Homes and Communities Agency Annual Report and Financial

Annual Report and Financial Statements 2008/09

INVESTINGNATIONALLYDELIVERINGLOCALLY

Homes and Communities Agency

Homes and Communities Agency Annual Report and Financial Statements 2008/09

Annual Report and Financial Statements presented to Parliament by the Secretary of State for Communities and Local Government pursuant to paragraphs 11 and 12 of Schedule 1 to the Housing and Regeneration Act 2008

Ordered by the House of Commons to be printed on 9 November 2009

The Homes and Communities Agency was established by Parliament under the Housing and Regeneration Act 2008.

£19.15HC 976 London: The Stationery Office


© Crown Copyright 2009

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Annual Report and Financial Statements 2008/09 2


3Annual Report and Financial Statements 2008/09

CONTENTS

Who we are and what we do 4

Regional highlights 6

Chairman’s report 8

Board Members 10

Chief Executive’s report 12

Growth 14

Renewal 16

Affordability 18

Sustainability 20

Investing in our business 22

Business performance 24

Report on the Financial Statements 28

Getting in touch 108

Front cover image The award-winning footbridge at Castleford in West Yorkshire, subject of a recent Channel 4 television series, is kickstarting the regeneration of this former mining town.



WHO WE ARE AND WHAT WE DO

CREATING OPPORTUNITY

FOR PEOPLE AND PLACES

The Homes and Communities Agency (HCA) is the single, national housing and regeneration agency for England. Our role is to create opportunity for people to live in high quality, sustainable places that embrace diversity and support inclusion. We provide funding for affordable housing, bring land back into productive use and improve quality of life by raising standards for the physical and social environment.We work nationally while supporting the ambitions of our local partners to provide better places that offer great homes and good jobs with a strong sense of community cohesion. Developing strong relationships at national, regional and local levels are key to our success as a national agency that delivers locally.

A new era for housing and regenerationThe HCA was created on 1 December 2008 by bringing together regeneration body English Partnerships, the investment arm of the Housing Corporation, the Academy for Sustainable Communities and a number of housing and regeneration programmes from Communities and Local Government (CLG). The result is a wholly new agency providing a single point of contact for all those involved in helping communities to thrive.

Each programme is crucial to the success of our communities and, by bringing them together in powerful, locally-accountable programmes built up by our regional teams in response to the needs of individual local ambition, we can ensure they are more than the sum of their parts.


We manage the following funding and delivery strands:

Finance Initiative)

Programme (NAHP)

National Coalfields Programme and Urban Regeneration Companies)


Skills and expertise The Agency is an unrivalled source of expertise and specialist knowledge in the housing and regeneration industry. Our Advisory Team for Large Applications (ATLAS) is expanding to cover the whole of England, offering planning expertise for local authorities on processing large schemes, while the HCA Academy is responsible for developing the skills and knowledge of all those people who create and maintain communities.

What we do We work closely with regional delivery partners, including local authorities, housing associations, housebuilders and communities, to develop a shared vision for each area, tailored to the individual and very diverse needs of the people and places involved.

We do this by addressing four themes of activity:

Growth Facilitating the delivery of large-scale developments in strategic locations, helping local areas achieve their growth targets.

Renewal Working with local authorities and regional agencies to identify renewal requirements, from rejuvenating failing estates to cleaning up swathes of brownfield land, removing the blight of dereliction and stimulating renewed economic activity.

Affordability Providing the funding for housing associations and private developers to build affordable homes for rent and sale.

Sustainability Improving quality of life through innovation, enhanced surroundings and a higher standard of the physical and social environment.

Ultimately, our aim is to help local authorities bring together their priorities for homes and communities into a single, comprehensive plan. This forms the basis of our Single Conversation business model, which acts as the link between local authorities, central government, housing providers and other delivery agencies. Together, we can create opportunity for people to live, work and enjoy life in places they desire, can afford, and which meet their needs.

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Making a difference

Crocodile Works, Newtown, Birmingham The HCA has invested £11.9m of joint NAHP and HMR funding to unblock this stalled regeneration project in Birmingham and get construction moving. The development is now underway, creating 168, mainly affordable, new homes – including family houses and apartments – and is designed by award-winning Midlands architect Glenn Howells.

We are working closely with Registered Social Landlord partner Midland Heart and HMR Pathfinder Urban Living, who are engaging with the local community to address issues such as crime and worklessness.

This important scheme is helping to kickstart the rejuvenation of this declined north-city suburb.



REGIONAL HIGHLIGHTS

Since 1 December, the HCA has started making a real difference to local communities up and down the country – from helping set up a brand new Community Land Trust for rural families on Holy Island in the North East, to unlocking stalled sites in the South West that will provide homes for over 2,000 people in Dorset and Wiltshire.Our national achievements include:• 27,666 new affordable homes

completed for rent and sale• Nearly 240,000 sq m of

employment floorspace created• Generated over £500m of

private sector investmentYou can find out more about our national achievements in our Business performance chapter on page 24 and on our website. A breakdown of our spending by local authority area is available at homesandcommunities.co.uk/la-summary

2,100 vitally-needed new affordable homes completed

• Start on site of Lime Street Gateway, Liverpool, delivering a new, accessible entrance to the city centre

• Maintaining momentum at New Islington – Chips building completed. 142 homes in total, half with NAHP support (see page 25)

• Held the first Key Event in Manchester, bringing together housing and finance professionals to help get people onto the property ladder

homesandcommunities.co.uk/ northwest

708 new affordable homes completed through the NAHP

• £10m of investment to deliver 250 new Extra Care homes for older people

• Approval for England’s first Community Land Trust to be supported through the NAHP at Holy Island, Northumberland (see page 19)

• 3 people with long-term disabilities supported into first-time home ownership

homesandcommunities.co.uk/northeast

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• £168m spent on building new affordable homes

• £190.7m allocated towards future NAHP projects to build 3,916 homes

• P lans submitted for 195 homes at zero carbon development Hanham Hall, near Bristol (see page 20)

homesandcommunities.co.uk/southwestAll figures on this page relate to the period of 1 December 2008 to 31 March 2009.



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• 1,888 starts on site (1,389 through theNAHP and 499 through private sector)

• Ov er 36,208 sq m of employmentfloorspace completed

• 112 ha of brownfield land reclaimed (95 ha directly and 17 ha with partners)

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across the region• Delivery of Corby rail station, awarded

Regeneration Project of the Year at East Midlands Property Awards

• 2,424 homes started on sitehomesandcommunities.co.uk/ eastmidlands

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with £11.9m HCA and HMR Pathfinder investment (see page 5)

• Ne w affordable homes, infrastructure works and school at North Solihull

• Refurbishment of the former Ledbury Cottage Hospital, to create rural affordable homes and commercial units

homesandcommunities.co.uk/westmidlands

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9m• 344 zero carbon homes to be provided

at Peterborough Carbon Challenge site• A major part of the Harlow Gateway

regeneration project brings new private and affordable homes to the area

• Elmswell scheme wins the 2009 RIBA Award for Architectural Excellence

homesandcommunities.co.uk/eastengland

5,489 affordable homes completed

• 4,902 affordable homes started on site and £410m allocated ahead of target for 7,348 affordable homes

• Funding innovation unlocks Epsom Cluster (300 homes), a precursor to the Kickstart programme

• Estate renewal partnerships at Rowner, Gosport and Christian Fields, Gravesend (see page 15)

homesandcommunities.co.uk/southeast

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• 8,497 starts on site and 6,836 completions through the NAHP

• £16m cash injection for Woodberry Down enables start on site

• P lanning permission granted for 4,000 homes at Kidbrooke, south-east London (see page 17)

homesandcommunities.co.uk/london


CHAIRMAN’S REPORT

Some might think that the creation of the HCA was a piece of bad timing. A backdrop of one of the worst economic downturns for decades heralded our launch. But I am proud that the Agency rallied and made a significant impact in securing much-needed affordable homes and supporting the future of the housebuilding industry in this country. So for me, the HCA started its work at just the right time.

In our first four months (1 December 2008 – 31 March 2009), industry feedback has been positive about the pragmatic approach we’ve taken to help maintain momentum and generate a supply of new homes. Of course we haven’t done this alone. I have been impressed by the way our partners, including housing associations, developers and local authorities, have been swift to respond to HCA initiatives and embraced our Single Conversation business model.

At the end of our financial year we were able to report an excellent performance. Overall we funded the completion of over 50,000 new and affordable homes in 2008/09, meaning that more than 100,000 people are now living in better surroundings than 12 months ago. Looking across all of our programmes, I believe we will have improved the lives of at least half a million people by the end of our first year of operation.

While the sharp downturn in the housing industry has focused our attention on building as many affordable homes as possible, we have not lost sight of our overarching vision to create opportunities for people to live in high quality places.

This vision was crystallised for me in the early days of my chairmanship, when I visited run-down areas around the country to witness the legacy that exists in some of our once vibrant ‘working’ towns.

But there is hope for these places. In Erdington, North Birmingham, the 1960s Lyndhurst Estate that features no-go areas and housing in a desperate state of repair, is set to be turned around through £100m of Private Finance Initiative funding through the HCA.

This first-hand experience has galvanised my resolve – and that of my Board – to make a positive difference to the lives of as many people as we can.

Using our funding, our skills and our work with government ministers and partners, I believe we can turn these areas around, building inspirational places that are well designed and embrace the concept of a low carbon economy. We have a real opportunity and a responsibility to create places that respect our environment and acknowledge the serious consequences of climate change.



“I believe we will have improved the lives of at least half a million people by the end of our first year.”

Despite organisational upheaval during its first months of operation, the HCA has delivered. The commitment of our staff, the strong leadership of our Chief Executive and his management team, and the efforts of my fellow Board Members, have created an agency that has the potential to make an enormous difference to the lives of many.

Through our proposed new quality standards (being published next year) we will set the pace for lowering the carbon footprint of all homes that we fund or are built on HCA land. In parallel we will support exemplar projects – such as Hanham Hall, near Bristol, being built to Code Level 6* – to pave the way for hitting the government’s target of zero carbon new homes by 2016.

Looking to the future, the extent of the HCA’s delivery of homes and communities will depend on our ability to drive value from every taxpayer’s pound we spend. This requires innovation, partnerships and leverage of new sources of funding. Many initiatives are in hand that will demonstrate new ways of working for what is still a new agency.

Robert Napier Chairman

A DECENT HOME

IN A DECENT NEIGHBOURHOOD

Making a difference

Wolverton Park, Milton Keynes Milton Keynes Partnership has continued to work with partners Milton Keynes Council, Network Rail and RSL Places for People to contribute to the regeneration of this historic railway town and bring two important Grade ll listed buildings back into use.

The transformation of this 5.12 ha brownfield site offers 300 new homes, of which 30 per cent are affordable; improved facilities for the local community including open space and leisure facilities; and 2,700 sq m of retail, commercial and heritage floorspace.


BOARD MEMBERS

1 Chairman Robert Napier was formerly Chairman and Non-Executive Director of English Partnerships.

Robert is also Chairman of the Board of the Met Office. He was Chief Executive of WWF-UK, the UK arm of the World Wide Fund for Nature, from 1999 to April 2007. Before that he spent 16 years at Redland plc, where he was successively Financial Director, Managing Director and Chief Executive.

Robert is currently a Non-Executive Director of Anglian Water Services. He was formerly a Non-Executive Director of Rentokil Initial plc, Non-Executive Director of United Biscuits plc, Chairman ofthe CBI Transport Policy Committee and President of the National Council of Building Material Producers.

Robert’s community activities include being Chairmaof the Governors of Sedbergh School and a Trustee of Baynards Zambia Trust. He is also Chairman of thetrustees of the Carbon Disclosure Project.

2 Chief Executive Sir Bob Kerslake began in post as Chief Executive Designate from 31 March 2008.

From 1997 to 2008 he was Chief Executive of Sheffield City Council, the fourth largest local authority in England. The Council is rated as a four-star authority and was Council of the Year in 2005.

Bob was previously with the London Borough of Hounslow, initially in the post of Director of Finance and then for seven years as Chief Executive. Prior to that he was with the Greater London Council, handling Transport Finance, and then with the Inner London Education Authority, where he was responsible for their main accounts with an expenditure in excess of £1bn.

Nationally, he has also been a Non-Executive Board Member of CLG and was a member of both the Equalities Review Panel and the National Employment Panel.

3 Candy Atherton is Chair of the Rural Housing Advisory Group. She is also founder of Atherton Associates. Candy is Chair of the Camborne and Redruth Constituency Labour Party and a Member of the Regional Board of the South West Labour Party. She was previously the Member of Parliamentfor Falmouth and Camborne, Vice Chair of CPR Regeneration, Mayor of the London Borough of Islington and a Non-Executive Board Member of the Housing Corporation.

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4 Kate Barker CBE is a member of the Monetary Policy Committee, Bank of England, and Chair of Governors at Anglia Ruskin University. Kate was previously Chief Economic Adviser to the CBI and Chief European Economist for Ford Europe. During the past few years she has led two major reviews on behalf of government on housing supply and land-use planning. She was also on the Board of the Housing Corporation.

5 Margaret Fay OBE is Non-Executive Chair of One North East Regional Development Agency, a former Board Member of English Partnerships and a former Non-Executive Director of Darlington Building Society. From 1981 to 2003 she worked at Tyne Tees Television, where for the final eight years she was Managing Director.

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10 Annual Report and Financial Statements 2008/09

Margaret was awarded an Honorary Doctorate in Business Administration from Sunderland University in July 2004 and an Honorary Degree of Doctor of Lawfrom the University of Teesside in November 2008.

6 Bob Lane OBE is Chairman of the London ThameGateway Development Corporation, a Board Membeof the National Housing and Planning Advice Unit and a Trustee of the Corby City Academy. Bob was previously Chief Executive of Catalyst Corby, North Northants Development Company and also of SpekeGarston Development Company. He was formerly a part-time senior adviser to the international consultancy group EDAW/AECOM.

7 Shaukat Moledina CBE is currently the Chair of a private investment trust supporting small and medium enterprises, as well as a Trustee and main Board Member of Save the Children, Vice President

of United Response and the Chair of The LHA-ASRA Group. Previously Shaukat was the Chair and a major shareholder in partnership with institutional investors of a successful start-up group of national companies, as well as the Deputy Chair of the Housing Corporation. He has held non-executive directorships in the NHS and housing associations.

8 Professor Peter Roberts OBE is Chair of the HCA Academy, Professor of Sustainable Spatial Development at the University of Leeds and adviser to Addleshaw Goddard solicitors and to Atkins Limited. Peter was previously Professor of Regional Planning, University of Liverpool and Professor of European Strategic Planning, University of Dundee. In 2005 he was awarded an OBE for services to regeneration and planning.

9 Ian Robertson is Chair of the Audit Advisory Board of the Scottish Parliament Corporate Body and is also a Non-Executive Director of Leeds Building Society.

Ian was previously Group Chief Executive of Wilson Bowden plc, a FTSE 200 company, Group Financial Controller at Northern Foods plc and Financial Controller at Terry’s of York. He was also President of the Institute of Chartered Accountants of Scotland and Chair (Provost) of Eastwood District Council, Scotland.

10 Dru Vesty MBE has her own consultancy company Estea Ltd. She is a Non-Executive Board Member of the London Thames Gateway Development Corporation and a member of the Planning Committee of the Olympic Delivery Authority.

Dru was previously Director of Healthcare Group Ltd, Director of Property Development at British Gas plc, and Royal Docks Area Director at London Docklands Development Corporation. She also served for eight years as a Non-Executive Board Member of a leading housing association.

11 Don Wood CBE is Chairman of the London Housing Foundation and a Trustee of The Orders of St John Care Trust. Formerly he was Group Chief Executive of L&Q Housing Group and prior to that Director of New Islington & Hackney Housing Association. Don holds no other public appointments.

The Register of Members’ Interests is open for public inspection and is included on our website.

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CHIEF EXECUTIVE’S REPORT

The HCA began operating on 1 December 2008. In many ways that date marked a culmination of months and months of frenetic activity in getting the Agency up and running; particularly for members of the Set-Up Team, but also for everyone at the predecessor bodies who’d also been asked to carry on with the ‘day job’. The successful launch, four months early, was down to their hard work and I must take this opportunity to give them my thanks.

But clearly in all the important ways, 1 December only marked the beginning. From day one we found ourselves in the midst of what we now know is the longest and deepest economic downturn for generations. It was, and remains, a challenging environment; but also one which presents many opportunities for a newborn organisation like ours to make a mark.

Looking at the activity detailed in this report – across the four key themes of Growth, Renewal, Affordability and Sustainability which drive our work – I believe we have done that. However, there are clearly many more challenges in the year ahead.

Despite opening for business against such a tough economic backdrop, the HCA was quick to respond. In particular, writing to our development partners was, I believe, one of the most important actions the HCA undertook. We offered tailored packages of support, including a commitment to flexible grant rates, in order to help them maintain development activity. It was a clear statement of our intent as a national organisation that delivers locally. Since then, we have developed a good working relationship with government and other stakeholders, progressing a number of initiatives with them, most recently our new and very welcomed emphasis on promoting apprenticeships as part of our mainstream delivery. Throughout this, our focus has been on delivery with a premium on maintaining new and affordable build and a firm emphasis on local impact.

Through the National Clearing House, HomeBuy Direct, Mortgage Rescue and other initiatives designed to respond to the effects of the credit crunch, I hope this report demonstrates that we have helped to make a difference, on the ground, in every neighbourhood. And through our wider activities and work with communities, I hope that we have helped create opportunity for people to live, work and enjoy life in places they desire and can afford. That will be our mission, too, in the year ahead.

Looking internally, over the coming months we must continue to meet the challenge of creating a single, integrated organisation; an agency fit for its local purpose. We have moved quickly to establish a strong senior management team, and as I write, the restructuring of our corporate and regional teams – in particular to streamline the centre and move posts to regional delivery – is well underway. It is vital that we get these structures right if we are to meet the challenge of delivery in the year ahead and beyond.



“We will ensure that our programmes fit places, not the other way around; and our objective will be to achieve local ambitions.”

The challenges over the coming 12 months – our first full year of operation – will be significant. Along with creating a single organisation, our work with colleagues at CLG will focus on maintaining programme momentum in the delivery of affordable housing and sustainable regeneration, and on increasing housing supply by responding to the market and laying the foundations for the future.

Our Corporate Plan for 2009/10–2010/11 clearly sets out our stall around this activity, to include how we will spend additional monies given to the HCA through the Budget and the Housing Pledge, a sign of government’s faith in our ability to deliver. And underpinning everything we do will be a commitment to quality, and the fourth of our priorities, to embed a place-focused model of working.

Through our new business process, the Single Conversation, priorities will be mutually shared and agreed, and backed by investment and clear roles for delivery. We will ensure that our programmes fit places, not the other way around; and our objective will be to achieve local ambitions.

That is our commitment to people and places, and to creating thriving communities.

Sir Bob Kerslake Chief Executive

MAKING A DIFFERENCE

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Making a difference

Epsom Cluster, Surrey The stalled Epsom Cluster development – including two former Victorian hospital sites and land linking them – brings various strands of our work together.

Three sites in all (West Park, St Ebbas and Horton Retail) belong to our Hospital Sites portfolio, and, with partners Crest Nicholson and Galliford Try, will deliver 710 new homes– a third of which will be for affordable rent or sale to first-time buyers.

Development has been unlocked thanks to £15m of NAHP grant funding, and a £10m HCA infrastructure loan.

All homes will be built to Code Level 3*. Cycle paths will minimise reliance on cars, while a new retail hub has been completed.

Listed hospital buildings will be retained for redevelopment.


GROWTH

DELIVERING LONG-TERM BENEFITS

TO COMMUNITIES

The pressure to increase the supply of new homes remains high. With demand still outstrippingsupply we have focused a great deal of effort on accelerating sustainable development in the growth locations that span the length and breadth of the country.

But building homes is just part of the picture. Creating new, thriving and sustainable communities needs a whole raft of supporting infrastructure, such as roads, sewerage, community space, parks, shops and improved transport systems. Alongside this, the capacity of local health, education and sociaservices need to be tailored and expanded to meet the demands of new and existing communities.

Government has made a multi-million pound growthfunding package available to both the Growth Areas and Growth Points, allowing local authorities to take control of delivering their priorities. In addition, a Community Infrastructure Fund (CIF) – specifically for transport schemes vital to unlocking large housing developments – is helping to accelerate growth programmes.

The HCA is playing an important role in developing policy, as well as working with local partnerships and councils through our Single Conversation, to deliver growth projects and programmes using this extensive package of funding, along with additional HCA investment.

Education and improving the skills of our workforce is one of the lynchpins of sustaining growth. Milton Keynes – centre of a major Growth Area and one of the country’s fastest growing urban areas – opened a new University Centre in January 2009.

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Corby rail station Opened in spring 2009, to provide a direct rail link to London.

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oat

Making a difference Christian Fields, Gravesend, Thames Gateway Delivery of growth and regeneration in the Thames Gateway is central to the future of London, the Greater South-East and, consequently, the UK economy.

The Thames Gateway strategy and programme is transforming communities along 40 miles of the Thames Estuary, from London Docklands to Southend in Essex and Sheerness in Kent. With strong partnerships in local government, business and the communities involved, we are working to improve the housing, transport, economy and education for thousands of people who live in the Gateway.

For example, a co-ordinated effort to improve the neighbourhood at Christian Fields, a formerly run-down housing community in Gravesend, has involved the residents, housing association Moat, the police and the council’s housing and community safety teams. Christian Fields is now being regenerated with a mixture of new and affordable rented homes and private housing.

£170mof Community Infrastucture Funding was allocated this year

The Centre, which also received £7.3m from Milton Keynes Partnership (a sub-committee of the HCA), will increase the city’s capacity to offer top quality learning opportunities, equipping the workforce of the future with the right skills to sustain economic growth. Community facilities are also being improved. In Ashford, growth funding is contributing towards a £2m multi-use arts venue within the 15th century St Mary’s Church in the town centre.

New homes, of course, are one of the key components of growth and unlocking sites is a crucial part of delivery. Plans to regenerate a former factory site in Belgrave, Leicester, have been made possible through £2.2m of Growth Point money along with a further £13.2m from the HCA and the private sector to create over 1,000 homes and new community facilities.

With our local authority partners, we are working on alternative ways to unlock land in public ownership. Through our Public Land Initiative, we will deliver homes by using a new approach to procurement and deferred land payments, to rebalance risks and returns between the public and private sectors.

In March this year, £170m of CIF funding was allocated to 29 small to medium-scale transport projects in areas of growth. This funding should not only protect and create more than 2,000 jobs but will directly support 40,000 new homes being built in the next 10 years. Projects range from a new road and junction improvements in the Southgate area of King’s Lynn, Norfolk – allowing the development of 900 homes – to a pedestrian and cycle bridge in Wichelstowe creating ‘green access’ to the centre of Swindon.

While growth is crucial to satisfying demand for new homes, we and our partners recognise that it must be carried out in a way that meets the needs of existing communities and delivers tangible, long-term benefits.


RENEWAL

TRANSFORMING PLACES


AND REVITALISINGCOMMUNITIES

Our place-maker role is as much about creating sustainable communities as it is about housing. In deprived areas especially, their renewal is critical to giving more people access to decent housing and a better community environment.

This is being shaped by our Single Conversation business model, transforming how we identify regeneration opportunities and housing need.

The HCA inherited a substantial portfolio of regeneration schemes from English Partnerships, ranging from rejuvenating failing sink estates to cleaning up large-scale brownfield sites. Despite the impact of the credit crunch on land values and availability of new funding, we have responded by exploring innovative sources of funding and offering flexibility in bringing schemes forward.

At Walker River’s Gate in Newcastle, HCA investment through the NAHP and Property and Regeneration funding for this development of 107 affordable homes is contributing to the wider £450m regeneration of this run-down area. Plans include a new community hub offering retail, leisure and educational facilities. This, in turn, will attract families and transform the area into one of housing choice.

Our flexible approach has helped guarantee continuation of key transformational schemes such as the Grade II* listed Park Hill site in Sheffield. A £16m HCA investment secured momentum for Phase 1, working with developers Urban Splash and Sheffield City Council to create a sustainable mixed-use community.


1,431 new homes have been delivered under the Housing Market Renewal programme

Elsewhere, despite the downturn, we’ve progressed estate renewal schemes including Kidbrooke’s Ferrier Estate, which reached its start-on-site milestone in March; Rowner former naval accommodation in Hampshire, where we’ve developed a regeneration plan with partners Wimpey, local authorities and Portsmouth Housing Association; and Woodberry Down in Hackney, where construction has now started. The latter is one of five stalled regeneration schemes in London to benefit from HCA funding to unlock sites.

Additionally, we are progressing housing PFI Round 6 focusing on estate regeneration, to ensure even more schemes are brought forward.

The Housing Market Renewal programme is making a significant contribution to community renewal, delivering 1,431 new build homes, 11,020 refurbishments, 3,987 demolitions and 3,809 acquisitions since the HCA opened for business.

Since inheriting Decent Homes, two Arms Length Management Organisations (ALMOs) – Stevenage and Enfield – passed their February inspections, facilitating Decent Homes funding for much-needed refurbishment of thousands of social tenants’ homes. Additionally, we spent £26.3m in gap funding to help RSLs reach their Decent Homes target.

We delivered two large housing stock transfers totalling over 13,000 homes, in Manchester East (partial) and Sedgefield (whole). The former benefited from £62m of gap funding to bring its social homes up to the Decent Homes standard and facilitate the transfer.

Crucially, our enabler role includes vulnerable people and those on the margins of society. Several delivery strands we inherited from CLG address this, such as the £80m Places of Change programme, which aims to improve service provision for homeless people through facilities for training and education. We helped fund a major show garden at the 2009 Chelsea Flower Show, developed by homeless people in partnership with the Eden Project and Homeless Link, equipping participants with confidence, new skills and hope for the future.

The Gypsy and Traveller Site Grants programme aims to fund new social rented sites alongside the refurbishment of existing ones. In February, we published bidding guidance for local authorities, RSLs and ALMOs wishing to take advantage of this.

The National Coalfields Programme (NCP) is embracing social renewal in our most deprived communities. Our Coalfields Action Plan outlines how we will work with partners to identify social and economic regeneration needs. This includes investment in the three-year Family Employment Initiative – a partnership with Wigan Council and the Coalfields Regeneration Trust – to tackle worklessness among families affected by long-term unemployment.

We know that during these challenging times, it is vital we work with our partners to maintain regeneration activity alongside momentum in the affordable housing market, so that communities can continue to thrive.


Making a difference

Kidbrooke, south-east London Kidbrooke residents are set to benefit from the transformation of their community, with one of the largest housing-focused regeneration schemes in Europe now underway.

Planning permission was granted in March for the redevelopment of the Ferrier Estate, which is being led by a partnership between the HCA, Greenwich Council, Berkeley Homes (Urban Renaissance), and Southern Housing Group. HCA funding has enabled demolition and Phase 1 to start.

The scheme will include 4,000 new mixed-tenure homes, almost 27,870 sq m of commercial and retail space, a new school, sports pitches, new community and health facilities, a new transport interchange and 8 ha of public open space.


AFFORDABILITY

27,666 affordable homes completed for rent and sale in our first four months of operation

DELIVERING AFFORDABLEHOMES

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IN A CHALLENGING MARKET

The HCA has a clear focus on housing affordability. In the first four months of operation we allocated £2.8bn to our developmenpartners. During the same period 27,666 new affordable homes were completed, part of a whole year figure of 47,800.

Despite challenging market conditions we met our target for the year. Thousands of families and individuals on local council waiting lists now have a new, decent home for a rent they can afford; and thousands more have been helped into home ownership.

In Cotherstone, County Durham, for example, our £1m investment saw the first affordable homes built in the village since the 1960s. Eight local families will now be able to remain living in the village, making a big difference to this rural community. At the other end of the country, a repayable loan of £3m to the developers of Hale Village in Tottenham, north London, will unlock 360 new affordable homes, as well as acting as the catalyst for the wider regeneration of the Upper Lee Valley, making it the ideal scheme for the first ever use of the HCA’s loan powers.

While the recent drop in house prices has helped with affordability, a lack of mortgage availability and an increasing requirement for large deposits means that, for many, home ownership remains unattainable. For others, the credit crunch has heralded the risk of repossession as they struggle with mortgage repayments.

Five Links Estate, Basildon Estate regeneration here has guaranteed a continued supply of affordable, desirable homes.

Making a difference

Holy Island Community Land Trust Local people living in an isolated rural community on Holy Island, off the Northumberland coast, will benefit from four new family-sized homes thanks to the HCA’s first ever investment in a Community Land Trust (CLT).

Because the homes are being provided by a CLT, they will be available for affordable rent to the island’s 160-strong community in perpetuity. As a result, four families who may have had to leave the island will now be able to stay.

Investing in rural areas, among the least affordable places to live, is a key responsibility for the HCA as we seek to tackle the problems of housing affordability and community sustainability.



HomeBuy Direct, a new shared equity product, allows first-time buyers to own 100 per cent of a new home with a mortgage for only 70 per cent of its value. The 30 per cent equity loan from the developer and the HCA effectively helps remove the barrier presented by the requirement for a large deposit. Successful bids for funding were announced in December and the first buyers registered for the scheme in March this year.

On the SWaN project in Sheffield, for example, the HCA provided funding to replace cross-subsidy lost as a result of the market downturn. The amount of affordable homes was increased and 20 will be available to local people through HomeBuy Direct.

In January, we signalled our commitment to Mortgage Rescue with £285m of funding to help those facing repossession to remain in their homes. And for those who have decided the time isn’t quite right to buy we are piloting Rent to HomeBuy, allowing them to save for a deposit and to effectively ‘try before they buy’. The concept is exemplified by L&Q’s UpToYou scheme, in which the HCA invested £42m in March.

Our Private Renal Sector Initiative will bring new institutional investors into the private rental market for the first time, providing new investment for housebuilders and greater choice for consumers. For those who can’t buy, but aren’t eligible for social housing, high quality, well-managed homes for private rent should be an option of choice.

Also in March, we re-appointed a streamlined national network of HomeBuy Agents, to make a simpler first port of call for local people interested in home ownership.

The success in meeting our affordable housing targets has been due in no small part to the action we took in the HCA’s first week of operation. We continued to focus on the National Clearing House scheme to buy unsold stock from developers – which saw over 9,000 empty homes brought into use for affordable rent – and we were clear with our partners that we would offer tailored packages of support. In particular, we signalled our commitment to flexible grant rates and allowed conversion of unsold homes to social rent, thereby reducing partner commitments, increasing their income, and helping to meet demand for homes.

We will continue to respond flexibly so that we can deliver affordable homes as the market changes, creating opportunity for all.


SUSTAINABILITY

TURNING OUR VISION

,

INTO REALITY


Tackling the impact of climate change is one of the biggest challenges we face today. We must simultaneously seek to significantly increase the number of new homes we build and lower their carbon footprint. This will not be easy, but turning this vision into a reality is a priority if we are to deliver our objective of extendinghigh standards of design in buildingspublic spaces and places; and embed sustainability in our own and our partners’ developments.

The way we approach this is by looking at sustainability in the round, and through our Single Conversation. We work with partners to discuss how we can achieve the best possible outcomes foran area, helping to ensure environmental, economicand social sustainability and a high level of quality.

Knowledge development and sharing is a key part of our work, and through exemplar programmes such as the Carbon Challenge, we share lessons with the industry about designing, developing and delivering greener homes for the future.


Hanham Hall, near Bristol England’s first zero carbon development.

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195 zero carbon homes are being built on our first Carbon Challenge site

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Our first Carbon Challenge site, the Grade II* listed Hanham Hall, near Bristol, had plans submitted in December 2008 for 195 new homes that will be built by Barratt Developments plc to the highest level of the Code for Sustainable Homes. Work will start on site later this year and progress on this, and three other sites across the country, will help us all learn more about what is needed to achieve Code Level 6* on a commercial scale.

By creating communities with local authorities and development partners, which are energy efficient, well connected and make it easy for people to live sustainable lifestyles, we hope to increase consumer choice and increase the range of renewable technologies and materials available. To do this we will help to increase supply chain demand and deliver homes that people enjoy living in.

An example of this type of development is at Graylingwell, a former hospital site in West Sussex, where plans for around 750 new homes were approved in March. The homes, of which 40 per cent will be affordable, are being built to Code Level 4*. A range of community and commercial uses also form part of the proposals including shops, office space, a multi-purpose community facility, studios and galleries for local artists, a single-storey pavilion with changing facilities, allotments and land reserved for a potential new primary school.

The HCA inherited a strong legacy from English Partnerships and the Housing Corporation and we are focused on helping to deliver government sustainability targets. By 2016, all new homes will need to be zero carbon, and the work we have undertaken so far, including the Future Communities website, progressing our Carbon Challenge programme and delivering other low carbon projects across the country plus, through our ATLAS team, feeding into the consultation on eco-towns, ensures this important element of our work remains high on the agenda.

Making a difference

Upton, Northampton We’re working with Metropolitan Housing Partnership to deliver some of England’s most eco-friendly homes at Upton, Northampton.

Their scheme, totalling 345 homes, incorporates innovative technologies including community scale wood pellet boilers, green roofs, rainwater harvesting, photovoltaics and solar thermal panels.

Whilst all the homes are built to high sustainability standards, six of them will be zero carbon Code Level 6*, completed way ahead of government’s 2016 target for new housing. HCA funding has contributed towards additional build costs of these six units.

Upton is an excellent example of how we’re working with developers to incorporate sustainability throughout the entire building process.


INVESTING IN OUR BUSINESS

SHAPINGOUR BUSINESS

TO MEET LOCAL NEEDS


Our first priority in creating a new single, integrated organisation of around 900 staff has been to get key plans, teams and structures in place from our component parts, at both regional and corporate level, and steer the course of a major cultural change.

When the HCA opened for business, we were well on the way to achieving this – having recruited nine new regional directors and a team of corporate directors. Four months later, the development of strategic plans to 2011 for each region was underway, as was implementation of our Change Plan, and we are progressing the harmonisation of office locations.

The Change Plan has been instrumental in linking all strands of our business as we move beyond the set-up phase, focusing on four key areas: sharpening delivery, embedding the HCA, creating a new organisation and delivering the Single Conversation.

Our Corporate Plan for the next two years outlines the distinctive agenda and priorities for the Agency, enabling us to build on the innovation and new opportunities created by the HCA.

Our Learning and Development Team has provided vital support to the organisation during this intense period of change, whilst continuing to develop the skills, capability and capacity of our staff, and our Graduate Development Programme, which at the end of the financial year had grown to 23 participants.

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HCA Academy Sharing knowledge within the sector.

Making a difference In a Nutshell – understanding place-makingThe HCA Academy is dedicated to developing skills, sharing knowledge and increasing talent. The focus is on providing busy practitioners with accessible and cost-effective skills and knowledge.

This online course that improves the understanding of place-making was launched on the Academy’s website in December 2008. The course brings togetherpeople from local government, regenerationand housing to develop their knowledge about sustainable communities. It consists of tutored workshops that explore:

individuals and organisations

A team of specialist tutors with experience in regeneration and online tutoring run the course.

Relationship-building throughout this time has helped lay a solid foundation for the organisation and shape the way we work regionally. Our National Consultancy Unit, for example, has worked with both our internal teams and external partners, providing a wide range of technical support and services including management of our consultancy panels. These have been a huge success with local authorities; by the end of March 2009 over 110 had signed up to use them – something which is having a positive impact on our Single Conversation business model.

As the HCA becomes established, the outward facing role of our consultancy teams becomes ever more important. For instance, the ATLAS team, which provides an independent advisory service to local planning authorities and their partners, helped the Planning Advisory Service deliver a series of 10 regional seminars in March, looking at development management and its role in delivering large-scale quality places. ATLAS’s contribution was recognised in February, when their online guide was shortlisted for the RTPI Planning Awards.

We are also committed to improving external skills in the regions. Our success will hinge on effective local partnerships, and to achieve this we need to invest in skills. The HCA Academy, our external skills arm, supports our partners to deliver housing and regeneration programmes, and therefore better places for the future, by providing access to practical training and resources. The Academy is focusing on identifying skills gaps in the regions and improving the ability of people to lead partnerships and developments; dealing with the downturn and preparing for the upturn; and supporting the Single Conversation by working with regional teams to improve local delivery.

The Academy has already rolled out several training opportunities for our partners. One of its key successes is the national roll-out of Planning for Non-Planners. Between January and March 2009, this bespoke, regionally-focused course helped people from a non-planning background understand the English planning system to improve outcomes delivered by local authorities.

The HCA is a wealth of expertise, talent and knowledge. The investment we’ve made so far in our business, and that of our partners, is critical in realising our ambitions to create thriving, diverse places and affordable homes – now, and in the future.

Key facts and figures underlying this chapter are set out in the following Financial Statements, but are also brought together in a single place at homesandcommunities.co.uk/staffing


BUSINESS PERFORMANCE

DIFFICULT TIMES CALL FOR

INNOVATIVE SOLUTIONS


Despite being faced with a particularly challenging economic environment from the outset, the HCA maintained programme momentum in the delivery of affordable homes, and responded actively and innovatively to market conditions.

When we started work in December, the HCA was tasked with achieving the balance of the output targets set for 2008/09 for the NAHP inherited from the Housing Corporation and for the Property and Regeneration programme inherited from English Partnerships. Target ranges were set at the beginning of the financial year before the full impact of the downturn could be assessed.

In the first four months of the Agency’s operation, we achieved 58 per cent of the affordable housing completions and 71 per cent of the affordable housing starts delivered in the full financial year for 2008/09.

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Making a difference

New Islington, Manchester In Manchester, the New Islington Millennium Community is an example of successful public and private sector collaboration.

Working with Urban Splash, New East Manchester URC and Manchester City Council, we are regenerating one of the region’s most deprived communities.

The redevelopment will incorporate 1,400 homes, 12,700 sq m of retail and commercial space and a primary school, all of which will create employment opportunities.

Infrastructure works are now complete following a £22m HCA investment. A further £2m created 50 shared-ownership apartments, while an additional £1.3m enabled the switch of units to Rent to HomeBuy, guaranteeing progress despite the economic climate. An additional 142 homes were completed in March 2009.



The results are reported in the table on page 26 together with the outturn for all other outputs for which we inherited targets. Over the full year, the outputs exceeded the target ranges for brownfield land reclaimed and employment floorspace created. They fell within the ranges for all housing completion types and the social rent housing starts delivered under the NAHP. Other types of housing starts were severely impacted by deteriorating market conditions and fell below the range.

The total outputs recorded for the Property and Regeneration programme include those relating to the NCP delivered on sites owned and/or managed by the Regional Development Agencies. In 2008/09 the outputs delivered on these NCP sites amounted to:

We recognised from day one that achieving diversity and community cohesion outcomes is integral to our success. Equally, our overt commitment to people, as well as places, is driven by a business culture where diversity is valued and requires us to demonstrate excellence in everything that we do. To this end, we’ve developed an interim Single Equality Scheme, outlining the ways we will meet our statutory duties for race, gender and disability equality, as well as underline our commitment to diversity regardless of age, religion or belief. This document can be downloaded from our website, homesandcommunites.co.uk. Our ongoing delivery of equality and cohesion outcomes will be evident in all of our functions and will be overseen by the HCA’s Board Advisory Group for Equality and Diversity.


BUSINESS PERFORMANCE

HCA outputs against targets

National Affordable Housing Programme

Output Measure Target Range

2008/09 Outturn

2008/09

Outturn 1 December 2008 – 31 March 2009

Affordable homes for rent – completions (no.)

20,920 –31,380 27,798 17,384

of which: larger homes (no.) 6,522 –9,782 8,099 5,231 Low Cost Home Ownership – completions (no.)

17,280 –25,920 19,781 10,282

Rural homes – included within total completions (no.)

2,240 –3,360 2,415 1,482

Affordable homes for rent – starts on site (no.) 1

24,000 –36,000 30,563 21,841

Low Cost Home Ownership – starts on site (no.) 1

11,200 –16,800 10,789 7,489

Property and Regeneration programme

Output Measure Target Range

2008/09 Outturn

2008/09

Outturn 1 December 2008 – 31 March 2009

Brownfield land reclaimed (ha.) 200 –225 327 204 Housing starts commissioned (no.) 1 9,175 –10,450 3,120 1,507 Housing completions (no.) 2 6,080–6,600 6,264 3,154 Employment floorspace (sq m) 375,000 –410,000 450,487 239,660

Private sector investment (£m) 1,090 –1,190 1,035 546

HCA spend against programme

Programme3 Spend (£m)

Community Infrastructure Fund 24 Decent Homes 124 Growth Funding 265 HCA Academy 6 Housing Market Renewal 381 National Affordable Housing Programme 2,630 Places of Change 33 Property and Regeneration 383 Thames Gateway 44

Delivery Responsibility Spend (£m)

ALMOs 896 Housing PFI Credits 138

1 The former English Partnerships used housing starts commissioned as its prime indicator, whereas the Housing Corporation used physical starts on site. The HCA has now adopted the latter approach. The outturn number for English Partnerships in 2008/09 on this basis was 4,394.

2 Output may include some affordable housing units that have been supported by social housing grant since this was the basis on which the target range was determined.

3 The HCA took budgetary control of the Gypsy and Traveller Site Grants programme as of 1 April 2009.


Walker River’s Gate, Newcastle Affordable homes and new community facilities in this £450m regeneration project.

Sycamore Hall, Wensleydale An Extra Care development providing new accommodation and support to older people.

Performance measures As a new organisation with a defined vision, goals and strategic objectives, we have developed a high-level Integrated Performance Framework. This provides a new approach to how we will target, measure, manage and report performance. This, in turn, will help us to demonstrate that we are making a difference in ways that are greater than the sum of our inherited parts.


In particular, we have incorporated performance measures that reflect our strategic objectives for the next two years, which centre on the need to maintain the momentum of programme delivery whilst addressing the opportunities and challenges presented by the market downturn; and transform our ways of working and enhance our organisational effectiveness and efficiency.

The high-level framework architecture and principles were approved by our Board in March 2009. Work is now progressing with the detailed specification and testing of the measures through an intensive programme of engagement and consultation both with our own staff and with delivery partners, as well as with officials at CLG.

Performance targets To complement the development of the framework, we have identified specific performance measures that will be the subject of performance targets for the HCA in 2009/10. These measures are detailed in our published Corporate Plan 2009/10–2010/11.

The Annual Report narrative demonstrates our achievements during the first four months of operation as the HCA. The following Financial Statements relate to the full financial year of 1 April 2008 to 31 March 2009 and include the achievements of our predecessor bodies up to 30 November 2008.



HOMES AND COMMUNITIES AGENCYREPORT ON THE FINANCIAL STATEMENTS



Report on the Financial Statements Year ended 31 March 2009

Board Members’ Report

The Board Members are pleased to present their report on the affairs of the Homes and Communities Agency along with the audited Financial Statements and the auditor’s report for the year ended 31 March 2009.

Statutory background The Homes and Communities Agency (HCA) was established by Parliament under the Housing and Regeneration Act 2008 and is the national housing and regeneration agency for England, with an annual investment budget of more than £4bn.

The HCA was formed on 1 December 2008 through the transfer of the functions and assets of English Partnerships; the investment functions of the Housing Corporation; a number of delivery programmes from the Department for Communities and Local Government (CLG) and the transfer of the Academy for Sustainable Communities.

Principal activities The statutory objects of the HCA, as listed in the Housing and Regeneration Act 2008 are to:

people living in England.

Format of the Financial Statements The HCA’s Financial Statements for the year to 31 March 2009 have been prepared in accordance with the Direction on the Annual Accounts issued on 24 November 2008 by the Secretary of State with the consent of HM Treasury and in accordance with Paragraph 12(3) of Schedule 1 to the Housing and Regeneration Act 2008.

Going concern basis The Balance Sheet at 31 March 2009 shows net assets of £0.95bn (2008: £2.31bn). This reflects the inclusion of liabilities falling due in future years which, to the extent that they are not to be met from the HCA’s other sources of income, may only be met by future grants or grant in aid from the HCA’s sponsoring department, CLG. Such grants may not be issued in advance of need

in that year, has already been approved by Parliament. There is no reason to believe that CLG’s future sponsorship and future parliamentary approval will not be forthcoming. The Directors therefore consider it appropriate to adopt a going concern basis for the preparation of these Financial Statements.

Pension arrangements The accounting policy for pensions is disclosed in Note 1 to the Financial Statements. Information on Board Members’ and key managers’ pension entitlements is disclosed in the Remuneration Report which starts on page 41.



Report on the Financial Statements Year ended 31 March 2009 (continued)

Business review A review of the HCA’s business, a description of the principal risks and uncertainties facing it and the position of the HCA at the end of the financial year has been prepared under the Management Commentary which starts on page 36. This includes reference to an impairment charge of £542m incurred on the Agency’s development asset portfolio and incorporates the impairment charges presented in the Financial Statements of the Agency’s predecessor bodies for the year ended 31 March 2009. Predecessor bodies’ Financial Statements presented the trading results for eight months to 30 November 2008.

Better payment practice code In accordance with Managing Public Money, the HCA complied with the British Standard for Achieving Good Payment Performance in Commercial Transactions and with the Late Payment of Commercial Debts (Interest) Act 1998, as amended. We aimed to pay all undisputed invoices within 30 days of receipt and at least 90 per cent of invoices, whether disputed or not, within this timescale. It was the policy to:

with the contract;

are contested.

In the four months of trading to 31 March 2009 the HCA paid 94 per cent of all invoices within 30 days of receipt and was committed to maintaining this high standard of performance. This included the payment of grants for social housing to RSLs and other bodies. If these payments were excluded, the percentage was 91 per cent.

Environmental matters The HCA is committed to the promotion of environmental sustainability in both its daily working practices, through the promotion of new and higher environmental standards in the homes it funds, and throughout its areas of business and in the advancement of best practice in its delivery programmes.

The HCA Advisory Group on Design and Sustainable Development, chaired by Dru Vesty, provides independent strategic policy advice on design and sustainability aspects, including those relating to the environment and those associated with climate change.

Like all businesses, we recognise our office and administration activities have an impact on the environment. We aim to continue our work in reducing adverse effects wherever we can, recognising our obligation in setting a good example to other stakeholders.



Employees

regeneration agency and as an employer.

We published an interim scheme in December 2008 and now have a draft scheme. This scheme, called Diverse Interventions,

plan of how we will incorporate diversity into everything we do and identifies a series of corporate values that represent our objectives together with the manner in which we achieve them:

Delivery We make a real difference to communities through our expertise and experience.

Diversity We recognise the value of diversity among our own staff and the need for diverse outcomes to meet different needs.

Drive We are ambitious for people and places, and strive for the highest standards in all we do.

Dialogue We build close, productive relationships with our partners and foster teamwork among our staff.

Development We continue to grow our expertise by investing in personal development, encouraging creativity, empowering people to lead and sharing best practice.

In the period up to the creation of the HCA, monthly updates were received by colleagues from Sir Bob Kerslake, the then

Agency, weekly newsletters are issued to colleagues to allow the sharing of news in one place.

that responded to the wide social diversity in contemporary society and reinforced each entity’s diversity commitment to staff, partners, stakeholders and the wider community in which we operated.




Social and community issues We work nationally but support the ambitions of our local partners to provide better places that offer great homes and good jobs. By engaging people in the development of the places in which they live and work, we can create a sense of community pride and ownership.

Effective community engagement is an integral part of our work and that of our partners. Meaningful community engagement

that it can reap rewards in a number of ways. The benefits of effective engagement with communities include:

different backgrounds; and

Auditors The Comptroller and Auditor General is the statutorily appointed auditor under the provisions of the Housing and Regeneration Act 2008.

The cost of work performed by the auditors for the Agency, in respect of the year ended 31 March 2009, is as follows: £’000

Audit Fee 115

So far as we are aware, there is no relevant audit information of which the auditors are unaware, and we have taken all the steps to make ourselves aware of any relevant audit information and to establish that the auditors are aware of that information.



Board Members’ responsibilities and composition The HCA is governed by a Board of 11 Members, appointed by the Secretary of State for Communities and Local Government. The Board determines the strategic direction of the Agency. Robert Napier is the HCA’s Chairman and Sir Bob Kerslake is its Chief Executive.

Code of Practice HCA Board Members are obliged to act in accordance with the HCA Code of Practice for Board Members, which is based on the model ‘Guidance on Codes of Practice for Board Members of Public Bodies’

HCA Committee members, who are not members of the HCA Board but who may have voting rights, are obliged to act in accordance with a shorter version of the Code of Practice, comprising general principles as to interests and standards in public life.

Standing Orders

Annual Report and Accounts The HCA Code of Practice for Board Members states that, as part of its responsibilities for the stewardship of public funds, the Board must ensure that it includes a full statement of the use of such resources in its Annual Report and Accounts. Such accounts should be prepared in accordance with the Accounts Direction issued by the responsible Minister and such other guidance as may be issued, from time to time, by the sponsor department and the Treasury.

The Annual Report and Accounts should provide a full description of the Board’s activities; state the extent to which key strategic objectives and agreed financial and other performance targets have been met; list the names of the current Members and senior staff; and provide details of remuneration of Members and senior staff in accordance with Treasury guidance. The Annual Report should contain information on access to Registers of Interests. The Register of Members’ Interests is open for public inspection and is included on our website.

Membership and attendance at Board Meetings Sir Bob Kerslake 4/4 Candy Atherton 3/4 Kate Barker, CBE 3/4

Shaukat Moledina, CBE 4/4 Robert Napier 4/4

Ian Robertson 4/4 Dru Vesty, MBE 4/4 Don Wood, CBE 4/4




Board committees

the effective conduct of its business. The Board has delegated all but the most significant decisions to these committees.

The Audit and Risk Committee The Audit and Risk Committee is an advisory committee. It supports the Board in its responsibilities for risk control, governance, financial stewardship and financial and statutory reporting. The agenda and public minutes of the Committee meetings are available on our website for download.

This Committee is made up of the following five HCA Board Members:

The Remuneration Committee The Remuneration Committee is responsible for advising on overall pay and rewards and other broader staffing issues; and for determining the remuneration and bonuses for senior staff, including the Chief Executive.

This Committee is made up of the following five HCA Board Members:

The Investment Committee The Investment Committee is responsible for overseeing the delivery of the HCA’s programmes and projects for housing and regeneration, except for those which relate to London or Milton Keynes specifically, which are the responsibility of the HCA London Board and Milton Keynes Partnership Committee, respectively. The agenda and public minutes of the Committee meetings are available on our website for download.

This Committee is made up of the following seven HCA Board Members:



The HCA London Board The HCA London Board oversees and directs the investment programme of the HCA in London, within the scheme of delegation set by the HCA Board and having regard to the London Housing Strategy. It is chaired by the Mayor of London and involves a number of key stakeholders, together with HCA Board Members.

This Committee is made up of the following members:

The Milton Keynes Partnership Committee


Independent/private sector


Milton Keynes Council members

Local Strategic Partnership members




Milton Keynes Partnership Planning Sub-Committee


Independent members


Milton Keynes Council

Local Strategic Partnership

The Academy Committee The Academy Committee oversees the operation of the Homes and Communities Academy and provides guidance on the fulfilment of its key roles.

The Committee is made up of the following members:

Independent Members


Management Commentary

Companies Act 2006 and takes into consideration the recommendations outlined in the Accounting Standards Board’s Reporting

to affect the entities’ futures.



Current and future development and performance The HCA combines the land and property expertise of English Partnerships, the Housing Corporation’s track record of delivering

(LSVT), Housing Private Finance Initiative (PFI) and PFI for new supply. Budget responsibility remains with CLG and programme spend is recorded in the Resource Accounts for CLG.

Another programme, Gypsy and Traveller Site Grants transferred to the HCA on 1 April 2009.

The Agency was launched at a time of severely depressed financial and housing markets which have led to a set of particularly challenging circumstances for the full year being reported. Despite this, the Agency has demonstrated its capacity for implementing the Government’s policies, ensuring delivery and making a real difference to local communities through its diverse portfolio of programmes, projects and initiatives. In particular, we delivered more than 50,000 new and affordable homes across England and hit our target of investing £3.9bn on our national housing and regeneration programmes.

In addition, the Agency has developed products designed to respond to the effects of the credit crunch, such as Mortgage Rescue and HomeBuy Direct. These products have been developed and brought to the point of delivery under very tight timescales.

back the related development land;

As a result of the continuing recession in the property market and the inability to generate land receipts, it was a challenge to manage partners’ expectations and meet both political commitments and the priorities of the delivery teams. Following the Chancellor’s April budget, further funding was made available in future financial years for the Kickstart Housing and Mortgage Rescue initiatives, local authority social housing and environmental measures. This will give the HCA more flexibility and opportunities to unlock sites for new and affordable housing, responding to local needs and those of the housing industry and councils. The HCA is keen to bring local authorities into the development arena and to ensure more homes are delivered as soon as possible.




Resources Market position and reputation With an investment budget of over £4bn in 2008/09, the HCA’s scale and resources mean it can increase housing supply,

We will match national targets with local ambitions and a strong regional presence, operating as a national organisation that delivers locally. We aim to be a responsive, adaptable agency that will help local authorities and their partners meet shared objectives for housing and regeneration in their area.

Key stakeholders include local authorities, housing associations and developers. Those that benefit most from our work will be local people and places.

The Single Conversation is the HCA’s most important business process. It is the way in which we agree and secure delivery at the local level in support of our national objectives. By working in an open and transparent way with local authorities and others we aim to become local government’s best delivery partner, with the ability to secure more and reach better outcomes for each place. The term ‘Single Conversation’ refers to its comprehensive coverage including the full range of housing, infrastructure, regeneration and community activities. It draws on the priorities for a local area as set out in key local plans and is an ongoing, evolving and dynamic process. It will always be a negotiation and will have, at its core, shared visions and objectives for places.

Together with our partners, we will develop an understanding of local housing growth needs, how to improve areas through regeneration and how HCA investment can be used to meet the ambitions of these areas.

People We recognise our staff as our greatest asset and have focused closely over the year on the development of leadership and management training programmes as well as technical training for investment and regeneration professionals.

With our experienced staff based across the country, the HCA is a source of expertise and specialist knowledge on housing

The HCA Academy is responsible for developing the skills and knowledge of people who create and maintain communities.

as a way of positioning the HCA as an employer of choice.

Structure

country, puts us in the best possible position to act as a bridge between national targets and local ambitions.

Principal risks and uncertainties A review of the HCA’s capacity to handle risk, which sets out the HCA’s objectives in respect of risk management and the strategy to be employed in putting the policy into effect, has been prepared as set out in the Statement on Internal Control which starts on page 46. Note 36 sets out the HCA’s financial risk management procedures.



Relationships Sponsor bodies, partners and suppliers The HCA has good working relationships with its sponsor department and other bodies such as:

This allows the sharing of expertise and best practice across the regeneration and development sector.

Employees The HCA employs staff with a wide range of skills and experience, from varied backgrounds in the private and public sectors.

We offer our staff a range of benefits, which forms a total reward package designed to recruit, motivate and retain staff. We have regular appraisals and personal development plans, a comprehensive induction programme, a wide range of training courses and

have excellent opportunities for career development and diversification.

to contribute to some of the most exciting projects in the country. During the programme, graduates complete placements within the HCA and in other public and private sector organisations. Participants develop professional and technical competence through

to programme participants.

are based upon estimates of need.

Any balance remaining at the end of each business day is transferred to the Government Banking Service, the banking services shared service provider to the public sector which encourages public sector bodies to maximise the value of funds available to




Key performance indicators Financial targets and performance The Secretary of State sets Departmental Expenditure Limits for Resource Consumption and Resource Capital. These limits and performance against these limits were:

Limit £m

Actual £m

Capital 3,668 3,653

Annually Managed Expenditure 124 542

Sub total 223 628

Departmental Expenditure Limits exist as a budgetary tool to control the performance of the HCA throughout the financial year. Monthly submissions summarising actual performance against these limits together with estimates of annual forecasts are made to CLG. Annually Managed Expenditure includes any charges for the impairment of development assets for which the Agency

limit of £124m.

The last opportunity for the Agency’s limits to be revised was as part of HM Treasury’s Spring Supplementary review which was submitted in December 2008. The development asset valuation process was not finalised until March 2009 and the results of impairment charges not known until then, too late to be included in the Spring Supplementary review. The economic conditions that exist in the period being reported upon are unprecedented, therefore as soon as individual valuations and resulting impairments became apparent, we made CLG and HM Treasury aware.

Non-financial targets and performance

Financial Statements and include:



Remuneration Report

Constitution of the Remuneration Committee The constitution of the Remuneration Committee is set out on page 34.

Functions and responsibilities

the remuneration, contractual and pension arrangements of staff at Director level and above, and any related matters;

Chief Executive, subject to CLG approval;

CLG approval;

by the Board, and in relation to any directions laid down by CLG;

and performance awards that are referred to the Committee by the Executive; and

schemes in respect of benefits and contributions, the administration of the schemes and the safeguarding and management of the pension funds’ assets.

Service contracts There are no service contracts in place (2008: nil).

Audited information Current year total staff costs are disclosed in Note 13 and include expenditure by the predecessor bodies for the eight months to 30 November 2008 comprising:

activities that continue under the HCA.

Similarly, in relation to the Housing Corporation, the total staff costs comparatives for 2008 in Note 13 are included for those key managers who were involved in investment activity that continues under the HCA.

Details of the remuneration of individual key managers and that of the Chief Executives for English Partnerships and the Housing Corporation for the period to 30 November 2008 are included in each of the entities’ 2008/09 Financial Statements and comprise:


English Partnerships

£’000

Housing Corporation

£’000 Total

£’000

Salary 929 393 1,322

Employers’ contribution to pension fund 180 65 245



The following information provides details of the remuneration and pension interests of the Chairman, Chief Executive and key managers in their capacity as employees of the HCA from 1 December 2008 to 31 March 2009 inclusive. Remuneration of those individuals who were employees of predecessor bodies, and who were Board Members or key managers in those bodies to 30 November 2008, is also disclosed. Amounts disclosed for individuals who transferred from the Housing Corporation represent their total remuneration whose roles included, but were not dedicated to, investment activities.


Board Members’ emoluments 2009 £’000

Chairman Robert Napier

HCA 33

8

9

8

18

Board Members Candy Atherton

Housing Corporation (to 30 November 2008)

Kate Barker, CBE


English Partnerships (to 30 November 2008)

Shaukat Moledina, CBE


Chief Executive’s emoluments Employer’s

Taxable Contribution to Total Salary £’000

Bonus £’000

Benefits £’000

Pension Fund £’000

2009 £’000

Sir Bob Kerslake

Key Managers’ emoluments

Salary £’000

Bonus £’000

Taxable Benefits

£’000

Employer’sContribution

to Pension Fund

£’000

Total 2009 £’000

Margaret Allen Regional Director, East Midlands

Trevor Beattie, Director of Strategy, Policy, Performance and Research

English Partnerships (to 30 November 2008) 99 9 4 20 132

Eamonn Boylan

David Curtis

David Edwards Regional Director, South East

Terry Fuller

Richard Hill Director of Investment and Regeneration

Chief Executive, Milton Keynes Partnership

English Partnerships (to 30 November 2008) 90 9 4 23 126

David Lunts

Deborah McLaughlin

Colin Molton






Salary £’000

Bonus £’000

Taxable Benefits

£’000

Employer’sContribution

to Pension Fund

£’000

Total 2009 £’000

Pat Ritchie

Paul Spooner Regional Director, West Midlands

Gill Taylor Director of Corporate Services (Acting from 1 December 2008) and Chief Executive, HCA Academy

From this date Richard Ennis became the Director of Finance and Corporate Services.

Salary Basic salaries are determined by taking into account each individual’s responsibilities, performance against agreed objectives and experience together with market trends.

The Secretary of State determines the Board Members’ emoluments.

Sir Bob Kerslake was the highest paid employee.

Performance related pay Board Members and key managers, who are direct employees of the HCA, benefit from a Performance Related Pay scheme whereby any bonuses are determined with reference to performance against agreed objectives during a performance year

Statements.

The Chairman is not eligible for performance related payments or other taxable benefits as a result of his appointment.

Sir Bob Kerslake has an entitlement to an annual performance related bonus based upon the achievement of agreed targets. Although Sir Bob Kerslake has been awarded a full performance related bonus in relation to the year to 31 March 2009, he has waived his entitlement.

Benefits in kind The monetary value of benefits in kind covers any benefits provided by the employer and treated by the HM Revenue and Customs as a taxable emolument. They are in respect of lease cars.

Pension benefits Accrued CETV

pension at31 March 2009

31 March 2009

£’000 £’000

Sir Bob Kerslake

Key Managers Margaret Allen 23 495 Trevor Beattie 50 1,011

David Curtis 53 1,245 David Edwards 3 65 Terry Fuller 1 12 Richard Hill 16 245

Colin Molton 1 10 Pat Ritchie 1 10 Paul Spooner 54 1,198 Gill Taylor 1 14

The Chief Executive and key managers are eligible to participate in the Homes and Communities Agency Pension Scheme,

Pension Scheme. Sir Bob Kerslake, Margaret Allen and Richard Hill are active members of the City of Westminster Pension Fund.

Accrued pension at 31 March 2009 The accrued pension entitlement is the pension which would be paid annually on retirement, based upon pensionable service

from previous employment.

Cash Equivalent Transfer Value (CETV) 31 March 2009 The transfer values are the actuarially assessed capitalised value of pension scheme benefits. It is an amount payable by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The figures shown relate to benefits

in a senior capacity to which disclosure applies.

Robert Napier Sir Bob Kerslake




Statements by the Accounting Officer Year ended 31 March 2009

Housing and Regeneration Act 2008, the Secretary of State has directed the Homes and Communities Agency to prepare for each financial year a statement of accounts in the form and on the basis set out in the Accounts Direction. The accounts are prepared on an accruals basis and must give a true and fair view of the state of affairs of the Homes and Communities Agency and of its income and expenditure, recognised gains and losses and cash flows for the financial year.

Government Financial Reporting Manual and in particular to:

Government Financial Reporting Manual have been followed, and disclose and explain any material departures in the financial statements; and

out in the Financial Memorandum published by the Secretary of State.

Statement on Internal Control Scope of responsibility

of the Homes and Communities Agency’s policies, aims and objectives, whilst safeguarding the public funds and assets for

of Communities and Local Government (CLG) on 28 November 2008 and as defined in Managing Public Money.

Accountability arrangements The Homes and Communities Agency (HCA) was launched on 1 December 2008 under the powers contained in the Housing and Regeneration Act 2008. The HCA is a new body that has taken on the assets and liabilities, duties and obligations formerly vested

the investment activities of the Housing Corporation; the Academy for Sustainable Communities and certain programmes that were delivered by Communities and Local Government.

The legal entities of URA and CNT remained in existence up to 31 March 2009 when they were formally wound up by Statutory

In respect of the programmes transferring from CLG with the exception of the following:

Gypsy and Traveller Site Grants: this programme transferred to the HCA on 1 April 2009 when I assumed the Accounting

31 March 2009. Decent Homesdebt payments and Large Scale Voluntary Transfer (LSVT) levy payments elements of this programme remain with the



Housing Private Finance Initiative (PFI)

ensure delivery of PFI housing projects by local authorities.

Relationships between the HCA and CLG The relationship between the HCA and CLG is formally governed by an overarching tasking framework, a detailed financial framework and a supporting sponsorship infrastructure. Detailed plans and priorities are set out in the Corporate Plan which is subject to approval by CLG Ministers and is available on our website.

The Tasking Framework sets out the Government’s vision for how the HCA will deliver on its strategic priorities. The framework

regional targets for housing and regeneration by working with local authorities and regional agencies.

the payment and expenditure of public money, including:

The sponsorship infrastructure includes the existence of a dedicated Sponsorship team within CLG responsible for commissioning the HCA on behalf of Government to deliver its policy objectives in places across England. There is a regular programme of engagements at Ministerial, sponsorship, and strategic and policy related levels through which the relationship is formally managed. This is supplemented by routine operational arrangements throughout the programmes and activities for which the HCA is responsible.

Two corporate plans have been submitted to CLG. An interim plan was published in December 2008 based on work that had been undertaken in the lead up to the launch of the HCA. The interim plan served to form the basis for consultation, draw together how the Agency will deliver its functions, set out how we will innovate for better delivery, make use of the powers provided by the Housing and Regeneration Act 2008 and the coalescence of funding streams within a single, new organisation and described

process and the continuation of emerging thinking. This plan was approved by Ministers on 9 September 2009.

The purpose of the system of internal control The system of internal control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives. It can, therefore, only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of the organisation’s policies, aims and objectives, to ensure the safeguarding of assets, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically. The system of internal control has been in place in the HCA and its predecessor bodies for the year ended 31 March 2009 and up to the date of approval of the annual report and accounts and accords with Treasury guidance.



Statements by the Accounting Officer Year ended 31 March 2009 (continued)

Capacity to handle risk

within the organisation to manage strategic and operational business and within the core risk management policy and supporting resources guidance and training.

The key governance structures established with the HCA to give leadership to the management of risk are:

Non-Executive i) The Board that meets monthly to provide strategic direction to the Agency; to oversee financial and operational performance

and programme delivery; and to set corporate policy. The Board has appointed six committees to undertake a number of tasks on its behalf.

ii) The Audit and Risk Committee is an advisory committee of Board Members. It supports the Board by ensuring appropriate processes are in place for risk control, governance, financial stewardship and financial and statutory reporting.

iii) The Investment Committee, comprising seven Board Members. It oversees the delivery of the Agency’s investment programmes and considers project proposals for approval.

iv) The HCA London Board oversees and approves proposals for the delivery of the HCA’s programmes in London and ensures that the Agency has regard to the Mayor’s Housing Strategy. It includes in its membership the HCA Chairman and Chief Executive, representatives of the London Development Agency, Thames Gateway Development Corporation, London Councils and the Greater London Authority, and is chaired by the Mayor of London.

v) The Milton Keynes Partnership Committee is responsible for ensuring the successful and sustainable growth of Milton Keynes

vi) The Academy Committee is an advisory body overseeing the strategic direction of the HCA Academy. It is chaired by an HCA Board Member and its other members have been appointed through an open recruitment process to provide a range of expertise relevant to the Academy’s work.

vii) The Remuneration Committee comprises five Board Members. It sets the annual performance objectives and remuneration arrangements for the Chief Executive and executive directors, subject to CLG approval.

The Board has also established four Board Advisory Groups to provide external expertise, challenge and advice on four aspects of its work. Each group includes one Board Member:

Executive i) The Corporate Team comprises the Chief Executive and Corporate Directors. It meets weekly to oversee the day to day

management of the Agency, delivery of corporate functions and the preparation of advice and reporting to the Board. This group sits as the HCA’s Property Asset Management Board, and is the principal focus for issues relating to information risk.

ii) The Directors’ Group comprises the Corporate Team and Regional Directors. It meets monthly and is the principal strategy

procedures and the deployment of resources.

iii) The Regional Directors Network also meets monthly to share best practice and coordinate regional delivery, including the development of the Single Conversation business model.



iv) The Projects Executive meets monthly to consider Property and Regeneration and Thames Gateway project proposals under the provisions of the HCA’s project gateway process. The group is chaired by the Chief Executive. Where project proposals exceed the delegation level currently set for the executive, proposals are recommended to the Investment Committee, HCA London Board or Milton Keynes Partnership Committee for consideration. If such projects also exceed the HCA’s delegation limit, they are submitted to CLG and, if appropriate, HM Treasury for approval.

The executive has established a number of Programme Boards, comprising directors and senior officers from across the Agency to advise the executive and oversee the development and delivery of the Agency’s programmes:

i) The Affordable Housing Programme Board Site Grants Programme and Places of Change Programme.

ii) The Growth Programme Board and Thames Gateway programmes.

iii) The Renewal Programme Board

iv) The Design and Sustainability Programme Board

the HCA’s corporate planning and operations.

v) The Innovations Programme Board models that can be used by the HCA in the delivery of its objectives and responses to the market. This was incorporated into the Housing Stimulus Programme Board in April 2009.

vi) The Operations Board Benefits Realisation Plan. This Board was established in September 2009 and took over the role previously performed by

vii) The Housing Stimulus Programme Board Housing Stimulus Programme and to achieve its delivery commitments as outlined in the Budget Package. To oversee the assessment and future development of innovative ideas and models that can be used by the HCA in delivery of its objectives. This includes representation from CLG and HM Treasury.

Risk Management in the HCA is directed by an overall Risk Management policy and strategy that was reviewed by the Audit and Risk Committee on 11 November 2008 and approved by the Corporate Team on 15 December 2008. The policy sets out roles and responsibilities for risk management and the overall approach to be adopted including the determination of risk appetite.

Government Commerce and the British Standards Institute.

Risk Management is a responsibility for all managers within the HCA and they are supported by a dedicated Risk Manager

The risk and control framework

the identification of risks associated with individual projects, programmes and activities. A risk reporting regime aims to ensure that responses to risks are effective and that emerging risks are escalated in a timely fashion. The process is coordinated through a Senior Risk Sponsor (the Director of Finance and Corporate Services) assisted by the Risk Manager.

The strategic risk register identifies the following key risks:



Statements by the Accounting Officer Year ended 31 March 2009 (continued)

All of these risks are inherently significant to the success of the Agency, but the first three are considered the most significant since these are driven by the market or other factors that are not within the Agency’s direct control.

The means by which risk appetite can be determined is specified in the risk management policy and strategy, and this is supplemented by scrutiny to both challenge the assessments made and to take decisions on whether risks should be accepted at a higher or lower level than the norm.

Specific arrangements have been made to ensure that Information Risk is appropriately dealt with. The Senior Information Risk

Handling Guidelines and aim to ensure that information security is aligned with mainstream business. Arrangements in place are based on the good progress that had been made in predecessor organisations and are now being adapted and updated to the HCA context.

Key methods of embedding risk management in the activity of the business include:

Review of effectiveness

effectiveness of the system of internal control is informed by the work of Corporate Assurance and the executive managers within the department who have responsibility for the development and maintenance of the internal control framework and comments

advised on the implications of the result of my review of the effectiveness of the system of internal control by the Board and the Audit and Risk Committee. A plan to address weaknesses and ensure continuous improvement of the system is in place.

The system of internal control is subject to ongoing review, and this process is coordinated and managed through the Audit

and experience), who in turn provide both regular feedback to the main Board and an annual report and overall opinion on the system of internal control.

The Audit and Risk Committee bases its judgment on the reports and opinions of Corporate Assurance, updates provided by the

Additional forms of assurance relating to the establishment of the HCA have also been reported to form part of the overall

Corporate Assurance has performed a programme of independent and objective reviews, in accordance with Government Internal Audit Standards and other work to provide assurance on the system of internal control. Their work during 2008/09 has been supplemented by similar work undertaken in predecessor bodies. The outcome of their work has been regularly reported to me and the Audit and Risk Committee and there is a process in place to follow up the implementation of actions agreed as part of their work.



The National Audit Office

Residuary Board was put

Board has itself been overseen by the Audit and Risk Committee.

The Senior Information Risk Officer has provided an annual assessment of information security risk.

As part of the process of setting up the HCA a Due Diligence review was undertaken, and an OGC Gateway review was performed to provide assurance that systems and procedures were in place and sufficient to ensure a successful launch and continuity of operations.

pre vesting assurance letters place within these organisations in the period from 1 April 2008 to 30 November 2008 and that all necessary arrangements had been made for the transition to the HCA. These letters have been made available to me and have formed part of my review. Although the Department did not follow the same process for those programmes transferring from CLG, I have received sufficient assurance from the due diligence process conducted by CLG prior to vesting.

Significant control issues The HCA was established on 1 December 2008, four months ahead of schedule. In so doing it took on many of the risk and control mechanisms used by predecessor bodies and has since then begun a process designed to blend these to develop an overall approach that is effective for the HCA. This process will take time as it is important that any new arrangements are at least as good and ideally better than those inherited. During the process we do not wish the control environment to be weakened.

and in so doing there is potential for gaps to appear.

The Audit and Risk Committee recognises that systems and procedures are developing in the HCA, building on those inherited from predecessor organisations. However, the Committee considers that particular attention should be paid to ensuring the arrangements for risk management and data security are improved, as well as the need for the early implementation of outstanding audit actions inherited from predecessor organisations. The Agency has also inherited predecessor organisations,

of internal control is suffering, it is undoubtedly a risk. They have asked that appropriate attention and resource continues to be applied to risk management and internal control in this area.

and each were at different stages. In reviewing the HCA information security arrangements, whilst we are satisfied that they

The gaps to be addressed have been identified and an action plan is in place to address these gaps over the next year.

Sir Bob Kerslake



The Certificate and Report of the Comptroller and Auditor General to the Houses of Parliament and to the Board of the Homes and Communities Agency I certify that I have audited the financial statements of the Homes and Communities Agency for the year ended 31 March 2009 under the Housing and Regeneration Act 2008. These comprise the Income and Expenditure Account, the Balance Sheet, the Cash Flow Statement and Statement of Recognised Gains and Losses and the related notes. These financial statements have been prepared under the accounting policies set out within them. I have also audited the information in the Remuneration Report that is described in that report as having been audited.

Respective responsibilities of the Homes and Communities Agency, Chief Executive/ Accounting Officer and Auditor

the Remuneration Report and the financial statements in accordance with the Housing and Regeneration Act 2008 and Secretary of State directions made thereunder and for ensuring the regularity of financial transactions. These responsibilities are set out in

My responsibility is to audit the financial statements and the part of the Remuneration Report to be audited in accordance with

I report to you my opinion as to 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 properly prepared in accordance with the Housing and Regeneration Act 2008 and Secretary of State directions made thereunder. I report to you whether, in my opinion, the information, which comprises Board Members, the Board Members’ Report and the Management Commentary, included in the Annual Report is consistent with the financial statements. I also report whether in all material respects the expenditure and income have been applied to the purposes intended by Parliament and the financial transactions conform to the authorities which govern them.

In addition, I report to you if the Homes and Communities Agency has not kept proper accounting records, if I have not received

other transactions is not disclosed.

I review whether the Statement on Internal Control reflects the Homes and Communities Agency’s compliance with HM Treasury’s

an opinion on the effectiveness of the Homes and Communities Agency’s corporate governance procedures or its risk and control procedures.

I read the other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. This other information comprises ‘Who we are and what we do’, ‘Regional highlights’, ‘Chairman’s Report’, ‘Chief Executive’s report’, ‘Growth’, ‘Renewal’, ‘Affordability’, ‘Sustainability’, ‘Investing in our business’, ‘Business performance’ and the unaudited part of the Remuneration Report. I consider the implications for my report if I become aware of any apparent misstatements or material inconsistencies with the financial statements. My responsibilities do not extend to any other information.

Basis of audit opinions

Board. My audit includes examination, on a test basis, of evidence relevant to the amounts, disclosures and regularity of financial transactions included in the financial statements and the part of the Remuneration Report to be audited. It also includes an

in the preparation of the financial statements, and of whether the accounting policies are most appropriate to the Homes and

I planned and performed my audit so as to obtain all the information and explanations which I considered necessary in order to provide me with sufficient evidence to give reasonable assurance that the financial statements and the part of the Remuneration Report to be audited are free from material misstatement, whether caused by fraud or error, and that in all material respects the expenditure and income have been applied to the purposes intended by Parliament and the financial transactions conform to the

in the financial statements and the part of the Remuneration Report to be audited.



Opinions In my opinion:

Housing and Regeneration Act 2008 and directions made thereunder by the Secretary of State, of the state of the Homes and Communities Agency’s affairs as at 31 March 2009 and of its net expenditure for the year then ended;

with the Housing and Regeneration Act 2008 and Secretary of State directions made thereunder; and

within the Annual Report, is consistent with the financial statements.

Opinion on Regularity In my opinion, in all material respects the expenditure and income have been applied to the purposes intended by Parliament and the financial transactions conform to the authorities which govern them.

Report I have no observations to make on these financial statements.

Amyas C E Morse Comptroller and Auditor General National Audit Office 151 Buckingham Palace Road Victoria London SW1W 9SS



Group Income and Expenditure Account Year ended 31 March 2009

Note 2009 £’000

2008 £’000

Income Proceeds from disposal of property assets Rent and other property income Contributions from partners

Clawback of grants and contributions

3 4

6

51,119 6,198 8,354

40,946

333,035 8,596

39,165

64,484

115,644 466,201

Expenditure

Cost of property disposals

Administration costs allocated to cost of property disposals

Provision for impairment of development assets

Depreciation on fixed assets

3

9

26

19,20

65,426

(1,696)

541,852

2,129

448,454

(13,298)

31,553

1,341

4,505,350 3,482,958

Share of operating (losses)/profits in associates 18 (15,005) 6,665

Net expenditure before interest

Pension fund finance costs 33(h) (1,996) (501)

Net expenditure before taxation

Net expenditure after taxation

Net expenditure for the year

All activities above derive from continuing operations. Net expenditure is financed by Grant in Aid as explained in accounting

of capital, etc.


Group Statement of Recognised Gains and Losses Year ended 31 March 2009

Note 2009 2008 £’000 £’000

Revaluation of tangible fixed assets 38 (1,865) 1,865 Group share of unrealised (deficit)/surplus on revaluation of investments 38 (3,281) 322

Fair value (loss)/gain on available for sale assets 39 (29) 12,111 Realised gains on disposal of available for sale assets recognised in

Total (losses)/gains recognised since last Financial Statements

The accompanying Notes are an integral part of these Financial Statements.



Group Balance Sheet At 31 March 2009



Note 2009 £’000

2008 £’000

Fixed assets Intangible fixed assets

Available for sale financial assets Water companies

19

22 23

2,299

165,953 30,835

3,034

89,190 31,030

Current assets

Debtors:

1,195,821 2,864,135

Creditors: Amounts falling due within one year 30 (311,941) (604,282)

Net current assets 883,880 2,259,853

Total assets less current liabilities

951,884 2,313,601


Note 2009 £’000

2008 £’000

Reserves

951,884 2,313,601




Balance Sheet At 31 March 2009

06,011

64,135

56,511



Note 2009 £’000

2008 £’000

Fixed assets Intangible fixed assets

Investment in subsidiary undertakings

Available for sale financial assets Water companies

19

21

22 23

2,299

25,000

165,953 30,835

3,034

25,000

89,190 31,030

281,636 2

Current assets

Debtors:

1,195,821 2,8

Creditors:

Net current assets 880,538 2,2

Total assets less current liabilities


Note 2009 £’000

2008 £’000

Reserves

Revaluation reserve 38 242,454 858,489




Group Cash Flow Statement Year ended 31 March 2009

926

654)



Net cash outflow from operating activities

Note 2009 £’000

2008 £’000

Returns on investments and servicing of finance Interest received 29,298 41,640

Net cash inflow from returns on investments and servicing of finance 29,258 40,

Taxation Corporation tax repaid/(paid) 5,016 (16,654)

Net cash inflow/(outflow) from taxation 5,016 (16,

Net cash outflow from capital expenditure and financial investment

Net cash inflow from financing c) 3,561,412 2,621,619

Increase/(decrease) in cash

Note 2009 £’000

2008 £’000

a) Reconciliation of net operating expenditure to net cash outflow from operating activities

Book value of property disposals Provisions for impairment of assets

Depreciation on fixed assets Impairment of fixed assets Loss on disposal of fixed assets

3 26

19,20 10 10

50,253 541,852

2,129 1,486

40

304,390 31,553

1,341 1,008

2

Decrease/(increase) in debtors 193,912 (190,213)

Net cash outflow from operating activities

b) Capital expenditure and financial investment

Purchase of intangible fixed assets 19 (342) (1,349)

Net cash outflow from capital expenditure and financial investment



Group Cash Flow Statement Year ended 31 March 2009 (continued)



Note 2009 £’000

2008 £’000

c) Financing

Net cash inflow from financing 3,561,412 2,621,619

d) Analysis of changes in net funds/(debt) 1 April Cash 31 March

2008 flow 2009 £’000 £’000 £’000

Bank overdraft (198,913) 129,505 (69,408)


Notes to the Financial Statements Year ended 31 March 2009

1. Statement of accounting policies

a) Statutory basis The Financial Statements of the Homes and Communities Agency (the Agency) are governed under the provisions of the Housing and Regeneration Act 2008 and by the Direction on the Annual Accounts given by the Secretary of State, with approval of HM Treasury under the Act. The Direction issued on 24 November 2008 reflects government policy that the Financial Statements

Managing Public Money, Financial Reporting Manual (‘FReM’) and in HM Treasury’s Fees and Charges Guide. This guidance aims to ensure that the Financial Statements are prepared in accordance with applicable accounting standards, are produced on a commercial basis and comply

b) Financial instrument standards

to adopt new financial instruments standards. The Agency has adopted the following standards since its formation.

FRS 25 Financial Instruments: Presentation and FRS 29 Financial Instruments: Disclosures

of the Agency’s financial instruments and the nature and extent of risks arising from those financial instruments. The new disclosures are included throughout the Financial Statements.

FRS 26 Financial Instruments: Recognition and Measurement

The related accounting policy for financial instruments is disclosed in Note 1(r).

c) Basis of accounting The Financial Statements are prepared under the historical cost convention modified by the revaluation of fixed assets, stock of development assets and available for sale financial assets.

d) Basis of preparation and consolidation

Regeneration Agency, the investment functions of the Housing Corporation, the Academy for Sustainable Communities and delivery functions of the Department for Communities and Local Government transferred into the Agency.

The functions that transferred from the Department for Communities and Local Government on 1 December 2008 were as follows:

Places of Change and the Community Infrastructure Fund;

(PFI) and PFI for new supply. Budget responsibility remains with the Department for Communities and Local Government and programme spend is recorded in the Resource Accounts for the Department. The Financial Statements therefore exclude these activities.



Notes to the Financial Statements Year ended 31 March 2009 (continued)

The FReM states that ‘the merger of two or more entities into one entity will be accounted for using merger accounting’.

Merger accounting principles have therefore been adopted in the preparation of the Financial Statements to reflect the position as if the Agency had legally existed for the past two financial years.

The Financial Statements incorporate the results of the above entities/functions for the two financial years ended 31 March 2008 and 2009 respectively. Where material, accounting policies of the separate entities/functions have been harmonised.

The consolidated Financial Statements also incorporate those of the Agency and its active subsidiary undertaking, English Partnerships (Limited Partner) Limited (EP(LP)Limited). No Income and Expenditure Account is presented for the Agency as permitted by section 230 of the Companies Act 1985.

includes the Group’s share of associates’ profits less losses while its share of net assets of associates is shown in the Group Balance Sheet.

The share of net asset and profit information is based on unaudited Financial Statements to 31 March 2009 except for Priority Sites Limited where audited Financial Statements to 31 December 2008 have been used.

e) Intangible fixed assets

systems of the Housing Corporation that have transferred into the Agency. Development costs are capitalised as the asset under construction is anticipated to have a life in excess of a year and therefore the costs of developing that asset are chargeable over the same life cycle as the asset.

Intangible assets are valued at amortised historical cost, which is not materially different from amortised replacement cost.

The relevant amortisation rates applicable to each category of asset are as follows:

Computer software 3 to 4 years Set up costs of future 5 years grant programmes

f) Tangible fixed assets Tangible fixed assets, excluding freehold and long leasehold property, are stated at cost less accumulated depreciation and any impairment in value.

Land and freehold buildings are recognised initially at cost and thereafter measured at fair value, less depreciation on buildings

materially from its carrying amount. A full valuation is performed every five years.

Depreciation is charged to the Income and Expenditure Account based upon cost or fair value (in the case of revalued assets), less estimated residual value of each asset (where material) evenly over its expected useful life as follows:

Freehold and long leasehold property Remaining useful economic life

Motor vehicles 4 years Furniture, fixtures and fittings 4 to 15 years



Capitalisation levels for fixed assets From 1 December 2008 fixed assets are capitalised if a single item or group of assets cost £5,000 or more.

The previous capitalisation limits were £5,000 per single item for assets transferred from the Commission for the New Towns

g) Property/development assets i) Valuation Property/development assets, consisting of land and buildings, are shown in the Balance Sheet at market value. A valuation

external valuers appointed to perform the majority of the portfolio’s value and also to value complex properties. In all cases the valuations were in accordance with the Statement of Asset Valuation and Guidance Notes (6th Edition) published by the Royal Institution of Chartered Surveyors.

Each asset has an individual calculation in order to calculate the net gain or loss on each site following the revaluation.

Any increase above historical cost is taken to the Revaluation Reserve whilst losses are written off against the reserve up to

of a development asset, any revaluation reserve relating to a particular asset being sold is transferred to the Income and Expenditure Reserve.

ii) Change in accounting policy Prior to the formation of the Agency, property/development assets held by the Commission for the New Towns and the

Commission for the New Towns Stocks of land and buildings were included in the Balance Sheet at the lower of cost or estimated market value.

Urban Regeneration Agency Development assets were shown at the lower of current replacement cost and net realisable value.

Had these previous accounting polices been applied, the net book value of development assets would be reduced by £242m

assets charged to the Income and Expenditure Account would remain the same.

iii) Disposal of property/development assets The Agency recognises income from disposal of property/development assets (net of VAT), when there is a legally binding sale agreement, which has become unconditional and irrevocable by the Balance Sheet date, subject to any provisions necessary to cover residual commitments relating to the property.

Where proceeds are receivable over a period of more than 12 months after the Balance Sheet date, the proceeds are discounted at the Agency’s cost of capital rate of 3.5 per cent to reflect the net present value of the receipts.

The corresponding debtor is also discounted and the difference between actual cash receipts and the net present value of the receipts is credited to interest receivable over the life of the debt.

h) Funding The Agency’s activities are funded in part by receipts. However the majority of the Agency’s funding is by grant in aid provided by the Department for Communities and Local Government for specified types of expenditure.

Grant in aid received to finance activities and expenditure which support the statutory and other objectives of the Agency are treated as financing and credited to the Income and Expenditure Reserve in full, because they are regarded as contributions from a controlling party. Any profit or loss for the period is transferred to this reserve.




i) Grants payable Payments of capital and revenue grants to Registered Social Landlords (RSLs) and other bodies are accounted for on an accruals basis.

Payments of Capital Investment Grant, under the National Affordable Housing Programme, are paid in two instalments, a start on site tranche and a completion tranche. From 1 April 2008 payments were 50 per cent for each tranche until 1 August 2008 when the tranche payments were varied to 60 per cent for the start on site tranche. The only exception to this is that grants to private developers are paid in one tranche once the scheme is occupied.

j) Grant recoveries from RSLs Recoveries of grants are accounted for when the amount due for repayment has been agreed with the RSL and invoiced. RSLs are able to retain any grant recoverable from sales within their own accounts for recycling, with the funds becoming due back to the Agency if unused within three years.

k) Cost of capital employed

Income and Expenditure Account, to ensure that it bears an appropriate charge for the use of capital in the business in the year. The charge is set at a rate of 3.5 per cent of the average net assets.

After the net expenditure for the year there is an entry reversing this amount.

Prior to the formation of the Agency, a notional cost of capital was not applied to the net assets of the Commission for the New Towns. If this policy still applied the notional cost of capital charge would be £29.9m lower as would the reversal of the charge.

l) Investments

m) Taxation Corporation tax is payable on profits at the current rate.

Deferred taxation is provided in accordance with FRS19, Deferred Tax transactions and events recognised in the Financial Statements. Deferred taxation assets are recognised only to the extent that it is regarded as more likely than not that they will be recovered.

n) Administration costs Prior to the formation of the Agency, the Commission for the New Towns allocated a proportion of its administration costs against

Following harmonisation of accounting policies a proportion of the Agency’s administration costs is charged against the cost of all property disposals.

The impact of this change is to increase cost of property disposals by £0.3m and decrease administration costs by the same amount. There is no overall impact on the Income and Expenditure Account.



basis over the terms of the lease.

p) Pension costs The Agency accounts for pension costs in accordance with FRS17, Retirement Benefits. During 2008/09 the Agency’s employees were able to participate in the Homes and Communities Agency’s Pension Scheme, and two Local Government Pension Schemes: the City of Westminster Pension Fund and the West Sussex County Council Pension Fund. The two Local Government Pension Schemes are now closed to new employees of the Agency.

FRS 17. In the case of the Homes and Communities Agency’s Pension Scheme, contributions are affected by a surplus or deficit in the scheme, but the Agency is unable to identify its share of the underlying assets and liabilities in the scheme on a consistent and reasonable basis. Contributions are charged in the Income and Expenditure Account as they become payable in accordance with the rules of the Scheme.

The actuaries of the two Local Government Pension Schemes however, are able to estimate the Agency’s share of underlying assets and liabilities on a consistent and reasonable basis. Full provision is made for any liabilities within Provisions for pensions.

Provisions are made in respect of the estimated future maintenance costs of community related assets. This is done on the basis that these assets have no value and are not income generating and because it is the Agency’s policy to transfer such assets to

r) Financial instruments Financial assets and financial liabilities are recognised on the Balance Sheet when the Agency becomes a party to the contractual provisions of the instrument.

The Agency derecognises a financial asset only when the contractual rights to the cash flows for the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.

The Agency derecognises a financial liability only when the Agency’s obligations are discharged, cancelled or they expire.

Financial assets

upon the nature and purpose of the financial assets and is determined at the time of initial recognition.

Available for sale financial assets

take out an affordable mortgage, which along with any deposit, must make up a minimum of 50 per cent of the full purchase price of the property. In return the Agency will assist with up to 50 per cent of the full property price. The assistance is paid to the participating housebuilder, not the buyer. However, as part of the sales agreement, the Agency has an entitlement to a share of the

The Agency’s entitlement to the future sale proceeds on these properties is classified as being available for sale and is stated at fair value.

Gains and losses arising from changes in fair value are recognised directly in Reserves with the exception of impairment losses which are recognised directly in the Income and Expenditure Account. Where the financial asset is disposed of, the cumulative gain previously recognised in Reserves is included in the Income and Expenditure Account for that period.




Loans and receivables Loans and mortgages and trade and other receivables are classified as ‘loans and receivables’.

Loans and mortgages

Trade and other receivables

They are included within current assets, except for those with maturities greater than 12 months after the Balance Sheet date

balances are classified as ‘trade and other receivables’ in the Balance Sheet.

Impairment of financial assets ‘Loans and receivables’ are assessed for indicators of impairment at each Balance Sheet date and are impaired where there is objective evidence that the recovery of the receivable is in doubt.

For financial assets classified as available for sale, a significant or prolonged decline in the value of the property underpinning the financial asset is considered to be objective evidence of impairment.

Cash and cash equivalents

inception and are subject to an insignificant risk of changes in value.

Financial liabilities

Financial liabilities consist of trade and other payables.

Financial liabilities are classified as current liabilities unless the Agency has an unconditional right to defer settlement for at least 12 months after the Balance Sheet date.


2. Fees and charges

HM Treasury’s Fees and Charges Guide, to disclose performance results for the areas of its activities where fees and charges are made.

Statement of Standard Accounting Practice 25: Segmental Reporting.

All services are charged at full cost and, therefore, result in no attributable surplus or deficit. During the year, the Agency provided services to other public sector bodies. The amounts, included in Rent and other property income, were as follows:

2009 2008 £’000 £’000

3. Disposal of property assets Note 2009

£’000 2008 £’000

Proceeds from disposals 51,119 333,

Cost of property disposals: Direct sales expenses and allocated administration costs Book value of property disposals Provision for additional consideration payable for development assets

26 31

(11,213) (50,253) (3,960)

(30,181) (304,390) (113,883)

(65,426) (448,454)

Deficit on disposal

costs (Note 9). This recharge is calculated as a percentage of disposal proceeds and has reduced due to the decrease in disposals.

4. Rent and other property income 2009 2008 £’000 £’000

Leaseback rents 439 892

Miscellaneous 98 33

6,198 8,596

03 5





5. Other operating income 2009 £’000

2008 £’000

Car park income

Staff on secondment

1,369

35

1,403

43

6. Clawback of grants and contributions 2009 2008 £’000 £’000

Regeneration Grants (21) 3,288

40,946 64,484

7. Grant payments a) Grant payments were made to RSLs, other bodies, local authorities, Regional Development Agencies and other public and private sector partners under the following programmes:

2009 £’000

Housing Market Renewal 380,399

2008 £’000

404,668

totalling £2,651m (2008: £2,064m). The composition of these payments and any recoveries is noted below.

b) Social Housing Grant

of the Housing Act 1996. The power to recover grant is conferred by Section 52 of the Housing Act 1988 Housing Act 1996.



i) Social Housing Grant payments Low-cost

Social home Works to 2009 2008 rent

£’000 ownership

£’000 RSLs’stock

£’000 Other £’000

Total £’000

Total £’000

North West 160,342 28,514 6,940 645 196,441 110,035

1,989,615 621,224 38,840 1,414 2,651,093 2,063,503


ii) Social Housing Grant recoveries In the normal course of its business the Agency recovers grant payments paid in previous years where schemes are terminated, subject to a change of use or have a cost underrun.

Low-cost Social home Works to 2009 2008

rent ownership RSLs’stock Other Total Total £’000 £’000 £’000 £’000 £’000 £’000




iii) Social Housing Grant payments net of receipts

Social rent

£’000

Low-cost home

ownership £’000

Works to RSLs’stock

£’000 Other £’000

2009 Total

£’000

2008 Total

£’000

8. Programme costs 2009 2008 £’000 £’000

HCA Academy 5,494 5,511

to fund projects and research programmes on wider strategic projects which support the Agency’s remit.

During the year the Agency provided support to numerous projects including research into town centre regeneration, agents’ fees in connection with the First Time Buyers’ Initiative and feasibility fees in connection with housing initiatives and Housing Market Renewal. The Agency continues to provide support for the operation of wider strategic programmes such as the National Coalfields and Surplus Public Sector Land programmes.



9. Administration costs

Indirect staff costs Travel and subsistence

Professional fees Marketing and promotion

Note

2009 £’000

1,498 3,943

8,806 4,060

2008 £’000

2,2113,234

6,1813,251

Administration costs allocated to cost of property disposals 3 (1,696) (13,298)

Administration costs also include £4.4m o f transitional costs in relation to setting up the HCA. The increase in staff costs is the product of increased activity in the Agency’s programme.

of development assets. As this recharge is calculated as a proportion of sales proceeds, the recharge has fallen by £11.6m to reflect the £282m reduction in disposal proceeds.

10. Other operating costs Note 2009 2008 £’000 £’000

Rent of lease/sale properties 852 1,515

Impairment of fixed assets 1,486 1,008

Loss on disposal of fixed assets 40 2



11. Exceptional costs

Impairment of development assets In accordance with the Accounts Direction, the Agency conducted a review of the carrying value of its development assets at 31 March 2009. This has resulted in an impairment charge of £542m (2008: £32m), principally due to the current deterioration

Movement in bad debt provision

of and resulted in the Agency having to provide for a debt of £12.6m. This is included within the £12.4m movement in bad debt provision charge in Note 10 which would have reported a £0.2m credit if this charge had not been made. If the Agency had not

12. Net operating expenditure 2009 2008 £’000 £’000

Net operating expenditure has been arrived at after charging the following:

The auditor’s remuneration in relation to HCA comprises £115,000 in relation to statutory audit fees in relation to the Agency’s own Financial Statements and £12,000 for the provision of other services. The auditor’s remuneration for predecessor bodies represents statutory audit fees in relation to the Agency’s predecessor bodies’ 2008/09 Financial Statements.


13. Staff costs The costs of salaried staff, excluding Board Members, for the 12 months, which included those of predecessor bodies and included transitional costs in relation to setting up the HCA, were as follows:

a) Total staff costs 2009 £’000

2008 £’000

Social security costs 3,238 3,022

Temporary staff 2,591 2,666

Less: HCA Academy staff costs recharged to programme costs (Note 8) 51,252(1,425) (1,280)

61 53

4 6,951

There were no staff costs capitalised in 2009 (2008: nil).

2009 2008 Total Total

Number Number

Permanent 854Temporary 54 49

818

14. Interest receivable Note 2009 2008

£’000 £’000

Disposal of property assets 165 220 Housing mortgages 15 21

Interest receivable from local authorities relates to interest due on loans in respect of assets transferred from the Commission




15. Interest payable Note 2009

£’000 2008 £’000

Share of interest payable in associated undertakings 18 3,390 2,148

16. Taxation a) Taxation (credit)/charge in the Income and Expenditure Account comprises:

Note 2009 2008 £’000 £’000

Corporation tax on the results for the year at 28/30 per cent (512) 659 Share of taxation charge in associated undertakings 18 110 312


b) Factors that may affect future tax charge Deferred tax assets have not been recognised in respect of timing differences relating to provisions and funded and unfunded pension liabilities as there is insufficient evidence that the assets will be recovered. The amounts of the assets not recognised are £15m, £14m and £2m respectively.

At 31 March 2009 the Agency had estimated tax losses to carry forward of approximately £340m (31 March 2008: £86m). There is, therefore, an unrecognised deferred tax asset of approximately £95m (31 March 2008: £26m). This has not been recognised because of the uncertainty over future trading profits, which would enable such losses to be utilised.


c) Reconciliation of taxation charge 2009 £’000

2008 £’000

Taxation on deficit at 28/30 per cent Effects of:

Expenditure not deductible for taxation, including grant payments

Grant clawback

Depreciation Capital allowances on plant and machinery

Losses used in period Losses carried forward

(1,224,341)

1,040,528

106

596 (186)

(656) 168,300

(890,925)

835,998

808

402 (392)

(5,668) 15,603

17. Surplus funds Housing and Regeneration Act 2008, the Secretary of State is entitled to direct that the whole or part


18. Share of operating (losses)/profits in associates


Note 2009 2008 £’000 £’000

The Group’s share of (losses)/profits in associates included in the Income and Expenditure Account is as follows:

Share of operating (losses)/profits in associates (15,005) 6,665

Share of interest payable 15 (3,390) (2,148) Share of taxation 16 (110) (312)

19. Intangible fixed assets Group and Agency

Software £’000

Other intangible

assets £’000

Total £’000

Cost

Additions 222 120 342

Depreciation At 1 April 2008 494 1,560 2,054

At 31 March 2009 412 2,531 2,943

Net book value At 1 April 2008 143 2,891 3,034

At 31 March 2009 259 2,040 2,299



20. Tangible fixed assets a) Revalued basis Group and Agency

Land £’000

Freehold buildings

£’000

Fixtures, fittings

and office equipment

£’000

Information technology

£’000 Total

£’000

Cost

At 31 March 2009 1,244 3,859 4,561 1,918 11,582

Depreciation

Net book value

Land and freehold buildings comprise the Agency’s offices at St George’s House, Gateshead and Arpley House, Warrington. Independent professional valuations were carried out by GVA Lamb & Edge in relation to St George’s House and CB Richard Ellis in relation to Arpley House which showed the values to be £1.5m and £3.6m, respectively as at 31 March 2009. An accounting adjustment was made to reflect this value.


If land and freehold buildings had not been revalued the historical cost and accumulated depreciation would have been:

b) Historical cost 2009 £’000

2008 £’000

Historical cost Land 1,586 1

Accumulated depreciation

Net book value Land Freehold buildings

1,5865,033

14,853

6,619 6,439

Land is not depreciated. Buildings are depreciated on a straight line basis over their remaining useful economic life.

21. Investments Subsidiary undertakings Agency Cost or Valuation

2009 2008 £’000 £’000

At 1 April 2008 25,000 25,000

At 31 March 2009 25,000 25,000

,586

,586


ordinary shares of £1 each), representing 100 per cent of the issued share capital. The company commenced trading during 2003 and the nature of its business is investment in property related projects. At 31 March 2009 EP(LP) Limited had aggregate capital and reserves of £25.0m, and had no transactions in the year then ended.

The Agency also holds a 100 per cent interest in the ordinary shares of Beehive Workshops Limited which was dormant throughout the period. At 31 March 2009 Beehive Workshops Limited had aggregate capital and reserves of £3.3m.

All subsidiary undertakings are registered in England.



Associated undertakings Group The Group’s share of operating profits in associates included in the Income and Expenditure Account is as follows:

Share of Note Shares Loans net assets Total

£’000 £’000 £’000 £’000

Cost or valuation


Associated undertakings Agency

Shares £’000

Loans £’000

Total £’000

Cost At 1 April 2008 10,349 40,501 50,850

Provision for impairment

Net book value At 1 April 2008 2,849 40,501 43,350


Name of Undertaking Interest

Nature of Business

(General Partner) Limited

Land Restoration Trust ½ membership Land development

English Cities Fund Limited partnership Property development

Blueprint East Midlands Regeneration Partnership

25 per cent Property rental and development

Creative Sheffield Company limited by guarantee ⅓ membership

Regeneration of Sheffield

Liverpool Vision Company limited by guarantee ⅓ membership

Regeneration of Liverpool

New East Manchester Company limited by guarantee ⅓ membership

Regeneration of East Manchester

Tees Valley Regeneration Company limited by guarantee ⅓ membership

Regeneration of Tees Valley

Leicester Regeneration Company Company limited by guarantee ⅓ membership

Regeneration of Leicester

Sunderland arc Company limited by guarantee ⅓ membership

Regeneration of Sunderland

Meden Valley Making Places Ltd

Company limited by guarantee ¼ membership

Regeneration of Meden Valley

English Environment Fund Company limited by guarantee ½ membership

Promotion of Environmental projects

Derby Cityscape Company limited by guarantee ⅓ membership

Regeneration of Derby

Gloucester Heritage Company limited by guarantee ¼ membership

Regeneration of Gloucester

Regenco (Sandwell) Company limited by guarantee ⅓ membership

Regeneration of West Bromwich

Walsall Regeneration Company

Company limited by guarantee ⅓ membership

Regeneration of Walsall

Aylesbury Vale Advantage

Company limited by guarantee ⅕ membership

Regeneration of Aylesbury

CL:AIRE Company limited by guarantee ⅕ membership

Research

⅓ membership Central Salford

⅓ membership Peterborough





CPR Regeneration Company limited by guarantee Regeneration of Camborne, ¼ membership Pool and Redruth

Renaissance Southend Company limited by guarantee Regeneration of

⅓ membership Hull

The New Swindon Company Company limited by guarantee Regeneration of ⅓ membership Swindon

North Northants Company limited by guarantee Regeneration of Development Company 1∕7 membership North Northants

Plymouth City Company limited by guarantee Regeneration of Development Company ⅓ membership Plymouth

1st East Company limited by guarantee Regeneration of Great ⅙ membership Yarmouth and Lowestoft

The Agency has invested in English Cities Fund (ECF), a limited partnership. The majority of its investment is by way of loan stock in ECF via the Agency’s wholly owned subsidiary EP(LP) Limited. The return to the Agency varies according to the level of profits achieved and its share of net assets is influenced proportionately.

to the HCA.

22. Available for sale financial assets

Group and Agency 2009 2008

Note £’000 £’000

Fair value adjustment 39 (29) 12,111

Balance at 31 March 165,953 89,190

23. Water companies This represents loans to water companies, which are in respect of assets constructed by former development corporations for the provision of water and sewerage facilities to new town developments where ownership has been transferred to the relevant local water company under the 1973 Water Act. The final redemption dates of the remaining water company loans will be between March 2030 and March 2053.


Group and Agency 2009 2008 £’000 £’000

Loans outstanding at 1 April 31,030 31,208

Loans outstanding at 31 March 30,835 31,030

24. Loans to Registered Social Landlords


Housing Associations Act 1985.

The average interest rate applied to schemes under development during the year was 6.05 per cent (2008: 6.88 per cent).

Group and Agency Schemes under development

Principal £’000

Interest £’000

Total £’000


25. Other loans and mortgages Group and Agency

2009 £’000

2008 £’000

Local authorities at 1 April 2,522 2,629

2,408 2,522

Mortgages on housing property at 1 April Repayment of mortgages

510 (60)

634 (124)

450 510

Loans outstanding at 31 March 2,858 3,032

Loans to local authorities represent the notional loan debt transferred to the appropriate local authority in respect of assets

to the outstanding loan debt at the date of transfer, translated into a new loan agreement between the Agency and the local

The number of outstanding mortgages on housing property reduced from 62 at 1 April 2008 to 55 at 31 March 2009.

26. Property/development assets Group and Agency

2009 2008 £’000 £’000

Movement in year:

Disposals (50,253) (304,390) Provision for impairment of development assets (541,852) (31,553)


a) Movement in the year i) Capital expenditure

from local authorities.

ii) Costs of property assets disposed The value of property/development assets, including community related assets, which were disposed of during the year

iii) Provision for impairment of development assets Where the market value of a property/development asset is lower than costs incurred on that asset, a provision is established to write the asset down to market value. This provision is reviewed annually and any adjustment is taken to the Income and Expenditure Account. Any provision against an asset is utilised against the cost of disposal when that asset is sold.

iv) Revaluation adjustment Where the market value of a property/development asset exceeds historical cost, the increase above historical cost is taken

of the credit balance. If market value falls below cost a provision is established as in Note (iii), and charged via the Income and Expenditure Account.

b) Valuation i) General

in accordance with the Statement of Asset Valuation and Guidance Notes (6th Edition) published by the Royal Institution of Chartered Surveyors.

ii) Property interests with negative value The market valuation excludes property interests with a negative value. The future liabilities associated with these property interests are fully provided for in provisions for liabilities and charges (Note 31). Such provisions are prudently made based on modified valuation data that takes into account any contractual, legal or constructive obligations.

27. Debtors Group and Agency

2009 2008 £’000 £’000

a) Amounts falling due after more than one year



2009 2008 £’000 £’000

b) Amounts falling due within one year

Trade debtors 10,523 15,801

Corporation Tax 1,885 6,389

Prepayments 1,993 1,206

Loans to employees 93 21


Trade debtors are amounts owed to the Agency mainly by RSLs and include an estimated amount of £1.9m (2008: £1m) for the recovery by the Agency of amounts held for more than three years by RSLs in their Recycled Capital Grant Fund account. In addition, an amount of £nil (2008: £10.1m) in respect of grants recoverable from RSLs who no longer provide housing under the Key Worker Living initiative has been accrued.


Amounts falling Amounts falling due due within one year after more than one year

2009 2008 2009 2008 £’000 £’000 £’000 ’000


28. Cash at bank and in hand Group and Agency

2009 2008 £’000 £’000

29. Current investments Group and Agency

2009 2008 £’000 £’000


30. Creditors


a) Amounts falling due within one year Group 2009 £000

Group 2008 £000

Agency 2009 £’000

Agency 2008 £’000

Trade creditors

Bank overdraft

160,299

69,408

315,822

198,913

160,299

69,408

315,822

198,913

Group Group Agency Agency 2009 2008 2009 2008 £’000 £’000 £’000 £’000

31. Provisions for liabilities and charges Group and Agency

Property Additional interests consideration

with on CRA negative development Other

transfers value land liabilities Total £’000 £’000 £’000 £’000 £’000

Charge to Income and Expenditure Account 4,814 438 3,960* 2,026 11,238

* Charged against cost of property disposals (Note 3)


a) CRA transfers The Agency’s policy is to transfer community related assets to local authorities and other appropriate organisations. To the extent that the activities of the Agency have raised a reasonable expectation with third parties that these transactions will proceed, a provision has been made in the Financial Statements.

These liabilities will be discharged by forming balancing packages of industrial and commercial assets and by cash endowment.

related assets are transferred, the provision that has been made is utilised in the cost of property disposals to offset the cost of the assets transferred.

b) Property interests with negative value Provision has been made for estimated liabilities arising in respect of disengagement from property interests with negative value. These relate to lease/leaseback interests, rental guarantees and assets where disengagement is dependent upon significant investment in sites by the Agency, the cost of which exceeds the value to be realised in future asset sales. Although the ultimate cost of disengagement from these interests is uncertain, the extent of the Agency’s liability has been estimated in consultation

contractual and constructive obligations, on rents payable and, where appropriate, both rents receivable and repair and maintenance obligations, in respect of each individual interest.

c) Additional consideration payable for the purchase of development assets

The development agreement was structured so that initial consideration payable would be supplemented by further consideration when milestones for income and profit were triggered. Based on sales completed to date and forecasts for remaining disposals it is almost certain that additional consideration will be payable.

In order to match income recognised in the Agency’s accounts with the true cost of disposal, the Agency has established the above provision. The provision calculates the proportion of additional consideration that will become payable attributable to sales recognised to date. The movement in this provision has been charged against cost of property disposals in the Income and Expenditure Account.

This provision comes under the broad definition of a financial instrument. Refer to Note 36 for further information.




32. Advances from the National Loans Fund The Agency’s borrowing powers are conferred by Section 92 of the Housing Associations Act 1985. Section 93, as amended

At 31 March 2009 the amount owed was nil and hence the rate of interest payable on the advance was nil per cent (2008: 5.54 per cent) and the weighted average rate of interest for the year was 3.01 per cent (2008: 5.66 per cent).

Group and Agency Total

£’000

33. Pension arrangements and liabilities During 2009 Agency employees were able to participate in contributory pension arrangements afforded by either the Homes and Communities Agency’s Pension Scheme or statutory Local Government schemes administered by either the City of Westminster or West Sussex County Council. These pension schemes have broadly comparable benefits. The two Local Government Pension Schemes are now closed to new employees of the Agency.

a) Homes and Communities Agency’s Pension Scheme FRS 17, Retirement Benefits. The Scheme was

initially started in English Estates and has evolved through several changes, the main ones of which being the formation of Regional Development Agencies and the London Development Agency and the integration of English Partnerships into the HCA.

Because of this complex history it is not possible to allocate the scheme’s assets and liabilities to each individual contributing employer on a reasonable and consistent basis. Therefore, whilst the figure is disclosed, it has not been provided for in these Financial Statements.

The rate of employers’ contributions is the same for all contributing entities in the scheme based on the needs of the scheme in total. This rate is reviewed on a periodic basis, normally three yearly, with additional reviews as necessary and is adjusted in order to ensure that the full liabilities of the scheme will be met. Contributions are charged to the Income and Expenditure Account as they become payable in accordance with the rules of the scheme.



A valuation of the scheme’s total assets and liabilities at 31 March 2009 in accordance with FRS 17 has been prepared and the results together with the key assumptions used are noted below:

£m £m 2009 2008

Actuarial value of the liability 144.5 129.2

Salary increase rate 4.9% 5.5% Pension increase rate 3.4% 3.5%

Price inflation 3.4% 3.5%

The Financial Statements of the Agency’s Pension Scheme are available from the Secretary, at St George’s House, Kingsway, Team Valley, Gateshead NE11 0NA. All employees who are members of the Agency’s Pension Scheme are issued with a summary of the Financial Statements.

b) City of Westminster Pension Fund The Agency is also an admitted body of the City of Westminster Pension Fund which operates under the Local Government Pension Scheme Regulations. It is a defined benefit scheme based on pensionable salary.

Westminster Pension Fund to take account of the FRS 17 valued on an actuarial basis using the projected unit method which assesses the future liabilities discounted to their present value. The employer’s contribution rate for the year ended 31 March 2009 was based on the recommendation contained in the valuation report of the fund as at 31 March 2004.

A valuation of the Agency’s total assets and liabilities at 31 March 2009 in accordance with FRS 17 has been prepared and the results together with the key assumptions are disclosed in Note (d) below.

c) West Sussex County Council Pension Fund FRS 17. The Agency’s contributions are

affected by a surplus or deficit in the scheme.

A valuation of the Agency’s total assets and liabilities at 31 March 2009 in accordance with FRS 17 has been prepared and the results together with the key assumptions are disclosed in Notes (d) and (e) below.


d) Pension liabilities 2009 2008

Funded Unfunded Total Funded Unfunded Total £’000 £’000 £’000 £’000 £’000 £,000


e) Actuarial assumptions The main assumptions used by the actuaries of the City of Westminster Pension Fund and West Sussex County Council Pension Fund are as follows:

i) Financial assumptions 2009 2008

2009 West Sussex 2008 West Sussex City of

Westminster County Council

City of Westminster

County Council

Pension Fund Pension Fund Pension Fund Pension Fund

Salary increases 5.1% 4.6% 5.2% 5.1%

Discount rate 6.5% 6.9% 6.8% 6.9%

ii) Mortality assumptions

for pensioners. Based on these assumptions, the average future life expectancies at age 65 are summarised below:

At 31 March 2009 West Sussex

City of Westminster

County Council

Pension Fund Pension Fund

Male Female Male Female Years Years Years Years

Current pensioners 22.2 24.2 21.5 24.4 Future pensioners 24.5 26.4 22.6 25.5

f) Fair value of employer assets 2009 2008

2009 West Sussex 2008 West Sussex City of County City of County

Westminster Council Westminster Council Pension Fund Pension Fund Pension Fund Pension Fund

£’000 £’000 £’000 £’000

Bonds 9,015 5,556 11,921 6,554




g) Net pension liability 2009

City of Westminster


2009 West Sussex

County Council


2008 City of

Westminster Pension Fund

£’000

2008 West Sussex

County Council


Net under funding in funded plans

Net liability

(35,030)

(35,030)

(16,921)

(24,410)

(13,031)

(13,031)

(8,838)

(16,643)


h) Analysis of Income and Expenditure Charge 2009

City of Westminster Pension Fund

£’000

2009 West Sussex

County Council


2009 Total

£’000

2008 City of

Westminster Pension Fund

£’000

2008 West Sussex

County Council


2008 Total

£’000

Amounts charged to net operating expenditure

Amounts charged to finance costs

Total expense recognised in Income and Expenditure Account


i) Reconciliation of fair value of employer assets 2009 2008


Westminster County Council 2009

City of Westminster

County Council 2008

Pension Fund Pension Fund Total Pension Fund Pension Fund Total £’000 £’000 £’000 £’000 £’000 £’000

j) Reconciliation of defined benefit obligation 2009 2008


Westminster County Council 2009

City of Westminster

County Council 2008


k) Amounts recognised in Statement of Recognised Gains and Losses

2009 2008 2009 West Sussex 2008 West Sussex

City of Westminster

County Council 2009

City of Westminster

County Council 2008




l) History of experience adjustments

City of Westminster Pension Fund 2009 £’000

2008 £’000

2007 £’000

2006 £’000

2005 £’000

Deficit in the scheme (35,030) (13,031) (18,611) (18,848) (19,261)

* net gain on assets and liabilities

West Sussex County Council Pension Fund 2009 £’000

2008 £’000

2007 £’000

2006 £’000

2005 £’000

Present value of defined benefit obligations (53,653) (55,346) (60,410) (54,831) (49,641)

Deficit in the scheme (24,410) (16,643) (19,194) (14,229) (15,569)

34. Financial assets The carrying values and fair values of the Agency’s financial assets, by classification, are as follows:


2009 2009 2008 2008 Fair

value Carrying

value Fair

value Carrying

value £’000 £’000 £’000 £’000

Loans and receivables

Loans and mortgages 33,693 33,693 34,645 34,645 Available for sale Financial assets 165,953 165,953 89,190 89,190

financial assets above are determined as described in Note 35.




35. Financial liabilities The carrying values and fair values of the Agency’s financial liabilities, by classification, are as follows:

2009 2009 2008 2008 Fair

value Carrying

value Fair

value Carrying

value £’000 £’000 £’000 £’000

Creditors 252,038 252,038 560,039 560,039

The fair values of financial assets and liabilities are determined as follows:

level, being the most relevant available observable market data. Therefore these fair values are categorised as level 2 in the fair value hierarchy as defined by FRS 29.

by HM Treasury, or the rate intrinsic to the financial instrument if higher.

36. Financial risk management The Agency’s financial assets and liabilities are detailed in Notes 34 and 35, respectively.

The Agency is exposed to operational risk in its activities, particularly as it generally becomes involved in developments at locations where the private sector is unwilling to proceed without intervention. Through transactions with developers, the

The Agency is exposed to interest rate risk as a result of financial instruments that bear interest at variable rates.

The Agency manages risk from a strategic and operational perspective, which includes the financial aspects of risk management. The Agency has a corporate risk management function whose role is to provide advice and assistance to managers on handling risk across the Agency including:

The Agency has approved a risk management framework including policy, strategy, processes and reporting responsibilities. A monthly review of risk takes place across the Agency, from which the Corporate Team and the Audit and Risk Committee are

for example on debtor balances, is provided by Central Finance as necessary.



The potential exposure to debtor balances is a key focus for management, particularly in the current economic climate. In order to mitigate this risk, the Agency adopts the following approach to transactions with developers:

developers are referred for financial vetting for geographically distant projects;

of the disposed property in the event of a default by the buyer.

a) Credit risk Credit risk is the risk of financial loss where counterparties are not able to meet their obligations.

The Agency’s maximum exposure to credit risk, without taking into account any security held, is the same as the carrying amount of financial assets recorded in the financial statements, as disclosed in Note 34.

In addition, the Agency has guaranteed the payments under loan obligations of other entities, as disclosed in Note 41. The total

This guarantee is backed by the right for the Agency to take a first legal charge over the association’s saleable assets.

Agency was formally created, cash and investments were held with various financial institutions in accordance with the Agency’s predecessor bodies’ processes for treasury management as approved by their Boards. The amount shown as a bank overdraft at 31 March 2008 and 31 March 2009 relates only to payments which were in transit at the year end, and the Agency’s bank accounts remained in credit throughout the period.

The counterparties to other financial assets are generally major developers and housebuilders in the private sector, and normally arise from disposals of development assets. However, available for sale financial assets relate mainly to amounts receivable individually from the private owners of housing units when their properties are sold, resulting in a broad spread of credit risk for these assets. Amounts receivable from the disposal of property are always secured by the Agency’s right to retake possession of the disposed property in the event of a default by the buyer, and in appropriate cases are backed by financial guarantees. Amounts receivable from the owners of housing units are secured by a second charge over their property. Loans to water companies relate to only one debtor. There are no significant concentrations of credit risk in the Agency’s other debtors.

land previously disposed of, which will be used in the Agency’s ordinary activities in future. The carrying value of the land at the Balance Sheet date was £2.3m.

Board on an annual basis. The criteria of accepted best practice were adhered to, including compliance with all statutory and relevant regulatory codes.

investments. Investment of cash surpluses were made only with approved counterparties and in accordance with established exposure limits.




The Agency does not engage in speculative activity and its policy does not allow the use of more complex financial instruments, such as derivatives.

make payment, are as follows:

Carrying value £’000

Contractual cash flows

£’000

Less than 1 year £’000

1-2 years £’000

2-5 years £’000

Over 5 years £’000

The provisions shown above are contractually payable only when cash has been received from debtors arising from disposals of the relevant property. The contractual cash flows above reflect the estimated timing of cash receipts as used in the calculation of the carrying value of the related amount included in debtors.

The Agency’s financial guarantee contracts (as disclosed in Note 41) can be called upon at any time.

c) Interest rate risk The Agency is exposed to interest rate risk on its financial assets classified as loans and receivables, where these pay interest at a variable rate. However, the Agency’s loans and receivables mainly carry interest at fixed rates. Therefore there is no significant interest rate exposure arising from the Agency’s loans and receivables or other financial instruments.

d) Market price risk

The Agency is also exposed to market price risk in its available for sale financial assets. The financial assets are the Agency’s

for the period unless an impairment is reported.

The Agency has performed a sensitivity analysis that measures the change in fair value of the financial assets held for hypothetical changes in market prices. The sensitivity analysis is based on a proportional change to all prices applied to the financial instrument balances existing at the year end.


e) Currency risk The Agency’s dealings are almost entirely Sterling denominated, and therefore the Agency has no material exposure to currency risk.

37. Income and expenditure reserve Group Group Agency Agency 2009 2008 2009 2008 £’000 £’000 £’000 £’000

Transfer from revaluation reserve 26,509 169,162 26,509 169,162

Grant in aid received 3,908,112 2,621,619 3,908,112 2,621,619


38. Revaluation reserve Group 2009

Group 2008

Agency 2009

Agency 2008

£’000 £’000 £’000 £’000

Revaluation gains released on disposal (26,509) (169,162) (26,509) (169,162)

Revaluation of tangible fixed assets (1,865) 1,865 (1,865) 1,865

The revaluation reserve represents the excess of market value over historical cost for the Agency’s fixed assets and development assets.

39. Fair value reserve Group and Agency

Note 2009 2008 £’000 £’000

Balance at 1 April 12,405 294 Fair value (loss)/gain on available for sale assets 22 (29) 12,111 Realised gains on disposal of available for sale assets recognised in

The fair value reserve represents the excess of fair value over historical cost for ‘available for sale’ assets.




40. Operating leases At 31 March 2009 the Agency had annual commitments under operating leases as follows:

2009 2008 Land and 2009 Land and 2008 Buildings

£’000 Others £’000

Buildings £’000

Others £’000

Leases expiring

5,415 1,116 4,888 1,144

Most of the leases relating to land and buildings are part of lease and leaseback arrangements entered into by the Agency or by former development corporations and are subject to rent review periods ranging from 1 to 21 years.

41. Contingent assets and liabilities Contingent assets

materially increases the return to the purchaser, the Agency has a right to participate in the returns achieved. The normal term during which this arrangement remains in force is 21 years. For social housing and other community related schemes the term is more usually 35 years. By its nature this income is variable and the timing of receipt is uncertain; therefore, it is not possible

Contingent liabilities a) Home Group

development corporation and 12 local authorities jointly and severally guaranteed the punctual payment of interest and any

The money has been used by Home Group to develop assured tenancy housing on sites made available to it by the 19 authorities. Each participant’s contingent liability is determined by the amount of development expenditure incurred in its area, as a

completed dwellings is 21.65 per cent.

In the event of Home Group failing to make good any default within two months, the Agency and other authorities are entitled

b) Sunderland City Council The freeholds of several hundred properties on two estates in Washington were transferred to Sunderland City Council on 1 April

at this time.


Housing Associations Act 1985 the Agency is empowered to indemnity certain secured lenders in England. During the years 1984 and 1985 the Agency indemnified four building societies against losses that might arise

The amount shown is the maximum liability that might arise in the event of a call being made under the agreements. No calls have been made against the indemnities during the last five years.

2009 2008 £’000 £’000

Liability under Section 84 88 120

The Agency also has the following contingent liabilities: 2009 2008 £’000 £’000

Indemnities to building societies with regard to housing mortgages 5,583 5,583


London-Wide Initiative

the Agency terminates development agreements with partners. The Agency has agreed to reimburse all eligible expenditure up to a capped limit. The maximum exposure for the Agency is £21m for existing agreements. As at 31 March 2009 no agreements had been terminated.

Indemnities The indemnities represent the value of the mortgage outstanding when the Agency took over the indemnity. It is not practical to assess the current balance outstanding because of the number of individual loans involved.

The Agency is potentially liable for miscellaneous claims by developers, contractors and individuals in respect of costs and claims

Payment, if any, against these claims may depend on lengthy and complex litigation and potential final settlements cannot be determined with any certainty at this time. As claims reach a more advanced stage they are considered in detail and specific provisions are made in respect of those liabilities to the extent payment is considered probable.

42. Capital expenditure commitments 2009 2008 £’000 £’000

months after practical completion, the Agency will buy back the remaining share of the LWI units from the developers.




43. Agency merger a) Analysis of current year results An analysis of the contribution to the results for the year ended 31 March 2009 made by the combining entities in the period prioto the merger date of 1 December 2008, together with the contribution from the combined Agency in the period since the mergedate, is as follows:

r r


CNT Pre-merger

£’000

URA Group Pre-merger

£’000

HC Pre-merger

£’000

CLG Pre-merger

£’000

HCA Academy

Pre-merger£’000

HCA Group Post-

merger £’000

Total £’000

Share of operating

Recognised gains and losses Actuarial loss from

Loss on revaluation of

Group share of loss on

Loss on revaluation of

Realised gains on disposal of AFS assets

Total recognised gains


b) Analysis of prior year results

CNT Pre-merger

£’000

URA Group Pre-merger

£’000

HC Pre-merger

£’000

CLG Pre-merger

£’000

HCA Academy

Pre-merger £’000

Total £’000

Recognised gains and losses

Group share of unrealised surplus on

Surplus on revaluation of

c) Accounting policy alignments: effect on net assets The book value of net assets at the time of the merger, together with adjustments arising from alignment of accounting policies, were as follows:

HCA CNT

Pre-merger £’000

URA Pre-merger

£’000

HC Pre-merger

£’000

CLG Pre-merger

£’000

Academy Pre-merger

£’000 Total

£’000

of the Agency, development assets were carried at the lower of cost and estimated market value in CNT, and at the lower of

merged entities, although the effect of these is not material to the Agency.



d) Accounting policy alignments: effect on consolidated reserves Adjustments to consolidated reserves resulting from the merger are as follows:

Fair I & E Revaluation Value

reserve reserve reserve Total £’000 £’000 £’000 £’000

The accounting policy alignments are those described in (c) above.

44. Related party transactions

to be related parties. During the year, the Agency has had a significant number of material transactions with CLG.

The Agency has had a number of material transactions with other government departments and other central government bodies, including various local authorities, Regional Development Agencies and the Department for Business, Enterprise and Regulatory Reform. The Agency has also had a number of material transactions with its associated undertakings including:

The Agency’s internal approval procedures are established so that members of staff nominated to act as directors or officers of associated undertakings do not have delegated authority with regard to the relevant undertaking.

There were no other transactions in which Board Members and related parties had a direct or indirect financial interest.

During the year none of the senior managers or related parties has undertaken any material transactions with the Agency.



45. Losses and special payments In accordance with the provisions of the Accounts Direction, the Agency must summarise all losses and special payments made during the year, being transactions of a type, which Parliament cannot be supposed to have contemplated. During the course

46. Post balance sheet events The Agency’s Financial Statements are laid before the Houses of Parliament by the Secretary of State of Communities and Local Government. FRS21, Events After the Balance Sheet Date are authorised for issue. This is the date on which the certified accounts are despatched by the Agency’s management to the Secretary of State of Communities and Local Government.



Accounts direction given by the Secretary of State in accordance with paragraph 12(3) of Schedule 1 to the Housing and Regeneration Act 2008 1. The annual accounts of The Homes and Communities Agency (hereafter in this accounts direction referred to as “the Agency”) shall give a true and fair view of the income and expenditure and cash flows for the year and the state of affairs at the year end.

Managing Public Money and in the Government Financial Reporting Manual issued by the Treasury (“the IFReM”), as amended or augmented from time to time;

(b) any other relevant guidance that the Treasury may issue from time to time;

and except where agreed otherwise with the Secretary of State and the Treasury, in which case the exception shall be described in the notes to the accounts.

Signed by authority of the Secretary of State

An officer in the Department for Communities and Local Government Date 24 November 2008



Schedule 1

to be disclosed by paragraph 1 of this direction.

The notes to the annual accounts shall disclose: (a) an analysis of grants from:

(i) government departments

(ii) European Community funds

(iii) other sources identified as to each source;

(b) an analysis of the total amount of grant from the Department for Communities and Local Government, showing how the grant was used;

(c) an analysis of grants included as expenditure in the income and expenditure account and a statement of the total value of grant commitments not yet included in the income and expenditure account;

and those on secondment or loan to the Agency, but excluding those on secondment or loan to other organisations, analysed between appropriate categories (one of which is those whose costs of employment have been capitalised)

(ii) the total amount of loans to employees

(1) wages and salaries

(2) early retirement costs

(3) social security costs

(4) contributions to pension schemes

(5) payments for unfunded pensions

(6) other pension costs

(The above analysis shall be given separately for the following categories:

I employed directly by the Agency

II on secondment or loan to the Agency

III agency or temporary staff

IV employee costs that have been capitalised);

(e) in the note on debtors, prepayments and payments on account shall each be identified separately;

(f) a statement of debts written off and movements in provisions for bad and doubtful debts;



Accounts direction given by the Secretary of State in accordance with paragraph 12(3) of Schedule 1 to the Housing and Regeneration Act 2008 (continued)


(g) a statement of losses and special payments during the year, being transactions of a type which Parliament cannot be supposed to have contemplated. Disclosure shall be made of the total of losses and special payments if this exceeds £250,000, with separate disclosure and particulars of any individual amounts in excess of £250,000. Disclosure shall also be made of any loss or special payment of £250,000 and below if it is considered material in the context of the Agency’s operations.

*(h) particulars of material transactions during the year and outstanding balances at the year end (other than those arising from a contract of service or of employment with the Agency), between the Agency and a party that, at any time during the year, was a related party. For this purpose, notwithstanding anything in the accounting standard, the following assumptions shall be made:

(i) transactions and balances of £5,000 and below are not material

(ii) parties related to board members and key managers are as notified to the Agency by each individual board member or key manager

(iii) the following are related parties:

(1) subsidiary and associate companies of the Agency

(2) pensions funds for the benefit of employees of the Agency or any subsidiary companies (although there is

(3) board members and key managers of the Agency

(4) members of the close family of board members and key managers

(5) companies in which a board member or a key manager is a director

(6) partnerships and joint ventures in which a board member or a key manager is a partner or venturer

is a trustee or committee member

(8) companies, and subsidiaries of companies, in which a board member or a key manager has a controlling interest

(9) settlements in which a board member or a key manager is a settlor or beneficiary

(10) companies, and subsidiaries of companies, in which a member of the close family of a board member or of a key manager has a controlling interest

(11) partnerships and joint ventures in which a member of the close family of a board member or of a key manager is a partner or venturer

(12) settlements in which a member of the close family of a board member or of a key manager is a settlor or beneficiary

(13) the Department for Communities and Local Government, as the sponsor department for the Agency.


(i) A key manager means a member of the Agency’s management board.

(ii) The close family of an individual is the individual’s spouse, the individual’s relatives and their spouses, and relatives of the individual’s spouse. For the purposes of this definition, “spouse” includes personal partners, and “relatives” means brothers, sisters, ancestors, lineal descendants and adopted children.

(iii) A controlling shareholder of a company is an individual (or an individual acting jointly with other persons by agreement) who is entitled to exercise (or control the exercise of) 30% or more of the rights to vote at general meetings of the company, or who is able to control the appointment of directors who are then able to exercise a majority of votes at board meetings of the company.

* Note to paragraph 1(h) of Schedule 1: under the Data Protection Act 1998 individuals need to give their consent for some

of the individual.



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Documents

Homes and Communities Agency Annual Report and Financial