The following article is taken from “Inside Housing” (25.9.2009).
“The 2008/09 accounts for English Partnerships – quietly posted in July on a website that has supposedly been defunct since December – reveal the financial devastation visited on the agency in its last eight months of existence, as it posted an operating loss of £492.2 million. It was so badly hit by the house market collapse it had to seek an extra £67 million of funding from the Communities and Local Government department to continue trading.
Its two divisions – the Commission for the New Towns and the Urban Regeneration Agency – were both absorbed by the Homes and Communities Agency in December. Each organisation prepared separate accounts.
The URA, the main land holding division, was particularly badly hit by the housing market downturn.
It was forced to wipe £263.7 million from the value of its land. Its operating deficit more than doubled from £200 million in 2008 to £406 million in 2009. The agency always ran at a deficit because of the way it was funded.
The Commission for New Towns made a £56 million write-down. It lost £12.6 million in a land deal after a developer which owed it £15 million became insolvent. It got the land back but its value had dropped to £2.3 million.
Overall, the value of the URA’s £719 million land bank in 2008 was slashed by a third over the eight months from 1 April to 30 November, leaving it £481 million of land assets to transfer to the HCA on 1 December 2008.
Communities secretary John Denham will face a barrage of questions over the revelations.
Conservative shadow housing minister Grant Shapps, said: ‘When Parliament returns I will be lining up a series of questions for the secretary of state to uncover the truth behind what looks like a very murky situation. When you find out these things months after the event it becomes difficult to hold the quango to account. Why weren’t we told about this at the time?’
The accounts raised a ‘host of questions’ about how EP assets were transferred to the HCA, he added. ‘I was critical of setting up a mega-quango because it is very difficult to track what is going on.’
An HCA spokesperson said the housing market downturn had left EP with ‘a deficit between anticipated receipts and spending commitments’.
‘This was constantly monitored by EP and the CLG,’ he added. ‘To ensure EP did not breach its allocated budget, additional capital budget cover was requested.’
The extra £67 million of funding was approved at the end of last year. The spokesperson said EP had ‘short-term budget issues’ which the HCA had inherited. ‘Short-term operating budget pressures are not the same as technical insolvency. EP passed £1.8 billion of assets to the HCA on 1 December so was clearly not insolvent.’ A link to EPs’ accounts was posted on the HCA’s website.
A history of EP
• 1961 Commission for the New Towns created
• 1993 The Urban Regeneration Agency established
• May 1999 English Partnerships set up to run the agency and commission
• November 2008 Both organisations cease trading
• December 2008 Homes and Communities Agency launched”