HCA to halve running costs, withdraw funding for 13 housing PFI pipeline projects

The government and the Homes and Communities Agency have unveiled plans for the overhaul of the HCA into “a smaller enabling body working for local communities on their priorities”, in a move that will see its running costs halved.

The announcement came as the agency said it would continue to support – through the Private Finance Initiative – 13 housing schemes currently in procurement. The schemes will, however, be subject to a “further rigorous review of value for money”, the outcome of which is expected next month.

A further 25 housing schemes under contract will continue to be supported, but 13 pipeline schemes will see funding worth £1.9bn withdrawn.

Under the plans revealed by Housing Minister Grant Shapps and HCA chief executive Grant Ritchie:

• There will be a 50% reduction in the HCA’s running costs, from more than £80m per year to around £40m per year
• The number of HCA Directors will be reduced from 12 to six, “with the potential to reduce this further over time”
• The agency will operate from four core offices, rather than its current 17 locations. The core offices will be finalised as part of the broader DCLG and public sector estate rationalisation programme.

Shapps insisted the government was committed to building more affordable homes and regenerating local communities.

“The HCA will play a vital role in delivering this radical agenda, but with a new working ethos of communities in charge, drawing on the expertise that the HCA has to help them achieve their priorities,” he added.

“The plans we are announcing today will enable local communities to do just that – while also saving the taxpayer over £100m. Like all areas of the public sector, the changes I am announcing today mark the start of a process, not the end. HCA will need to remain flexible to deal with new challenges that will continue to emerge in the coming months and years."

The HCA’s Ritchie said: "Government has given the HCA an important role in meeting the housing and regeneration priorities of local authorities and communities, and in regulating the housing sector to command lender confidence and protect the taxpayer.

He said the agency had therefore created a top structure with a strong local focus “that will provide effective leadership and engagement with local partners while saving money”.

A range of authorities have been affected by withdrawal of funding for housing PFI pipeline projects. They include Birmingham City Council, the London Borough of Camden, Hull City Council, and Shropshire County Council.

Commenting on the funding support decisions, Ritchie said: “At the HCA we will now concentrate on helping local authorities maximise the impact of available funding, through our expertise on procurement and other technical services. We will also work with those councils which have received disappointing news, to look at any ways in which their objectives might be supported through a non-PFI route.”