Strong delivery by the HCA backed by steady financial improvement

The Homes and Communities Agency’s (HCA) annual report and financial statements 2009/10, published online today, show that it has partially recovered from the market turmoil of the previous year, with its strong delivery supported by a steadily improving financial position.

The HCA met or exceeded all of its key targets in 2009/10, including an “exceptional” housing performance, starting or completing over 120,000 new and affordable homes. The total equates to more than half of all homes under construction during the reporting period.

Net operating expenditure was up by 21 per cent but remained within budget at £5.2 billion, a reflection of increased programme funding channelled through the HCA by Government.

Expenditure increased across every core programme with the exception of Housing Market Renewal and the Places of Change programme, including an additional £720 million on affordable housing through the NAHP and £29 million on regeneration activities.

The value of the HCA’s net assets grew by £214 million to £1.16 billion, while development assets also saw an increase in value, of £20 million, resulting from a £24 million writeback of the impairment charge recorded in the previous financial year. Available for sale assets grew by 130 per cent to £381 million, as a result of greater investment in low cost home ownership products, helping first time buyers and the house building industry as well as promising a return to the taxpayer in future years.
Despite a significant increase in activity, reflected in a 42 per cent increase in the value of the HCA’s programme relative to the previous year, overall administration costs fell in line with the agency’s efficiency target and resulted in a £2 million saving.

Chief executive of the HCA, Sir Bob Kerslake, said: “I am pleased to be able to report a steadily improving financial position, which underlies the Agency’s strong delivery this year. Like the recovery in the market to which it is linked, our improved position has been achieved gradually and through tight financial control.

“I am particularly pleased that we met or exceeded all of our key targets for delivery, achieving our ambitions and helping local authorities to achieve theirs, and managed to shave £2 million off our running costs at the same time as our operation grew by over 40 per cent.

“We are now in a healthier position for delivery this financial year and we remain well placed to meet Government objectives and enable local authorities to achieve their ambitions for their own areas.”

The current difficult market conditions, however, continued to impact on the HCA’s receipts, with proceeds from land sales falling by 34 per cent; and on exceptional items with a £26 million liability on the London Wide Initiative, recorded as a potential liability last year and crystallised in this year’s accounts, and a £5.1 million impairment relating to the same scheme.

The same market factors combined with inflationary rises and increased longevity mean that in keeping with many public and private sector organisations, the HCA is responsible for a proportion of a pension deficit which totals £141 million. Provision for the HCA’s pensions increased by 30 per cent, to £77 million.

Despite being owed nearly £390 million at the beginning of the year, all the HCA’s major debtors met their repayments, representing a significant achievement at a time of continued economic difficulty. As a result the amount of money due to the agency fell by 25 per cent to just under £293 million.

As well as starting or completing over 120,000 new and affordable homes, during 2009/10 the Agency also attracted £583 million of private investment to the sector, gave a boost to jobs and economic activity through the creation of 175,000sqm of employment floor space, and reclaimed 356 hectares of brownfield land, bringing it back into productive use and helping to remove the blight of dereliction in communities.