations continue tackle homelessness, develop The Corporation has a team of to attract private finance at very social enterprise, champion the over 500 staff based in nine offices competitive rates to build and tenant voice, regenerate areas across England. In the year the improve affordable homes whilst suffering from low housing Corporation spent £52.0 million delivering excellent services to demand and build new sustainable on running the organisation their residents and communities. communities. In doing so, we will (including revenue grants to Across the country about work closely with our partners in third parties), £2 billion on its five million residents benefit national, regional and local Capital Investment programme from a stable sector, focused government as well as our future and £3.5 million on its Capital on meeting their needs and colleagues in English Partnerships. Administration programme. those of their communities. From 1 April 2009, all government departments must produce their Investor accounts under International Influence Financial Reporting Standards We help develop and implement We help shape housing, (IFRS). The transition date will regional and national housing community and regeneration therefore be 1 April 2008 as strategies, using public subsidy policy nationally, regionally and comparative data must be to procure affordable housing locally. With our extensive network produced. The Tenant Services which provides quality homes of regional offices and close Authority and HCA must both in the places where our help is relations with housing associations produce comparative data for most needed across the country. and regional and local government, 2008-09 under IFRS. The Each year we support over 3,000 we are able to bring high-quality Corporation must restate its housing developments which have market information and unrivalled opening balance sheet at 1 April provided around 50,000 homes delivery expertise to bear on 2008 by 30 September 2008 which in 2007-08 to individuals and national policy development. will help to ensure the correct families who would otherwise be opening balances are available for unable to access new high-quality Our targets for 2007-08 were agreed the new agencies. The Financial housing. The Corporation helps by the Board and the Secretary Reporting Manual (FReM) is being to create and sustain affordable of State at the start of the year replaced by the International homes in strong communities. In as part of our 2007-09 Corporate FReM. 2005-06 we began the process of Plan. Our achievements against expanding our partnership base the Corporate Plan Targets (CPT), with the introduction of grants together with a summary of our to unregistered bodies. With activities and key issues for the government funding we provided 2007-08 period, using the four grants for the development of key corporate objectives set some 29,400 rented and 21,400 out in our 2007-09 Corporate low-cost home ownership homes Plan, are set out below. for people in need in 2007-08. This was the second and final year of the 2006-08 programme. 33 Annual report and accounts 2007-08
The four key corporate We will regulate in proportion To support these four key objectives for the year were: to risk, rewarding sustained objectives we have our core values good performance with less which define the principles which intrusive regulation. We will work guide our work and the way in More quality homes towards continual improvement which we aspire to serve the in the sector’s response to the communities of England: We will expand our investment needs of existing and emerging programmes to fund more new communities and ensure that our high-quality affordable homes equality duties are incorporated Transforming lives and places and complete our transition from into our work with the sector. a giver of grant to an investor in We believe that access to decent physical and social capital. We homes helps to transform lives will develop greater competition and create strong communities. Making best use of our expertise in provision through actively encouraging a range of providers. We will disseminate our research We will drive even greater and use our business intelligence Innovation and continuous efficiency in the investment to focus on critical aspects of the improvement programme and ensure a role for housing agenda and we will add By sharing knowledge and specialist providers within the value to the development and expertise within the Housing partnering framework. We will use implementation of housing policy Corporation and across the our registration and regulation access to the public and private wider housing and regeneration powers to ensure all housing sectors. community we will bring about association homes meet, or exceed, significant fresh thinking, the Decent Home Standard continuous learning and by 2010. Developing our can-do culture improvement. We will continue to embrace a culture that is proactive and Improving landlord value adding. In doing so we will Openness and integrity performance unlock the skills and knowledge We will work collaboratively We will foster and challenge of our people and harness the with all our stakeholders and housing associations, and relationships we enjoy with our communities to develop trust unregistered bodies managing partners and stakeholders to make and respect through good grant-funded homes, to provide an even bigger difference to the communication, honesty and excellent services, be efficient and two million households transparency. devise innovative housing and we serve. community solutions. We will ensure that we, and our partners, Delivering excellence place the views of tenants at the heart of their processes. We will foster individual and collective responsibility, supporting people and teams, developing expertise, holding ourselves to account and celebrating success. 34 Annual report and accounts 2007-08
04 // More quality homes year of this two-year investment programme. When compared to the 2004-06 programme we Working with RSLs and other partners we contribute agreed with the CLG some significant increases in to achieving the Government’s social housing both our social rent and low-cost home ownership programme by allocating funding provided by the targets over the two years. The outputs we were CLG for the delivery of the Government’s sustainable tasked to deliver over the two-year period were communities agenda. The Minister for Housing and 49,000 social rented homes and 35,000 low-cost home Planning agreed targets with the Housing Corporation ownership homes. Within these two-year targets are for the two year period 2006-08, based on Regional annual targets which were achieved for both years. Housing Strategies. 2007-08 saw the second and final
Summary of corporate planning targets
Deliver the second and final year of the National Affordable Housing Programme (NAHP) for 2006-08 Deliver 49,000 completions of new social rented homes from the National Affordable Housing Programme in 2006-08 (28,000 for 2007-08) CPT 2, CPT 3 Deliver 35,000 new low-cost home ownership completions through the and CPT 4 National Affordable Housing Programme 2006-08 (19,263 for 2007-08) Low-cost home Affordable rent ownership (AR) (LCHO) Total affordable homes Target Actual & % including Actual & % Actual & % Region Target achieved KWL Target achieved Target achieved London 8,004 7,619 7,874 6,131 15,878 13,750 95% 78% 87% South East 4,727 4,948 3,245 4,111 7,972 9,059 105% 127% 114% East of England 3,794 3,986 2,005 2,387 5,799 6,373 105% 119% 110% South West 2,781 3,036 1,025 1,670 3,806 4,706 109% 163% 124% North West 1,932 2,268 311 1,095 2,243 3,363 117% 352% 150% West Midlands 1,448 1,675 1,018 1,492 2,466 3,167 116% 147% 128% East Midlands 1,517 1,785 1,072 1,371 2,589 3,156 118% 128% 122% Yorkshire and the Humber 907 1,153 108 490 1,015 1,643 127% 454% 162% North East 518 577 57 118 575 695 111% 207% 121% B/fwd from 2006-07 2,372 2,372 2,548 2,548 4,920 4,920 Unallocated 138 125 263 100% 100% 100% Total 28,000 29,557 19,263 21,538 47,263 51,095 106% 112% 108%
CPT = Corporate Planning Target, KWL = Key Worker Living Programme 35 Annual report and accounts 2007-08
Completions shown as actual on the ‘unallocated’ Capital Grant Fund (RCGF) or disposal proceeds of a line are those homes funded by the reinvestment grant-funded property. of capital grant retained by RSLs from the Recycled
Product targets and sub-targets Affordable rent and low-cost home ownership Target Actual Number of homes completed for affordable rent, CPT 1 28,000 29,557 Number of homes completed for low-cost home ownership, CPT 2 19,253 21,538 Number of key worker living homes, CPT 3. It was agreed with CLG that KWL completions would be treated as a two-year target. 4,300 3,171
All targets were achieved except the Key Worker All regions hit their main affordable rent and shared Living Target. During 2006-07 it was recognised that ownership targets except London which hit 95% of the expanded Open Market HomeBuy product was its affordable rent target and 78% of its LCHO target. proving much less popular than envisaged. CLG, in The annual national targets for the delivery of all recognition of this, agreed to make the key worker affordable housing, affordable rent and LCHO targets target a two-year target and subsequently reduced were comfortably met, leading to the over-delivery expectations for delivery of 9,044 homes over the against the targets for the 2006-08 programme. 2006-08 period. An annual target of 4,300 was set for The number of starts on sites which impact on the 2007-08, against which completions of 3,171 were 2008-11 programme is ahead of schedule, which achieved. Of the three regions with key worker targets bodes well for the delivery of the outputs associated only the East of England achieved its target, with the with that programme. As part of building the South East and London achieving 80% programme for 2008-11, a significant number of and 69% respectively. starts on sites were required as part of the delivery outputs of the 2006-08 programme. To ensure a strong performance in this area, the value of the start on site payments was increased from 50% to 60% of the total scheme value during March. The number of starts on sites exceeded our expectations, which is encouraging in terms of our ability to deliver the first-year targets of the 2008-11 programme. 36 Annual report and accounts 2007-08
Increase the percentage of larger properties available for affordable rent provided in Target met: London through the National Affordable At the end of March 2008 grant confirmed Housing Programme from 26.6% in 2005-06 social rent 3+ bed allocations in London to 34% in the 2006-08 allocation. represented 35.7% of total social rent allocations for the year. Nationally, exceed 7,000 larger homes completions available for affordable rent At the end of March 2008, 8,240 larger homes CPT 5 in 2007-08. had been completed.
Target met: Monitor and report on the delivery of rural 3,706 units had been approved under rural CPT 6 housing informed by the Regional Assemblies. housing by March 2008.
Reduce average level of grant required to deliver programme.
Average level of grant to deliver 2007-08 2007-08 programme (unadjusted) Target £ Actual £ Target met Average grant per new rented home (Gross) 61,554 59,633 yes Average grant per person housed in rented homes 16,678 16,269 yes Average grant per low cost home ownership completion (Includes CPT 7 NBHB, but excludes OMHB) 26,540 21,282 yes
Number of homes approved in year to be constructed using modern methods of Target met: CPT 8 construction (allocations) to be 25%. Number actually constructed 40%. Target met: These requirements were included in NAHP Pre-prospectus and Design and Quality Strategy and Standards (April 2007) and NAHP Prospectus (September 2007). Monitoring arrangements agreed with CLG for post April 2008. Introduce the requirement that a 3 star rating The Public Realm Conference held in June 2007 in the Code for Sustainable Homes level 3 and conferences with Sustainable Homes in becomes the minimum standard for the September and October 2007 was aimed at CPT 9 2008-11 bidding round. supporting bidders to achieve CSH level 3. 37 Annual report and accounts 2007-08
Target met: The Decent Home Standard Extension Panel has approved later delivery dates for 16 RSLs covering 8,946 properties, and 0.47% of eligible stock. These are largely in respect of properties affected by regeneration proposals which are likely to be demolished subject to finalisation of local strategies. In addition, CLG is agreeing later DHS target dates for current stock transfers. Total DHS fails for 2007 are 251,586. The total corrected by deducting new DHS fails imported by stock transfer of 27,035 is 224,551 ‘net’ DHS fails for 2007 and this represents a reduction of 69,005 from 2006. If this rate of reduction continues, and excluding future stock transfers, then 44,571 DHS fails would remain in 2010, representing approximately 2% of the To ensure that all registered social landlords current total stock of 1,979,614; or, all housing with more than 1,000 homes are on track to association homes would meet the DHS by CPT 10 meet the 2010 Decent Home Standard (DHS). December 2010.
For 2007-08 our budget for capital sector employees in essential The Corporation continues to investment in new affordable services where there are difficulties enjoy the confidence of CLG in homes was agreed by CLG at £2.1 in recruitment and retention of meeting the Government’s social billion. Due to restrictions in our staff. Throughout the year the housing targets. Working closely legal framework we rely solely on Corporation continued to develop with CLG and stakeholders such as CLG for our grant in aid funding. initiatives which will generate the Regional Assemblies, English Approximately 62% of capital grant cost savings in the provision of Partnerships, the National Housing was spent in the high demand affordable homes. The year under Federation, the CIH, the Local areas of London and the South review was the fourth year of our Government Association and other East of England. We continued to ‘partnering’ approach, whereby housing experts, we are confident deliver affordable housing for key 83 RSLs, or groups of associations, that we can meet the challenges workers through the Key Worker were selected to plan development arising in the year ending March Living (KWL) element of the LCHO with more certainty and deliver 2009, including the transfer of programme. The KWL element is economies of scale. Financial functions to the new agencies. restricted to specific geographical details of the Corporation’s NAHP areas of high housing demand and are disclosed in Note 2 to the a defined client group of public Financial Statements. 38 Annual report and accounts 2007-08
05 // Improving landlord We use our regulatory system associations, and all those in performance to drive improvements in receipt of investment funding. We housing association efficiency reviewed our regulatory regime for The Corporation is committed to and performance, and help to smaller associations as a further better regulation. We believe that ensure that associations continue refinement to our proportionate embedding the principles of better to attract private finance at and risk-based approach to regulation in all our activities competitive rates to build and regulation. is an effective way to enhance improve affordable homes whilst We are continuing to use our consumer protection and support delivering excellent services to registration and regulation stakeholder confidence in their residents and communities. the sector. powers to ensure that all housing We want residents to have a associations with more than 1,000 Our regulation reflects objective greater say in how their housing homes are on track to meet, or assessments of risk, to maintain association is run and in decisions exceed, the Decent Home Standard and improve the viability of that affect their lives, as this is by 2010. the sector and the quality of critical to the effective delivery We have responded to the governance and service delivery. of housing and housing-related Cave Review by accepting and Our engagement is tailored, services. This year we published implementing the relevant appropriate and proportionate to our new requirements of housing recommendations and by the risks which providers face. associations to ensure that 95% contributing effectively to the of the larger housing associations From 6 April 2008, the Corporation successful transition to the new have resident representation on is subject to the statutory Tenant Services Authority. Regulators’ Compliance Code, all boards with service delivery issued under section 22 of the responsibility by March 2009. Legislative and Regulatory Reform We have continued to maintain Act 2006. Our overall approach integrity and transparency in our to regulation is risk-based and regulatory activity by publishing outcome-focused, strategically up-to-date Housing Corporation aligned with the requirements Assessments for the larger of the Code. 39 Annual report and accounts 2007-08
Profile of the sector
The Housing Corporation has a statutory duty to associations operating in England listed on our maintain a register of the associations we regulate. register, a net decrease of 45 since the previous year On 31 March 2008 there were 1,879 housing end. These associations comprised:
Industrial & Provident Act Societies (Charitable rules – 681/Non-charitable rules – 413) 1,094 Registered charities only 410 Registered companies only 65 Registered as both a company and a charity 310 Total 1,879
Distribution of housing associations by Housing Corporation Field and type
Registry type London South East South West Central North National Almshouses 63 68 52 113 80 376 Abbeyfield 28 52 53 44 53 230 YMCA/YWCA 9 3 4 14 8 38 Co-operatives 138 6 4 27 68 243 Co-ownerships 6 2 - 10 7 25 Letting 127 104 62 157 156 606 Letting/Hostel 79 52 38 70 52 291 Hostels 15 5 5 12 6 43 Sale or Lease 11 4 1 2 9 27 Field Totals 476 296 219 449 439 1,879
Analysis of the sector by stock size
Number of properties Number of RSLs Percentage of RSLs Less than 250 1,354 72.1% 250 - 2,499 246 13.1% 2,500 - 4,999 137 7.3% 5,000 - 7,499 74 3.8% 7,500 - 9,999 24 1.3% 10,000 - 12,499 15 0.8% 12,500 - 14,999 11 0.6% 15,000 - 17,499 5 0.3% 17,500 - 19,999 3 0.2% More than 20,000 10 0.5% 1,879 100% 40 Annual report and accounts 2007-08
Registrations and Phoenix Community Housing Seven of the new transfer Association with 6,344 homes from registrations were formed as During the year we registered the London Borough of Lewisham. subsidiaries of new RSLs, three 37 new housing associations, Where stock transfers involve as part of an existing RSL Group compared to 22 in the previous an increase in size of a group and ten as new ‘independent’ year. The new registrations structure the Corporation looks associations on the Register comprised 20 large-scale whole for efficiencies in the proposed of Social Landlords. or partial stock transfers from running costs of the organisation local authorities; 12 new parent which will deliver future benefit, bodies of a group structure; four to tenants. De-registrations amalgamations and one other general registration of a small During the year 21 RSLs were charitable trust. de-registered and 61 were removed Registrations as part from the register. of a group structure
Stock transfer registrations We completed 12 group structure registrations of non-stock owning Consents The 20 transfer registrations ‘parent’ associations, of which as part of the Government’s During the year the Corporation seven were formed to take in a approved programme of large- issued 3,045 sealed statutory new stock transfer RSL scale voluntary transfers resulted consents to RSLs. This comprised as a subsidiary. in 90,371 local authority homes 170 constitutional consents, becoming part of the regulated Group structure activity continues of which 140 were to amend sector in 2007-08. This is an to be an important area of work. or update RSL governing increase on the previous year of A new feature is amalgamations instruments. Four consents to RSL 23,099. This year the majority of by associations that are Industrial amalgamations and 26 Transfer of transfers once again involved & Provident Societies already Engagement consents were issued. relatively medium-sized Shire, in a group structure. During the The Consents Section issued District and Borough Council year we have registered four 2,875 Section 9 consents during transfers rather than larger urban amalgamated bodies, resulting the year, of which 652 were for metropolitan authorities. However from two or more associations private finance secured against there were three large urban completing a formal amalgamation RSL properties. 2,223 Section 9 transfer registrations of: to create one continuing body, consents were for RSL disposals under the process set out in the Liverpool Mutual Homes with or transfer of properties Industrial & Provident Society 15,146 homes from Liverpool between RSLs. Act and with the Consent of the City Council; Southway Housing Financial Services Authority. Trust with just under 6,000 homes from Manchester City Council
Submission of annual accounts
2007-08 Accounts Due 1,738* Received from RSLs during year and placed on Register 1,651 RSL Accounts outstanding 87
* Number of accounts due varies with changes of RSLs’ financial year end as well as the number of social landlords registered with the Housing Corporation. 41 Annual report and accounts 2007-08
Figures exclude RSLs which had cases were identified and 94 cases At 31 March 2008, seven yet to submit accounts where the were resolved. There were four associations had statutory anniversary of the financial year new cases in 2007-08. appointees on their boards. end had not yet fallen. The trend towards fewer Following the outcome of a These figures refer to accounts for supervision cases continues to statutory inquiry, the Corporation’s financial periods ending October reflect the impact of the principles Board decided to direct the 2006 to September 2007, for which of the Regulatory Code and of statutory transfer of Black Roof the required date for submission risk-based regulation. The shift in Community Housing Association’s fell between 1 April 2007 and 31 emphasis towards self-assessment land (essentially all of its assets March 2008. and self-regulation, together and liabilities) to another with more reliance on internal registered social landlord. The Most of the outstanding annual assurance and verification, has process of selecting a suitable accounts are for small associations, led to associations taking greater transferee association was or where the RSL is merging or responsibility for their own completed and ASRA Greater transferring their engagements to compliance with the Code. We London Housing Association was another RSL. have moved away from dealing chosen as preferred recipient of In all cases regulatory action is with concerns about process, the land. The Corporation applied taken to ensure that accounts are which previously accounted to the Secretary of State for the provided and reasons for any delay for a high proportion of cases. necessary consent to the transfer. are understood. Supervision casework now, by That consent was received in definition, handles the most March 2008, and the process for difficult and complex problems, completing the transfer was in Determinations issued under with high levels of risk and impact. its final stages at the point these Paragraph (2)(2)(f) of Schedule 1 accounts were signed. to the Housing Act 1996 (Payments We continue to emphasise the and benefits to officers) importance of governance and In December 2007 and January management performance in our 2008 the Corporation used its In 2007-08 the Housing Corporation regulatory assessments. In many insolvency powers under Sections issued 78 special determinations of the most serious cases of under- 39 to 50 of the Housing Act 1996 for exemptions from Paragraph performance we use our power to for the first time. This followed 2(1), Part 1 of Schedule 1 of the make statutory appointments to action by lenders to call default, above Act. 115 were issued in the the governing bodies of housing and appoint receivers, in respect of previous year. associations. These bring in the borrowings of Ujima Housing additional skills and expertise to Association. The Corporation Supervision help to resolve the problems as used its powers to impose a quickly as possible. During the moratorium on creditors’ action, Where we have intervened year we made appointments to the and thereafter to make proposals Where we find that housing boards of five associations (two in for securing the future of Ujima by associations do not comply 2006-07). These were: way of a transfer of engagements with the Regulatory Code in a to London and Quadrant Housing significant way we intervene to • AmicusHorizon Housing Group; Trust. The proposals were accepted deal with the underlying concerns. • Clays Lane Housing Co-operative; by the secured creditors, thus In the most serious cases of under- • Leeds Federated Housing avoiding the collapse of Ujima, performance we place associations Association; and the transfer was completed under supervision. The number • St. Matthew Housing; and within 28 days in accordance of housing associations under • Ujima Housing Association. with the requirements of the supervision reduced to eight legislation. In the current year a cases as at 31 March 2008, which review of the Ujima case has been compares to a total of 47 cases commissioned to examine our five years ago (see statistics table regulatory approach and ensure below). Over the five years, 55 new lessons are learned as appropriate for the future. 42 Annual report and accounts 2007-08
In January 2008 we launched a new initiative which association governing bodies. Further information aims to expand the pool of expert persons who are about this initiative is available on the supervision available to act as statutory appointees to housing pages of the Corporation’s website.
Statistics
Section 1: Supervision cases summary Number of cases as at 1 April 2007 17 New cases added 4 Cases resolved (13) Number of cases as at 31 March 2008 8
Section 2: Five-year trend 2007-08 2006-07 2005-06 2004-05 2003-04 Number of cases brought forward 17 23 42 51 47 New cases 4 3 8 15 25 Cases resolved (13) (9) (27) (24) (21) Number of cases carried forward 8 17 23 42 51
Section 3: Cases per Field Central 1 London 4 North 2 South East 1 South West - Total 8
Section 4: Cases by size (no. of homes) >1,000 <1,000 All Central - 1 1 London 2 2 4 North 1 1 2 South East 1 - 1 South West - - - Total 448
Section 5: Ageing of cases Number o/s more than 5 years 3 Number o/s between 4 - 5 years - Number o/s between 3 - 4 years 1 Number o/s between 2 - 3 years - Number o/s between 1 - 2 years - Number o/s less than 1 year 4 Total 8 43 Annual report and accounts 2007-08
Financial health • surplus on operations, at £1.4 Decent Home Standard is met and of the sector billion has increased by 11.7% as a consequence of the transfer on the previous year’s level, of stock from local authorities to The Global Accounts publication generating an operating margin traditional associations. provides aggregated balance sheet of 15.5%; and and income and expenditure Whilst average interest cover information for those associations • pre-tax surplus is £0.3 billion up and gearing ratios are declining, with over 1,000 homes in 8.4% on the previous year. this is to be expected as average grant rates for new supply management. In 2007, this The financial position of the are reducing and increasingly represented 383 associations which sector masks the performance associations develop without manage almost 2.2 million homes. and financial potential of two public subsidy. At 118% and 33.5% The criteria for inclusion have very distinct segments within it: respectively, however, the ratios changed from the previous years stock transfers and traditional for the traditional sector remain from associations with 250 homes associations. to those with 1,000 homes. The reasonable. Analysis of trends change was made in light of the The surplus in the sector as a in interest cover and operating Elton review of regulatory burdens, whole is depressed by the deficits margin do demonstrate that the which resulted in a reduction in suffered in the stock transfer sector is exposed to differential information requirements from segment, caused mainly by inflationary impact of salary associations with less the 1,000 those associations within the and maintenance costs and units. The publication provides first six years of transfer. These increasing interest rates. The sector and sub-sector analysis of associations spend significant sector’s response to the drive financial performance, highlights sums re-improving the transferred for improving efficiency is a key trends in key ratios, together with stock and, in general, return losses factor in its financial performance commentary of the impact of the during that period. In aggregate, withstanding these pressures. stock transfer associations external economic environment These results of our Global returned a deficit of £108 million and key initiatives in operation Accounts indicate a sector that and generated an operating within the sector. should be well placed to deliver on margin of only 10.4%, compared to its social and business objectives The results for the year are largely 18.4% for traditional associations. into the future. However, they consistent with previous years and However, as individual stock represent the position at March demonstrate that, in aggregate, transfer associations mature, 2007 and pre-date the turmoil the sector is financially sound and they typically achieve a level of seen in the global financial continues to grow. Growth of 10.3% financial performance more akin markets since the summer of 2007. in total assets and 8.7% in turnover to traditional associations. is delivered through a combination Whilst the sector is managing of local authority stock transfer Indicators of the traditional the pressures imposed by rent and new development supported association sector’s financial restructuring and compliance with by capital grant programmes. position remain strong. The the Decent Home Standard, it faces segment returned an aggregate challenges in delivering increased Highlights of the financial surplus of £378 million, although, levels of development against a statements include: increasingly, this surplus is backdrop of both a weaker housing • the gross cost/valuation achieved through the profit on market and tightening credit of housing properties sales of housing assets, mainly conditions for additional is £77 billion, an increase through shared ownership external finance. of 10.1% on 2006; products. The average operating margin has continued its • turnover for the year is £9.1 marginally decreasing trend of billion, up £0.8 billion on the recent years and analysis suggests previous year; this is influenced mainly by increasing spend on improvements to the housing stock to ensure the 44 Annual report and accounts 2007-08
Performance against our key Corporate Plan Targets in this area is set out below:
Target met: Dissemination events were held in each of the Housing Corporation and regions between March and May 2007. Events included input from the Homelessness Action Team (HAT). On the whole these were well attended by both local authorities and RSLs. The format of events was driven by Housing Corporation regions to ensure best fit with local issues.
A homelessness workshop was held in June 2007 at the CIH conference in Harrogate to present an update on Housing Corporation research and to underpin the implementation of the strategy. This event was very successful and confirmed the high levels of interest in future reports/recommendations for the sector. These reports and recommendations were disseminated during the autumn 2007 round of NHF/CIH conferences To ensure that the promotion and as well as events/seminars organised at local and dissemination of the Homelessness regional levels. Strategy is delivered through a national programme of activity which will include The HAT is also rolling out its activities beyond London at least one event in each of the nine and a key element of this is dissemination of key CPT 11 English regions. actions from the homelessness strategy.
To ensure that 95% of the larger housing associations have resident representation on the board with service delivery responsibility by 2008-09. Target met: Performance against this target will be On target to deliver performance monitoring from CPT 12 monitored from March 2009. March 2009.
Achieve or exceed Gershon efficiency targets for new supply, capital works, management and maintenance, and commodity goods and services. Target met:
2007-08 Actual 2007-08 Efficiency gains £ million £ million New supply 160 825 Capital works 60 133 Management and maintenance 80 189 Commodity goods CPT 13 and services 55 66 45 Annual report and accounts 2007-08
Target met: The annual target was delivered and exceeded due to reactive requirements (for mergers, inspections etc) over and above plan – by end December, over 250 HCAs were published. Maintain up-to-date Housing At end March, all HCA revisions were delivered Corporation Assessments for the larger according to revised plans for 2008. associations and all those in receipt of investment funding – with an estimated Up-to-date Housing Corporation 200 HCAs produced in the calendar year Assessments are available on the website CPT 14 ending December 2007. www.housingcorp.gov.uk for all large associations.
Target met: All cases are reviewed by the local project board We will undertake reviews of all quarterly and monthly progress reports are produced. supervision cases on a three, monthly basis and produce action plans with All icebergs are reviewed at the local quarterly milestones including monthly update on supervision panel and reported to Board’s CPT 15 progress by lead officers. sub-committee.
Target not met: We want at least two out of three RSLs The 2006-07 performance indicators, based on the to improve performance against the March 2007 RSR and accounts return, were published indicators below. in December 2007. The average performance for each of these PIs across the sector as a whole shows % of RSLs % of RSLs that showed that showed improvement over 2006 figures for four out of five and improvement improvement the remaining PI shows a slight variance downwards between between of less than 0.1%. For context, the PI national average 2005-06 2006-07 results are (with 2006 in brackets): % of • % general needs vacant 2.1% (2.0%); general
needs • average relet days 39 days, (42 days); vacant 62.0 66.0 % of • average SAP 68.6% (68.1%); average • % routine repairs 94.0% (93.1%); and days re-let 64.0 66.0
Average • rent arrears 5.2% (5.2%). SAP rating 87.4 66.0 For many associations it is difficult to improve on % of routine results which are at the higher regions of performance. repairs on However in 2007-08 we set a stretching Corporate target 62.3 66.0 Plan target of improvement by two thirds of all % of rent associations. Despite results above we did not observe CPT 16 arrears 64.8 66.0 improvements across two thirds of associations. 46 Annual report and accounts 2007-08
06 // Making best During 2007-08, the following key During 2007-08, a total of 150 use of our expertise projects were supported: projects received funding under our Innovation and Good • a major study on the Innovation, good practice Practice grant, 46 of which were demographic, economic and research commenced during that period. and spatial drivers of future New projects focused in particular The Housing Corporation has affordable housing demand, and on the following areas: continued to invest significantly the likely aspirations of future in high-quality research, data residents of affordable housing; • barriers to LCHO; collection and analysis, and in support of innovation and • a high-profile study on the • land availability; life chances of social housing best practice, informing the • responding to an ageing residents, tracking cohorts of Corporation’s delivery roles and population; contributing to the development of tenants from the Second World future approaches to the delivery War to the present day; • housing management services in the 21st century; and and management of affordable • the development of the homes. During 2007-08, the Residents Consultation Panel, • tackling Respect. Corporation invested a total of £1.8 which includes some 1,400 The Gold Award for Excellence, million in research, data collection housing association and 1,000 launched in 2005, continues to and analysis, innovation and best local authority and ALMO challenge and inform the sector. practice, prioritising its investment residents, providing important The second round of Gold, in projects relevant to: information on the views and launched in June 2007, focused priorities of residents of social • meeting the housing needs of on empowering communities housing; vulnerable people and diverse and environmental sustainability. communities; • two projects focusing on An intensive dissemination • ensuring we are responding understanding the drivers programme has ensured a high effectively to the challenges of of satisfaction amongst BME level of participation by the an ageing population; tenants and the impact of sector in events ranging from culturally sensitive services in conferences, policy breakfasts, • addressing climate change by meeting housing need; and seminars and open days as well reducing the carbon impact of as materials such as brochures • a review of housing association existing and future affordable and CD toolkits. homes; activity aimed at tackling worklessness. A third round competition • developing our understanding was launched, with themes of of future demands on affordable building cohesive communities, housing, and the likely changes delivering joined up development in the range of delivery partners and tackling worklessness, with available to us; winning entries to be announced • better understanding the tools in early 2008-09. needed to deliver effective and sustainable estate renewal and promote the development of mixed and cohesive communities; and
• better understanding the extent to which current approaches are meeting the needs of black minority and ethnic (BME) communities. 47 Annual report and accounts 2007-08
Each year the Housing Corporation During the year, specific and Reflecting the Corporation’s collects key information from substantive analysis of the data determination to ensure that all RSLs in order to understand has provided key current insights our investment in research and national and local trends in into, amongst other things, good practice is as accessible and social housing, inform policy worklessness, homelessness, useful as possible, the Corporation development and provide a Decent Homes progress, rent has continued to invest in consistent overview of RSLs at comparisons and trends, and improving the dissemination of the local level. This information housing for vulnerable people. our research, IGP and statistical supports the Housing Corporation’s Data from RSR and CORE is used outputs. This has included a regulatory system, the provision of to calculate key performance new sector-wide bulletin – CRMI housing association performance indicators. The data is also used Insights – highlighting recent indicators and the work of the extensively in research, and research findings; continued Audit Commission’s Housing Innovation and Good Practice investment in our magazine Inspectorate. projects commissioned by the Open, which highlights best Corporation and a range of practice and resources on key Information is collected through stakeholders. thematic areas; and seminars and the Regulatory and Statistical conferences aimed at housing Return (RSR) which provides an The Corporation has been associations and policy makers annual snapshot of the two million working closely with CLG on the within government. In addition housing association properties, development of the National we have developed an ongoing including profile of stock, and key Register of Social Housing internal learning programme in breakdowns including additions (NROSH). The initiative is creating order that Corporation staff benefit and losses, evictions, anti-social a single, national and consistent from the best information on behaviour, Decent Homes and social housing database, providing housing issues, in preparation for low-cost home ownership. The key information (c. 40 attributes) the forthcoming transition to the Continuous Recording of Lettings on each of the four million social Tenant Services Authority and the and Sales (CORE), monitors lettings housing properties provided by Homes and Communities Agency. (c. 300,000 per year) and sales housing associations and local (c. 17,000 per year) by housing authorities. Not only does this associations and local authorities, allow powerful analysis at any including key household geographical level, but information characteristics, such as, age, sex, is also extracted from the Housing economic status, occupation, Management Systems more ethnicity and nationality, income efficiently. NROSH is planned and benefits, rent, source of referral to supersede most of the RSR and previous accommodation. and some CLG data collection elements, and already contains Through our external partners some information for 1.3 million all of this data is collected in properties. electronic form, validated, analysed and published to ensure that the resulting information is sufficiently fit for purpose. Outputs include summaries for each individual RSL through to national reports, as well as online analytical tools which have been developed and implemented this year. (See www.rsrsurvey.co.uk, www.core.ac.uk, www.dataspring.co.uk) 48 Annual report and accounts 2007-08
Performance against key Corporate Plan Targets for the period is summarised below:
Target met: To inform our policy development and Four surveys have been conducted, two further operations with residents’ views and surveys are planned for January and March aspirations by means of feeding into and will also cover local authority tenants. our research six surveys of the Resident Summaries are available on the CRMI CPT 17 Consultation Panel. website pages.
Improve dissemination of completed IGP projects through a range of media by ensuring a dissemination plan and impact appraisal is Target met: incorporated into every project contract All IGP contracts now include requirement CPT 18 for 2007-08. for dissemination plans and impact appraisal.
Target met: 2007 – Very successful programme to date, reaching over 500 delegates at Housing Corporation events, satisfaction rating of 92%. Participated in other events, eg CIH national conference, NHF national conference, Green Week Summit, Green Construction Summit, NHF Environment Conference, Northern Housing Summit etc. 20,000 copies of Inside Housing supplement distributed, 6,000 copies of knowledge-sharing brochure and CD toolkit in progress to deliver 37,000 copies. Successfully disseminate good practice 2008 – 72 applications received across of 2007 Gold winners. Successfully launch new three themes representing 900,000 homes. round of the Gold Award, generating at least Applications received from every Field. 50 high-quality applications from housing 18 short listed, from which nine winners CPT 19 associations. are likely.
07 // Developing our • the introduction of a • implementation of a new IS can-do culture co-ordinated organisational strategy (approved by the Board change programme to manage in February 2007) which saw a During 2007-08 we have the collective input into the shift from bespoke development demonstrated our ability to deliver transition to the two new to a buy-not-build approach, our can-do culture through: agencies in 2008-09; which has been applied in the development of Investment • a successful track record in • improving our internal and Regulation systems over delivering the Government’s communications and this period; affordable housing targets, performance management combining expertise of national processes – creating better • the appointment of a new ICT policy and local knowledge in linkages between corporate and supplier to improve the hosting field offices; individual targets; service of our IT infrastructure • a strongly shared ethos during 2008-09; based on transforming lives and communities through the provision of high quality affordable housing; 49 Annual report and accounts 2007-08
• the successful completion of transition and staff from across We have reviewed and updated our Leadership Development the Corporation were invited to our main people-related policies Programme. The integration of become involved. to ensure legal compliance. this cohort and our Executive Equality impact assessments A variety of communication Management team has seen were completed for all the main channels – staff briefings, the much better collaborative HR policies. We also refined intranet, conferences and working within the Corporation our corporate performance dedicated newsletters and which has ensured we have met management system to establish magazines – ensure that staff the majority of our corporate clearer links between corporate, are aware and are kept informed targets; operational and individual of the main issues affecting the objectives, and risks, which • corporate-wide training in risk Corporation. Just over half the culminated in the production of management, relationship Corporation’s workforce are a single corporate performance management and project members of one of the recognised calendar. We continued to improve management; trade unions, and meetings performance through the delivery with the elected representatives • Learning Champions in all Fields of people and development continue to take place on a regular and functions have continued to strategies. All programmes basis. At the beginning of the year link effectively with the central identified as business critical, as we negotiated a new recognition learning and development team, part of the three-year learning agreement which is clearer about delivering locally responsive and development strategy, were the arrangements for time off and programmes within a national implemented and evaluated tightens up dispute resolution. framework; – including the leadership and We are keen to widen the scope of management development • the involvement of our second employee relations to encompass programmes, as were other tier of management in designing the whole staff body. key elements such as personal the agenda for our Corporate During the year we have been development through coaching Management Group thus making developing our new pay and and mentoring. The Housing it more relevant to the staff of grading arrangements to Corporation places great store the Corporation; and ensure salaries are both fair in the development of its staff. • confirmation from the IiP and reasonable in relation to Formal policies and structures assessor that we are ready for colleagues, and also competitive are in place to provide career the planned assessment in within the external labour market. development and learning 2008-09 from the evidence seen. We believe it is in everyone’s opportunities for all. interest that pay is awarded The Government’s announcement The Housing Corporation fairly and equitably as it is one of during the year of the intention to employs a diverse workforce as a the key factors affecting morale create two new housing agencies consequence of recruiting people and relationships at work. We was greeted by Corporation from the widest possible talent recognise that our pay systems staff in different ways. Some, pool. We are committed to creating must be transparent, based on understandably, were unsettled an open and inclusive working objective criteria and free from by this major forthcoming change environment which reflects the bias – a finding that was confirmed and others were excited about communities within which we by an equal pay audit undertaken the new challenges ahead. Early operate. We recognise that our during the year. We have also built on the Corporation recognised innovation and creativity is based on our existing voluntary benefits the importance of producing on the skills and experiences provision by re-launching a an effective employee relations different people bring to the tax-free cycle-to-work scheme. and engagement strategy for organisation. As an IiP accredited the transition period. A number organisation, we are recognised of workstreams were identified specifically in relation to the 50 Annual report and accounts 2007-08
as an employer where all of our a number of sub-groups focusing people are equipped to achieve on human resources, learning both corporate and professional and development, and policy and aspirations. communications. Sir Bob Kerslake, the Chief Executive designate of In meeting our corporate objectives the Homes and Communities we value the views of our staff Agency, has stated that he wants and believe that the learning to use the FRESH model we have environment we have created adopted and build on our success can only be maintained through going forward in the new agency. listening to one another. Employee forums have enabled us to shape The People with a Disability our approach to disabled people, Group provides an opportunity for women and the BME communities. disabled people to engage directly Much work was done during the with the Housing Corporation to year in developing our single ensure that improvements are equality scheme, which seeks to continuous and sustainable. consolidate our three separate We believe that the disadvantage schemes and the broader approach experienced by many disabled to equality into one coherent people stems from attitudinal and document. This forms part of environmental barriers. Through the action taken to maintain our disability policy and strategy and develop the provision of and by supporting our staff with information to, and consult widely a disability we remain committed with, employees. to achieving disability equality The Forum Representing Ethnic by working to dismantle these Minority Staff in Housing (FRESH) barriers wherever possible. Any has become an integral part of employee who becomes disabled the Housing Corporation since will receive support to ensure, it was launched four years ago. wherever possible, they are able Its purpose is to enhance the to continue in their role. participation made by BME staff within the Corporation. It achieves this by working with senior management through 51 Annual report and accounts 2007-08
Performance against the key can-do culture Corporate Plan Targets is summarised below:
Target met: An independent survey among our regional delivery partners and the results were reported to the Executive Management Team and the Corporation’s Board. The overall target was achieved with our general effectiveness at a regional level rounding up to 80%. Other results were that 81% of respondents thought that we were effective in contributing Achieve 80% satisfaction of key external to regional housing strategies and 96% said stakeholders which will be measured by an that we understood the regional issues CPT 19 independent survey of regional stakeholders. of stakeholders.
Target met: Implement environmental management across Implemented environmental management the Corporation by gaining full recognition of across the Corporation by gaining full CPT 20 ISO 14001 by autumn 2007. recognition of ISO 14001 by autumn 2007.
Target met: All phases of this project were completed on time and to budget, ensuring that the NAHP Deliver a bid data collection system 2008-11 bid round was a success, and also to support the next NAHP bidding round providing a system to support future regular CPT21a by September 2007. market engagement.
Target partially met: Phases A and B of this project were completed. A mid-year strategic review resulted in the final phase C being mothballed and resources diverted to upgrading the current Investment Management System (IMS) for the 2008-11 programme (see narrative below). Deliver the Programme Information System This upgrade to IMS 2008-11 was completed CPT21b (PIMs) by March 2008. on time and to budget.
Target met: A new ICT contract was awarded to the Deliver the successor to current ASP contract successful bidder on 16 October 2007 CPT 22 by January 2008. and service commenced on 1 January 2008. 52 Annual report and accounts 2007-08
IS-PIMS During the last two years we have 08 // General financial learnt from this experience and The Systems Group (a sub- matters – pensions, developed a revised IS strategy payments, audit, loans, group of the Executive) spent the which emphasises the need for financial instruments and early part of 2007-08 reviewing robust and clear business cases the development approach to be developed and agreed post-balance sheet events and deliverability of the new prior to the commencement The Corporation is an admitted .net Programme Investment of development; and sets body to the City of Westminster Management System. Flowing out a philosophy for systems Pension Fund. The liabilities from this a recommendation was development based on the buy- of the fund have decreased by made at a workshop to halt PIMS before-build approach; and £13.8 million to £31.5 million. In development as the probability where bespoke development is addition an actuarial gain of £14.4 of delivery for April 2008 was not needed or a preference for fixed million has been credited to the considered strong. There are a price development contracts to General Reserve and is disclosed number of factors that drove this be entered into. As a result of in the Statement of Recognised decision including continued applying this revised strategy the Gains and Losses. The employers’ availability of support for the new and enhanced IMS 2008-11 contribution rate for the year current IMS system (the lack of system (including bids capture, was 9.6%. A full disclosure of the which was a fundamental driver assessment, transfer, rme and pension scheme performance to the 2004 business case), and other new requirements) was is contained in Note 10 to the the anticipated further changes to delivered on time and to budget as Financial Statements. systems that will be required a functional system on or before post HCA. April 2008. The CLG pays grant in aid based on the estimates the The decision to halt PIMS resulted The Corporation is subject to Corporation makes for its in a rapid reduction in externally budgetary controls and grant in immediate requirements. Grant bought-in development on PIMS aid with CLG. Our net running in aid is transferred from the CLG and a period of internally delivered costs, amounting to £46.8 million, on a weekly basis to fund the bug fixing, documentation and revenue grants of £8.2 million Corporation’s daily grant payments tidying to ensure the product and net interest receipts of £3.0 to social housing providers and development effort could be picked million were managed within a on a monthly basis to fund its up and accelerated if required. Resource Near Cash Non-Cash administration and capital costs. Because we cannot predict budget of £52.8 million. Capital whether HCA will wish to pursue administration expenditure of The Corporation’s accounts and this development in due course, we £3.5 million was managed within financial transactions are audited have subsequently recommended a budget of £3.6 million. Details of by the National Audit Office. This a and actioned the write-off of the Corporation’s revenue costs statutory appointment under the historic development costs. are disclosed in notes 3 to 9 and Government and Resources Act capital expenditure in notes 12 and 2000 (Audit of Public Bodies) Order 13 to the Financial Statements. 2003 (SI 2003/1326). During the year the NAO undertook no non-audit work for the Corporation. 53 Annual report and accounts 2007-08
The Corporation manages a small 09 // Better Payment 10 // Changes in fixed portfolio of loans. They are funded Practice Code assets by a similar borrowing from the National Loans Fund. All loans are The Corporation fully supports the The Corporation invested £3.6 secured on property and, except CBI Better Payment Practice Code million in tangible and intangible in few minor cases, all annuity and aims to pay all undisputed assets. Of this, £998,000 was spent repayments were made when invoices within 30 days of receipt on developing software for our they became due. Two debts were and at least 90% of invoices investment systems and £503,000 written off during the year for whether disputed or not within on our regulation systems. A which full provision was included these timescales when paying further £135,000 was spent on in the accounts. Details of our for goods and services. For the developing the framework for loans and the borrowing from the payment of grants to RSLs and the NAHP programme. This has National Loans Fund are disclosed other bodies the Corporation has increased the value of intangible in Notes 15 and 20 to the Financial a policy to pay these either on assets within the balance sheet. Statements. scheduled dates or within ten These development costs have working days of receiving a valid been capitalised under FRS13. We have made no disclosures grant claim. regarding financial instruments During the year a decision was other than at Note 22 to the It is the Corporation’s policy to: made to write-off the development Financial Statements. No costs of our .net infrastructure. • settle the terms of payments Of the £998,000 spent on the significant post Balance Sheet with suppliers when agreeing investment systems, £231,000 was events have occurred. the terms of each transaction spent on the .net infrastructure. and pay bills in accordance I, Steven Douglas, being the More details can be found at with contract; Corporation’s Accounting Officer, section 7. Due to the engagement can confirm that all information • ensure that those suppliers are of a new supplier to provide the required by our external auditors, made aware of the terms ICT infrastructure we needed to in order for them to gain sufficient of payment; spend £1.6 million to enable the assurances that the Corporation first phase of benefits to occur. • abide by the payment terms has acted within transparent and A further £100,000 was spent on of individual suppliers; and accountable processes and that we replacing our wide area network have delivered our business within • deal reasonably with complaints to enable better communications our statutory framework, has been and disputes and advise and flow of data traffic. provided to them. suppliers without delay when Refurbishments in a number invoices, or parts of invoices, of our offices and the purchase are contested. of office equipment and hardware totalled £250,000. The value of fixed assets held by the Corporation is disclosed in Notes 12 and 13 to the Financial Statements. 54 Annual report and accounts 2007-08
11 // Freedom As far as we are aware there have Building on the publication of information not been any cases referred to the of EcoHomes XB for existing Commissioner’s office for review buildings we are actively The Housing Corporation is since March 2007. promoting the methodology a public authority subject to to our investment partners the right of access under the though publication of guidance Freedom of Information Act 12 // Policy on energy and though dissemination 2000. In accordance with the conservation and events. Using experience from Act, the Housing Corporation environmental issues the Gold Award environmental proactively publishes information, performance theme, we have and will be continuing this As a key trend-setter for the also commissioned authoritative work over the summer months construction industry, the Housing guidance for social landlords as the Corporation adopts the Corporation continues to drive for on retrofitting measures to Information Commissioner’s higher environmental standards in assist them in appraising and model publication scheme. The the homes it funds and to embed installing measures to improve Executive and Board regularly sustainability throughout our areas environmental performance of review the nature, source and of business. existing stock. Furthermore we extent of Freedom of Information have developed a framework to In progressing to the 2008-11 bid (FOI) requests in order to review stimulate associations to retrofit round the Housing Corporation compliance and our general measures and are liaising with CLG has achieved a significant step approach to the publication of to implement this. Moving forward, forward. All new-build rent and information. environmental performance of LCHO schemes funded in the new existing stock is key a theme in our The Corporation has received programme will be compliant with innovation and good practice 123 FOI requests from 1 April Code for Sustainable Homes level grant scheme. 2007 to 31 March 2008. Of these 3 or better. Code level 3 represents requests, 15 have resulted in an a 25% improvement over building Demonstrating its commitment internal review – in 12 cases the regulations in terms of CO2 to the environment, the Housing original decision was upheld and emissions, a maximum water Corporation has been awarded in three cases the information was consumption of 105 litres per the internationally recognised ISO disclosed. The remaining 108 cases person per day, and a challenging 14001 certificate. were where we either disclosed set of other criteria to be met. Like all businesses, we recognise the information or where we didn’t Current forecasts indicate that in our office and administration but they were satisfied with our 2008-11, 93% of these homes will activities have an impact on reasoning and did not appeal meet level 3 of the Code and 7% the environment. We aim to our decision. will meet the higher levels of continue our work in reducing the Code. Since the introduction of FOI in adverse effects wherever we can, 2005 the Corporation has had These foundations will be built on recognising our obligation in only six cases referred to the in future as we have committed setting a good example to other Information Commissioner’s office to achieving Code level 4 for the stakeholders in the social for external review. Due to the next bid round (2011-14) and housing sector. backlog at the Commissioner’s to zero carbon development by office these cases are only just 2015, subject to the technology being investigated. Four of the six becoming cost effectively available. cases were resolved informally and the information disclosed. One case was subject to a formal decision notice in which the Commissioner upheld the Corporation’s original decision and one case is yet to be investigated. 55 Annual report and accounts 2007-08
We are committed to continually Our environmental policy is being In accordance with Schedule improving our own environmental implemented by the setting of 7A of the Companies Act 1985, performance by complying with objectives and targets, which are as inserted by the Directors’ relevant legislation, ensuring that regularly monitored and annually Remuneration Report Regulations prevention of pollution remains reviewed. 2002, the following sections of an integral part of our working the report have been audited: practice. The award during the individual remuneration of the year of ISO 14001 status was 13 // Remuneration report Executive team, the emoluments also in respect of improving of the Board members and the environmental standards in all On behalf of the Board I am disclosures and notes relating our offices. As part of our ongoing pleased to present this report on to Pensions. commitment to maintaining this the remuneration of the Executive, Service contracts standard we will continue to: Directors and Board members. The Remuneration Committee The Chief Executive and Deputy • ensure all employees are aware Chief Executive and other senior of our environmental policy meets twice a year and is chaired managers have open-ended service and fully understand their by Peter Dixon. The Board contracts which do not contain any responsibilities within it; members who, together with the Chair, form the committee are: predetermined compensation on • reduce office waste (for termination of office. example, by increasing our use Shaukat Moledina, Sandi O’Neill, Individual remuneration for the of computers for information Donald Hoodless, Sir Duncan year ended 31 March storage, editing of documents Michael and Steven Douglas. and printing on both sides of The Remuneration Committee The key managers of the paper when possible); advises the Chief Executive on Corporation comprise the Chief the remuneration, contractual Executive, who is also a Board • use recycled and/or member, the Deputy Chief environmentally friendly paper and Corporation pension Executive and Directors. and favour those suppliers scheme arrangements for of office materials who are the Chief Executive, Deputy committed to environmental Chief Executive and Directors. good practice, ideally through The Committee provides an BS 8555 or ISO 14001; independent perspective of the market pressures governing pay, • recycle, or re-use waste where specific recruitment and retention practicable; sensitivities. It considers and reviews, when necessary, the • use energy efficiently throughout our offices; Corporation’s policy on senior staff remuneration, conditions of • minimise fuel consumption service, benefits and compensation by careful planning of commitments on early journeys and favour the use termination of contracts. It makes of environmentally friendly recommendations to CLG on the vehicles (during the year we performance criteria in respect of introduced the cycle-to-work the Chief Executive’s bonus and it scheme); and decides the bonus of the Deputy Chief Executive. • encourage greater use of public transport where possible. 56 Annual report and accounts 2007-08
All senior managers have consented to the following disclosures relating to their emoluments and accrued pension entitlement.
Additional responsibility Salary Bonus payment (a)
2008 2007 2008 2007 2008 2007 ££££££ Chief Executive and Deputy Chief Executive Steven Douglas (c) 137,135 114,497 17,587 4,125 9,831 - Chief Executive Peter Marsh (d) (e) 121,975 117,181 1,150 1,000 13,012 - Deputy Chief Executive Jon Rouse 35,982 130,688 17,759 16,656 - - Chief Executive to 1 July 2007 Director Members of the Executive Team Matthew Leach 86,352 81,685 1,765 1,050 10,419 - Director, Policy and Communications Clare Miller 95,715 92,869 1,765 1,050 11,549 - Director, Regulation Richard Hill 99,876 97,800 1,650 900 15,815 - Director, Investment Margaret Allen 95,715 92,228 1,765 1,050 10,511 - Field Director, Central John Carleton (e) 93,586 91,726 1,765 900 6,720 - Field Director, North Fiona Cruickshank 82,554 80,838 1,765 1,100 - - Field Director, South East Rona Nicholson 101,957 99,838 1,765 83 11,486 - Field Director, London Andrew Wiles 82,554 80,838 1,765 1,050 9,279 - Field Director, South West
(a) The Corporation’s Remuneration Committee with the transfer of the Corporation’s activities to the and the Permanent Secretary of CLG agreed a series new agencies and, for Directors who have agreed to of retention payments for Directors to mitigate do so, an extension of their resignation notice period the risks of non-delivery of corporate targets and from three to six months. to ensure business continuity is maintained in (b) Taxable benefits are the value of cars stated at the transitional period leading up to the creation their taxable value net of personal contribution for of the Homes and Communities Agency and the private use. Tenant Services Authority. The payments reflect the additional workload and responsibilities connected 57 Annual report and accounts 2007-08
Employer’s pension fund Taxable benefits (b) contributions Total
2008 2007 2008 2007 2008 2007 £££££ £
6,741 6,332 13,861 11,388 185,155 136,342
- - 11,426 10,952 147,563 129,133
- - 4,896 14,145 58,637 161,489
- - 8,459 8,057 106,995 90,792
3,124 2,965 9,358 9,016 121,511 105,900
- 9,746 9,475 127,087 108,175
5,512 5,414 9,358 8,955 122,861 107,647
- - 8,760 8,498 110,831 101,124
3,827 3,827 8,095 7,866 96,241 93,631
- - 9,957 9,592 125,165 109,513
3,515 2,798 8,095 7,861 105,208 92,547
(c) Steven Douglas was Deputy Chief Executive to (e) The salary figures for Peter Marsh and John 2 July 2007 when he was appointed Acting Chief Carleton include a cash allowance in lieu of a Executive. He was confirmed as Chief Executive on 18 Corporation car. December 2007. (f) An interim Director of HR was recruited through an (d) Peter Marsh was Director of Resources to 2 July agency on 3 December 2007 to provide senior support 2007 when he was appointed Acting Deputy Chief during the transition period leading up to the creation Executive and assumed corporate responsibility for of the new agencies. Fees for the Director’s services regulation policy and supervision. He was confirmed paid to the agency in the period ended 31 March 2008 as Deputy Chief Executive on 18 December 2007. amount to £82,603, including VAT. 58 Annual report and accounts 2007-08
Bonus payments Key managers’ pension scheme and chooses to transfer entitlements the pension benefits they have The posts of Chief Executive and accrued in their former scheme. Deputy Chief Executive carry an The Chief Executive, Deputy The accrued annual pension entitlement to a performance Chief Executive and the Directors and Cash Equivalent Value related bonus of up to 15%. The are ordinary members of the (CETV) shown below relate to level of bonus is determined by staff pension scheme which has the benefits that the Directors the Remuneration Committee and HMRC approval and is a statutory have accrued as a consequence in the case of the Chief Executive scheme (See note 10 to the of their total membership of the requires the endorsement of accounts). Employer contributions pension scheme and not just the Permanent Secretary, CLG. are at the rate recommended by the service in a senior capacity The bonus payments to Steven actuaries and applicable for all to which disclosure applies. The Douglas and Jon Rouse disclosed members. The Corporation does total accrued annual pension and in the above table are in respect of not have a scheme that provides CETV figures include the value of achievements in the year ended additional pension. Individual any pension benefit from another 31 March 2007. Peter Marsh, who Directors may make Additional scheme which the Director has was appointed Deputy Chief Voluntary Contributions and these transferred to the Corporation’s Executive during the year under contributions and benefits are pension scheme. review, received the standard excluded from the table below. bonus payment referred to below. Benefits accrue at the rate of 1/80th CETVs are calculated within The performance related bonus of pensionable salary for each the guidelines and framework entitlements in respect of the year of service. prescribed by the Institute and year ended 31 March 2008 for Faculty of Actuaries. The Cash Equivalent Transfer Value Steven Douglas, Peter Marsh and (CETV) is the actuarially assessed The real increase in the value of Directors were approved by the capitalised value of the pension the CETV reflects the increase in Remuneration Committee on 10 scheme benefits accrued by a CETV effectively funded by the June 2008 and subject to sign off by member at a particular point in employer. It takes account of the CLGs Permanent Secretary will be time. The benefits valued are the increase in accrued pension due to paid in 2008-09. member’s accrued benefits and inflation, contributions paid by the The bonus payments disclosed any contingent spouse’s pension Director (including the value of any above are in respect of payable from the scheme. It is benefits transferred from another achievements in the year ended a payment made by a pension pension scheme or arrangement) 31 March 2007 and an interim scheme or arrangement to secure and uses common market amount (40%) for targets achieved pension benefits in another valuation factors for the start in the year under review. pension scheme or arrangement and end of the period. when the member leaves a 59 Annual report and accounts 2007-08
Real increase in CETV after Total Cash Cash adjustment Accrued accrued equivalent equivalent for inflation, Real annual related transfer transfer market Real increase pension at lump sum value at value at condition and increase in in related 31 March 31 March 31 March 31 March employee pension lump sum 2008 2008 2007 2008 contributions ££ ££ £ £ £ Steven Douglas 3,319 9,958 12,120 36,359 99,500 142,371 30,328 Margaret Allen 1,327 3,981 19,412 58,237 266,469 297,368 14,658 John Carleton 1,111 3,333 5,272 15,816 53,657 70,633 9,408 Fiona Cruickshank 819 2,457 25,674 77,022 375,393 403,284 8,191 Richard Hill 1,166 3,497 11,870 35,611 115,868 133,497 7,019 Matthew Leach 1,130 3,389 3,510 10,529 24,683 37,822 6,890 Peter Marsh 1,576 4,727 21,657 64,971 179,078 236,460 43,257 Clare Miller 1,200 3,600 18,985 56,955 233,201 258,799 10,654 Rona Nicholson 1,279 3,837 20,112 60,336 277,987 309,122 14,069 Andrew Wiles 860 2,579 22,879 68,637 368,727 398,396 10,230
A rate of inflation of 3.9% determined by the Secretary of or other remuneration. The (2007: 3.6%) has been applied in State and, during the year under conditions for the appointment calculating the annual increase of review, were paid directly by CLG. of Board members are accrued pension and CETV. The contained in Schedule 6 to the The CLG’s Permanent Secretary Corporation’s pension liabilities are Housing Associations Act 1985. determines the Chief Executive’s disclosed in detail at note 10 to the Appointments are generally for remuneration after discussion financial statements. The deficit periods of three years. The holder with Treasury and the Corporation. on the funds amounted to £31.5 of the post of Chief Executive is Details of Board members’ million at 31 March 2008. also a Board member. With the remuneration, other details exception of the Chief Executive, Board members’ appointments relating to their appointment are Board members are paid directly and remuneration set out below and any related party by CLG. The remuneration of transactions are disclosed in Note Board members are appointed Steven Douglas and Jon Rouse is 27 to the financial statements. by the Secretary of State in disclosed above. accordance with Schedule 6 to the Board members’ emoluments Housing Associations Act 1985. The fees of the Board members Appointments are generally for of the Corporation during the periods of three years. The holder year were as follows. Other of the office of Chief Executive is than the Chairman’s pension also a Board member. With the entitlement disclosed below, exception of the Chief Executive, there were no other benefits, Board members’ emoluments are special pension arrangements 60 Annual report and accounts 2007-08
Date of first Date Appointment Appointment of re-appointment lapses/lapsed 2008 2007 ££ Peter Dixon, Chairman 1 October 2003 1 October 2006 See Note (a) 82,933 62,942 Shaukat Moledina, 1 December Deputy Chairman 2002 1 October 2005 30 September 2008 27,675 27,494 Candy Atherton 1 October 2005 30 September 2008 12,621 12,538 Kate Barker 1 October 2005 30 September 2008 14,023 12,538 Julie 1 December Fawcett 2002 1 October 2005 30 September 2008 12,621 15,206 Chris Holmes 1 October 2004 See Note (a) 12,621 12,538 Donald Hoodless 1 October 2005 30 September 2008 15,306 13,872 Kevin Lavery 1 October 2004 See Note (a) 12,621 12,538 Sir Duncan Michael 1 October 2000 1 October 2004 See Note (a) 15,306 15,206 Sandi 1 December O’Neill 2002 1 October 2005 30 September 2008 12,621 12,538 Peter Rogers 1 October 2004 See Note (a) 12,621 12,538 Sheila Drew 1 December Smith 2002 1 October 2005 30 September 2008 15,306 15,206 Sheila Button 1 October 1997 1 October 2004 30 September 2006 - 7,603 John Walker 2 January 2007 - - Total remuneration 246,275 232,757 Social security costs 22,383 20,367
(a) Appointment renewed for the life of the Corporation subject to the passage of the Housing and Regeneration Bill through Parliament. 61 Annual report and accounts 2007-08
Board members with Any significant interests held by appointments lapsing on 30 Board members can be viewed via September 2008 have now had the Register of Interests which is their appointments extended for open to the public on our website, the life of the Corporation. www.housingcorp.gov.uk.
Throughout the year ended 31 Board members’ time March 2008 the number of Board commitment members, including Steven The Chairman increased his time Douglas, remained at 14. commitment from two to three Under an initiative introduced days a week with effect from in 2003 by the then Deputy 1 November 2006. The Deputy Prime Minister to foster a closer Chairman’s time commitment working relationship between is four to five days a month. The the Corporation and English agreed time commitment of other Partnerships, the Chief Executive Board members is two to three of each organisation is appointed days a month. The post of Chief to both Boards. The appointment Executive is full-time. is for the duration of their appointment as Chief Executive. Neither the Chief Executive of the Corporation nor the Chief Executive of English Partnerships receives remuneration for these additional responsibilities. In addition, from April 2008, the Chief Executive designate of the Homes and Communities Agency has been appointed to both Boards for which he receives no additional remuneration. 62 Annual report and accounts 2007-08
Chairman’s pension entitlements
Real increase in CETV after Total Cash Cash adjustment Real Accrued accrued equivalent equivalent for inflation, Real increase annual related transfer transfer market increase in in related pension at lump sum value at value at condition and pension lump sum 31 March 31 March 31 March 31 March employee at age 65 at age 65 2008 2008 2007 2008 contributions ££ ££ £ £ £ Between Between Between Between £0 £2,500 £2,500 £7,500 and and and and Peter Dixon £2,500 £5,000 £5,000 £10,000 37,000 59,000 16,000
Under the exercise of powers contained in Schedule Capitalised value of accrued pension benefits 6 to the Housing Associations Act 1985 the Secretary The scheme is unfunded, with benefits being paid as of State can, with HMT approval, extend membership they fall due and guaranteed by the employer (CLG) of a pension scheme to the Chairman and Deputy and, therefore, there is no surplus or deficit. Members Chairman. Mr Moledina was not a member of the do, however, make a contribution, at the rate of 6% of pension scheme during the year ended 31 March gross salary. Pensions are currently in pay for three 2008. The pension scheme is similar to the Local ex-chairmen. Government Pension Scheme, however, there are no employer contributions. 63 Annual report and accounts 2007-08
The main assumptions used for the purposes of FRS 17 are as follows:
2008 2007 2006 Rate of inflation 2.75% 2.75% 2.5% Rate of increase in salaries 4.30% 4.30% 4.0% Rate of increase for pensions in payment and deferred pensions 2.75% 2.75% 2.5% Discount rate for scheme liabilities 5.30% 4.60% 5.4%
Pensions are paid by CLG. Therefore the following movements do not impact on the Operating Cost Statement or the assets and liabilities of the Corporation.
2008 2007 Movement in the FRS 17 liability during the year: £’000 £’000 1 April, Present value of scheme liabilities (194) (147) 1 April, Increase in liabilities arising from revised real investment return - - Current service cost net of employee contributions (20) (13) Employee contributions to pension fund (5) (4) The interest cost (9) (8) Benefits paid 8 8 Actuarial gain/(loss) – effect of changes in demographic and financial assumptions 5 (30) 31 March, Present value of scheme liabilities (215) (194) Actuarial gains and losses during year Experience gain/(loss) 2 (5) Effect of changes in demographic and financial assumptions 3 (25) Percentage of the present value of scheme liabilities 2.4% 15.4%
Arrangements for compensation for redundancy compensation arrangements for Board members or premature loss of office for premature loss of office.
Board members’ appointments are made by the Mr Douglas’ contract specifies the circumstances Secretary of State under Schedule 6 to the Housing under which termination can occur without Associations Act 1985 and are subject to those payment of compensation. Redundancy or provisions. The Secretary of State may either premature loss of office for non-specified reasons terminate the appointment without notice in the requires compensation to be determined between specific circumstances outlined in the statute or upon the Corporation’s Chairman and CLG’s Permanent giving three months’ notice in writing. There are no Secretary. 64 Annual report and accounts 2007-08
14 // Corporate Details of the legislative principles of public life, and on Governance report and accounting framework the Corporation’s own experience and the responsibilities and and practices developed over its 44 (a) Statement of compliance with accountabilities of the Corporation years of existence. are described in the Management the Code on Corporate Governance Details of any related party Statement and Financial Combined transactions in respect of other Memorandum issued by CLG. This Board members with RSLs or Apart from the following document is available both on the other entities with which the exceptions, the Corporation has CLG website and in paper copy Corporation does business complied throughout the year with from the Corporation. the provisions set out in Section 1 are disclosed in Note 27 to the of the Combined Code published in The Corporation is accountable Financial Statements. Under an July 2003: through CLG to Ministers and initiative introduced in 2003 by to Parliament. The National the then Deputy Prime Minister to • As Board appointments are Audit Office, the Corporation’s foster a closer working relationship made by the Secretary of State, statutory auditors, has full rights between the Corporation and the Corporation does not have of inspection and the Corporation’s English Partnerships the Chief a Nomination Committee; Accounting Officer can be called Executive of each organisation • As all Board members, except upon to appear before the is appointed to both Boards. The the Chief Executive Officer, are Public Accounts Committee. The appointment is for the duration non-executive the Board has not Corporation may be called to give of their appointment as Chief appointed a senior independent evidence before any of Parliament’s Executive. Neither receives director; and, Select Committees. remuneration for these additional responsibilities. In addition, from Board vacancies are advertised • Board members, other than the March 2008, the Chief Executive nationally and members are Chief Executive Officer, do not designate of the Homes and appointed and remunerated receive performance-related Communities Agency has been under Schedule 6 to the 1985 payments. appointed to both Boards. Act and in accordance with (b) The Corporation and its Board the Code of Practice issued by Ordinary meetings of the full The Housing Corporation is an the Commissioner for Public Board are held at least six times executive Non Departmental Public Appointments. a year. Agendas for discussion includes minutes from all Board Body accountable to the Secretary The Board comprises a Chairman, Committees, and a report from of State for CLG. The Corporation a Deputy Chairman and up to the Audit and Risk Committee has a range of functions designed twelve non-executive members (ARC), performance management principally to finance, regulate and and the Chief Executive who, with reports, and issues of major facilitate the proper performance the Secretary of State’s approval, importance affecting the business of RSLs in England and pay is appointed by the Board. The of the Corporation requiring the grants to unregistered bodies. It Chief Executive, who is also the consideration and decision of the is a public body corporate with its Accounting Officer, assisted by full Board. In addition, the Board constitution is set out in Schedule the Deputy Chief Executive and holds ‘Policy Day’ meetings to 6 to the Housing Associations Act the Executive Team, is responsible discuss strategic items. The Board 1985. Its functions are derived from for the day-to-day running of the has corporate responsibility for that Act and the Housing Acts Corporation. The Corporation ensuring that the Corporation 1964, 1988, 1996 and 2004. has published a “Code of Best fulfils the aims and objectives Practice for Board Members of the set by the Secretary of State and Housing Corporation”, drawing for promoting the efficient and on the Cabinet Office Guidance effective use of staff and other on Codes of Practice for Board resources by the Corporation. To Members of Public Bodies, which meet this responsibility the Board now embraces the seven Nolan 65 Annual report and accounts 2007-08
establishes the overall strategic Board members are subject Other issues which the ARC direction of the Corporation to a Code of Practice which is considers and advises the Board on within the policy and resources consistent with Guidance on Codes include: framework determined by the of Practice for Board Members • the strategic processes and Secretary of State. It ensures that of Public Bodies published and policies for risk control, the Secretary of State is kept revised from time to time by the corporate governance and the informed of any changes which Cabinet Office. content of the Statement on are likely to impact on the strategic The Board has appointed four Internal Control; direction of the Corporation or committees consisting of Board the attainability of its targets, and • assurances relating to the members and advised by the determines the steps needed to adequacy and effectiveness of Executive, Directors and senior deal with such changes. risk control and governance officers. The minutes of each processes; The Board responsibilities include: Committee are reported formally in writing to the Board after each • the promotion, co-ordination • ensuring that the Corporation meeting. Since June 2006 all and monitoring of risk complies with all relevant Committees take decisions in their management activities, statutory or administrative own right subject to the delegated including the regular review requirements for the use of powers within the Management and input to the corporate risk public funds; Scheme. A summary of the profile; and, • establishing the overall strategic committees and Board members • the Internal Audit Annual direction of the organisation involved is provided below. Plan, the Internal Audit reports within the policy and resources and the implementation of framework agreed with the recommendations. Secretary of State; Audit and Risk Committee – four meetings per year The Corporation’s Head of Internal • ensuring that high standards (Chair, Donald Hoodless) Audit and the Audit Director of of corporate governance are the National Audit Office (the observed at all times; Board members: Sheila Drew Corporation’s external auditors) Smith, Sir Duncan Michael, • overseeing the delivery of have free and confidential access Sandi O’Neill. planned results by monitoring to the Chair of the ARC. All Internal performance against agreed The Audit and Risk Committee Audit reports are addressed to strategic objectives and targets (ARC) is responsible for ensuring the ARC. set out in the Corporate Plan; proper arrangements exist for internal audit, risk management, • ensuring that, in reaching internal control, monitoring decisions, the Board has taken performance against corporate into account guidance issued objectives and organisational by CLG including the then First development and that Secretary of State’s guidelines, assurances are reported relating the Financial Memorandum and to the Corporation’s corporate Management Statement; governance requirements. It carries • discharging the Corporation’s out a review of the Corporation’s statutory functions; and annual accounts and the matters raised by the external auditors in • ensuring that it operates within their Management Letter. the limits of its statutory and delegated authority agreed with CLG and in accordance with the Management Statement and Financial Memorandum. 66 Annual report and accounts 2007-08
Investment Committee It determines individual retention sensitivities. It considers – six meetings per year. registration and approves and reviews, when necessary, the (Chair, Sir Duncan Michael) applications, removals and Corporation’s policy on senior revocations as well as individual staff remuneration, conditions of Board members: Kate Barker, Chris applications for rule changes service, benefits and compensation Holmes, Kevin Lavery, Shaukat from RSLs arising from mergers commitments on early termination Moledina, Sheila Drew Smith which exceed a 10,000-home of contracts. (John Walker as an observer). threshold. It also advises the Board The Investment Committee on the Corporation’s policy for formulates and advises the the regulation of RSLs, including Various consultation Board on strategic policy for the the design and implementation and review groups Corporation’s capital investment of the Regulatory Code, and The Corporation acknowledges programmes and on wider issues associated guidance. It oversees the importance of maintaining of social housing policy within the supervision and control of effective dialogue and working the Corporation’s investment individual problem cases where together with a wide range of remit. It oversees the planning enforcement action is involved and organisations in the public, and implementation of the advises the Board on the use of the private and voluntary sectors as Corporation’s capital investment Corporation’s statutory powers in new policies are developed and programmes. such cases. implemented. As a result, Board (Chris Holmes and Sheila Drew Members of the former members lead or take part in other Smith joined the Committee and committees were: groups, which provide a means of Steven Douglas and Sandi O’Neill consulting or reviewing aspects Registration Committee – Sheila left the Committee in September of policy. Drew Smith (Chair), Candy 2007.) Atherton, Julie Fawcett, Chris Holmes, Donald Hoodless. Transition governance Registration and Regulation Regulation and Supervision CLG is leading on the Committee – six meetings per year Committee – Shaukat Moledina establishment of the two new (Chair, Sheila Drew Smith) (Chair), Steven Douglas, Julie agencies which will be created by Fawcett, Chris Holmes, Sandi Board members: Candy Atherton, the Housing and Regeneration Bill O’Neill, Peter Rogers. Julie Fawcett, Sandi O’Neill, Donald as successor bodies to the Housing Hoodless, Peter Rogers. Corporation. The Chief Executive, Donald Hoodless, Kate Barker and The Registration and Regulation Remuneration Committee the Deputy Chief Executive are Committee was formed in – two meetings per year members of the overall Programme September 2007 by the merger (Chair, Peter Dixon) Board. Kate Barker chaired the of the former Registration Board members: Sir Duncan OFTENANT Project Board from its Committee with the Regulation Michael, Shaukat Moledina, inception until May 2008 (prior to and Supervision Committee. The Sandi O’Neill, Donald Hoodless, the change of name to the Tenant new Committee advises on policy Steven Douglas. Services Authority). The Board for registration and approval and has monitored progress of the the criteria for registering RSLs and The Remuneration Committee transition at each meeting and has approving landlords. advises the Chief Executive on established a Transition/Legacy the remuneration, contractual Project Board, which includes and Corporation pension Sandi O’Neill, and is charged scheme arrangements for the with overseeing the work of the Executive, Directors and senior Corporation in relation to the staff. The Committee provides transfer of its staff, functions, an independent perspective of assets and liabilities to the the market pressures governing successor bodies. pay, specific recruitment and 67 Annual report and accounts 2007-08
15 // Going concern Grant in aid for the year ending 31 This report was approved by the March 2009, taking into account Board on 24 June 2008. The balance sheet at 31 March the amounts required by the 2008 shows net liabilities of £358.2 Corporation’s liabilities falling million (2007: £204.4 million). This due in that year, has already been Peter Dixon reflects the inclusion of liabilities included in the CLG’s estimates Chair falling due in future years which, for that year, which have been Steven Douglas to the extent that they are not to approved by Parliament, and be met from the Corporation’s Chief Executive and there is no reason to believe that Accounting Officer other sources of income, may the CLG’s future sponsorship and only be met by future grants or future parliamentary approval grant in aid from the Corporation’s will not be forthcoming. It is sponsoring Department, the considered appropriate to adopt CLG. This is because, under the a going concern basis for the normal conventions applying to preparation of these financial parliamentary control over income statements even though the and expenditure, such grants Corporation is being wound up by may not be issued in advance of the Regeneration and Housing Bill, need. The increase in liabilities of as the functions it undertakes are £153.8 million (2007: £92 million) is being transferred in their entirety mainly due to the creditor for grant to two new agencies during payments and an increase in the 2008-09 under the machinery of bank overdraft at 31 March 2008. government. There are no principal risks or uncertainties facing the Corporation or its successor bodies as we have agreed funding until March 2011, and our latest housing programme, NAHP, has deliverables through to 2014. 68 Annual report and accounts 2007-08 Statement of the Corporation’s and Chief Executive’s responsibilities
Under Section 97(1) of In preparing the accounts the The Corporation and Chief the Housing Associations Corporation and Chief Executive Executive confirm that the Act 1985 the Corporation are required to comply with the accounts comply with the above requirement of the Government requirements. is required to prepare a Financial Reporting Manual, and in The Board member appointed as statement of accounts particular to: for each financial year in Chief Executive is also designated the form and on the basis • observe the Accounts Direction the Accounting Officer and issued by the Secretary of the Consolidation Officer for determined by the Secretary State, including the relevant the Corporation. The relevant of State with the approval of accounting and disclosure responsibilities as Accounting the Treasury. The accounts requirements, and apply Officer, including the responsibility are prepared on an accruals suitable accounting policies for the propriety and regularity basis must show a true and on a consistent basis; of the public finances and for the keeping of proper records, are fair view of the Corporation’s • make judgments and estimates set out in the Non-Departmental state of affairs at the year on a reasonable basis; Public Bodies’ Accounting Officer end and of its Income and • state whether applicable Memorandum. Expenditure and cash flows accounting standards as set out for that financial year. in the Government Financial Reporting Manual have been followed and disclose and explain any material departures in the accounts; and
• prepare the accounts on the going concern basis. 69 Annual report and accounts 2007-08 Chief Executive and Accounting Officer’s statement on internal control
1. Scope of responsibility the year with officers from CLG, • a set of governance members of my Executive team arrangements designed to: As Chief Executive and and myself to discuss specific Accounting Officer of the Housing - ensure that the decisions taken and general business issues. A Corporation, I have responsibility by the Corporation conform to monthly Finance and Investment for maintaining a sound system the freedoms and constraints Programme Review meeting took of internal control that supports allowed to it by its sponsoring place throughout the year at which the achievements of agreed Department; the Monthly Management Report policies, aims and objectives, as and Accounts were discussed - ensure accountability of staff set by the then First Secretary with officers of CLG and the and managers through internal of State, whilst safeguarding the Corporation. In addition a number structures and networks of public funds and organisational of other meetings regarding the delegated powers; assets for which I am personally Corporate Plan, the National responsible, in accordance with - encourage staff and managers Affordable Housing Programme the responsibilities assigned to to act in the desired manner and other topics were held with me in Managing Public Money, without requiring continual officers and Ministers. the Financial Memorandum, detailed intervention; and and Accounting Officer and • a system of operational, Consolidation Officer letters. 3. The purpose of the system procedural and financial controls of internal control based around a framework of planning, recording, monitoring, 2. Accountability The purpose of the system of reporting and review. arrangements internal control is to facilitate the successful achievement of the The system of internal control The Housing Corporation is a Corporation’s aims and objectives. is designed to manage risk to Non-Departmental Public Body The system of internal control is a reasonable level rather than sponsored by CLG. Arrangements based on: to eliminate all risk of failure for securing accountability to achieve policies, aims and between the Corporation and • an ongoing process designed objectives; it can therefore CLG are set principally in the to identify and prioritise only provide reasonable and Appointment as Accounting Officer the principal risks to the not absolute assurance of letter issued to me by the CLG achievement of the Corporation’s effectiveness. Accounting Officer in May 2007, aims and objectives, to evaluate and the Management Statement the nature and extent of those The system of internal control is and Financial Memorandum risks and to manage them based on the operation ongoing issued on 1 April 2005. An ongoing efficiently, effectively and processes designed to identify dialogue is maintained at both a economically; and and prioritise the risks to the political and officer level. A series achievement of the Corporation’s of scheduled formal CLG round up policies, aims and objectives, to meetings were held throughout evaluate the likelihood of those 70 Annual report and accounts 2007-08 Statement of the Corporation’s and Chief Executive’s responsibilities
risks being realised and the and that the delivery culture of is aligned to the overall business impact should they be realised, the organisation is not adversely strategy; and to manage them efficiently, affected by the process of • all public funds made available effectively and economically. The organisational change, so that the to the Corporation, including system of internal control has been Corporation continues to fulfil its any approved income or other in place within the Corporation for overall purpose and achieve its receipts, are used for the purpose the year ended 31 March 2008 and intended outcomes successfully. intended by Parliament, and that up to the date of approval of the The Risk Management Strategy is such monies, together with the annual report and accounts, and available to all staff and the public Corporation’s assets, equipment accords with Treasury guidance. on our website. and staff, are used economically, efficiently and effectively; The Board sets internal policy 4. Capacity to handle risk on risk and internal control as • adequate internal management well as having responsibility for and financial controls are The Corporation’s updated determining our strategic direction maintained by the Corporation, Risk Management Strategy was and providing oversight of risk including effective measures published in January 2008. The management. I ensure that: against fraud and theft; organisation has continued to evolve its risk management • a system of risk management is • the Corporation reviews its processes and develop its risk maintained to inform decisions system of internal delegated management capability in line on financial and operational authorities which are notified with the strategy. This reflects planning and to assist in to all staff, together with a not only the evolution of risk achieving objectives and targets; system for regularly reviewing management processes within compliance with these • the Corporation maintains a Risk the organisation, but also the delegations; and Register in accordance with the significant new risks that were Treasury’s Orange Book; • effective human resources identified in the year. The most policies and employee relations significant being those risks • the corporate risk profile, which are maintained. associated with the formation now includes transition risks of the Homes and Community within the body of the register, The ARC considers and advises the Agency and the Tenant Services was reviewed and updated by Board on the strategic processes Authority and the much more EMT on a quarterly basis and and policies for risk management, difficult borrowing and lending reported to the Audit and Risk control and governance and regime operated by the financial Committee and the Board; gives detailed consideration institutions (the “credit crunch”) to the risk profile. Having a • an effective system of that may impact on the delivery of separate committee responsible programme, project and contract the Corporation’s 2008-09 targets. for the overall management of management is maintained; Throughout the transition period the risk agenda has the effect it will be important to ensure • the Corporation’s new of focusing attention and the that control activities remain Information Systems (IS) appropriate resources to the embedded in staff behaviours strategy, approved by the Board, effective management of risk. 71 Annual report and accounts 2007-08
All Committee and Board papers inherent and residual risk to all information held, regardless have a compulsory section on risk assessment figures within our of the format, equipment used or management which ensures risks risk profile document, with risks employment status of the user, are highlighted and considered at ranked on a score of one to five and to how we transmit data to an early stage. for both impact and likelihood outside organisations. producing a combined risk score As Chief Executive I discharge my We manage external of between one and 25. The Board responsibilities in relation to risk interdependencies through considers the management of all management by: our regulatory and investment risks scoring 12 and above and arrangements and contractual • providing leadership and requires active management, arrangements. We also manage direction over the risk wherever possible, of all risks external risks through formal management process; with a score of 16 and above. All frameworks and operational risks on the corporate risk profile • setting and communicating the relationships with our sponsor have a designated owner who risk management strategy; Department, English Partnerships, is a member of the Executive the Audit Commission and • regularly reviewing the risk Management Team. Regional Assemblies. profile; and Risks are reviewed and reported • conducting an annual review of regularly through the maintenance the effectiveness of the system of a rolling risk profile document 6. Structures of internal control. which is reviewed at least quarterly by the Executive Management The Board has been formally Team, Audit and Risk Committee constituted and comprises 13 non-executive directors, and 5. The risk and control and Board. The Registration and one executive director, appointed framework Regulation Committee consider risk arising within their own by the Secretary of State. The The Housing Corporation has in terms of reference. Staff and recruitment process for place a number of structures and Board members are encouraged non-executive directors is run processes that are designed to to notify the team responsible for by CLG in accordance with both identify, evaluate and manage maintaining the risk profile at any the Code of Practice for Public the risks to the achievement of stage of potential changes to Appointments issued by objectives. Our principal risks the profile. the Commissioner relate to the successful delivery of for Public Appointments. our business that helps to support During the year we fundamentally Non-executive directors are the provision of quality affordable reviewed our Information Security appointed initially for periods homes in England. Policy which now aims to ensure of up to three years, and the the confidentiality and integrity of level of their emoluments is set The Risk Management Strategy information held by the Housing by the Secretary of State. outlines in detail the arrangements Corporation, balancing this with by which we identify, categorise, our legal obligation of openness assess and address risks. Risk and the business need for readily appetite is monitored by the available information. It applies 72 Annual report and accounts 2007-08 Statement of the Corporation’s and Chief Executive’s responsibilities
7. Review of effectiveness Processes applied in maintaining • provision of individual internal and reviewing the effectiveness audit reports to standards As Accounting Officer, I have of the system of internal control defined in the Government responsibility for reviewing the during 2007-08 include: Internal Audit Standards effectiveness of the system of including recommendations for internal control. My review of the • regular meetings of the ARC to improvements to the responsible effectiveness of the system of consider risk, internal control Corporation senior officer. Copies internal control is informed by and the corporate risk profile. are also provided to the CLG the work of the internal auditors The Chair of the ARC reported to and the National Audit Office. and the executive managers the Board on any issues arising; An Audit Review Group (Audit within the Corporation, who have • the use of comprehensive Clinic), chaired by myself, meets responsibility for the development planning, forecasting and regularly to ensure that agreed and maintenance of the internal budgeting systems which enable recommendations contained control framework, and comments the monthly management in the audit reports are made by the external auditors report, annual budgets and implemented on a timely basis; in their management letter and latest estimates to be reviewed other reports. The Board and ARC • reporting Internal Audit findings by the Board and Executive advise me on the implications of to Executive Management Team Management Team; the result of my review of plans to meetings; address weaknesses and ensure • ARC approval of a rolling risk- • adequate procedures to control continuous improvement of the based programme for Internal both logical and physical system is in place. Audit in accordance with information systems access are priorities. Reports are provided in place; to each Committee meeting on progress and findings; • ARC consideration of the External Audit Management • the Head of Internal Audit’s Letter and Regulatory annual report to the ARC Compliance report; including an opinion on the adequacy and effectiveness • annual management assurance of the Corporation’s risk statements from my senior staff management, control and that proper systems and controls governance processes; are in place and have been operated during the year;
• the delegation of resource budgets down to cost centre level; 73 Annual report and accounts 2007-08
• quarterly review of estimates 8. Significant internal to ensure managers are taking control issues responsibility for delivering the business objectives within No serious internal control issues budget; and have arisen since April 2007 to the date at which the accounts are • rolling forecasts of expenditure signed. for the remaining life of the Corporation are reported to the Board to determine future Steven Douglas affordability. Chief Executive and Accounting Officer The Head of Internal Audit has given an opinion that there is an 24 June 2008 adequate and effective system of risk management, control and governance that provides reasonable assurance over the achievement of objectives.
The reports from both internal and external audit and the procedures outlined above, but in particular the risk framework monitoring reports and the day-to-day advice of my managers, inform the Board and me of the strength of the Corporation’s internal controls. 74 Annual report and accounts 2007-08 The certificate and report of the Comptroller and Auditor General to the Houses of Parliament and to the Housing Corporation
I certify that I have audited Respective responsibilities properly prepared in accordance the financial statements of the of the Housing Corporation, with the Housing Associations Housing Corporation for the year Chief Executive and auditor Act 1985 and Secretary of State ended 31 March 2008 under the directions made thereunder. The Housing Corporation and Housing Associations Act 1985 Chief Executive as Accounting I report to you whether, in my as amended by the Government Officer are responsible for opinion, the information, which Resources and Accounts Act 2000 preparing the Annual Report, the comprises the Chief Executive’s (Audit of Public Bodies) Order 2003. Remuneration Report and the Annual Review and the un- These comprise the Operating financial statements in accordance audited parts of the Remuneration Cost Statement, the Balance with the Housing Associations Report, included in the Annual Sheet, the Cash Flow Statement Act 1985 and Secretary of State Report, is consistent with the and Statement of Recognised directions made thereunder financial statements. I also report Gains and Losses and the related and for ensuring the regularity whether in all material respects notes. These financial statements of financial transactions. These the expenditure and income have have been prepared under the responsibilities are set out in the been applied to the purposes accounting policies set out within Statement of the Corporation’s and intended by Parliament and the them. I have also audited the Chief Executive’s Responsibilities. financial transactions conform to information in the Remuneration the authorities which govern them. Report that is described in that My responsibility is to audit the report as having been audited. financial statements and the part In addition, I report to you if the of the Remuneration Report to Housing Corporation has not kept be audited in accordance with proper accounting records, if I have relevant legal and regulatory not received all the information requirements, and with and explanations I require for International Standards on my audit, or if information Auditing (UK and Ireland). specified by HM Treasury regarding remuneration and other I report to you my opinion as to transactions is not disclosed. whether the financial statements give a true and fair view, and whether the financial statements and the part of the Remuneration Report to be audited have been 75 Annual report and accounts 2007-08
I review whether the Statement Basis of audit opinions I planned and performed my on Internal Control reflects the audit so as to obtain all the I conducted my audit in Housing Corporation’s compliance information and explanations accordance with International with HM Treasury’s guidance, which I considered necessary Standards on Auditing (UK and and I report if it does not. I am in order to provide me with Ireland) issued by the Auditing not required to consider whether sufficient evidence to give Practices Board. My audit includes this statement covers all risks reasonable assurance that the examination, on a test basis, of and controls, or form an opinion financial statements and the part evidence relevant to the amounts, on the effectiveness of the of the Remuneration Report to disclosures and regularity of Housing Corporation’s corporate be audited are free from material financial transactions included governance procedures or its misstatement, whether caused in the financial statements and risk and control procedures. by fraud or error, and that in all the part of the Remuneration material respects the expenditure I read the other information Report to be audited. It also and income have been applied contained in the Annual Report includes an assessment of to the purposes intended by and consider whether it is the significant estimates and Parliament and the financial consistent with the audited judgments made by the Housing transactions conform to the financial statements. This Corporation and Accounting authorities which govern them. other information comprises Officer in the preparation of In forming my opinion I also the Chief Executive’s Annual the financial statements, and evaluated the overall adequacy of Review and the un-audited parts of whether the accounting the presentation of information of the Remuneration Report. I policies are most appropriate in the financial statements and consider the implications for to the Housing Corporation’s the part of the Remuneration my report if I become aware of circumstances, consistently Report to be audited. any apparent misstatements or applied and adequately disclosed. material inconsistencies with the financial statements. My responsibilities do not extend to any other information. 76 Annual report and accounts 2007-08
Opinions Opinion on regularity
In my opinion: In my opinion, in all material respects the expenditure and • the financial statements give a income have been applied true and fair view, in accordance to the purposes intended by with the Housing Associations Parliament and the financial Act 1985 and directions made transactions conform to the thereunder by the Secretary authorities which govern them. of State, of the state of the Housing Corporation’s affairs as at 31 March 2008 Report and of its net expenditure for the year then ended; I have no observations to make on these financial statements. • the financial statements and the part of the Remuneration T J Burr Report to be audited have been Comptroller and Auditor General properly prepared in accordance National Audit Office with the Housing Associations 151 Buckingham Palace Road Act 1985 and Secretary of State Victoria directions made thereunder; and London SWIW 9SS
• information, which comprises 27 June 2008 the Chief Executive’s Annual Review and the un-audited parts of the Remuneration Report, included within the Annual Report, is consistent with the financial statements. 77 Annual report and accounts 2007-08 Operating cost statement for the year ended 31 March 2008
Notes 2008 2007 £’000 £’000 Expenditure Capital investment grants 2 (2,063,503) (1,951,264) Revenue grants 3 (8,169) (6,328) Staff costs 4 (30,103) (28,722) Administration expenditure 5 (17,278) (16,547) Interest payable 8 (1) - (2,119,054) (2,002,861) Income Capital investment grants recovered 2 58,887 33,554 Interest receivable 7 2,857 1,220 Other income 9 586 634 (Increase)/decrease in provision for doubtful debts 6 (4) 16 62,326 35,424 (2,056,728) (1,967,437) Net expenditure before tax, finance and notional costs Finance costs 8 (779) (628) Finance income 7 211 180 Notional cost of capital (credit) 1,167 1,282 (2,056,129) (1,966,603) Net operating cost of ordinary activities before tax Taxation 11 (7) (20) (2,056,136) (1,966,623) Net operating cost of ordinary activities after tax Reversal of notional cost of capital (debit) (1,167) (1,282) Net expenditure for the financial year (2,057,303) (1,967,905)
The Corporation’s grant payments and operating costs throughout both years and no new operations were are funded by grant in aid voted by Parliament. Grant acquired. The accompanying notes are an integral in aid received is credited directly to General Reserve, part of the Financial Statements. note 21. The Corporation continued all operations 78 Annual report and accounts 2007-08 Statement of recognised gains and losses for the year ended 31 March 2008
Notes 2008 2007 £’000 £’000 Actuarial gain (2007: loss) from staff pension fund 10 14,427 (410) Total recognised losses since last Financial Statements 14,427 (410)
The accompanying notes are an integral part of the Financial Statements. 79 Annual report and accounts 2007-08 Balance sheet as at 31 March 2008
Notes 2008 2008 2007 2007 Fixed assets £’000 £’000 £’000 £’000 Intangible assets 12 4,032 4,021 Tangible assets 13 3,519 2,718 7,551 6,739 Investments Share in The Housing Finance Corporation Ltd. 14 - - Loans 15 1,558 1,771 1,558 1,771 Total fixed assets 9,109 8,510 Current assets Debtors 16 17,024 4,504 Cash at bank and in hand 17 1,758 2 18,782 4,506 Creditors: amounts falling due within one year 18 (353,200) (170,542) Net current liabilities (334,418) (166,036) Total current liabilities less assets (325,309) (157,526) Provision for liabilities and charges 19 - (112) Advances from the National Loans Fund 20 (1,400) (1,400) Provision for unfunded pensions liability 10 (4,391) (4,580) Net liabilities excluding funded pension liability (331,100) (163,618) Pension scheme liability 10 (27,149) (40,760) Net liabilities (358,249) (204,378) Reserves General Reserve 21 (328,516) (160,838) Pension Reserve 21 (31,540) (45,340) Specific reserve 21 1,807 1,800 (358,249) (204,378)
The accompanying notes are an integral part of the Peter Dixon Financial Statements. The Financial Statements on Chairman pages 77 to 112 were approved by the Board on 24 Donald Hoodless June 2008 and were signed on its behalf by: Chair, Audit and Risk Committee Steven Douglas Chief Executive and Accounting Officer Peter Marsh Deputy Chief Executive 80 Annual report and accounts 2007-08 Cash flow statement for the year ended 31 March 2008
Cash flow 2008 2007 Notes £’000 £’000 £’000 £’000 Net cash outflow from operating activities ii (2,015,485) (1,872,735) Returns on investments and servicing of finance Interest received on loans 84 92 Interest received on deposit of specific reserve 83 81 Interest paid on loan from National Loans Fund (78) (64) 89 109 Taxation Corporation tax paid (23) (20) Capital expenditure and financial investment Purchase of intangible fixed assets (1,666) (1,702) Purchase of tangible fixed assets (1,573) (684) Sale of tangible fixed assets 12 11 Loan repayments 324 254 Loan advances (78) (480) (2,981) (2,601) Financing Grant in aid iv 1,889,005 1,875,616 Advances from the NLF 2,800 2,800 Repayments to the NLF (2,800) (2,800) 1,889,005 1,875,616 (Decrease)/increase in cash (129,395) 369 81 Annual report and accounts 2007-08 Notes to the cash flow statement for the year ended 31 March 2008
i Reconciliation of net cash flow to movement in net funds 2008 2007 £’000 £’000 (Decrease)/increase in cash (129,395) 369 Net funds at 1 april (69,160) (69,529) Net funds at 31 march (198,555) (69,160) ii Reconciliation of operating cost to net cash flow from operating activities Notes 2008 2007 £’000 £’000 Net operating cost before tax and finance cost (2,056,728) (1,967,437) Adjustments for non-cash transactions: Adjustment for FRS 17 pension costs 4 4,830 3,644 Depreciation and amortisation 5 1,713 1,600 Loss on disposal of fixed assets 5 1,011 84 Increase (2007: decrease) in provisions for doubtful debts 6 4 (16) Decrease in provisions for liabilities and charges 19 (112) (763) Increase (2007: decrease) in debtors (12,514) 2,919 Increase in creditors 51,214 90,778 Adjustments for cash transactions: Employer’s contributions to pension fund 10 (4,594) (3,245) Unfunded pensions paid to retired employees 10 (309) (299) Net cash outflow (2,015,485) (1,872,735) 82 Annual report and accounts 2007-08
iii Analysis of changes in net funds 1 April 2007 Cash flows 2008 31 March 2008 £’000 £’000 £’000 Cash at bank and in hand 2 1,756 1,758 Bank overdraft (67,762) (131,151) (198,913) (67,760) (129,395) (197,155) NLF debt due within one year (1,400) - (1,400) (69,160) (129,395) (198,555) iv Analysis of financing 2008 2007 £’000 £’000 Grant in aid received from CLG 1,889,005 1,875,616 Applied towards: Purchase of fixed assets (3,239) (2,386) Capital grants (1,807,551) (1,819,270) Revenue grants (7,511) (5,849) Administration costs net of other cash flows (41,980) (39,955) Increase in bank balance (28,724) (8,156) (1,889,005) (1,875,616) 83 Annual report and accounts 2007-08 Notes to the financial statements for the year ended 31 March 2008
Government grants receivable Grant recoveries
The Corporation’s activities are Recoveries of grant are accounted 01 funded by grant in aid provided for when the amount due for by CLG. All Grant in Aid and Grant repayment has been agreed Accounting received used to finance activities with the RSL and invoiced and expenditure which support as determined under the policies the statutory and other objectives circumstances outlined in the of the Housing Corporation are Corporation’s Capital Funding treated as financing, credited to Guide. RSLs are able to retain any Basis of accounting the General Reserve, because they grant recoverable from sales within The financial statements have are regarded as contributions from their own accounts for recycling, been prepared in a form directed a controlling party which gives with the funds only becoming due by the Secretary of State, with rise to a financial interest in the back to the Corporation if unused the consent of HM Treasury, in residual interest of the Housing within three years. accordance with the Housing Corporation. Associations Act 1985. The financial statements are prepared Administration in accordance with generally Grants payable expenditure and interest accepted accounting practice in the Payments of capital and revenue receivable and payable United Kingdom (UK GAAP) and grants to RSLs and other bodies the Companies Act requirements, Administration expenditure are accounted for on resource the disclosure and accounting and interest is also stated (accruals) basis. Payments of requirements contained in HM in the accounts on a resource Capital Investment Grant are paid Treasury’s Fees and Charges (accruals) basis. in two installments, a start on site Guide, and the accounting and tranche and a completion tranche. disclosure requirements given in Both tranches represented 50% of Managing Public Money and in the Cost of capital employed the value of the grant. To ensure Financial Reporting Manual (FReM), 2008-11 programme building was The Corporation is required insofar as these are appropriate given a sound base we varied to charge a notional cost of to the Housing Corporation and the proportion of these tranche capital against the income and are in force for the financial year payments to 60% for the start on expenditure account to ensure that for which the statements are site tranche in March. Since 1 April it bears an appropriate charge for prepared. The financial statements 2008 we have reverted back to the the use of capital in the business are prepared on the modified 50/50 split. The only exception in the year. The charge is set at historical cost basis as set out in to this is that grants to private a rate of 3.5% of the average net Treasury guidance. developers are paid in one tranche assets. Since 1 January 2004 the once the scheme is occupied. Corporation’s cash at bank, Revenue grant payments are based on the achievement of milestones. 84 Annual report and accounts 2007-08
now held with the Office of the However, during 2007-08 it was Leasing rentals Paymaster General, is excluded decided that progress on the All leases are considered to be from the calculation. development of this asset was operating leases and are charged insufficient to enable it to be to administration expenditure brought into use during the current on a straight-line basis over the Fixed assets year and sufficient doubt existed lease term. as to whether the Corporation Tangible fixed assets comprise would be able to use the asset furniture, fixtures and fittings, before it ceased to exist. A decision Information Technology, office was therefore taken under SSAP 13 Value Added Tax equipment and motor cars. to write off the development costs The Corporation is registered Intangible fixed assets comprise associated with PIMS to revenue in for VAT but because of partial software development and legal the current year. Development exemption rules is unable to costs associated with the costs are capitalised as the asset reclaim the majority of its input Corporation’s Core System Rewrite under construction is anticipated tax. Administration expenditure and the costs associated with to have a life in excess of a year is stated VAT inclusive where setting up the appropriate systems and, therefore, the costs of appropriate. to support the necessary changes developing that asset are required to support the National chargeable over the same life cycle Pilot and subsequent 2006-08 as the asset. Investments are Pensions programme in the provision of shown in the Balance Sheet as affordable housing. All assets are assets. These are loans made to The Corporation accounts for valued at cost less depreciation both individuals and organisations pension costs in accordance (Net Book value) and are for property purchase or with FRS 17 Retirement Benefits. depreciated on a straight-line basis refurbishment where the life of the As a result, the Operating Cost at rates sufficient to write off the asset is greater than one year. The Statement now recognises the historical cost of individual assets relevant depreciation rates movements in the scheme liability over their estimated useful lives. In applicable to each category of asset during the year analysed between 2006-07 development costs of the are as follows: the current service costs, the Corporation’s Programme interest on pension liabilities Computer equipment 4 years Investment Management System and the expected return on Computer software 4 years (PIMS) were capitalised under SSAP scheme liabilities. 13, but held as work in progress – Office equipment 4 years where assets were still under Motor cars 4 years construction and no depreciation Furniture, fixtures was charged to the Operating Cost and fittings 5 years Statement in that year. It was Set up costs of future intended that these development grant programmes 5 years costs would contribute to the formation of a new Investment Management System and become an asset in the current year. 85 Annual report and accounts 2007-08
The Corporation’s powers to pay grants for social Capital housing to RSLs and other bodies are conferred by 02 investment grants Sections 18, 20, 21 and 27A of the Housing Act 1996. The power to recover grant is conferred by Section 52 of the Housing Act 1988 and Section 27 of the Housing Act 1996.
Social Housing Grant payments 2008 Low-cost Works home to RSLs’ Social rent ownership stock Other Total £’000 £’000 £’000 £’000 £’000 London 682,029 187,145 25,003 1,064 895,241 South East 295,357 93,051 3,839 271 392,518 East of England 147,561 45,218 675 51 193,505 South West 144,618 30,396 1,565 17 176,596 North West 82,319 22,105 5,290 321 110,035 West Midlands 71,727 24,150 2,475 50 98,402 East Midlands 63,291 23,168 1,028 18 87,505 Yorkshire and the Humber 57,282 13,708 1,884 56 72,930 North East 33,491 2,950 266 64 36,771 1,577,675 441,891 42,025 1,912 2,063,503
In the normal course of its business the Corporation recovers grant payments paid in previous years where schemes are terminated, subject to a change of use or have a cost underrun.
London (22,545) (6,887) (71) - (29,503) South East (3,911) (1,079) (31) - (5,021) East of England (432) (424) - - (856) South West (50) (66) - - (116) North West (1,192) (118) (134) - (1,444) West Midlands - (150) - - (150) East Midlands (702) (719) - - (1,421) Yorkshire and the Humber - - - - - North East (54) - - - (54) (28,886) (9,443) (236) - (38,565) Grant recoveries from old schemes (20,322) (28,886) (9,443) (236) - (58,887) 86 Annual report and accounts 2007-08
Social Housing Grant payments net of receipts 2008 Low-cost Works home to RSLs’ Social rent ownership stock Other Total £’000 £’000 £’000 £’000 £’000 London 659,484 180,258 24,932 1,064 865,738 South East 291,446 91,972 3,808 271 387,497 East of England 147,129 44,794 675 51 192,649 South West 144,568 30,330 1,565 17 176,480 North West 81,127 21,987 5,156 321 108,591 West Midlands 71,727 24,000 2,475 50 98,252 East Midlands 62,589 22,449 1,028 18 86,084 Yorkshire and the Humber 57,282 13,708 1,884 56 72,930 North East 33,437 2,950 266 64 36,717 1,548,789 432,448 41,789 1,912 2,024,938 Grant recoveries from old schemes (20,322) 1,548,789 432,448 41,789 1,912 2,004,616
Social Housing Grant payments net of receipts 2007 Low-cost Works home to RSLs’ Social rent ownership stock Other Total £’000 £’000 £’000 £’000 £’000 London 631,268 238,478 20,842 323 890,911 South East 285,778 87,050 4,019 32 376,879 East of England 124,086 29,601 303 93 154,083 South West 94,970 17,026 3,099 - 115,095 North West 84,602 21,994 6,438 48 113,082 West Midlands 75,416 20,779 838 422 97,455 East Midlands 55,454 18,275 674 27 74,430 Yorkshire and the Humber 51,046 10,771 2,729 565 65,111 North East 38,597 2,963 790 320 42,670 1,441,217 446,93739,732 1,830 1,929,716 Grant recoveries from old schemes - - - - (12,006) 1,441,217 446,937 39,732 1,830 1,917,710
The Corporation’s commitments on schemes approved prior to 31 March 2008 amounted to £1,726.8 million (2007: £1,753.4 million)
87 Annual report and accounts 2007-08
Tenant Empowerment grants to tenant groups Revenue and advisors enabling council tenants to receive 03 grants independent advice on how they could become involved in the management of their homes and estates are paid under Section 27A to the Housing The Corporation’s powers to pay revenue grants Act 1996 as extended by Statutory Instrument to RSLs are conferred by Section 18 of the Housing SI 2006 No. 583. (These grants were previously Act 1996. administered by CLG.)
Innovation and Good Practice grants to RSLs and any A main element of the Government’s climate change other persons to facilitate the proper performance of strategy is the application of minimum standards of RSLs and co-operative housing associations are paid energy performance for new and renovated buildings. under Section 87 of the Housing Associations Act 1985 Eighty-two housing associations took part in the as substituted by Section 183 to the Local Government Housing Corporation’s pilot of Energy Performance and Housing Act 1989 and amended by the Housing Certificates which are to become compulsory for Acts 1996 and 2004. social housing from October 2008.
2008 2007 £’000 £’000 Innovation and Good Practice grants 4,155 3,831 Tenant Empowerment grants 2,228 2,497 Energy Performance Certificate grant 1,786 - 8,169 6,328 88 Annual report and accounts 2007-08
04 Staff costs
2008 2007 £’000 £’000 Staff salaries 19,821 19,092 Social security costs 1,754 1,707 Pension costs 4,830 3,644 Temporary and contract staff 2,121 2,388 Staff on inward secondment 325 81 Travel and subsistence 855 846 Other costs 397 964 30,103 28,722 Staff on outward secondment, shown in Note 9 to the Financial Statements (86) (135)
No staff costs were capitalised in year (2007: nil) the two new agencies to be set up during 2008-09. Transition costs included in the table above amount During the year the Corporation began to incur costs to £366,823 (2007: nil). in connection with the separation of its functions into
Average number of persons employed analysed by category of employment 2008 2007 Investment Regulation and and best Administration regeneration value teams and IT Total Total Staff 155 147 216 518 512 Temporary, agency and contract staff 3 2 27 32 39 Staff on inward secondment 1 1 3 5 2 Staff on outward secondment - (2) (1) (3) (2) 159 148 245 552 551 Average number of persons expressed as full-time equivalent 147 143 234 524 516 89 Annual report and accounts 2007-08
Administration 05 expenditure
Administration expenditure 2008 2007 £’000 £’000 Accommodation costs 3,450 4,314 Office running costs 1,703 1,590 Professional fees 5,002 4,780 Recruitment, training and publicity 2,583 2,818 Research and housing projects 1,846 1,519 Provision for liabilities and charges (30) (158) Depreciation and amortisation 1,713 1,600 PIMS development costs written off 901 - Loss on disposal of fixed assets 110 84 17,278 16,547 The above analysis of administration expenditure includes the following charges (inclusive of any VAT): Rental in respect of leased offices 1,852 2,369 Rental of office equipment 101 158 Auditors’ remuneration, Audit fees 100 100
CLG makes a significant contribution to the During the year the Corporation began to incur costs Corporation’s research into lettings and sales in connection with the separation of its functions into of social housing. The amount is included in note 9, the two new agencies to be set up during 2008-09. Other Income. Transition costs included in the table above amount to £118,913 (2007: nil). 90 Annual report and accounts 2007-08
Provisions for 06 doubtful debts
2008 2007 £’000 £’000 At 1 April 359 375 New provisions 5 1 364 376 Reductions in provisions (1) (17) Bad debts written off (346) - (347) (17) At 31 March 17 359
07 Interest receivable
2008 2007 £’000 £’000 From operating activities Interest on grant recoveries from RSLs 2,854 1,216 Other interest 3 4 2,857 1,220 From investments Loans - Schemes under development 37 - Loans - Completed schemes 67 68 Loans - Private mortgages 17 31 Short-term deposits of specific reserve 90 81 211 180 91 Annual report and accounts 2007-08
08 Interest payable
2008 2007 £’000 £’000 On operating activities Other interest 1 - On servicing of finance and pension commitments Borrowings from the National Loans Fund 79 68 Pension commitments (Note 10) 700 560 779 628
09 Other income
Other income excludes Social Housing Grant recovery which is disclosed in Note 2. 2008 2007 £’000 £’000 Research and housing project receipts 491 488 Staff on secondment 86 135 Other 9 11 586 634 92 Annual report and accounts 2007-08
for the year to 31 March 2008. Liabilities are valued on an actuarial basis using the projected unit method 10 Superannuation which assesses the future liabilities discounted to their present value. The employer’s contribution rate for the year ended 31 March 2008 was based on the The Corporation is an admitted body to the City recommendation contained in the valuation report of Westminster Pension Fund which operates under of the fund as at 31 March 2004. the Local Government Pension Scheme Regulations. The Corporation also pays pensions direct to It is a defined benefit scheme based on final ex-employees who were awarded additional benefits pensionable salary. under the Corporation’s early retirement scheme. The most recent triennial valuation of the Fund as These pension costs are funded from grant in aid at 31 March 2007 has been updated by independent as they are paid. actuaries to the City of Westminster Pension Fund to The pension charge for the period is shown below. take account of the FRS17 disclosure requirements
The main assumptions used by the actuary 2008 2007 2006 Rate of Inflation 3.7% 3.2% 3.0% Rate of general long-term increase in salaries 5.2% 4.7% 4.5% Rate of increase for pensions in payment and deferred pensions 3.7% 3.2% 3.0% Discount rate for scheme liabilities 6.3% 5.3% 4.9%
The assets of the Fund and the expected rate of return 2008 2007 2006 Expected Expected Expected long-term long-term long-term rate of rate of rate of return return return £’000 £’000 £’000 Equities 7.6% 79,880 7.7% 79,440 7.3% 75,720 Government Bonds 4.6% 13,500 4.7% 20,820 4.3% 19,650 Corporate Bonds 6.8% 11,590 - - - - Other assets 6.0% 160 5.6% 4,230 4.6% 1,960 Total market value of assets 105,130 104,490 97,330 Present value of scheme liabilities: Funded (132,280) (145,250) (136,960) Unfunded (4,390) (4,580) (4,640) (136,670) (149,830) (141,600) Deficit in the scheme (31,540) (45,340) (44,270) 93 Annual report and accounts 2007-08
2008 2007 Analysis of amount shown Unfunded Funded Unfunded Funded as staff costs pensions pensions Total pensions pensions Total £’000 £’000 £’000 £’000 £’000 £’000 Current service cost - 3,840 3,840 - 3,600 3,600 Past service cost - 990 990 - 44 44 Total operating charge - 4,830 4,830 - 3,644 3,644 Analysis of the amount debited to finance costs Expected return on pension scheme assets - 7,290 7,290 - 6,430 6,430 Interest on pension scheme liabilities (240) (7,750) (7,990) (219) (6,771) (6,990) Net return (240) (460) (700) (219) (341) (560) Analysis of amount in the statement of recognised gains and losses Actual return less expected return on pension scheme assets - (9,460) (9,460) - (1,510) (1,510) Experience gain/(loss) arising on the scheme liabilities 120 (2,040) (1,920) (40) (210) (250) Changes in assumptions underlying the present value of the scheme liabilities - 25,807 25,807 20 1,330 1,350 Total 120 14,307 14,427 (20) (390) (410) Movement in the FRS 17 liability during the year 1 April, Deficit in schemes (4,580) (40,760) (45,340) (4,640) (39,630) (44,270) Current service cost - (3,840) (3,840) - (3,600) (3,600) Employer’s contributions to pension fund - 4,594 4,594 - 3,245 3,245 Unfunded pensions paid to retired employees 309 - 309 299 - 299 Past service costs - (990) (990) - (44) (44) Other finance costs (240) (460) (700) (219) (341) (560) Actuarial gain (2007: loss) 120 14,307 14,427 (20) (390) (410) 31 March, Deficit in schemes (4,391) (27,149) (31,540) (4,580) (40,760) (45,340)
The date of the last full actuarial valuation of the of the funded and unfunded scheme liabilities at 31 pension fund was at 31 March 2007. Actuaries, acting March 2008. During the year the deficit for both the for the Corporation, have used assumptions relevant funded and unfunded parts of the scheme decreased to FRS 17 to arrive at the Corporation’s share of the by £13.8 million (2007: Increase of £1.1 million). assets of the fund and the Corporation’s present value 94 Annual report and accounts 2007-08
the year commencing 1 April 2008 has been set at 17% Superannuation of pensionable pay. 10 (continued) Since the previous year’s valuation revisions to financial assumptions and the investment returns relating to the funding targets to meet the scheme Normal employer contributions to the fund increased liabilities have been the most significant factors by £0.1 million (2007: £0.46 million) compared to contributing to the reduction of the deficit in the the previous year as a result of a general increase in funded scheme. pensionable pay. The payment of £0.5 million into the fund in March 2007 enabled the Corporation to Using similar assumptions to arrive at the current retain the employer contribution rate of 9.6% from the valuation, the actuaries have forecast for the year previous year throughout the year ended 31 March ending 31 March 2009 current service costs of £2.45 2008. An additional payment of £2.75 million made in million and a net charge to finance costs March 2008 was a contribution towards reducing the of £1.5 million. Both figures are contingent to the deficit in the fund. The employer contribution rate for continuation of the Corporation’s continued existence throughout the year ended 31 March 2009.
History of experience gains and losses in the funded part of the scheme 2008 2007 2006 £’000 £’000 £’000 Difference between expected and actual return on scheme assets Amount (£) (9,460) (1,510) 13,910 Percentage of scheme assets (9.0%) (1.4%) 14.3% Experience gain arising on scheme liabilities Amount (£) (1,920) (250) 30 Percentage of the present value of scheme liabilities (1.4%) (0.2%) 0.0% Changes in assumptions underlying the present value of the scheme liabilities Amount (£) 25,890 1,350 (10,580) Percentage of the present value of scheme liabilities 18.9% 0.9% (7.5%) Total amount recognised in the statement of recognised gains and losses Amount (£) 14,510 (410) 3,360 Percentage of the present value of scheme liabilities 10.6% (0.3%) 2.4% 95 Annual report and accounts 2007-08
11 Taxation
2008 2007 £’000 £’000 Corporation Tax at 20% (2007: 19%) on taxable transactions 5 21 Adjustment to Corporation Tax provision for the year ended 31 March 2007 2 (1) 7 20
Intangible fixed assets comprise licences to use Intangible fixed software developed by third parties. Other intangible 12 assets assets are the costs of developing the criteria and legal framework for the payment of grants to RSLs and non-registered bodies and the development costs of core systems of the Corporation.
2008 2007 Other intangible Software assets Total Total £’000 £’000 £’000 £’000 Cost At 1 April 2,948 3,515 6,463 5,087 Reclassification 3 (4) (1) - Additions 55 1,672 1,727 1,470 Disposals (1,119) (295) (1,414) (95) At 31 March 1,887 4,888 6,775 6,462 Amortisation At 1 April (1,461) (980) (2,441) (1,647) Reclassification 80 (80) - - Amortisation (176) (532) (708) (808) Disposals 406 - 406 14 At 31 March (1,151) (1,592) (2,743) (2,441) At 1 April, Net book value 1,487 2,535 4,022 3,440 At 31 March, Net book value 736 3,296 4,032 4,021 96 Annual report and accounts 2007-08
Tangible fixed assets are shown at cost less Tangible fixed depreciation which is not considered to be 13 assets significantly different from their net current replacement cost.
2008 2007 Office Information Furniture Cars equipment technology and fittings Total Total £’000 £’000 £’000 £’000 £’000 £’000 Cost At 1 April 115 524 2,789 3,281 6,709 6,044 Reclassification - 25 (22) (2) 1 - Additions 19 21 1,664 116 1,820 998 Disposals (17) (22) (352) (65) (456) (333) At 31 March 117 548 4,079 3,330 8,074 6,709 Depreciation At 1 April (50) (391) (1,890) (1,659) (3,990) (3,518) Reclassification ------Depreciation (29) (81) (433) (463) (1,006) (792) Disposals 12 22 343 64 441 319 At 31 March (67) (450) (1,980) (2,058) (4,555) (3,991) At 1 April, Net book value 65 133 899 1,622 2,719 2,526 At 31 March, Net book value 50 98 2,099 1,272 3,519 2,718 97 Annual report and accounts 2007-08
for investment in the development of social housing Share in the by RSLs, unregistered self-build societies and charities 14 Housing Finance having a housing function. THFC only seeks to cover its operating costs with income and the Corporation Corporation Ltd does not have a controlling influence.
The Rules of THFC prescribe that all share holdings The Housing Finance Corporation Ltd (THFC) was are non-beneficial. incorporated in 1987 under the Industrial and Provident Societies Act 1965 as the result of a joint The accounts of THFC are available at: initiative by the Corporation and the National Housing www.thfcorp.com Federation to raise funds from private sector sources
2008 2007 £1 ordinary share, fully paid £1 £1 98 Annual report and accounts 2007-08
Housing and Urban Development Act 1993. Statutory Instrument 1992 No. 1708, enables the Corporation to 15 Loans make loans to certain individuals in respect of service charges payable to RSLs.
The average interest rate applied to schemes under Loans to RSLs and unregistered societies are advanced development during the year was 6.88%. The rate at under Section 79 of the Housing Associations Act 31 March was 6.7%. There were no schemes under 1985. Private mortgages were advanced under development in the year ended 31 March 2007 that Section 132 of the Housing Act 1985 (the Right to Buy were attracting an interest charge. The interest rate legislation). The right to a loan from the Corporation applied during the year to all other loans was 7.14% for tenants exercising their Right to Buy was (2007: 6.53%) abolished by Section 107 of the Leasehold Reform,
Schemes Completed Private under development schemes mortgages 2008 2007 Principal Interest Principal Principal Total Total £’000 £’000 £’000 £’000 £’000 £’000 At 1 April 715 93 996 326 2,130 1,904 Loans advanced 78 - - - 78 480 Interest 37 37 - 793 130 996 326 2,245 2,384 Repayments (3) - (215) (106) (324) (254) Bad debts written off (244) (93) - (9) (346) - At 31 March 546 37 781 211 1,575 2,130 Provision for doubtful debts - - - (17) (17) (359) At 31 March, loans net of provision for doubtful debts 546 37 781 194 1,558 1,771
The value of schemes under development at 1 April policy, no interest has been charged on this scheme 2008 includes a self-build association which was in since the winding up order was granted. liquidation. In accordance with the Corporation’s 99 Annual report and accounts 2007-08
16 Debtors
2008 2007 £’000 £’000 Trade debtors 15,832 3,448 Prepayments 1,063 903 Other debtors 129 153 17,024 4,504
Trade debtors are amounts owed to the Corporation recovery by the Corporation of amounts held for more mainly by RSLs. Amounts in trade debtors owed than three years by RSLs in their Recycled Capital by public sector entities are as follows: central Grant Fund account. In addition, an amount of £10.1 government £7,092 (2007: nil); local authorities £5,122 million in respect of grants recoverable from RSLs (2007: £40,000). Trade debtors includes an estimated who no longer provide housing under the Key Worker amount of £1 million (2007: £1 million) for the Living initiative has been accrued.
The Corporation’s banking services are provided Cash at bank by the Office of the Paymaster General. 17 and in hand
2008 2007 £’000 £’000 Cash at bank 1,756 - Cash in hand 2 2 1,758 2
The Corporation made payments on the 31 March Funding from the CLG was was received on 2 April 2008 which exceeded the cash book balance and 2008 and the Corporation’s bank account remained in were in transit at the year end. The cash book balance credit throughout the period. is shown as bank overdraft in note 19, Creditors. 100 Annual report and accounts 2007-08
Creditors: amounts falling 18 due within one year
2008 2007 £’000 £’000 Taxation and social security 674 546 Bank overdraft 198,913 67,762 Accruals 12,275 16,151 Other creditors 141,338 86,083 353,200 170,542
Accruals includes an amount of £40,000 (2007: (2007: Other creditors includes an amount of £30,000 £45,974) owing to a central government department. owing to a local authority.)
exercise, which is now complete, enabled the Provision Corporation to vacate its London, Waverley House, 19 for liabilities office in November 2006 and to relocate staff requiring to remain in or near London to its Maple House and and charges Croydon offices. A full provision was made in the accounts for the year ended 2006 for redundancy costs for staff unable to relocate or to be redeployed In its response to Sir Michael Lyons’ Independent and for other costs consequent to relocation issues. Review of public sector relocation and reform of All payments of redundancy to staff affected by the public services issued in March 2004, the Corporation, relocation were made in the year ended 31 March commencing during the year ended March 2006, 2007 and the remaining provision related to other embarked on a programme of relocating posts from costs arising from the office move and which were London to its offices in the regions. The relocation settled in the current year.
2008 2007 £’000 £’000 At 1 April 112 875 Provision utilised (82) (605) Reduction in provision (30) (158) At 31 March - 112 101 Annual report and accounts 2007-08
No. 779, limits the Corporation’s borrowing from all Advances from sources to £2,300 million. 20 the national The balance at 31 March matures for repayment loans fund on 3 June 2008. At 31 March the rate of interest payable on the advance was 5.54% (2007: 5.2%) and the weighted The Corporation’s borrowing powers are conferred average rate of interest for the year was 5.66% by Section 92 of the Housing Associations Act 1985, (2007: 4.82%) Section 93, as amended by Statutory Instrument 1990
2008 2007 £’000 £’000 At 1 April 1,400 1,400 Advances made during the year 2,800 2,800 4,200 4,200 Repayments on maturity (2,800) (2,800) At 31 March 1,400 1,400 102 Annual report and accounts 2007-08
a RSL, after meeting the claims of creditors and any other liability following its dissolution or winding up, 21 Reserves is transferable to the Corporation. Use of the funds held under this paragraph is restricted to either managing the controlled dissolution and transfer of engagements of an individual RSL in financial Specific reserve difficulty or ensuring its continued existence, provided that adequate financial controls have been Under Paragraph 15 of Schedule 1 to the Housing Act put into place. 1996, any property that remains in the ownership of
2008 General Pension Specific reserve reserve reserve £’000 £’000 £’000 1 April 2007 160,838 45,340 (1,800) Net operating costs 2,057,303 - - Actuarial gain from staff pension fund (14,427) - - Grant in aid received from CLG (1,889,005) - - Transfer to reflect Pension Fund transactions 13,800 (13,800) - Transfer of interest net of costs 7 -(7) 31 March 2008 328,516 31,540 (1,807)
2007 General Pension Specific reserve reserve reserve £’000 £’000 £’000 1 April 2006 69,143 44,270 (1,734) Net operating costs 1,967,905 - - Actuarial loss from staff pension fund 410 - - Grant in aid received from CLG (1,875,616) - - Transfer to reflect Pension Fund transactions (1,070) 1,070 - Transfer of interest net of costs 66 - (66) 31 March 2007 160,838 45,340 (1,800) 103 Annual report and accounts 2007-08
and of administration expenditure are designed to Financial ensure that funding is available to meet obligations 22 instruments and as they fall due and that annually voted provisions are not exceeded. Capital and revenue grants are risk management paid to RSLs to fund development schemes that meet Government targets and published criteria for Overview development. Financial information is contained in Like all large organisations, the Corporation is notes 2, 3, 4 and 5 to the Financial Statements. exposed to financial risks in its business. The main financial risks it faces relate to funding, liquidity and, to a lesser extent, interest rates. It mitigates these Loans risks by adhering to the policies and procedures The Corporation’s loans, which can only be advanced summarised below. These have been in operation where permitted by statute, are disclosed in note 15 throughout the period under review and to the date of to the Financial Statements. They are financed by approval of our annual accounts. short-term fixed interest rate borrowings from the NLF and the Corporation’s reserves. All loans are secured and subject to variable interest rates which Assets and liabilities are set by reference to either current market rates or As permitted by FRS 13, debtors and creditors the Standard National Rate or the NLF rate applicable maturing or becoming payable within 12 months to our borrowing. of the balance sheet date have been omitted from The Corporation reviews its loans annually this note. and provides for any doubtful debts by a charge to the operating cost statement.
Funding The net book value of the loans after provision for doubtful loans is £1.56 million (2007: £1.77 million) The Corporation’s net operating costs are funded The fair value of the loans after provision is not by grant in aid voted annually by Parliament. considered to be materially different from the book The Corporation operates both within this constraint value. Interest is not charged in the operating cost and within budgets set annually by CLG. statement on loans subject to a judgement debt.
The Corporation’s controls over the commitment The interest rate profile for the Corporation’s loans: and payment of capital and revenue grants to RSLs
Average interest Average Loan classification bearing balance Interest interest rate £’000 £’000 Schemes under development 525 37 6.88% Completed schemes 936 67 7.14% Private mortgages 239 17 7.14%
For the reason stated in note 15, one scheme under development is excluded from the above table. 104 Annual report and accounts 2007-08
Cash advance of need but there is no limit to the cash that can be held at the OPG. The Office of the Paymaster General (OPG) provides the Corporation’s banking service. Apart from the The Corporation holds an amount of non-exchequer investment of the non-exchequer funds referred to funds, explained in note 21, which until June 2007 was below and in note 21, the investment of surplus cash invested with the National Loans Fund. Since June on current account is now handled by OPG for the 2007 the funds have been held in an interest bearing direct benefit of the Treasury. The Corporation adheres deposit account with the OPG. to the principle of not drawing cash from CLG in
Average daily value Average invested Interest interest rate £’000 £’000 1,768 90 5.11%
Liabilities Other disclosures
The Corporation may only borrow from the NLF The Corporation was not exposed to any risks arising and then only with the permission of the Secretary from the use of derivatives or from holding foreign of State. At 31 March, the Corporation had a single currency assets, liabilities or contracts. Any purchases short-term loan at a fixed rate of interest. Details are of goods and services from overseas suppliers are disclosed in note 20 to the Financial Statements. The converted from foreign currencies at the market rate borrowing was repaid on its maturity date of 3 June at the time of payment. 2008. The fair value of the borrowing is not considered to be materially different from its book value of £1.4 million. 105 Annual report and accounts 2007-08
1984 and 1985 the Corporation indemnified four Contingent Building Societies against losses that might arise from 23 liabilities advances they made under a scheme to promote home ownership (the Open Door scheme).
Under section 84 of the Housing Associations Act The amount shown is the maximum liability that 1985 the Corporation is empowered to indemnify might arise in the event of a call being made under certain secured lenders in England. During the years the agreements. No calls have been made against the indemnities during the last five years.
2008 2007 £’000 £’000 Total 120 213
Losses and special 24 payments
2008 2007 £’000 £’000 PIMS development costs written off 901 - Write off of loan 337 -
Expenditure during the three years ended 31 March investment function will shortly become the 2008 relating to the development of a new Programme responsibility of the Homes and Communities Agency Investment Management System (PIMS) and classified and the decision on whether to build further on the under SSAP13 (Accounting for Research and development of PIMS will be the decision of the new Development) as capital expenditure has been written agency. The decision to write off to revenue, under out of capital into revenue. It was intended that PIMS SSAP13, the cost of the development work undertaken would be ready in time for the 2008-11 investment to date has been taken as there will be no benefit to programme and provide better controls, management the Corporation during its remaining existence. The information and enhanced front-end user input write off is shown as disposal from Software and screens. It became apparent that the development Other intangible assets in note 12 to the Financial would not be completed within the desired timescale Statements. and resources were concentrated on enhancing the A loan was advanced to a self-build association in Corporation’s existing IMS. As explained in the December 1997 and secured by second mortgage on Foreword to the Annual Accounts, the Corporation’s 106 Annual report and accounts 2007-08
the development land. The association, which A full provision for the outstanding loan was made was an unregistered association, had severe in the accounts for the year ended 31 March 2002 cash-flow problems in 2001 which was followed and the Corporation endeavoured to recover as much by an unsecured creditor commencing winding-up of loan as possible over the ensuing years. The proceedings. A winding-up order against the remaining parcel of land over which the Corporation association was made in April 2001. had a charge was sold during the current year and with no prospect of recovering any further sums the The remaining assets of the association after decision to write off the loan against the full provision payment to the bank holding the first mortgage on has been made. The write off is shown in note 15 to development land were insufficient to clear the debt the Financial Statements. owing to the Corporation. This was a complex case as at the time of the winding-up not all the (2007: The Corporation did not incur any major losses development was complete and the Corporation still or special payments during the year.) held a charge over a small parcel of land not subject to development.
Commitments under 25 operating leases
2008 2007 Offices Equipment Total Offices Equipment Total £’000 £’000 £’000 £’000 £’000 £’000 Leases which expire within 1 year - 79 79 - 79 79 between 1 and 5 years 272 40 312 68 40 108 after 5 years 1,579 - 1,579 1,778 - 1,778 1,851 119 1,970 1,846 119 1,965
There were no capital commitments Capital as at 31 March (2007: nil). 26 commitments 107 Annual report and accounts 2007-08
Related party Transactions, arrangements and contracts involving Board members, senior officers 27 transactions and staff Under the rules of the Housing Finance Corporation Limited (THFC) the Corporation is empowered to The Corporation is a Non-Departmental Public Body appoint a Director to its Board. Throughout the sponsored by the CLG. Its operating activities are current year the Corporation’s Head of Private Finance funded by grant in aid paid by the CLG. For the year was the Corporation’s appointee. No fee was paid ended 31 March 2008, grant in aid received amounted either to the appointee or to the Corporation. to £1,889.0 million (2007: £1,875.6 million). Further Other than the above and their appointments to analysis of grant in aid received is disclosed in Note iv the Corporation Board there were no transactions, to the Cash Flow Statement. arrangements, relationships or contracts with Board The Corporation inevitably has transactions with members. Board members receive reimbursement other central government Departments, agencies at cost of expenses properly incurred in the and local authorities. These transactions are of performance of Corporation duties. a minor nature consisting of purchases, recharges and contributions to shared research. Related party transactions
The following transactions which took place during the year with RSLs and other bodies in which a Board member had an interest are disclosed in accordance with the Corporation’s Accounts Direction. All transactions were undertaken at arm’s length and in the normal course of conducting the Corporation’s business. 108 Annual report and accounts 2007-08
Board members’ interests RSL or other Name related body Appointment Transaction Value £000’s A reciprocal agreement exists whereby the Chief Sale of goods Executives of the Corporation and of English and services (1) Partnerships are also Board members of the other body. A project relating to Urban Design Staff on outward was commissioned from English Partnerships. secondment (4)
Office of Public Peter Dixon Management Chair Purchase of services 62
The contract to supply services to the Corporation was in place prior to Peter Dixon’s appointment to the OPM.
Peter Rogers Pinnacle Board member
The Housing Corporation, since its inception, has been an admitted body to the City of Westminster Pension Fund. IGP grant 30 Purchase of goods Sheila Drew Smith OBE Audit Commission Board member and services 24
Board members’ interests through a person connected with them: Capital grants paid 13,708 Chris Holmes Servite Houses Chair Capital grants recovered (400) Capital grants paid 4,325 Capital grants recovered (8,264) Interest on Capital Chris Holmes Peabody Trust Board member grant recovered (1,587) 109 Annual report and accounts 2007-08
Employee interests Transactions with employees
There are a number of employees who are related The Corporation has two loan schemes available to persons employed by RSLs or other bodies with for staff. An assisted car purchase loan scheme is which the Corporation has financial dealings. These available to employees in posts requiring the use relationships although between two organisations of a car to perform their duties efficiently. who have a financial interest do not in themselves The loans carry a fixed interest charge based on the involve any personal financial gain by the individuals prevailing government rate for five-year loans and concerned. No employees had any direct interests an administration charge. The loans are repayable by with RSLs, other organisations or suppliers in receipt monthly installments over a period not exceeding of grants or other payments. five years commencing with the date of the loan. The Corporation also offers interest-free loans repayable within one year to staff requiring to purchase an Appointments under paragraphs 6 to 8 of annual season ticket to travel to work. Schedule 1 to the Housing Act 1996
There were seven appointments of Corporation employees to an RSL Board during the year (2007: nil). At 31 March 2008, these appointments, together with six appointments made in earlier years, were still in place (2007: seven). The appointments were made to facilitate the orderly running of an RSL after its assets and liabilities had been transferred. The employees neither received any additional remuneration for their services nor was any housing grant paid to the RSL during the year.
2008 2007 £’000 £’000 At 31 March, Principal outstanding, included in Debtors 129 153 110 Annual report and accounts 2007-08
Related party transactions 27 (continued)
Comparative information: Year ended 31 March 2007
Related party transaction RSL or other Name related body Appointment Transaction Value £000’s A reciprocal agreement exists whereby the Chief Executives of the Corporation and of English Partnerships are also Board members of the other body. Transactions with English Partnerships comprised purchases of goods and services.
Office of Public IGP grant 50 Peter Dixon Management Chair Purchase of services 66
The contract to supply services to the Corporation was in place prior to Peter Dixon’s appointment to the OPM.
Westminster City Peter Rogers Council Chief Executive
The City of Westminster is the rating authority for London Field office of the Housing Corporation. The Housing Corporation is an admitted body to the City of Westminster Pension Fund. IGP grant 70 Purchase of goods Sheila Drew Smith OBE Audit Commission Board member and services 2
Board members’ interests through a person connected with them: Chris Holmes Peabody Trust Board member Capital grants 5,346 111 Annual report and accounts 2007-08
Employee interests Transactions with employees
There are a number of employees who are related The Corporation has two loan schemes available to persons employed by RSLs or other bodies with for staff. An assisted car purchase loan scheme is which the Corporation has financial dealings. available to employees in posts requiring the use These relationships although between two of a car to perform their duties efficiently. organisations who have a financial interest do not in The loans carry a fixed interest charge based on the themselves involve any personal financial gain by the prevailing government rate for five year loans and individuals concerned. No employees had any direct an administration charge. The loans are repayable by interests with RSLs, other organisations or suppliers monthly installments over a period not exceeding in receipt of grants or other payments. five years commencing with the date of the loan. The Corporation also offers interest free loans repayable within one year to staff requiring to Appointments under paragraphs 6 to 8 purchase an annual season ticket to travel to work. of Schedule 1 to the Housing Act 1996
There were no appointments of Corporation employees to an RSL Board during the year (2006: nine). At 31 March 2007, seven appointments were still in place (2006: seven). The appointments were made to facilitate the orderly running of an RSL after its assets and liabilities had been transferred. The employees neither received any additional remuneration for their services nor was any housing grant paid to the RSL during the year. 112 Annual report and accounts 2007-08
Date of authorisation for issue 28 and post balance sheet events
The Housing Corporation’s Financial Statements are The date of authorisation for issue is the date on laid before the Houses of Parliament by the Secretary which the certified accounts are despatched by the of State for CLG. Financial Reporting Standard 21 Corporation’s management to the Secretary of State requires the Corporation to disclose the date on for CLG. which the accounts were authorised for issue and any The authorised date for issue is 27 June 2008. material post balance sheet date events not disclosed in the Financial Statements. There have been no material post balance sheet date events. 113 Annual report and accounts 2007-08 Housing Corporation
Accounts direction given by the Secretary of State with the consent of the Treasury, in accordance with Section 97(1) of the Housing Associations Act 1985
1. The annual accounts of the Treasury in which case the Schedule 1 the Housing Corporation exception shall be described in 1. Stocks and work in progress (hereafter in this accounts the notes to the accounts. shall be included in the balance direction referred to as “the 2. Schedule 1 to this direction sheet at the lower of estimated Corporation”) shall give a true gives clarification of the replacement cost and estimated and fair view of the income application of the accounting net realisable value. and expenditure and cash and disclosure requirements flows for the year and the 2. The annual accounts shall be of the Companies Act and state of affairs at the year end. signed and dated by the accounting standards Subject to this requirement, the Chairman on behalf of and also gives any exceptions annual accounts for 2006-07 the Board members, to standard Treasury and subsequent years shall be and by the accounting officer. requirements. Additional prepared in accordance with: disclosure requirements of the (a) the accounting and disclosure Secretary of State and further requirements given in explanations of Treasury Schedule 2 Government Accounting and requirements are set out in Additional disclosure in, Government Financial Schedule 2. requirements Reporting Manual issued by 3. This direction shall be the Treasury (“the FReM”), as The following information shall be reproduced as an appendix to amended or augmented from disclosed in the annual accounts, the annual accounts. time to time, and subject to as a minimum, and in addition Schedule 1 to this direction; 4. This direction replaces all to the information required to be previously issued directions. disclosed by paragraphs 1 and 2 (b) any other relevant guidance of this direction. that the Treasury may issue from time to time; 1. The notes to the annual Signed by authority of the accounts (c) any other specific disclosure Secretary of State (a) an analysis of grants from: requirements of the Secretary P J Ruback (i) government Departments; of State; (ii) European Community An officer in the Department insofar as these requirements funds; and for Communities and Local are appropriate to the (iii) other sources, identified as Government Corporation and are in force for to each source; the year for which the accounts 30 March 2007 are prepared, and except where agreed otherwise with the Secretary of State and with 114 Annual report and accounts 2007-08
(b) an analysis the total amount (The above analysis shall disclosure and particulars of of grant from the Department be given separately for the any individual amounts in for Communities and Local following categories: excess of £250,000. Disclosure Government, showing how the shall also be made of any loss I employed directly by the grant was used; or special payment of £250,000 Corporation; and below if it is considered (c) an analysis of grant payments II on secondment or loan to material in the context of the by outcome, also showing the the Corporation; Corporation’s operations; and legislation under which the payments were made; III agency or temporary *(j) particulars, as required by the staff; and accounting standard on related (d) details of employees, other than party disclosures, of material board members, showing: IV employee costs that have transactions during the year been capitalised); (i) the average number of and outstanding balances at persons employed during (e) a statement of loans by the the year end (other than those the year, including part- Corporation showing the arising from a contract of time employees, agency movements during the year, the service or of employment with or temporary staff and rate of interest charged and the the Corporation), between the those on secondment or amount of interest receivable Corporation and a party that, at loan to the Corporation, for the year; any time during the year, was a but excluding those on related party. For this purpose, (f) an analysis of liquid resources, secondment or loan to other notwithstanding anything in as defined by accounting organisations, analysed the accounting standard, the standards, identifying any between appropriate following assumptions shall amount for which the use of categories (one of which be made: funds by the Corporation is is those whose costs of restricted to specific functions; (i) transactions and balances employment have been of £5,000 and below are not capitalised); (g) in the note on debtors, material; prepayments and payments on (ii) the total amount of loans to account shall each be identified (ii) parties related to board employees; separately; members and key (iii) employee costs during the managers are as notified (h) a statement of advances from year, showing separately: to the Corporation by each the National Loans Fund individual board member or (1) wages and salaries; showing the movements during key manager; the year, the rate of interest (2) early retirement costs; charged and the amount of (iii) the following are related (3) social security costs; interest payable for the year; parties:
(4) contributions to pension; (i) a statement of losses and (1) subsidiary and associate schemes special payments during companies of the the year, being transactions Corporation; (5) payments for unfunded of a type which Parliament pensions; cannot be supposed to have (6) other pension costs; and contemplated. Disclosure shall be made of the total of losses (7) amounts recoverable and special payments if this for employees on exceeds £250,000, with separate secondment or loan to other organisations; 115 Annual report and accounts 2007-08
(2) pensions funds for the (11) partnerships and joint meetings of the company, benefit of employees ventures in which a or is able to control the of the Corporation or its member of the close family appointment of directors subsidiary companies of a Board member or of a who are then able to (although there is no key manager is a partner exercise a majority of votes requirement to disclose or venturer; at board meetings of details of contributions the company. (12) settlements in which a to such funds); member of the close family (3) Board members and of a Board member or of a * Note to Schedule 2 paragraph key managers of the key manager is a settlor or 2(j): under the Data Protection Corporation; beneficiary; and Act 1998 individuals need to give their consent for some of (4) members of the close family (13) the Department for the information in these of Board members and key Communities and Local sub-paragraphs to be disclosed. managers; Government, as the If consent is withheld, this should sponsor Department for the (5) companies in which a Board be stated next to the name of the Corporation. member or a key manager is individual. a director; For the purposes of this sub-paragraph: (6) partnerships and joint ventures in which a Board (i) a key manager means member or a key manager a member of the is a partner or venturer; Corporation’s management board; (7) trusts, friendly societies and industrial and provident (ii) the close family of an societies in which a Board individual is the individual’s member or a key manager spouse, the individual’s is a trustee or committee relatives and their member; spouses, and relatives of the individual’s spouse. (8) companies, and subsidiaries For the purposes of this of companies, in which definition, “spouse” includes a Board member or a key personal partners, and manager has a controlling “relatives” means brothers, interest; sisters, ancestors, lineal (9) settlements in which a descendants and adopted Board member or a key children; manager is a settlor or (iii) an individual has a beneficiary; controlling interest in a (10) companies, and subsidiaries company if the individual of companies, in which (or the individual acting a member of the close jointly with other persons family of a Board member by agreement) is entitled or of a key manager has a to exercise (or control the controlling interest; exercise of) 30% or more of the rights to vote at general 116 Annual report and accounts 2007-08 Our offices
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