Annual Report and Financial Statements 2008/09

Thriving communities,
affordable homes
Annual Report and Financial Statements 2008/09
INVESTING
NATIONALLY
DELIVERING
LOCALLY
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.
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2 Annual Report and Financial Statements 2008/09
HCA_2009 AR_FRONT END digi_AW.indd 2 28/10/09 18:12:18

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.
Annual Report and Financial Statements 2008/09 3

WHO WE ARE AND WHAT WE DO
Creating
opportunity
The Homes and Communities
Agency (HCA) is the single, national
housing and regeneration agency for peopLe
for England. Our role is to create
opportunity for people to live in
high quality, sustainable places
anD 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 regeneration
The 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:
• Community Infrastructure Fund

• Decent Homes (including Private
Finance Initiative)
• Growth Funding
• Gypsy and Traveller Site Grants Skills and expertise
• HCA Academy The Agency is an unrivalled source of expertise
• Housing Market Renewal (HMR) and specialist knowledge in the housing and
• National Affordable Housing regeneration industry. Our Advisory Team for
Programme (NAHP) Large Applications (ATLAS) is expanding to cover
• Places of Change the whole of England, offering planning expertise
• Property and Regeneration (including for local authorities on processing large schemes,
National Coalfields Programme and while the HCA Academy is responsible for
Urban Regeneration Companies) developing the skills and knowledge of all those
• Thames Gateway 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
Making a difference individual and very diverse needs of the people
and places involved.
Crocodile Works, Newtown, Birmingham
The HCA has invested £11.9m of joint NAHP We do this by addressing four themes of activity:
and HMR funding to unblock this stalled Growth
regeneration project in Birmingham and Facilitating the delivery of large-scale developments
get construction moving. The development in strategic locations, helping local areas achieve
is now underway, creating 168, mainly their growth targets.
affordable, new homes – including family
Renewal
houses and apartments – and is designed
Working with local authorities and regional agencies
by award-winning Midlands architect
to identify renewal requirements, from rejuvenating
Glenn Howells.
failing estates to cleaning up swathes of brownfield
We are working closely with Registered land, removing the blight of dereliction and
Social Landlord partner Midland Heart stimulating renewed economic activity.
and HMR Pathfinder Urban Living, who
Affordability
are engaging with the local community
Providing the funding for housing associations
to address issues such as crime
and private developers to build affordable homes
and worklessness.
for rent and sale.
This important scheme is helping to
Sustainability
kickstart the rejuvenation of this declined
Improving quality of life through innovation,
north-city suburb.
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,
Computer generated image © Glenn Howells Architects
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.

REGIONAL HIGHLIGHTS
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)
Since 1 December, the HCA has • 3 people with long-term disabilities
supported into first-time home ownership
started making a real difference homesandcommunities.co.uk/northeast
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 investment
You 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
• Start on site of Lime Street Gateway,
vitally-needed new
affordable homes
completed
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/
3,273
northwest
• £168m spent on building new
affordable homes
• £190.7m allocated towards future
NAHP projects to build 3,916 homes
affordable homes for rent • Plans submitted for 195 homes at zero
and sale completed carbon development Hanham Hall,
near Bristol (see page 20)
All figures on this page relate to the period homesandcommunities.co.uk/southwest
of 1 December 2008 to 31 March 2009.

1,698
• 1,888 starts on site (1,389 through the
NAHP and 499 through private sector)
• Over 36,208 sq m of employment
floorspace completed
new homes completed in • 112 ha of brownfield land reclaimed
the region (95 ha directly and 17 ha with partners)
homesandcommunities.co.uk/yorkshirehumber
£169m 2,200
Over
invested in the region

• 3,437 affordable homes provided new homes completed
across the region • Unblocking Crocodile Works, Birmingham
• Delivery of Corby rail station, awarded with £11.9m HCA and HMR Pathfinder
Regeneration Project of the Year investment (see page 5)
at East Midlands Property Awards • New affordable homes, infrastructure
• 2,424 homes started on site works and school at North Solihull
homesandcommunities.co.uk/ • Refurbishment of the former Ledbury
eastmidlands Cottage Hospital, to create rural
affordable homes and commercial units
homesandcommunities.co.uk/westmidlands
£309m
invested in the region
• 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
£700m
Over
5,489 affordable homes

completed
• 4,902 affordable homes started on site and

affordable housing expenditure
this year
• 8,497 starts on site and 6,836
£410m allocated ahead of target for 7,348 completions through the NAHP
affordable homes • £16m cash injection for Woodberry
• Funding innovation unlocks Epsom Cluster (300 Down enables start on site
homes), a precursor to the Kickstart programme • Planning permission granted for
• Estate renewal partnerships at Rowner, Gosport 4,000 homes at Kidbrooke,
and Christian Fields, Gravesend (see page 15) south-east London (see page 17)
homesandcommunities.co.uk/southeast homesandcommunities.co.uk/london

CHAIRMAN’S REPORT
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
Some might think that the than 12 months ago. Looking across all of our
programmes, I believe we will have improved
creation of the HCA was a piece the lives of at least half a million people by the
of bad timing. A backdrop of end of our first year of operation.
one of the worst economic While the sharp downturn in the housing industry
downturns for decades heralded has focused our attention on building as many
affordable homes as possible, we have not lost
our launch. But I am proud that sight of our overarching vision to create opportunities
the Agency rallied and made for people to live in high quality places.
a significant impact in securing This vision was crystallised for me in the early days
much-needed affordable homes of my chairmanship, when I visited run-down areas
around the country to witness the legacy that exists
and supporting the future of in some of our once vibrant ‘working’ towns.
the housebuilding industry in
But there is hope for these places. In Erdington,
this country. So for me, the North Birmingham, the 1960s Lyndhurst Estate
HCA started its work at just that features no-go areas and housing in a desperate
the right time. 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.”
Through our proposed new quality standards Looking to the future, the extent of the HCA’s
(being published next year) we will set the pace delivery of homes and communities will depend
for lowering the carbon footprint of all homes that on our ability to drive value from every taxpayer’s
we fund or are built on HCA land. In parallel we pound we spend. This requires innovation,
will support exemplar projects – such as Hanham partnerships and leverage of new sources of
Hall, near Bristol, being built to Code Level 6* – to funding. Many initiatives are in hand that will
pave the way for hitting the government’s target demonstrate new ways of working for what
of zero carbon new homes by 2016. is still a new agency.
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
Robert Napier
created an agency that has the potential to make
Chairman
an enormous difference to the lives of many.
a DeCent
HoMe
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.
in a DeCent
neigHBourHooD

BOARD MEMBERS
1 Chairman Robert Napier was formerly Chairman 4 Kate Barker CBE is a member of the Monetary
and Non-Executive Director of English Partnerships. Policy Committee, Bank of England, and Chair of
Governors at Anglia Ruskin University. Kate was
Robert is also Chairman of the Board of the Met
previously Chief Economic Adviser to the CBI and
Office. He was Chief Executive of WWF-UK, the
Chief European Economist for Ford Europe. During
UK arm of the World Wide Fund for Nature, from
the past few years she has led two major reviews
1999 to April 2007. Before that he spent 16 years
on behalf of government on housing supply and
at Redland plc, where he was successively Financial
land-use planning. She was also on the Board of
Director, Managing Director and Chief Executive.
the Housing Corporation.
Robert is currently a Non-Executive Director of
5 Margaret Fay OBE is Non-Executive Chair of
Anglian Water Services. He was formerly a Non-
One North East Regional Development Agency,
Executive Director of Rentokil Initial plc, Non-
a former Board Member of English Partnerships
Executive Director of United Biscuits plc, Chairman of
and a former Non-Executive Director of Darlington
the CBI Transport Policy Committee and President of
Building Society. From 1981 to 2003 she worked
the National Council of Building Material Producers.
at Tyne Tees Television, where for the final eight
Robert’s community activities include being Chairman years she was Managing Director.
of the Governors of Sedbergh School and a Trustee
of Baynards Zambia Trust. He is also Chairman of the
trustees of the Carbon Disclosure Project.
1 2
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.
3 4
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
5 6
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 Parliament
for 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.

Margaret was awarded an Honorary Doctorate in of United Response and the Chair of The LHA-ASRA
Business Administration from Sunderland University Group. Previously Shaukat was the Chair and a
in July 2004 and an Honorary Degree of Doctor of Law major shareholder in partnership with institutional
from the University of Teesside in November 2008. investors of a successful start-up group of national
companies, as well as the Deputy Chair of the
6 Bob Lane OBE is Chairman of the London Thame
Housing Corporation. He has held non-executive
Gateway Development Corporation, a Board Membe
directorships in the NHS and housing associations.
of the National Housing and Planning Advice Unit
and a Trustee of the Corby City Academy. Bob was 8 Professor Peter Roberts OBE is Chair of the
previously Chief Executive of Catalyst Corby, North HCA Academy, Professor of Sustainable Spatial
Northants Development Company and also of Speke Development at the University of Leeds and adviser
Garston Development Company. He was formerly to Addleshaw Goddard solicitors and to Atkins
a part-time senior adviser to the international Limited. Peter was previously Professor of Regional
consultancy group EDAW/AECOM. Planning, University of Liverpool and Professor of
European Strategic Planning, University of Dundee.
7 Shaukat Moledina CBE is currently the Chair
In 2005 he was awarded an OBE for services to
of a private investment trust supporting small and
regeneration and planning.
medium enterprises, as well as a Trustee and main
Board Member of Save the Children, Vice President 9 Ian Robertson is Chair of the Audit Advisory Board
of the Scottish Parliament Corporate Body and is also
7 8 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
9 10
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
11
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.

CHIEF EXECUTIVE’S REPORT
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.
The HCA began operating on In particular, writing to our development partners
was, I believe, one of the most important actions
1 December 2008. In many the HCA undertook. We offered tailored packages
ways that date marked a of support, including a commitment to flexible grant
culmination of months and rates, in order to help them maintain development
activity. It was a clear statement of our intent
months of frenetic activity in as a national organisation that delivers locally.
getting the Agency up and Since then, we have developed a good working
running; particularly for relationship with government and other stakeholders,
progressing a number of initiatives with them,
members of the Set-Up Team, most recently our new and very welcomed
but also for everyone at the emphasis on promoting apprenticeships as part
predecessor bodies who’d also of our mainstream delivery. Throughout this,
our focus has been on delivery with a premium
been asked to carry on with on maintaining new and affordable build and
the ‘day job’. The successful a firm emphasis on local impact.
launch, four months early, Through the National Clearing House, HomeBuy
was down to their hard work Direct, Mortgage Rescue and other initiatives
designed to respond to the effects of the credit
and I must take this opportunity crunch, I hope this report demonstrates that we
to give them my thanks. 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 –

Through our new business process, the Single
our first full year of operation – will be significant.
Conversation, priorities will be mutually shared
Along with creating a single organisation, our work
and agreed, and backed by investment and
with colleagues at CLG will focus on maintaining
clear roles for delivery. We will ensure that our
programme momentum in the delivery of
programmes fit places, not the other way around;
affordable housing and sustainable regeneration,
and our objective will be to achieve local ambitions.
and on increasing housing supply by responding to
That is our commitment to people and places,

the market and laying the foundations for the future.
and to creating thriving communities.

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

Sir Bob Kerslake
everything we do will be a commitment to
Chief Executive
quality, and the fourth of our priorities, to
embed a place-focused model of working.
Making a
DifferenCe
on tHe
Making a difference
Epsom Cluster, Surrey
grounD
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,
Computer generated image
while a new retail hub has been completed.

Listed hospital buildings will be retained
for redevelopment.

GROWTH
DeLiVering
Long-terM
BenefitS
The pressure to increase the
supply of new homes remains
high. With demand still outstripping to
supply we have focused a great
deal of effort on accelerating
sustainable development in the
CoMMunitieS
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 social
services need to be tailored and expanded to meet
the demands of new and existing communities.
Government has made a multi-million pound growth
funding 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.

Corby rail station
£170m
Opened in spring 2009, to provide a direct rail link to London.
of Community Infrastucture Funding was

allocated this year
The Centre, which also received £7.3m from Milton

Keynes Partnership (a sub-committee of the HCA),
Making a difference
will increase the city’s capacity to offer top quality
Christian Fields, Gravesend, learning opportunities, equipping the workforce
Thames Gateway of the future with the right skills to sustain economic
Delivery of growth and regeneration in growth. Community facilities are also being
the Thames Gateway is central to the improved. In Ashford, growth funding is contributing
future of London, the Greater South-East towards a £2m multi-use arts venue within the
and, consequently, the UK economy. 15th century St Mary’s Church in the town centre.
The Thames Gateway strategy and New homes, of course, are one of the key
programme is transforming communities components of growth and unlocking sites is a
along 40 miles of the Thames Estuary, crucial part of delivery. Plans to regenerate a former
from London Docklands to Southend in factory site in Belgrave, Leicester, have been made
Essex and Sheerness in Kent. With strong possible through £2.2m of Growth Point money
partnerships in local government, business along with a further £13.2m from the HCA and
and the communities involved, we are the private sector to create over 1,000 homes
working to improve the housing, transport, and new community facilities.
economy and education for thousands of With our local authority partners, we are working on
people who live in the Gateway. alternative ways to unlock land in public ownership.
For example, a co-ordinated effort to Through our Public Land Initiative, we will deliver
improve the neighbourhood at Christian homes by using a new approach to procurement
Fields, a formerly run-down housing and deferred land payments, to rebalance risks
community in Gravesend, has involved and returns between the public and private sectors.
the residents, housing association Moat, In March this year, £170m of CIF funding was
the police and the council’s housing and allocated to 29 small to medium-scale transport
community safety teams. Christian Fields projects in areas of growth. This funding should
is now being regenerated with a mixture not only protect and create more than 2,000 jobs
of new and affordable rented homes but will directly support 40,000 new homes being
and private housing. 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.
© Moat

RENEWAL
tranSforMing
pLaCeS
Our place-maker role is as
much about creating sustainable
communities as it is about housing. anD
In deprived areas especially, their
renewal is critical to giving more reVitaLiSing
CoMMunitieS
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 Additionally, we are progressing housing PFI Round
estate renewal schemes including Kidbrooke’s 6 focusing on estate regeneration, to ensure even
Ferrier Estate, which reached its start-on-site more schemes are brought forward.
milestone in March; Rowner former naval
The Housing Market Renewal programme is making
accommodation in Hampshire, where we’ve
a significant contribution to community renewal,
developed a regeneration plan with partners
delivering 1,431 new build homes, 11,020
Wimpey, local authorities and Portsmouth Housing
refurbishments, 3,987 demolitions and 3,809
Association; and Woodberry Down in Hackney,
acquisitions since the HCA opened for business.
where construction has now started. The latter
is one of five stalled regeneration schemes in Since inheriting Decent Homes, two Arms Length
London to benefit from HCA funding to unlock sites. 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.
Making a difference
We delivered two large housing stock transfers
Kidbrooke, south-east London totalling over 13,000 homes, in Manchester
Kidbrooke residents are set to benefit
East (partial) and Sedgefield (whole). The former
from the transformation of their
benefited from £62m of gap funding to bring its
community, with one of the largest
social homes up to the Decent Homes standard
housing-focused regeneration schemes
and facilitate the transfer.
in Europe now underway.
Crucially, our enabler role includes vulnerable people

Planning permission was granted in March and those on the margins of society. Several delivery
for the redevelopment of the Ferrier Estate, strands we inherited from CLG address this, such
which is being led by a partnership between as the £80m Places of Change programme, which
the HCA, Greenwich Council, Berkeley aims to improve service provision for homeless
Homes (Urban Renaissance), and Southern people through facilities for training and education.
Housing Group. HCA funding has enabled We helped fund a major show garden at the 2009
demolition and Phase 1 to start. Chelsea Flower Show, developed by homeless
The scheme will include 4,000 new mixed- people in partnership with the Eden Project and
tenure homes, almost 27,870 sq m of Homeless Link, equipping participants with
commercial and retail space, a new school, confidence, new skills and hope for the future.
sports pitches, new community and health The Gypsy and Traveller Site Grants programme
facilities, a new transport interchange and aims to fund new social rented sites alongside
8 ha of public open space. 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.

27,666
AFFORDABILITY
affordable homes completed
for rent and sale in our first
four months of operation
DeLiVering
afforDaBLe
HoMeS
The HCA has a clear focus on
housing affordability. In the first
four months of operation we in a
allocated £2.8bn to our development
partners. During the same period CHaLLenging
27,666 new affordable homes
were completed, part of a whole
year figure of 47,800.
Market
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.
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
Making a difference Rescue with £285m of funding to help those facing
Holy Island Community Land Trust repossession to remain in their homes. And for those
Local people living in an isolated rural who have decided the time isn’t quite right to buy we
community on Holy Island, off the are piloting Rent to HomeBuy, allowing them to save
Northumberland coast, will benefit from for a deposit and to effectively ‘try before they buy’.
four new family-sized homes thanks The concept is exemplified by L&Q’s UpToYou scheme,
to the HCA’s first ever investment in in which the HCA invested £42m in March.
a Community Land Trust (CLT). Our Private Rental Sector Initiative will bring new
Because the homes are being provided by institutional investors into the private rental market
a CLT, they will be available for affordable for the first time, providing new investment for
rent to the island’s 160-strong community housebuilders and greater choice for consumers.
in perpetuity. As a result, four families who For those who can’t buy, but aren’t eligible for
may have had to leave the island will now social housing, high quality, well-managed homes
be able to stay. for private rent should be an option of choice.
Investing in rural areas, among the Also in March, we re-appointed a streamlined

least affordable places to live, is a key national network of HomeBuy Agents, to make
responsibility for the HCA as we seek to a simpler first port of call for local people interested
tackle the problems of housing affordability in home ownership.
and community sustainability. 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
Tackling the impact of climate
change is one of the biggest
challenges we face today. into
We must simultaneously seek to
significantly increase the number
of new homes we build and lower
reaLity
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 extending
high standards of design in buildings,
public 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 for
an area, helping to ensure environmental, economic
and 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.

195
zero carbon homes

are being built on
our first Carbon
Challenge site
Hanham Hall, near Bristol
England’s first zero carbon development.
Our first Carbon Challenge site, the Grade II* listed
Computer generated image © Barratt Developments plc

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
Making a difference we will help to increase supply chain demand
and deliver homes that people enjoy living in.
Upton, Northampton
We’re working with Metropolitan An example of this type of development is at
Housing Partnership to deliver some Graylingwell, a former hospital site in West Sussex,
of England’s most eco-friendly homes where plans for around 750 new homes were
at Upton, Northampton. approved in March. The homes, of which 40 per cent
will be affordable, are being built to Code Level 4*.
Their scheme, totalling 345 homes, A range of community and commercial uses also
incorporates innovative technologies form part of the proposals including shops, office
including community scale wood pellet space, a multi-purpose community facility, studios
boilers, green roofs, rainwater harvesting, and galleries for local artists, a single-storey pavilion
photovoltaics and solar thermal panels. with changing facilities, allotments and land
Whilst all the homes are built to high reserved for a potential new primary school.
sustainability standards, six of them will The HCA inherited a strong legacy from English
be zero carbon Code Level 6*, completed Partnerships and the Housing Corporation and
way ahead of government’s 2016 target we are focused on helping to deliver government
for new housing. HCA funding has sustainability targets. By 2016, all new homes
contributed towards additional build will need to be zero carbon, and the work we
costs of these six units. have undertaken so far, including the Future
Upton is an excellent example of how Communities website, progressing our Carbon
we’re working with developers to Challenge programme and delivering other low
incorporate sustainability throughout carbon projects across the country plus, through
the entire building process. our ATLAS team, feeding into the consultation
on eco-towns, ensures this important element
of our work remains high on the agenda.

900
INVESTING IN OUR BUSINESS Around
members of staff
make up the HCA
SHaping
our BuSineSS
Our first priority in creating
a new single, integrated
organisation of around 900 staff to Meet
has been to get key plans, teams
and structures in place from our
component parts, at both regional
LoCaL neeDS
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.

HCA Academy
Sharing knowledge within the sector.
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
Making a difference planning authorities and their partners, helped the
Planning Advisory Service deliver a series of 10
In a Nutshell – understanding place-making regional seminars in March, looking at development
The HCA Academy is dedicated to management and its role in delivering large-scale
developing skills, sharing knowledge and quality places. ATLAS’s contribution was recognised
increasing talent. The focus is on providing in February, when their online guide was shortlisted
busy practitioners with accessible and for the RTPI Planning Awards.
cost-effective skills and knowledge.
We are also committed to improving external skills
This online course that improves the in the regions. Our success will hinge on effective
understanding of place-making was local partnerships, and to achieve this we need to
launched on the Academy’s website in invest in skills. The HCA Academy, our external skills
December 2008. The course brings together arm, supports our partners to deliver housing and
people from local government, regeneration regeneration programmes, and therefore better
and housing to develop their knowledge places for the future, by providing access to practical
about sustainable communities. It consists training and resources. The Academy is focusing on
of tutored workshops that explore: identifying skills gaps in the regions and improving
• the concept of place-making the ability of people to lead partnerships and
• national and regional policy developments; dealing with the downturn and
• roles, responsibilities and skills of preparing for the upturn; and supporting the
individuals and organisations Single Conversation by working with regional
• core professions involved in delivery teams to improve local delivery.
A team of specialist tutors with experience The Academy has already rolled out several training
in regeneration and online tutoring run opportunities for our partners. One of its key successes
the course. 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
Despite being faced with a
particularly challenging economic
environment from the outset, innoVatiVe
the HCA maintained programme

momentum in the delivery of
affordable homes, and responded
SoLutionS
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.

£168m
worth of private sector investment attracted into

the National Coalfields Programme
The results are reported in the table on page 26

together with the outturn for all other outputs for
Making a difference
which we inherited targets. Over the full year, the
New Islington, Manchester outputs exceeded the target ranges for brownfield
In Manchester, the New Islington Millennium land reclaimed and employment floorspace created.
Community is an example of successful They fell within the ranges for all housing completion
public and private sector collaboration. types and the social rent housing starts delivered
under the NAHP. Other types of housing starts
Working with Urban Splash, New East
were severely impacted by deteriorating market
Manchester URC and Manchester City
conditions and fell below the range.
Council, we are regenerating one of the
region’s most deprived communities. The total outputs recorded for the Property and
Regeneration programme include those relating
The redevelopment will incorporate 1,400
to the NCP delivered on sites owned and/or
homes, 12,700 sq m of retail and commercial
managed by the Regional Development Agencies.
space and a primary school, all of which
In 2008/09 the outputs delivered on these NCP
will create employment opportunities.
sites amounted to:
Infrastructure works are now complete
• 166 ha of brownfield land reclaimed;
following a £22m HCA investment.
• 151 housing starts on site commissioned;
A further £2m created 50 shared-ownership
• 231 housing completions;
apartments, while an additional £1.3m
• 232,004 sq m of employment floorspace created; and
enabled the switch of units to Rent to
• £168m of private sector investment attracted.
HomeBuy, guaranteeing progress despite
the economic climate. An additional 142 We recognised from day one that achieving diversity and
homes were completed in March 2009. 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

Outturn
Target Range Outturn 1 December 2008
Output Measure 2008/09 2008/09 – 31 March 2009
Affordable homes for rent 20,920 –31,380 27,798 17,384

– completions (no.)
of which: larger homes (no.) 6,522 –9,782 8,099 5,231
Low Cost Home Ownership 17,280 –25,920 19,781 10,282
– completions (no.)
Rural homes – included within 2,240 –3,360 2,415 1,482
total completions (no.)
Affordable homes for rent 24,000 –36,000 30,563 21,841
– starts on site (no.) 1
Low Cost Home Ownership 11,200 –16,800 10,789 7,489
– starts on site (no.) 1
Property and Regeneration programme

Outturn
Target Range Outturn 1 December 2008
Output Measure 2008/09 2008/09 – 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.
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.
Sycamore Hall, Wensleydale
Performance targets
An Extra Care development providing new
To complement the development of the framework,
accommodation and support to older people.
we have identified specific performance measures
that will be the subject of performance targets for
Performance measures the HCA in 2009/10. These measures are detailed
As a new organisation with a defined vision, in our published Corporate Plan 2009/10–2010/11.
goals and strategic objectives, we have developed
The Annual Report narrative demonstrates our
a high-level Integrated Performance Framework.
achievements during the first four months of
This provides a new approach to how we will
operation as the HCA. The following Financial
target, measure, manage and report performance.
Statements relate to the full financial year of
This, in turn, will help us to demonstrate that we
1 April 2008 to 31 March 2009 and include
are making a difference in ways that are greater
the achievements of our predecessor bodies
than the sum of our inherited parts.
up to 30 November 2008.

Homes and
Communities
agenCy
RepoRt on
tHe FinanCial
statements
HCA_2009 AR_ ACCOUNTS digi_AW.indd 28 28/10/09 18:24:54

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:
• improve the supply and quality of housing in England;

• secure the regeneration or development of land or infrastructure in England;
• support in other ways the creation, regeneration or development of communities in England or their continued well-being; and
• c ontribute to the achievement of sustainable development and good design in England, with a view to meeting the needs of
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
and grant in aid for the year ending 31 March 2010, taking into account the amounts required by the HCA’s liabilities falling due
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.


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:
• settle the terms of payments with suppliers when agreeing the terms of each transaction and pay bills in accordance
with the contract;
• ensure that the suppliers were made aware of the terms of payment;
• abide by the payment terms of individual suppliers; and
• deal reasonably with complaints and disputes and advise suppliers without delay when invoices or parts of invoices,
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
As a public body we are required to meet a series of statutory duties for race, gender and disability equality. Our arrangements
for meeting these duties are set out in our Single Equality Scheme, which covers all of our functions as a housing and
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,
sets out our vision for the delivery of equality, diversity and cohesion for the next two years. The scheme includes an action
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
Chief Executive Designate of the HCA. An intranet web page on the HCA Set-Up Team had also been made available to colleagues.
This enabled the Set-Up Team to communicate directly with all staff affected by the HCA’s creation. Since the creation of the
Agency, weekly newsletters are issued to colleagues to allow the sharing of news in one place.
English Partnerships, the Housing Corporation and the other contributing entities had integrated Equality and Diversity Policies
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
can require the commitment of time, effort and financial resources at the early stages of the process, but experience has shown
that it can reap rewards in a number of ways. The benefits of effective engagement with communities include:
• creating better places and building in long-term sustainability with the help of residents’ local knowledge;
• c larifying uncertainties and overcoming developing tensions, which can, in turn, increase the speed of planning approvals
through early-stage community engagement;
• fostering social cohesion by developing a common vision and sense of belonging among people of different ages and from
different backgrounds; and
• building accountability and enabling residents and communities to develop skills, confidence and achieve a higher quality of life.
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

Other services 12
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’ produced by the Cabinet Office.
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
The Board and its Committees are also governed by Standing Orders, which set out the details of how the HCA Board manages
its business, for example how it calls meetings, how many members must attend them to make a quorum and so on.
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
Margaret Fay, OBE 3/4
Bob Lane, OBE 4/4
Shaukat Moledina, CBE 4/4
Robert Napier 4/4
Professor Peter Roberts, OBE 4/4
Ian Robertson 4/4
Dru Vesty, MBE 4/4
Don Wood, CBE 4/4


Board committees
The HCA Board has also established a number of committees, boards and sub-committees which it considers necessary for
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:
• Ian Robertson (Chairman)

• Kate Barker, CBE
• Shaukat Moledina, CBE
• Dru Vesty, MBE
• Don Wood, CBE
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:
• Robert Napier (Chairman)

• Margaret Fay, OBE
• Bob Lane, OBE
• Ian Robertson
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:
• Robert Napier (Chairman)

• Kate Barker, CBE
• Bob Lane, OBE
• Ian Robertson
• Dru Vesty, MBE
• Don Wood, CBE

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:
• Boris Johnson (Chairman) – Mayor

• Robert Napier (Vice-Chairman) – HCA Chairman
• Sir Bob Kerslake – HCA Chief Executive
• Cllr Stephen Carr – London Councils Member
• Cllr Jamie Carswell – London Councils Member
• Cllr Terry Stacy – London Councils Member
• Richard Blakeway – Greater London Authority
• Peter Rogers – London Development Agency
• Bob Lane, OBE – London Thames Gateway Development Corporation (and HCA Board Member)
The Milton Keynes Partnership Committee

The Committee contributes to the successful and sustainable growth of Milton Keynes including planning, co-ordinating and
implementing development within the Milton Keynes Urban Development Area.
Independent/private sector
• Dr Ann Limb (Chair)
• Leon Roach

• Don Wood, CBE
• David Edwards (nominee of Sir Bob Kerslake, Chief Executive)
Milton Keynes Council members

• Cllr Isobel McCall
• Cllr Roger Bristow
• Cllr David Hopkins
Local Strategic Partnership members

• Wendy Lehmann
• Andrew Peck
• Malcolm Brighton


Milton Keynes Partnership Planning Sub-Committee

The Milton Keynes Partnership Committee has a Planning Sub-Committee, which carries out the functions of a planning authority.
Independent members
• Dr Ann Limb (Chair)
• Leon Roach

• Sir Bob Kerslake or his nominee
Milton Keynes Council

• Cllr Isobel McCall
• Cllr David Hopkins
Local Strategic Partnership

• Andrew Peck
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
• Professor Peter Roberts, OBE (Chair)
• Rebecca Bennett Casserly
• Lynne Ceeney
• Peter Hetherington
• Mushtaq Khan
• Deborah Lamb

• Gill Taylor (Chief Executive, HCA Academy)
Management Commentary
The management commentary discloses the matters required to be disclosed in the business review under Section 417 of the
Companies Act 2006 and takes into consideration the recommendations outlined in the Accounting Standards Board’s Reporting
Statement Operating and Financial Review. Its objective is to provide a balanced analysis of:
• the development and performance of the businesses during the financial year;
• the position at the end of the financial year; and
• the main trends and factors underlying development, performance and position during the financial year and which are likely
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
affordable homes and the Academy for Sustainable Communities’ knowledge of creating and renewing high quality places.
Our role also incorporates the following major delivery programmes transferred from CLG:
• Decent Homes Gap Funding;

• Mixed Communities;
• Growth;
• Housing Market Renewal;
• Community Infrastructure Fund;
• Thames Gateway; and
• Places of Change.
We also have delivery responsibility for Arms Length Management Organisations (ALMOs), Large Scale Voluntary Transfers
(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.
Other significant transactions within the Agency during the year included:
• an impairment charge of £542m as a result of the current deterioration in the housing market;
• provision for a £12.6m debt following the liquidation of a developer. The Agency exercised its step-in rights to seize
a
back the related development land;
• the acquisitions of Castle College Northside site in Sheffield and St Clements Hospital, East London; and
• the disposal of land at the Gateway site in Harlow.
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,
and enhance people’s quality of life by creating and regenerating communities where people want, and can afford, to live.
Our role is to create opportunity for people to live in high quality, sustainable places. 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 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
and regeneration. Our very low sickness absence rate amounted to 2.3 per cent of working days being lost.
The HCA Academy is responsible for developing the skills and knowledge of people who create and maintain communities.
In June 2008, Sir Bob Kerslake announced his intention to develop a strategic partnership with the Chartered Institute of Housing
as a way of positioning the HCA as an employer of choice.
Structure
Our strong regional presence, aligned to the nine Government Office regions and supported by corporate teams around the
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:
• Central and local government;

• Housing associations;
• Private sector builders and developers;
• The voluntary and community sectors;
• Regional Development Agencies;
• Professional and industry bodies; and
• Local delivery vehicles.
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
opportunities for sponsorship towards professional qualifications. Because of the wide range of work that we undertake, our staff
have excellent opportunities for career development and diversification.
Under the Graduate Development Programme, we train graduates in all aspects of housing and regeneration, with opportunities
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
workshops and master classes, one-to-one coaching and self-directed learning, and wide-ranging skills in areas such as strategic
thinking, managing relationships and commercial acumen. Full funding for a qualification in housing or regeneration is available
to programme participants.
Cash flow and liquidity

The HCA relies upon grant in aid receipts from CLG to maintain general liquidity. Grant in aid is drawn-down weekly from CLG
to fund the HCA’s daily grant payments and monthly to fund its administration and capital costs. The amounts drawn-down
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
the Exchequer.


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 Actual
£m £m
Resource Consumption – Near-cash 147 146

Capital 3,668 3,653
Sub total 3,815 3,799
Resource Consumption – Non-cash 99 86

Annually Managed Expenditure 124 542
Sub total 223 628
Total 4,038 4,427
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
recorded an exceptional charge of £542m due to the current deterioration in the UK housing market. This exceeds the original
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

A number of non-financial key performance indicators are used to manage the HCA. These are set out in the foreword to these
Financial Statements and include:
• Brownfield land reclaimed;

• Housing units – starts on site commissioned;
• Housing units – completed;
• Employment floorspace created;
• Private sector investment attracted;
• Total investment in new low-cost ownership homes;
• Total investment in homes for social rent; and
• Number of homes delivered for low-cost ownership and for rent.

Remuneration Report
Unaudited information
Constitution of the Remuneration Committee
The constitution of the Remuneration Committee is set out on page 34.
Functions and responsibilities

The Remuneration Committee is required to:
• advise the Chairman, the Board, and the Chief Executive in his role as the HCA’s Accounting Officer, on overall pay and rewards,
the remuneration, contractual and pension arrangements of staff at Director level and above, and any related matters;
• s et and agree annual performance objectives, remuneration terms and other terms and conditions of employment of the
Chief Executive, subject to CLG approval;
• consider and approve the bonus payment for the Chief Executive and other senior officers on an annual basis, subject to
CLG approval;
• consider and advise the Board on broader staffing issues, such as recruitment and retention;
• monitor and approve the Agency’s staffing situation against the organisational structure and revenue budget agreed
by the Board, and in relation to any directions laid down by CLG;
• review terms and conditions of service and to determine any issues in relation to terms and conditions, overall pay levels
and performance awards that are referred to the Committee by the Executive; and
• ensure that there are appropriate legal, financial and administrative arrangements covering the provision of the HCA’s pension
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:
• t he full costs of key managers from English Partnerships; and

• a proportion of key managers’ costs from the Housing Corporation for those individuals who were involved in investment
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 Housing
Partnerships Corporation Total
£’000 £’000 £’000
Salary 929 393 1,322

Performance related pay 82 87 169
Taxable benefits 43 7 50
Employers’ contribution to pension fund 180 65 245
Total 1,234 552 1,786


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
English Partnerships (to 30 November 2008) 78
Board Members
Candy Atherton
HCA 7
Housing Corporation (to 30 November 2008) 8
Kate Barker, CBE
HCA 7
Margaret Fay, OBE
HCA 7
English Partnerships (to 30 November 2008) 8
Bob Lane, OBE 7
Shaukat Moledina, CBE
HCA 7
Professor Peter Roberts, OBE 7
Ian Robertson 7
Dru Vesty, MBE 7
Don Wood, CBE 7

Chief Executive’s emoluments

Employer’s
Taxable Contribution to Total
Salary Bonus Benefits Pension Fund 2009
£’000 £’000 £’000 £’000 £’000
Sir Bob Kerslake

HCA 73 – – 12 85
Chief Executive Designate (to 30 November 2008) 147 – – 26 173
Key Managers’ emoluments

Employer’s
Contribution
Taxable to Pension Total
Salary Bonus Benefits Fund 2009
£’000 £’000 £’000 £’000 £’000
Margaret Allen
Regional Director, East Midlands
HCA 42 – 1 7 50
Housing Corporation (to 30 November 2008) 75 15 4 11 105
Trevor Beattie,
Director of Strategy, Policy, Performance and Research
HCA 48 – 2 12 62
English Partnerships (to 30 November 2008) 99 9 4 20 132
Eamonn Boylan
Director of New Ventures and Partnerships 52 – 2 6 60
David Curtis
Regional Director, Yorkshire and the Humber 40 – – 10 50
David Edwards
Regional Director, South East
HCA 43 – 2 10 55
Terry Fuller
Regional Director, East of England 47 – 2 11 60
Richard Hill
Director of Investment and Regeneration
HCA 47 – – 8 55
Housing Corporation (to 30 November 2008) 85 17 – 13 115
Gail James
Director of Finance (Acting from 1 December 2008) 40 – 3 8 51
John Lewis
Chief Executive, Milton Keynes Partnership
HCA 40 – 2 10 52
David Lunts
Regional Director, London 52 – – 6 58
Deborah McLaughlin
Regional Director, North West 40 – 2 5 47
Colin Molton
Regional Director, South West 43 – 2 10 55


Employer’s
Contribution
Taxable to Pension Total
Salary Bonus Benefits Fund 2009
£’000 £’000 £’000 £’000 £’000
Pat Ritchie
Regional Director, North East 44 – 1 10 55
Paul Spooner
Regional Director, West Midlands
HCA 43 – 2 10 55
Gill Taylor
Director of Corporate Services (Acting from 1 December 2008)
and Chief Executive, HCA Academy
HCA 44 – – 10 54
Academy for Sustainable Communities (to 30 November 2008) 79 17 – 20 116
On 20 April 2009, Gail James and Gill Taylor ceased to be the acting Directors of Finance and Corporate Services, respectively.
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
running from July to June. Payments for 2008/09 are still to be determined and will be disclosed in the 2009/10 Financial
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 at 31 March
31 March 2009 2009
£’000 £’000
Sir Bob Kerslake

Chief Executive and Accounting Officer 3 53
Key Managers
Margaret Allen 23 495
Trevor Beattie 50 1,011
Eamonn Boylan – 6
David Curtis 53 1,245
David Edwards 3 65
Terry Fuller 1 12
Richard Hill 16 245
Gail James 22 438
John Lewis 22 337
David Lunts – 6
Deborah McLaughlin – 4
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,
which is a multi-employer defined benefit scheme. Robert Napier is not a member of the Homes and Communities Agency
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
to 31 March 2009. The CETV disclosed above for David Curtis incorporates the effect of a transfer of £1,077,000 into the scheme
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
that the individual has accrued as a consequence of their total membership of the pension scheme and not just the service
in a senior capacity to which disclosure applies.
Robert Napier Sir Bob Kerslake

Chairman Chief Executive and Accounting Officer
22 October 2009 22 October 2009

Statements by the Accounting Officer

Responsibilities of the Accounting Officer

Under the 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.
In preparing the accounts, the Accounting Officer is required to comply with the requirements of the Government Financial
Reporting Manual and in particular to:
• o
bserve the Accounts Direction issued by the Secretary of State including the relevant accounting and disclosure
requirements, and apply suitable accounting policies on a consistent basis;
• make judgments and estimates on a reasonable basis;
• s tate whether applicable accounting standards as set out in the Government Financial Reporting Manual have been followed,
and disclose and explain any material departures in the financial statements; and
• prepare the financial statements on a going concern basis.
The Secretary of State has appointed the Chief Executive as Accounting Officer of the Homes and Communities Agency.
The responsibilities of an Accounting Officer, including responsibility for the propriety and regularity of the public finances
for which the Accounting Officer is answerable, for keeping proper records and for safeguarding the HCA’s assets, are set
out in the Financial Memorandum published by the Secretary of State.
Statement on Internal Control

Scope of responsibility
As Accounting Officer, I have responsibility for maintaining a sound system of internal control that supports the achievement
of the Homes and Communities Agency’s policies, aims and objectives, whilst safeguarding the public funds and assets for
which I am personally responsible, in accordance with the responsibilities assigned to me by the Principal Accounting Officer
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
in the Urban Regeneration Agency (URA) and Commission for the New Towns (CNT) (known collectively as English Partnerships);
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
Instrument. I was the designated Accounting Officer for these bodies from 1 December 2008 until their wind up. Each body had
its own Accounting Officer for the period from 1 April 2008 to 30 November 2008.
In respect of the programmes transferring from CLG I assumed Accounting Officer responsibilities for these on 1 December 2008
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
Officer responsibilities. Accounting Officer responsibility remained with the CLG Principal Accounting Officer until
31 March 2009.
• Decent Homes: Accounting Officer responsibility for the Arms Length Management Organisation (ALMO), overhanging
debt payments and Large Scale Voluntary Transfer (LSVT) levy payments elements of this programme remain with the
CLG Principal Accounting Officer. The HCA role in this case is in respect of making funding recommendations to CLG,
and supporting local authorities’ delivery of their ALMO programme.

• Housing Private Finance Initiative (PFI): Accounting Officer responsibility for this programme remains with the CLG Principal
Accounting Officer. The HCA role is to make recommendations to CLG on the allocation of PFI credits, and to support and
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
provides long-term strategic direction but also reflects Government’s medium-term expectations for both the initial period after
set up and the remainder of the CSR07 period. The Tasking Framework also sets out how the HCA will best deliver national and
regional targets for housing and regeneration by working with local authorities and regional agencies.
The Financial Framework governs the formal relationship between the HCA and CLG and lays down requirements related to
the payment and expenditure of public money, including:
• governance and accountability;

• management and financial responsibilities;
• budgeting;
• financial delegations and matters requiring CLG consent; and
• matters relating to the employment of staff.
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
our emerging thinking. The 2009/10–2010/11 Plan builds on the interim plan supported by further analysis, a business planning
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.


Capacity to handle risk

Capacity to handle risk within the HCA is embedded within the non-executive and executive governance structures established
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 Boardthat 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 Committeeis responsible for ensuring the successful and sustainable growth of Milton Keynes
including planning, co-ordinating and implementing development within the Milton Keynes Urban Development Area. It has
established a Planning Sub-Committee to undertake its statutory development control responsibilities.
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:
• Design and Sustainability

• Rural Housing
• Equalities and Diversity
• Vulnerable and Older People
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’ Groupcomprises the Corporate Team and Regional Directors. It meets monthly and is the principal strategy
setting group for the Agency below Board-level, as well as the senior structure for agreeing operational policies and
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 – overseeing the National Affordable Housing Programme, Gypsy and Traveller
Site Grants Programme and Places of Change Programme.
ii) The Growth Programme Board – to oversee the delivery of the Agency’s Growth, Community Infrastructure Fund
and Thames Gateway programmes.
iii) The Renewal Programme Board – overseeing the Decent Homes and Housing Market Renewal programmes.
iv) The Design and Sustainability Programme Board – shaping policy, process and programme development in order to ensure
that the statutory HCA duties for the delivery of quality, sustainable development and good design are embedded within
the HCA’s corporate planning and operations.
v) The Innovations Programme Board – overseeing the creation, assessment and future development of innovative ideas and
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 – overseeing all aspects of the HCA’s operations and delivery of the Agency’s Change Plan and
Benefits Realisation Plan. This Board was established in September 2009 and took over the role previously performed by
the Organisational Development Board. This Board has a number of sub-committees looking at particular areas of operation.
vii) The Housing Stimulus Programme Board – established following the Budget announcement on 22 April 2009 to lead the HCA’s
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.
The policy and strategy have been developed with reference to relevant guidance published by HM Treasury, Office of
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
who facilitates the process and provides guidance and training where required.
The risk and control framework

The risk and control framework is integrated and multi layered within the HCA. It operates from both a top-down perspective,
through the identification of risks associated with the objectives identified in the Corporate Plan and a bottom-up process, through
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:
• downturn in the property market and its impact on partners’ access to funds and lender activity;
• sufficiency of funds through land receipts and grant in aid to match delivery expectations;
• changes in the political environment;
• partner capacity to respond to increased delivery demands;
• embedding the new organisation, bringing together legacy organisation staff;


• the possibility of external relationships not being satisfactorily managed;

• organisational capacity in terms of ensuring that staff skills and knowledge are aligned to new ways of working;
• lack of flexibility in delegations to respond to changing market conditions; and
• liabilities attaching to legacy organisations fall to the HCA to manage/settle.
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
Officer (SIRO) is the Director of Finance and Corporate Services from 20 April 2009 (for the period from 1 December 2008 to
19 April 2009 the SIRO role was undertaken by the Interim Director of Corporate Services). He is supported by an Information
Security Officer and a Business Information Security Group, who collectively monitor compliance with the mandatory Data
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:
• risk identification, assessment and mitigation plans included in Business Plans;

• routine consideration of risk in all investment decision making processes;
• regular review of risk registers for programmes, regions and projects;
• research and analysis of the property and housing market to help inform strategy development and investment decisions; and
• quarterly risk reporting to senior management and Audit and Risk Committee.
Review of effectiveness
As Accounting Officer, I have responsibility for reviewing the effectiveness of the system of internal control. My review of the
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
made by the National Audit Office (NAO) acting as external auditors in their management letter and other reports. I have been
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 Risk Committee (the membership of which is composed of Non-Executive Board Members possessing the relevant skills
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
NAO, risk reports, reports on the preparation of the Financial Statements and reports from the Senior Information Risk Officer.
Additional forms of assurance relating to the establishment of the HCA have also been reported to form part of the overall
judgment. The Committee has met on six occasions from November 2008 up to the end of October 2009.
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 has provided regular updates on their work as external auditors for the HCA, CNT and URA.
To assist me in fulfilling my role as Accounting Officer for the CNT and URA legal entities, a formal Residuary Board was put
in place to oversee the wind-up process and the production of the final accounts for these entities. The work of the Residuary
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.
Finally, as part of the transition arrangements the Accounting Officers for both English Partnerships and the Housing Corporation
were required to submit pre vesting assurance letters to the CLG Principal Accounting Officer regarding the arrangements in
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.
One of the outcomes of this is that what worked in four separate organisations needs rebasing within the new organisation,
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,
which require review and mitigation.
In addition, the Committee drew to the attention of the Board and Accounting Officer the inherent dangers attaching to the
speed at which the Agency is being asked to act – and to take on new roles. While they had no reason to believe that the quality
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.
In respect of the data control issues, legacy bodies were each pursuing their own programmes to comply with these requirements
and each were at different stages. In reviewing the HCA information security arrangements, whilst we are satisfied that they
are proportionate to business risk, it has become clear that there are gaps in terms of strict compliance with the requirements.
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

Chief Executive and Accounting Officer

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 Homes and Communities Agency and Chief Executive as Accounting Officer are responsible for preparing the Annual Report,
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
the Statement of Accounting Officer’s Responsibilities.
My responsibility is to audit the financial statements and the part of the Remuneration Report to be audited in accordance with
relevant legal and regulatory requirements, and with International Standards on Auditing (UK and Ireland).
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
all the information and explanations I require for my audit, or if information specified by HM Treasury regarding remuneration and
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
guidance, and I report if it does not. I am not required to consider whether this statement covers all risks and controls, or form
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

I conducted my audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices
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
assessment of the significant estimates and judgments made by the Homes and Communities Agency and Accounting Officer
in the preparation of the financial statements, and of whether the accounting policies are most appropriate to the Homes and
Communities Agency’s circumstances, consistently applied and adequately disclosed.
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
authorities which govern them. In forming my opinion I also evaluated the overall adequacy of the presentation of information
in the financial statements and the part of the Remuneration Report to be audited.

Opinions
In my opinion:
• t he financial statements give a true and fair view, in accordance with the 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;
• t he 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; and
• i nformation, which comprises Board Members, the Board Members’ Report and the Management Commentary included
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
27 October 2009

Group Income and Expenditure Account

Note 2009 2008

£’000 £’000
Income
Proceeds from disposal of property assets 3 51,119 333,035
Rent and other property income 4 6,198 8,596
Contributions from partners 8,354 39,165
Other operating income 5 9,027 20,921
Clawback of grants and contributions 6 40,946 64,484
115,644 466,201
Expenditure
Grant payments 7 3,667,130 2,780,413
Cost of property disposals 3 65,426 448,454
Administration costs 9 82,141 72,377
Administration costs allocated to cost of property disposals 9 (1,696) (13,298)
Estate management costs 18,967 18,914
Programme costs 8 28,459 37,149
Grant clawback returnable to Treasury 378 2,847
Provision for impairment of development assets 26 541,852 31,553
Provision for other liabilities and charges 31 7,278 1,891
Depreciation on fixed assets 19,20 2,129 1,341
Other operating costs 10 23,283 10,371
Notional cost of capital 70,003 90,946
4,505,350 3,482,958
Group net operating expenditure 12 (4,389,706) (3,016,757)

Share of operating (losses)/profits in associates 18 (15,005) 6,665
Net expenditure before interest (4,404,711) (3,010,092)
Interest receivable 14 37,792 43,706

Interest payable 15 (3,731) (2,863)
Pension fund finance costs 33(h) (1,996) (501)
Net expenditure before taxation (4,372,646) (2,969,750)

Taxation 16 402 (971)
Net expenditure after taxation (4,372,244) (2,970,721)

Net expenditure for the year (4,302,241) (2,879,775)
All activities above derive from continuing operations. Net expenditure is financed by Grant in Aid as explained in accounting
policy Note 1(h), with the exception of non-cash expenditure, for example, depreciation, provisions, impairments, notional cost
of capital, etc.

Group Statement of Recognised Gains and Losses

Note 2009 2008

£’000 £’000
Actuarial (loss)/gain from pension fund 33(k) (28,749) 7,947

Revaluation of tangible fixed assets 38 (1,865) 1,865
Group share of unrealised (deficit)/surplus on revaluation of investments 38 (3,281) 322
Revaluation of property/development assets 38 (587,661) 114,631
Fair value (loss)/gain on available for sale assets 39 (29) 12,111
Realised gains on disposal of available for sale assets recognised in
Income and Expenditure Account 39 (3) –
Total (losses)/gains recognised since last Financial Statements (621,588) 136,876
The accompanying Notes are an integral part of these Financial Statements.

Group Balance Sheet

At 31 March 2009
Note 2009 2008

£’000 £’000
Fixed assets
Intangible fixed assets 19 2,299 3,034
Tangible fixed assets 20 7,054 10,792
Investment in associated undertakings 21 70,309 87,161
Available for sale financial assets 22 165,953 89,190
Water companies 23 30,835 31,030
Loans to Registered Social Landlords 24 – 583
Other loans and mortgages 25 2,858 3,032
279,308 224,822
Current assets
Property/development assets 26 764,026 1,841,027
Debtors:
- due after more than one year 27 273,749 384,680
- due within one year 27 117,459 197,097
Cash at bank and in hand 28 40,587 162,331
Investments 29 – 279,000
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 1,163,188 2,484,675
Provisions for liabilities and charges 31 (151,864) (140,700)

Advances from the National Loans Fund 32 – (700)
Provisions for pensions 33 (59,440) (29,674)
951,884 2,313,601

Note 2009 2008

£’000 £’000
Reserves
Income and expenditure reserve 37 693,764 1,436,133
Revaluation reserve 38 245,747 865,063
Fair value reserve 39 12,373 12,405
951,884 2,313,601
Approved by the Board on 22 October 2009 and signed on their behalf by:


Balance Sheet
At 31 March 2009
Note 2009 2008

£’000 £’000
Fixed assets
Intangible fixed assets 19 2,299 3,034
Tangible fixed assets 20 7,054 10,792
Investment in subsidiary undertakings 21 25,000 25,000
Investment in associated undertakings 21 47,637 43,350
Available for sale financial assets 22 165,953 89,190
Water companies 23 30,835 31,030
Loans to Registered Social Landlords 24 – 583
Other loans and mortgages 25 2,858 3,032
281,636 206,011
Current assets
Property/development assets 26 764,026 1,841,027
Debtors:
- due after more than one year 27 273,749 384,680
- due within one year 27 117,459 197,097
Cash at bank and in hand 28 40,587 162,331
Investments 29 – 279,000
1,195,821 2,864,135
Creditors:
Amounts falling due within one year 30 (315,283) (607,624)
Net current assets 880,538 2,256,511
Total assets less current liabilities 1,162,174 2,462,522
Provisions for liabilities and charges 31 (151,864) (140,700)

Advances from the National Loans Fund 32 – (700)
Provisions for pensions 33 (59,440) (29,674)
950,870 2,291,448

Note 2009 2008

£’000 £’000
Reserves
Income and expenditure reserve 37 696,043 1,420,554
Revaluation reserve 38 242,454 858,489
Fair value reserve 39 12,373 12,405
950,870 2,291,448
Approved by the Board on 22 October 2009 and signed on their behalf by:


Group Cash Flow Statement

Note 2009 2008

£’000 £’000
Net cash outflow from operating activities a) (3,785,543) (2,721,835)
Returns on investments and servicing of finance

Interest received 29,298 41,640
Interest paid (40) (714)
Net cash inflow from returns on investments and servicing of finance 29,258 40,926
Taxation
Corporation tax repaid/(paid) 5,016 (16,654)
Net cash inflow/(outflow) from taxation 5,016 (16,654)
Net cash outflow from capital expenditure and financial investment b) (81,382) (78,837)
Net cash outflow before use of liquid resources and financing (3,832,651) (2,776,400)
Management of liquid resources

Decrease in cash invested on short-term deposits 279,000 13,000
Net cash inflow from management of liquid resources 279,000 13,000
Net cash inflow from financing c) 3,561,412 2,621,619
Increase/(decrease) in cash 7,761 (141,781)

Note 2009 2008

£’000 £’000
a) Reconciliation of net operating expenditure to net cash outflow

from operating activities
Net operating expenditure (4,389,706) (3,016,757)
Book value of property disposals 3 50,253 304,390
Provisions for impairment of assets 26 541,852 31,553
Additions to property/development assets 26 (102,765) (176,911)
Depreciation on fixed assets 19,20 2,129 1,341
Impairment of fixed assets 10 1,486 1,008
Loss on disposal of fixed assets 10 40 2
Loss on disposal of available for sale assets 205 –
Pension costs (979) (610)
(3,827,482) (2,765,038)
Decrease/(increase) in debtors 193,912 (190,213)

(Decrease)/increase in creditors (163,137) 126,121
Increase in provisions 11,164 107,295
Net cash outflow from operating activities (3,785,543) (2,721,835)
b) Capital expenditure and financial investment

Loans repaid to Agency 952 357
Loans advanced by Agency – (78)
Purchase of tangible fixed assets 20 (705) (1,651)
Sale of fixed assets – 6
Purchase of intangible fixed assets 19 (342) (1,349)
Purchase of loan stock in associate 21 (4,287) (6,665)
Additions to available for sale financial assets 22 (77,108) (69,457)
Disposal of available for sale financial assets 108 –
Net cash outflow from capital expenditure and financial investment (81,382) (78,837)

Group Cash Flow Statement

Note 2009 2008

£’000 £’000
c) Financing
Grant in aid 37 3,908,112 2,621,619
Repayment of funds to HM Treasury (346,000) –
Advances from the National Loans Fund – 1,400
Repayments to the National Loans Fund (700) (1,400)
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
Cash at bank and in hand 162,331 (121,744) 40,587

Bank overdraft (198,913) 129,505 (69,408)
(36,582) 7,761 (28,821)
Short-term deposits 279,000 (279,000) –

Advances from the National Loans Fund (700) 700 –
241,718 (270,539) (28,821)

Notes to the Financial Statements

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
should, insofar as appropriate, conform to the accounting and disclosure requirements contained in 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
with generally accepted accounting practice in the UK.
b) Financial instrument standards

With effect from 1 April 2008, the Government Financial Reporting Manual (FReM) requires non-departmental public bodies
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

These standards require disclosure of information that enables users of the Financial Statements to evaluate the significance
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

This standard sets out requirements for the measurement, recognition and de-recognition of financial instruments.
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

The Agency was formed on 1 December 2008. At this date the functions of the Commission for the New Towns, the Urban
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:
• Programme management responsibility for Decent Homes Gap Funding, Mixed Communities, Housing Market Renewal,
Places of Change and the Community Infrastructure Fund;
• Housing and delivery functions in support of the main existing growth areas and in the Thames Gateway; and
• The Agency also has delivery responsibilities for the decent homes programmes for the social housing sector including
Arms Length Management Organisations (ALMOs), Large Scale Voluntary Transfers (LSVT), Housing Private Finance Initiative
(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.


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.
The Group’s associated undertakings are all undertakings in which the Group has 20 per cent or more of the equity or
voting rights held as a long-term investment and over which it exerts significant influence. In the Group Financial Statements,
investments in subsidiaries are accounted for using the equity method. The consolidated Income and Expenditure Account
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

Intangible fixed assets comprise licenses to use software developed by third parties. Other intangible assets are the costs of
developing the critieria and legal framework for grants to RSLs and non-registered bodies and the development costs of core
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
and any impairment subsequent to the date of valuation. Land is not depreciated.
An assessment is carried out each year by a qualified valuer to ensure that the fair value of a revalued asset does not differ
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

Computer equipment 3 to 4 years
Motor vehicles 4 years
Furniture, fixtures and fittings 4 to 15 years
Office equipment 4 to 5 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
and the Urban Regeneration Agency and £500 per single item for items transferred from the Housing Corporation.
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
of the whole portfolio was carried out as at 31 March 2009 by both internal and external qualified valuers, with independent
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
the value of the credit balance in the reserve and are shown in the Income and Expenditure Account thereafter. Upon disposal
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
Urban Regeneration Agency were valued as follows:
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
with an equivalent reduction in the Revaluation Reserve. Profit on disposal would be £12.2m. The write down of development
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

When calculating the net expenditure for the year, the Agency is required to charge a notional cost of capital against the
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.
Any cash balance held with the Office of the Paymaster General, is excluded from the calculation.
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
Equity investments in the Agency’s own Balance Sheet are shown at cost less provision for impairment.
m) Taxation
Corporation tax is payable on profits at the current rate.
Deferred taxation is provided in accordance with FRS19, Deferred Tax to include the estimated future taxation consequences of
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
the cost of property disposals. The Urban Regeneration Agency did not allocate such costs against the cost of property disposals.
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.

o) Operating leases
Operating lease rentals receivable and payable are accounted for in the Income and Expenditure Account on a straight line
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.
All three schemes are multi-employer defined benefit schemes as described by paragraph 9 of 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.
q) Provisions in respect of community related assets

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
local authorities and other appropriate organisations. On transfer the Agency is usually required to transfer other assets of value,
including cash, which equate to the estimated future maintenance liability attaching to such assets.
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
Non-derivative financial assets are classified as either ‘available for sale’ or ‘loans and receivables’. The classification depends
upon the nature and purpose of the financial assets and is determined at the time of initial recognition.
Available for sale financial assets

The Agency provides financial assistance to first-time buyers and key workers to buy a share in a new build home. The buyer must
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
future sales proceeds which will be equal to the initial percentage contribution. This is secured by a second charge on the property.
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

Loans and mortgages are shown at amortised cost using the effective interest rate and are included within non-current assets.
Trade and other receivables

Trade and other receivables are financial assets with fixed or determinable payments that are not quoted in an active market.
They are included within current assets, except for those with maturities greater than 12 months after the Balance Sheet date
which are classified as non-current assets and are measured at amortised cost less a provision for bad debts. The net of these
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.
Objective evidence of impairment could include significant financial difficulty to the customer, default on payment terms or
the customer going into liquidation.
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

Cash and cash equivalents include cash and balances in bank accounts with no notice or less than three months’ notice from
inception and are subject to an insignificant risk of changes in value.
Cash and cash equivalents are classified as ‘loans and receivables’.
Financial liabilities
All non-derivative financial liabilities are initially measured at fair value and subsequently measured at amortised cost.
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
The Agency is required, in accordance with HM Treasury’s Fees and Charges Guide, to disclose performance results for the areas
of its activities where fees and charges are made.
The segmental analysis is not intended to meet the requirements of the 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
Amounts charged to other public sector bodies 43 67

43 67
3. Disposal of property assets

Note 2009 2008
£’000 £’000
Proceeds from disposals 51,119 333,035
Cost of property disposals:

Direct sales expenses and allocated administration costs (11,213) (30,181)
Book value of property disposals 26 (50,253) (304,390)
Provision for additional consideration payable for development assets 31 (3,960) (113,883)
(65,426) (448,454)
Deficit on disposal (14,307) (115,419)
Direct sales expenses and allocated administration costs include a recharge of £1.7m (2007/08: £13.3m) from administration
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
Building rents 4,000 5,257

Ground rents 1,605 1,167
Leaseback rents 439 892
Service charges 56 1,247
Miscellaneous 98 33
6,198 8,596


5. Other operating income

2009 2008
£’000 £’000
Housing Action Trusts 3,360 3,723

Car park income 1,369 1,403
Release of restrictive covenants and other windfall income 4,263 15,752
Staff on secondment 35 43
9,027 20,921
6. Clawback of grants and contributions

2009 2008
£’000 £’000
Social Housing Grant (Note 7(b)(ii)) 40,690 58,887

Derelict Land Grant 277 2,309
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 2008
£’000 £’000
Social Housing Grant (Note 7(b)(i)) 2,651,093 2,063,503

Housing Market Renewal 380,399 404,668
Growth 265,177 –
Decent Homes Programme 124,373 79,870
Thames Gateway Delivery Plan 41,455 48,471
Homelessness 33,511 20,747
Community Infrastructure Fund 23,801 –
Property and Regeneration 145,792 160,039
Other 1,529 3,115
3,667,130 2,780,413
Grant payments of £3,667m (2008: £2,780m) comprise capital investment grants for social housing to RSLs and other bodies
totalling £2,651m (2008: £2,064m). The composition of these payments and any recoveries is noted below.
b) Social Housing Grant

The Agency’s powers to pay grants for social housing to RSLs and other bodies are conferred by Sections 18, 20, 21 and 27A
of the Housing Act 1996. The power to recover grant is conferred by Section 52 of the Housing Act 1988 and Section 27 of the
Housing Act 1996.

i) Social Housing Grant payments

Low-cost
Social home Works to 2009 2008
rent ownership RSLs’stock Other Total Total
£’000 £’000 £’000 £’000 £’000 £’000
London 749,110 251,889 15,747 462 1,017,208 895,241

South East 305,155 123,022 3,030 117 431,324 392,518
East of England 193,238 77,566 1,839 27 272,670 193,505
South West 187,010 42,306 6,000 – 235,316 176,596
North West 160,342 28,514 6,940 645 196,441 110,035
West Midlands 153,164 42,030 2,120 91 197,405 98,402
East Midlands 105,356 27,379 2,172 – 134,907 87,505
Yorkshire and the Humber 84,403 22,939 902 9 108,253 72,930
North East 51,837 5,579 90 63 57,569 36,771
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
£’000 £’000 £’000 £’000 £’000 £’000
London 14,217 3,925 67 – 18,209 29,503

South East 2,077 1,907 – – 3,984 5,021
East of England 1,032 913 1 – 1,946 856
South West 599 – – – 599 116
North West 1,269 85 – – 1,354 1,444
West Midlands 5 9 9 – 23 150
East Midlands 1,242 445 – – 1,687 1,421
Yorkshire and the Humber 1,929 465 – 1,048 3,442 –
North East – – – – – 54
22,370 7,749 77 1,048 31,244 38,565
Grant recoveries from old schemes 9,446 – – – 9,446 20,322
31,816 7,749 77 1,048 40,690 58,887


iii) Social Housing Grant payments net of receipts

Low-cost
£’000 £’000 £’000 £’000 £’000 £’000
London 734,893 247,964 15,680 462 998,999 865,738

South East 303,078 121,115 3,030 117 427,340 387,497
East of England 192,206 76,653 1,838 27 270,724 192,649
South West 186,411 42,306 6,000 – 234,717 176,480
North West 159,073 28,429 6,940 645 195,087 108,591
West Midlands 153,159 42,021 2,111 91 197,382 98,252
East Midlands 104,114 26,934 2,172 – 133,220 86,084
Yorkshire and the Humber 82,474 22,474 902 (1,039) 104,811 72,930
North East 51,837 5,579 90 63 57,569 36,717
1,967,245 613,475 38,763 366 2,619,849 2,024,938
Grant recoveries from old schemes (9,446) – – – (9,446) (20,322)
1,957,799 613,475 38,763 366 2,610,403 2,004,616
8. Programme costs

2009 2008
£’000 £’000
HCA Academy 5,494 5,511

Other programme costs 22,965 31,638
28,459 37,149
The HCA Academy costs include £1.4m (2007/08: £1.3m) of staff costs (Note 13).
Other programme costs include contributions and other non-asset, project specific costs as part of the Property and Regeneration
programme. Contributions included payments for the running costs of Urban Regeneration Companies and private sector partners
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
Note 2009 2008
£’000 £’000
Staff costs 13 49,827 45,671

Board Members’ remuneration 171 246
Indirect staff costs 1,498 2,211
Travel and subsistence 3,943 3,234
Accommodation costs 7,359 7,378
Office running costs 5,305 3,814
Professional fees 8,806 6,181
Marketing and promotion 4,060 3,251
External audit 12 247 160
Other 925 231
82,141 72,377
Administration costs allocated to cost of property disposals 3 (1,696) (13,298)
80,445 59,079
Administration costs also include £4.4m of 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.
An allocation of administration costs is made to the cost of property disposals to reflect the in-house resource utilised in disposing
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
Housing Action Trusts 3,267 4,127

Property operating costs 678 799
Rent of lease/sale properties 852 1,515
Movement in bad debt provision 11 12,432 73
Redundancy and restructuring 573 280
Early retirement pension costs 497 1,394
Impairment of fixed assets 1,486 1,008
Taxation not recoverable 3,458 1,171
Loss on disposal of fixed assets 40 2
Miscellaneous – 2
23,283 10,371


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
in the UK housing market.
Movement in bad debt provision

In the year to 31 March 2009, the Agency exercised its step-in rights to seize possession of development land previously disposed
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
exercised its step-in rights, it would have had to provide for a debt of £15m.
12. Net operating expenditure

2009 2008
£’000 £’000
Net operating expenditure has been arrived at after charging the following:
Auditor’s remuneration - audit fee for HCA 127 –

Auditor’s remuneration - audit fees for predecessor bodies 120 160
Operating lease rentals - land and buildings 3,889 4,573
Operating lease rentals - other 1,148 1,026
Redundancy and restructuring 573 280
Early retirement pension costs 497 1,394
Bad debts written off/movement in bad debt provision 12,432 73
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 2008
£’000 £’000
Salaries and wages 36,490 33,327

Social security costs 3,238 3,022
Other pension costs 7,561 7,366
47,289 43,715
Temporary staff 2,591 2,666

Seconded staff 1,372 570
51,252 46,951
Less: HCA Academy staff costs recharged to programme costs (Note 8) (1,425) (1,280)
49,827 45,671
Non-Executive Board Member expenses reimbursed 61 53

61 53
There were no staff costs capitalised in 2009 (2008: nil).
b) Average number of staff employed by the Agency (full time equivalents)

2009 2008
Total Total
Number Number
Permanent 854 818

Temporary 54 49
908 867
14. Interest receivable

Note 2009 2008
£’000 £’000
Short-term deposits 16,001 24,775

Water companies - annual payments 3,613 3,654
Unwinding of discount on financial assets 12,473 8,728
Loan interest 1,607 1,811
Local authorities 189 197
Disposal of property assets 165 220
Housing mortgages 15 21
Interest on grant recoveries from RSLs 2,175 2,854
Miscellaneous interest 907 477
Share of interest receivable in associated undertakings 18 647 969
37,792 43,706
Interest receivable from local authorities relates to interest due on loans in respect of assets transferred from the Commission
for the New Towns or from New Town Development Corporations prior to their wind-up (Note 25).


15. Interest payable

Note 2009 2008
£’000 £’000
Borrowings from the National Loans Fund 17 40

Unwinding of discount on financial liabilities 301 596
Interest on overdue tax – 12
Share of interest payable in associated undertakings 18 3,390 2,148
Other interest 23 67
3,731 2,863
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
(402) 971
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 2008
£’000 £’000
Net expenditure before taxation (4,372,646) (2,969,750)

Taxation on deficit at 28/30 per cent (1,224,341) (890,925)
Effects of:
Non-taxable grant income (13,804) (31,000)
Expenditure not deductible for taxation, including grant payments 1,040,528 835,998
Grant clawback 106 808
Purchase of plant/equipment 22 37
Depreciation 596 402
Capital allowances on plant and machinery (186) (392)
Industrial/agricultural buildings allowances – (1)
Net increase/(decrease) in provisions 2,017 (1,923)
Revaluation adjustment on disposals 7,423 50,747
Losses used in period (656) (5,668)
Losses carried forward 168,300 15,603
Taxation (credit)/charge for period (402) 971

17. Surplus funds

Under Section 25 of the Housing and Regeneration Act 2008, the Secretary of State is entitled to direct that the whole or part
of any surplus funds shall be paid into the Exchequer. During 2008/09, £346m was repaid (2007/08: £nil).
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 receivable 14 647 969
Share of interest payable 15 (3,390) (2,148)
Share of taxation 16 (110) (312)
Share of (losses)/profits in associates 21 (17,858) 5,174
19. Intangible fixed assets

Group and Agency
Other
intangible
Software assets Total
£’000 £’000 £’000
Cost
At 1 April 2008 637 4,451 5,088
Additions 222 120 342
Disposals (188) – (188)
At 31 March 2009 671 4,571 5,242
Depreciation
At 1 April 2008 494 1,560 2,054
Charge in year 106 971 1,077
Disposals (188) – (188)
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
Fixtures,
fittings
Freehold and office Information
Land buildings equipment technology Total
£’000 £’000 £’000 £’000 £’000
Cost
At 1 April 2008 2,057 6,248 4,694 2,178 15,177
Additions – 285 134 286 705
Disposals – – (267) (546) (813)
Revaluations (813) (2,674) – – (3,487)
At 31 March 2009 1,244 3,859 4,561 1,918 11,582
Depreciation
At 1 April 2008 – – 2,808 1,577 4,385
Disposals – – (266) (507) (773)
Charge in year – 136 643 273 1,052
Revaluations – (136) – – (136)
At 31 March 2009 – – 3,185 1,343 4,528
Net book value

At 1 April 2008 2,057 6,248 1,886 601 10,792
At 31 March 2009 1,244 3,859 1,376 575 7,054
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 2008
£’000 £’000
Historical cost
Land 1,586 1,586
Freehold buildings 5,852 5,570
7,438 7,156
Accumulated depreciation
Land – –
Freehold buildings 819 717
819 717
Net book value

Land 1,586 1,586
Freehold buildings 5,033 4,853
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

Additions in year – –
At 31 March 2009 25,000 25,000
The Agency has a subsidiary, EP(LP) Limited, in which it holds 25,000,000 ordinary shares of £1 each (2007/08: 25,000,000
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
At 1 April 2008 22,379 40,501 24,281 87,161
Additions – 4,287 – 4,287
Share of losses in associated undertakings 18 (3,459) – (14,399) (17,858)
Share of revaluation reserve (3,281) – – (3,281)
At 31 March 2009 15,639 44,788 9,882 70,309
Associated undertakings
Agency
Shares Loans Total
£’000 £’000 £’000
Cost
At 1 April 2008 10,349 40,501 50,850
Additions – 4,287 4,287
At 31 March 2009 10,349 44,788 55,137
Provision for impairment

At 1 April 2008 and 31 March 2009 (7,500) – (7,500)
Net book value

At 1 April 2008 2,849 40,501 43,350
At 31 March 2009 2,849 44,788 47,637

Name of Nature of
Undertaking Interest Business
Priority Sites Limited 49 per cent ‘B’ Ordinary Property rental and development
Network Space Limited 49 per cent ‘A’ Ordinary Development of workspace
100 per cent ‘C’ Deferred, non-voting
English Cities Fund 33⅓ per cent ‘A’ Ordinary Property development
(General Partner) Limited
Land Restoration Trust ½ membership Land development
English Cities Fund Limited partnership Property development
Blueprint East Midlands 25 per cent Property rental and development
Regeneration Partnership
Creative Sheffield Company limited by guarantee Regeneration of Sheffield
⅓ membership
Liverpool Vision Company limited by guarantee Regeneration of Liverpool
⅓ membership
New East Manchester Company limited by guarantee Regeneration of East Manchester
⅓ membership
Tees Valley Regeneration Company limited by guarantee Regeneration of Tees Valley
⅓ membership
Leicester Regeneration Company Company limited by guarantee Regeneration of Leicester
⅓ membership
Sunderland arc Company limited by guarantee Regeneration of Sunderland
⅓ membership
Meden Valley Company limited by guarantee Regeneration of
Making Places Ltd ¼ membership Meden Valley
Barking Riverside Ltd 49 per cent Ordinary Shares Development of land
English Environment Fund Company limited by guarantee Promotion of Environmental projects
½ membership
Derby Cityscape Company limited by guarantee Regeneration of Derby
⅓ membership
Gloucester Heritage Company limited by guarantee Regeneration of Gloucester
¼ membership
Regenco (Sandwell) Company limited by guarantee Regeneration of
⅓ membership West Bromwich
Walsall Regeneration Company limited by guarantee Regeneration of
Company ⅓ membership Walsall
Aylesbury Vale Company limited by guarantee Regeneration of
Advantage ⅕ membership Aylesbury
CL:AIRE Company limited by guarantee Research
⅕ membership
Central Salford URC Ltd Company limited by guarantee Regeneration of
⅓ membership Central Salford
Opportunity Peterborough Company limited by guarantee Regeneration of
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
⅕ membership Southend-on-Sea
Hull URC 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.
On 1 December 2008 the Agency’s interests in associated undertakings were transferred from the Urban Regeneration Agency
to the HCA.
22. Available for sale financial assets

Available for sale financial assets relate to the Agency’s entitlement to future sale proceeds that is equal to the percentage
contribution of financial assistance provided to first-time buyers and key workers. They are stated at fair value.
Group and Agency

2009 2008
Note £’000 £’000
Balance at 1 April 89,190 7,622

Additions 77,108 69,457
Disposals (316) –
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

Repayment of loans (195) (178)
Loans outstanding at 31 March 30,835 31,030

24. Loans to Registered Social Landlords

Loans to RSLs and unregistered societies are advanced under Section 79 of the 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 Interest Total
£’000 £’000 £’000
At 1 April 2008 546 37 583

Repayments (546) (37) (583)
At 31 March 2009 – – –
25. Other loans and mortgages

Group and Agency
2009 2008
£’000 £’000
Local authorities at 1 April 2,522 2,629

Repayment of loans (114) (107)
2,408 2,522
Mortgages on housing property at 1 April 510 634

Repayment of mortgages (60) (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
transferred. In the main this represented assets, which had been taken over by the local authority, at a valuation equivalent
to the outstanding loan debt at the date of transfer, translated into a new loan agreement between the Agency and the local
authority concerned. The final redemption dates of the remaining loans will be between March 2017 and March 2033.
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
Market value at 1 April 1,841,027 1,885,428

Movement in year:
Capital expenditure 102,765 176,911
Disposals (50,253) (304,390)
Provision for impairment of development assets (541,852) (31,553)
Revaluation adjustment (587,661) 114,631
Market value at 31 March 764,026 1,841,027


a) Movement in the year

i) Capital expenditure
Capital expenditure to acquire and improve property/development assets, construct and improve civic assets, or to disengage
from community related assets amounted to £103m after crediting £7.2m of contributions, including £0.6m of contributions
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
amounted to £50.3m (2007/08: £304.4m) and this amount is offset against disposal proceeds received.
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.
The impairment of development assets is classified as an exceptional cost by virtue of its size (Note 11).
iv) Revaluation adjustment

Where the market value of a property/development asset exceeds historical cost, the increase above historical cost is taken
to the Revaluation Reserve. Any subsequent decrease in market value is written off against the reserve up to the value
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
The majority of valuations have been carried out by independent external valuers holding a relevant professional qualification,
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

Due from disposal of property/development assets 161,644 247,644
Trade and other receivables 112,105 137,036
273,749 384,680

2009 2008
£’000 £’000
b) Amounts falling due within one year

Due from disposal of property/development assets 80,247 145,222
Trade debtors 10,523 15,801
Interest on short-term deposits – 4,626
Rents 577 317
Corporation Tax 1,885 6,389
VAT – 2,456
Other taxation 529 450
Prepayments 1,993 1,206
Other debtors 21,612 20,609
Loans to employees 93 21
117,459 197,097
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.
c) Intra-Government balances
Amounts falling Amounts falling due
due within one year after more than one year
2009 2008 2009 2008
£’000 £’000 £’000 ’000
Balances with other central government bodies 3,019 15,519 – –

Balances with local authorities 1,934 3,230 – –
Balances with public corporations and trading funds – 338 – –
Intra-Government balances 4,953 19,087 – –
Balances with bodies external to government 112,506 178,010 273,749 384,680
117,459 197,097 273,749 384,680


28. Cash at bank and in hand

Group and Agency
2009 2008
£’000 £’000
Cash at bank and in hand (Note 34) 40,587 162,331

40,587 162,331
29. Current investments

Group and Agency
2009 2008
£’000 £’000
Cash on sterling deposit (Note 34) – 279,000

– 279,000
30. Creditors
a) Amounts falling due within one year
Group Group Agency Agency
2009 2008 2009 2008
£000 £000 £’000 £’000
Miscellaneous deposits 291 257 291 257

Trade creditors 160,299 315,822 160,299 315,822
Taxation and social security 8,360 16,750 8,360 16,750
Bank overdraft 69,408 198,913 69,408 198,913
Other creditors 1,566 2,569 1,566 2,569
Housing Action Trusts deferred income 10,753 13,394 10,753 13,394
Accruals and deferred income 61,264 56,577 61,264 56,577
Amount due to subsidiary undertaking – – 3,342 3,342
311,941 604,282 315,283 607,624
b) Intra-Government balances
2009 2008 2009 2008
£’000 £’000 £’000 £’000
Balances with other central government bodies 15,017 34,771 15,017 34,771
Balances with local authorities 98,701 118,234 98,701 118,234
Balances with public corporations – 3 – 3
Intra-Government balances 113,718 153,008 113,718 153,008
Balances with bodies external to government 198,223 451,274 201,565 454,616
311,941 604,282 315,283 607,624

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
Balance at 1 April 2008 22,439 3,352 113,883 1,026 140,700

Charge to Income and Expenditure Account 4,814 438 3,960* 2,026 11,238
Expenditure against provisions (50) – – (24) (74)
Balance at 31 March 2009 27,203 3,790 117,843 3,028 151,864
* 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.
Any asset transferred as part of a balancing package will not as a consequence realise disposal receipts. Where community
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
with retained property agents. The estimates are based on costed investment requirements that take into account legal,
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

In 2005/06 the Agency entered into an agreement with a third party to acquire a portfolio of surplus public sector land.
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.
d) Other liabilities
Other liabilities primarily comprise specific provisions for property transactions and legal actions. The amount includes
a £2m provision in relation to a profit guarantee payable to a developer under the London-Wide Initiative.


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
by Statutory Instrument 1990 No. 779, limits the Agency’s borrowing from all sources to £2,300m.
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
Balance at 1 April 2008 700

Advances made during the year –
Repayments on maturity (700)
Balance at 31 March 2009 –
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

This is a multi-employer defined benefit scheme as described in paragraph 9 of 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

Market value of assets 107.3 130.0
Net pension (deficit)/surplus (37.2) 0.8
Salary increase rate 4.9% 5.5%

Pension increase rate 3.4% 3.5%
Discount rate 6.7% 6.9%
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.
The most recent triennial valuation of the Fund as at 31 March 2007 has been updated by independent actuaries to the City of
Westminster Pension Fund to take account of the FRS 17 disclosure requirements for the year to 31 March 2009. Liabilities are
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

This is also a multi-employer defined benefit scheme as described in paragraph 9 of 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
City of Westminster Pension Fund 35,030 – 35,030 13,031 – 13,031

West Sussex County Council Pension Fund 16,921 7,489 24,410 8,838 7,805 16,643
51,951 7,489 59,440 21,869 7,805 29,674


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 County City of County
Westminster Council Westminster Council
Pension Fund Pension Fund Pension Fund Pension Fund
Inflation increases rate 3.6% 3.1% 3.7% 3.6%

Salary increases 5.1% 4.6% 5.2% 5.1%
Pension increases 3.6% 3.1% 3.7% 3.6%
Expected return on assets 6.5% 6.4% 6.9% 7.1%
Discount rate 6.5% 6.9% 6.8% 6.9%
ii) Mortality assumptions

Life expectancy is based upon actuarial mortality tables, projected to calendar year 2033 for non pensioners and 2017
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 County
Westminster 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
£’000 £’000 £’000 £’000
Equities 28,789 20,471 37,860 27,660

Bonds 9,015 5,556 11,921 6,554
Property – 2,339 – 3,057
Other assets 76 877 100 1,432

Total 37,880 29,243 49,881 38,703
Long-term expected rate of return on assets 6.5% 6.4% 7.1% 7.1%

g) Net pension liability

2009 2008
£’000 £’000 £’000 £’000
Fair value of employer assets 37,880 29,243 49,881 38,703

Present value of funded liabilities (72,910) (46,164) (62,912) (47,541)
Net under funding in funded plans (35,030) (16,921) (13,031) (8,838)
Present value of unfunded liabilities – (7,489) – (7,805)
Net liability (35,030) (24,410) (13,031) (16,643)
h) Analysis of Income and Expenditure Charge

2009 2008
Westminster Council 2009 Westminster Council 2008
Pension Fund Pension Fund Total Pension Fund Pension Fund Total
£’000 £’000 £’000 £’000 £’000 £’000
Amounts charged to net operating expenditure

Current service costs 1,111 228 1,339 1,574 344 1,918
Past service costs 202 160 362 406 – 406
Losses on curtailments and settlements – 454 454 – 219 219
Sub-total 1,313 842 2,155 1,980 563 2,543
Amounts charged to finance costs

Interest charged 4,186 3,755 7,941 3,177 3,231 6,408
Expected return on assets (3,248) (2,697) (5,945) (2,989) (2,918) (5,907)
Sub-total 938 1,058 1,996 188 313 501
Total expense recognised in Income

and Expenditure Account 2,251 1,900 4,151 2,168 876 3,044


i) Reconciliation of fair value of employer assets

2009 2008
£’000 £’000 £’000 £’000 £’000 £’000
Opening fair value of employer assets 49,881 38,703 88,584 50,359 41,216 91,575
Expected return on assets 3,248 2,697 5,945 2,989 2,918 5,907
Contributions by members 695 102 797 546 97 643
Contributions by the employer 1,846 791 2,637 1,883 868 2,751
Contributions in respect of unfunded benefits – 497 497 – 478 478
Actuarial gains/(losses) (16,370) (10,709) (27,079) (4,541) (4,005) (8,546)
Unfunded benefits paid – (497) (497) – (478) (478)
Benefits paid (1,420) (2,341) (3,761) (1,355) (2,391) (3,746)
Closing fair value of employer assets 37,880 29,243 67,123 49,881 38,703 88,584
j) Reconciliation of defined benefit obligation

2009 2008
£’000 £’000 £’000 £’000 £’000 £’000
Opening defined benefit obligation 62,912 55,346 118,258 68,970 60,410 129,380
Current service cost 1,111 228 1,339 1,574 344 1,918
Interest cost 4,186 3,755 7,941 3,177 3,231 6,408
Contributions by members 695 102 797 547 97 644
Past service costs 202 160 362 406 – 406
Actuarial (gains)/losses 5,224 (3,554) 1,670 (10,407) (6,086) (16,493)
Losses on curtailments – 454 454 – 219 219
Unfunded benefits paid – (497) (497) – (478) (478)
Benefits paid (1,420) (2,341) (3,761) (1,355) (2,391) (3,746)
Closing defined benefit obligation 72,910 53,653 126,563 62,912 55,346 118,258
k) Amounts recognised in Statement of Recognised Gains and Losses
2009 2008
£’000 £’000 £’000 £’000 £’000 £’000
Actuarial (losses)/gains (21,594) (7,155) (28,749) 5,866 2,081 7,947

l) History of experience adjustments

The five-year history of experience adjustments is as follows:
City of Westminster Pension Fund

2009 2008 2007 2006 2005
£’000 £’000 £’000 £’000 £’000
Present value of defined benefit obligations (72,910) (62,912) (68,970) (65,138) (56,177)
Fair value of scheme assets 37,880 49,881 50,359 46,290 36,916
Deficit in the scheme (35,030) (13,031) (18,611) (18,848) (19,261)
Experience gains/(losses) on scheme liabilities (16,828) (875) (119) 14* 398*

Experience gains/(losses) on assets (360) (4,509) (718) – –
* net gain on assets and liabilities
West Sussex County Council Pension Fund

2009 2008 2007 2006 2005
£’000 £’000 £’000 £’000 £’000
Present value of defined benefit obligations (53,653) (55,346) (60,410) (54,831) (49,641)
Fair value of scheme assets 29,243 38,703 41,216 40,602 34,072
Deficit in the scheme (24,410) (16,643) (19,194) (14,229) (15,569)
Experience gains/(losses) on scheme liabilities (15) (854) 2 121 (1,575)

Experience gains/(losses) on assets (10,709) (4,005) (7,778) 5,791 1,471
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 Carrying Fair Carrying
value value value value
£’000 £’000 £’000 £’000
Loans and receivables

Cash at bank and in hand 40,587 40,587 162,331 162,331
Investments – – 279,000 279,000
Debtors 386,801 386,801 571,276 571,276
Loans and mortgages 33,693 33,693 34,645 34,645
Available for sale
Financial assets 165,953 165,953 89,190 89,190
Total financial assets 627,034 627,034 1,136,442 1,136,442
Prepayments, tax and social security are excluded from the table above as these are non-financial assets. The fair values of
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 Carrying Fair Carrying
value value value value
£’000 £’000 £’000 £’000
Other financial liabilities

Creditors 252,038 252,038 560,039 560,039
Advances from the National Loans Fund – – 700 700
Provisions for liabilities and charges 117,843 117,843 113,883 113,883
Total financial liabilities 369,881 369,881 674,622 674,622
Deferred income, tax, social security and certain provisions are excluded from the table above as these are non-financial liabilities.
The fair values of financial assets and liabilities are determined as follows:
• The
fair values of available for sale financial assets are calculated using movements in the CLG house price index at a regional
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.
• The fair values of other financial instruments are calculated by discounting their future cash flows using discount rates set
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
Agency’s intervention results in financial risks, most significantly credit risk and liquidity risk. The Agency also has exposure
to market price risk arising from financial instruments as a result of its equity interests in housing units noted in Note 1(r).
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:
• providing a risk management framework for the Agency;

• facilitating risk assessment workshops for strategic, programme, regional and project activities; and
• providing quarterly reports to senior management.
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
informed on a quarterly basis. The monthly reviews incorporate numerically scored assessments of both the likelihood and impact
of specific risks arising, which are combined to direct management’s attention to the areas requiring action. Quantitative data,
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:
•
potential exposure to credit risk is monitored by Business Appraisal, including the accumulation of risk where the same
developers are referred for financial vetting for geographically distant projects;
• existing credit risks, assessments are performed monthly by delivery teams and reported to Central Finance; and
for
• development agreements resulting in the sale 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.
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
maximum exposure under these guarantees is £27.3m (2008: £27.4m), of which £21.7m (2008: £21.7m) relates to Home Group.
This guarantee is backed by the right for the Agency to take a first legal charge over the association’s saleable assets.
At 31 March 2009, the Agency’s cash was held entirely with the Office of the Paymaster General. At 31 March 2008, before the
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.
For all financial assets excluding cash, the maximum exposure to a single counterparty at 31 March 2009 was £137.8m (2008:
£177.7m), and the five largest counterparties accounted for 49 per cent of the total balance (2008: 41 per cent).
In the year ended 31 March 2009 the Agency suffered a bad debt expense of £12.6m (Note 11) resulting from the liquidation
of a developer and the administration of its guarantors. As a consequence the Agency retook possession of the development
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.
b) Liquidity risk
Liquidity risk is the risk that the Agency will be unable to meet its liabilities as they fall due.
Up until the launch of the Agency, the Treasury Management Policy was reviewed and approved by the English Partnerships’
Board on an annual basis. The criteria of accepted best practice were adhered to, including compliance with all statutory and
relevant regulatory codes.
Sufficient liquidity was retained at all times to meet expected liabilities through the investment of cash surpluses in financial
instruments with maturity profiles necessary to ensure the availability of funds when required while optimising returns on
investments. Investment of cash surpluses were made only with approved counterparties and in accordance with established
exposure limits.


Investments were all short-term sterling deposits which did not exceed six months. For the other predecessor bodies and, since
the formation of the Agency on 1 December 2008, cash surpluses have been held with the Office of the Paymaster General.
The Agency does not engage in speculative activity and its policy does not allow the use of more complex financial instruments,
such as derivatives.
The expected undiscounted cash flows of financial liabilities, based on the earliest date on which the Agency can be required to
make payment, are as follows:
Carrying Contractual Less than 1-2 2-5 Over 5

value cash flows 1 year years years years
£’000 £’000 £’000 £’000 £’000 £’000
2009 Other financial liabilities

Creditors 252,038 252,038 252,038 – – –
Advances from the National Loans Fund – – – – – –
Provisions for liabilities and charges 117,843 117,843 – – 117,843 –
Total 369,881 369,881 252,038 – 117,843 –
2008 Other financial liabilities

Creditors 560,039 560,039 560,039 – – –
Advances from the National Loans Fund 700 700 700 – – –
Provisions for liabilities and charges 113,883 113,883 – 17,646 96,237 –
Total 674,622 674,622 560,739 17,646 96,237 –
Deferred income, certain provisions, tax and social security are excluded from the table above as these are non-financial liabilities.
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’s results and equity are dependent upon the prevailing conditions of the UK economy, in particular UK house prices.
The UK housing market affects the valuation of the Agency’s non-financial assets and liabilities, especially development assets.
The Agency is also exposed to market price risk in its available for sale financial assets. The financial assets are the Agency’s
interests in housing units located in geographically diverse areas within the UK. As these assets are classified as available for
sale, any market price movements are normally reflected in changes in equity, and have no effect on the reported net expenditure
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.

At 31 March 2009, if UK house prices had been 10 per cent higher/lower and all other variables were held constant, the Agency’s
reserves, before the effects of taxation, would have been £13.6m higher/lower than as stated (2008: £7.8m higher/lower).
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

2009 2008 2009 2008
£’000 £’000 £’000 £’000
Balance at 1 April 1,436,133 1,517,180 1,420,554 1,506,769

Actuarial (loss)/gain from pension fund (28,749) 7,947 (28,749) 7,947
Transfer from revaluation reserve 26,509 169,162 26,509 169,162
Repayment of surplus funds to HM Treasury (346,000) – (346,000) –
Grant in aid received 3,908,112 2,621,619 3,908,112 2,621,619
4,996,005 4,315,908 4,980,426 4,305,497
Net expenditure (4,302,241) (2,879,775) (4,284,383) (2,884,943)
Balance at 31 March 693,764 1,436,133 696,043 1,420,554
38. Revaluation reserve

2009 2008 2009 2008
£’000 £’000 £’000 £’000
Balance at 1 April 865,063 917,407 858,489 911,155

Revaluation of property/development assets (587,661) 114,631 (587,661) 114,631
Revaluation gains released on disposal (26,509) (169,162) (26,509) (169,162)
Group share of revaluation reserve (3,281) 322 – –
Revaluation of tangible fixed assets (1,865) 1,865 (1,865) 1,865
Balance at 31 March 245,747 865,063 242,454 858,489
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
Income and Expenditure Account (3) –
Balance at 31 March 12,373 12,405
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 Others Buildings Others
£’000 £’000 £’000 £’000
Leases expiring
- within one year 1,097 288 411 391
- between one and five years 2,574 828 1,795 753
- in over five years 1,744 – 2,682 –
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
The Agency has in certain instances disposed of land on the basis that if there is a subsequent change in use of the land, which
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
to quantify the likely income, which may ultimately be received by the Agency.
Contingent liabilities
a) Home Group
On 6 May 1987 with the Secretary of State’s consent, the Milton Keynes Development Corporation together with one other
development corporation and 12 local authorities jointly and severally guaranteed the punctual payment of interest and any
other monies due together with the repayment of principal in the year 2037 in respect of 8.75 per cent guaranteed loan stock
amounting up to a maximum of £100m created by North Housing Association which subsequently became Home Group.
The initial stock issued in May 1987 totalled £66.3m.
On 30 May 1991 the liability of one other development corporation was transferred to a local authority. Since that date further
tranches of the stock amounting to £33.7m have been issued and the number of participating authorities increased to 19.
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
percentage of the total stock issued. On this basis, the Agency’s currently assessed contingent liability in respect of 450
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
to take a first legal charge on sufficient of the association’s saleable assets as represents adequate security for the debt.
b) Sunderland City Council

The freeholds of several hundred properties on two estates in Washington were transferred to Sunderland City Council on 1 April
1997. The transfer was subject to an Agency indemnity valid for a period of 30 years against costs which may be incurred in
remedying shale related defects. This indemnity was issued with the approval of CLG. The extent of this liability is unquantifiable
at this time.

c) Open Door scheme

Under Section 84 of the 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
from advances they made under a scheme to promote home ownership (the Open Door scheme).
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
d) Other contingent liabilities

The Agency also has the following contingent liabilities:
2009 2008
£’000 £’000
London-Wide Initiative 21,000 –

Indemnities to building societies with regard to housing mortgages 5,583 5,583
London-Wide Initiative
The Agency has entered into agreements to underwrite pre-development costs on the London-Wide Initiative in the event that
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
not allowed for in development agreements, construction contracts, grants and claims such as Compulsory Purchase Orders.
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
Expenditure that has been authorised by the Agency at 31 March – –
Contractual arrangements under the London-Wide Initiative (LWI) specify that, in the event that any LWI units remain unsold three
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 prior
to the merger date of 1 December 2008, together with the contribution from the combined Agency in the period since the merger
date, is as follows:
HCA HCA Group
CNT URA Group HC CLG Academy Post
Pre-merger Pre-merger Pre-merger Pre-merger Pre-merger merger Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Income 33,963 15,130 20,097 – 265 46,189 115,644

Expenditure (146,548) (428,742) (866,844) (524,601) (2,117) (2,536,498) (4,505,350)
Net operating expenditure (112,585) (413,612) (846,747) (524,601) (1,852) (2,490,309) (4,389,706)
Share of operating
loss in associates – (10,003) – – – (5,002) (15,005)
Interest receivable 19,723 9,038 1,888 – – 7,143 37,792
Interest payable – (2,482) (17) – – (1,232) (3,731)
Pension fund finance costs (690) – (528) – – (778) (1,996)
Net expenditure before taxation (93,552) (417,059) (845,404) (524,601) (1,852) (2,490,178) (4,372,646)
Taxation 656 (211) (6) – – (37) 402
Net expenditure after taxation (92,896) (417,270) (845,410) (524,601) (1,852) (2,490,215) (4,372,244)
Notional cost of capital 29,898 25,254 (538) (1,856) – 17,245 70,003
Net expenditure for the year (62,998) (392,016) (845,948) (526,457) (1,852) (2,472,970) (4,302,241)
Recognised gains and losses

Actuarial loss from
pension fund (3,031) – (4,599) – – (21,119) (28,749)
Loss on revaluation of
fixed assets (1,073) (452) – – – (340) (1,865)
Group share of loss on
revaluation of investments – (2,187) – – – (1,094) (3,281)
Loss on revaluation of
development assets (353,416) (109,411) – – – (124,834) (587,661)
Fair value loss on AFS assets – (81) – – – 52 (29)
Realised gains on
disposal of AFS assets
recognised in I & E Account – – – – – (3) ( 3)
Total recognised gains
and losses (357,520) (112,131) (4,599) – – (147,338) (621,588)

b) Analysis of prior year results

An equivalent analysis for the year ended 31 March 2008 is as follows:
HCA
CNT URA Group HC CLG Academy
Pre-merger Pre-merger Pre-merger Pre-merger Pre-merger Total
£’000 £’000 £’000 £’000 £’000 £’000
Income 118,352 288,910 58,934 – 5 466,201

Expenditure (243,954) (595,485) (2,083,670) (554,338) (5,511) (3,482,958)
Net operating expenditure (125,602) (306,575) (2,024,736) (554,338) (5,506) (3,016,757)
Share of operating profit in associates – 6,665 – – – 6,665
Interest receivable 30,142 10,652 2,912 – – 43,706
Interest payable (12) (2,811) (40) – – (2,863)
Pension fund finance costs (313) – (188) – – (501)
Net expenditure before taxation (95,785) (292,069) (2,022,052) (554,338) (5,506) (2,969,750)
Taxation (656) (312) (3) – – (971)
Net expenditure after taxation (96,441) (292,381) (2,022,055) (554,338) (5,506) (2,970,721)
Notional cost of capital 51,155 44,739 (583) (4,365) – 90,946
Net expenditure for the year (45,286) (247,642) (2,022,638) (558,703) (5,506) (2,879,775)
Recognised gains and losses

Actuarial gain from pension fund 2,081 – 5,866 – – 7,947
Gain on revaluation of fixed assets 1,073 792 – – – 1,865
Group share of unrealised surplus on
revaluation of investments – 322 – – – 322
Surplus on revaluation of
development assets 108,264 6,367 – – – 114,631
Fair value gain on AFS assets – 12,111 – – – 12,111
Total recognised gains and losses 111,418 19,592 5,866 – – 136,876
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 URA HC CLG Academy
Pre-merger Pre-merger Pre-merger Pre-merger Pre-merger Total
£’000 £’000 £’000 £’000 £’000 £’000
Net assets at time of merger 680,066 876,446 (16,833) (4,409) – 1,535,270

Accounting policy alignments 381,502 10,578 – – – 392,080
Restated net assets at time of merger 1,061,568 887,024 (16,833) (4,409) – 1,927,350
The Agency is required by the Direction on the Annual Accounts to carry development assets at market value. Before the creation
of the Agency, development assets were carried at the lower of cost and estimated market value in CNT, and at the lower of
current replacement cost and net realisable value in URA. This has resulted in adjustments for accounting policy alignments of
£381.5m for CNT and £12.6m for URA. A number of other accounting policies and practices have been aligned between the
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
Consolidated reserves at time of merger 1,516,022 4,727 14,521 1,535,270

Accounting policy alignments 20,668 373,609 (2,197) 392,080
Restated consolidated reserves at time of merger 1,536,690 378,336 12,324 1,927,350
The accounting policy alignments are those described in (c) above.
44. Related party transactions

The Agency is a non-departmental public body sponsored by CLG. Hence any other bodies sponsored by CLG are considered
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:
• Priority Sites in which the Agency has a 49 per cent interest:

- the provision of grant funding totalling £3.1m (2007/08: £10.3m)
- loan stock interest to the Agency of £0.7m (2007/08: £0.8m)
• Urban Regeneration Companies, in most of which the Agency is a 1/3 member:

- contributions to the operating costs, research and studies of these companies totalling £6.7m (2007/08: £7m)
• Land Restoration Trust in which the Agency has a 50 per cent holding:
- grant funding totalling £0.6m (2007/08: £0.5m)
• Meden Valley Making Places in which the Agency has a 25 per cent holding:
- payment of grant funding totalling £nil (2007/08: repayment of £3.5m)
• Blueprint East Midlands in which the Agency has a 25 per cent holding:
- investment by way of loan stock and shares in the form of cash and property £nil (2007/08: £2.5m)
• Barking Riverside in which the Agency has a 49 per cent holding:

- investment by way of loan stock £4.3m (2007/08: £4.2m)
- loan stock interest to the Agency of £0.9m (2007/08: £0.9m)
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
of the financial year the Agency made no losses or special payments requiring disclosure.
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 requires the Agency to disclose the date on which the accounts
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.
The authorised date for issue is 27 October 2009.

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.
Subject to this requirement, the annual accounts for 2008/09 and for subsequent years shall be prepared in accordance with:–
(a) the accounting and disclosure requirements given in 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;
(c) any other specific disclosure requirements of the Secretary of State;
insofar as these requirements are appropriate to the Agency and are in force for the year for which the accounts are prepared,
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.
2. Schedule 1 to this direction gives additional disclosure requirements of the Secretary of State.
Signed by authority of the Secretary of State
Liz Barnard
An officer in the Department for Communities and Local Government
Date 24 November 2008

Schedule 1
Additional disclosure requirements
The following information shall be disclosed in the annual accounts, as a minimum, and in addition to the information required
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;
(d) details of employees, other than board members, showing:–
(i) the average number of persons employed during the year, including part-time employees, agency or temporary staff
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
(iii) employee costs during the year, showing separately:–
(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
(7) amounts recoverable for employees on secondment or loan to other organisations
(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
no requirement to disclose details of contributions to such funds)
(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
(7) trusts, friendly societies and industrial and provident societies in which a board member or a key manager
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.

For the purposes of this sub-paragraph:
(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 information in these sub-paragraphs to be disclosed. If consent is withheld, this should be stated next to the name
of the individual.

GettinG in touch
homesandcommunities.co.uk
mail@homesandcommunities.co.uk
0300 1234 500
HCA Offices
Corporate Centre London Corby London – West End
110 Buckingham Palace Road 1st Floor Maple House
London Exchange Court 7th Floor
SW1W 9SA Central Business Park 149 Tottenham Court Road
Cottingham Road London
Corporate Centre Warrington
Corby W1T 7BN
Arpley House
NN17 1TY
110 Birchwood Boulevard Manchester
Birchwood Croydon 4th Floor
Warrington Leon House One Piccadilly Gardens
WA3 7QH High Street Manchester
Croydon M1 1RG
Ashford
Surrey
Kent House Milton Keynes
CR9 1UH
81 Station Road Central Business Exchange II
Ashford Exeter 414–428 Midsummer Boulevard
Kent Beaufort House Central Milton Keynes
TN23 1PP 51 New North Road MK9 2EA
Exeter
Birmingham Nottingham
EX4 4EP
5 St Philip’s Place The Belgrave Centre
Colmore Row Gateshead Stanley Place
Birmingham St George’s House Talbot Street
B3 2PW Kingsway Nottingham
Team Valley NG1 5GG
Bristol
Gateshead
1st Floor, Aztec Centre Telford
NE11 0NA
Aztec West Jordan House West
Almondsbury Leeds Hall Court
Bristol 2nd Floor, Lateral Hall Park Way
BS32 4TD 8 City Walk Telford
Leeds TF3 4NN
Cambridge
LS11 9AT
Block 2, Suite 3
Westbrook Centre London – Southwark
Milton Road Palestra
Cambridge 197 Blackfriars Road
CB4 1YG London
SE1 8AA

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Publication Date: November 2009
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Homes and Communities Agency Annual Report and Financial Statements 2008/09
mail@homesandcommunities.co.uk
0300 1234 500
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2 Annual Report and Financial Statements 2008/09

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Who we are and what we do 4

Front cover image

Annual Report and Financial Statements 2008/09 3

WHO WE ARE AND WHAT WE DO

4 Annual Report and Financial Statements 2008/09

We manage the following funding and

• Community Infrastructure Fund

which acts as the link between local authorities,

Annual Report and Financial Statements 2008/09 5

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• £10m of investment to deliver 250 new

Liverpool, delivering a new, accessible

6 Annual Report and Financial Statements 2008/09

invested in the region

• 344 zero carbon homes to be provided

5,489 affordable homes

• 4,902 affordable homes started on site and

Annual Report and Financial Statements 2008/09 7

In our first four months (1 December 2008 – 31

8 Annual Report and Financial Statements 2008/09

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“I believe we will have improved

the lives of at least half

Wolverton Park, Milton Keynes

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10 Annual Report and Financial Statements 2008/09

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The Register of Members’ Interests is open for

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CHIEF EXECUTIVE’S REPORT

But clearly in all the important ways, 1 December

12 Annual Report and Financial Statements 2008/09

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“We will ensure that our programmes

fit places, not the other way around;

and our objective will be to achieve

The challenges over the coming 12 months –

That is our commitment to people and places,

and to creating thriving communities.

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

embed a place-focused model of working.

Epsom Cluster, Surrey

while a new retail hub has been completed.

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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