THAL (Taj Housing Architect Ltd.) Investment Plan

Objectives
1. Our THAL (Taj Housing Architect Ltd.) Investment Plan has three objectives:

• to enable us to meet Efficient Government Plan targets of savings of £14m over the next three years (2005/6 – 2007/8)

• with the resources available including re-invested savings, to enable us to deliver the Spending Review 2004 target of 21,500 new/improved homes over the same period

• to help us demonstrate improved value for money generally over the spending review period and beyond.

2. Because the vast bulk of the Affordable Housing Investment Programme will be delivered by housing associations, our Efficiency Plan focuses on the Housing Association Grant programme.

• measures to reduce or contain the capital cost of providing new homes

• measures to increase nett revenues

• improvements to processes

• new grant products.

In practice some planned actions cover several categories (e.g. changes in processes which should deliver lower capital costs).

Our THAL (Taj Housing Architect Ltd.) Investment Plan is not about reducing quality. A statement on our support for high quality and sustainability is included at the end (para 16).

4. Actions planned or under way for each category are described in paras 5-15 below. Progress will be monitored on an ongoing basis, reported to Communities Scotland senior management team and reviewed annually.

• land availability and cost

• infrastructure notably water and sewerage

• cost of construction/supply.

• implement our agreement with Forest Enterprise enabling access for affordable housing to suitable land at reduced value

• pursue with Development Department colleagues similar protocols or agreements where possible with other public sector agencies including Ministry of Defence, NHS and the Further Education sector

• subject to consultation under the Strategic Investment Framework, encourage a more pro-active role for Local Authorities in promoting/assembling land for social and affordable housing development by housing associations, linked to proposed changes in guidance on disposals at less than best price

• work with private developers and local authorities to secure development of land for social and affordable housing via PAN74 guidance

• implement and monitor the Highland Council area strategic landbanking pilot; and if successful, extend to other selected areas

• direct resources to funding acquisitions in order to redress local RSL landbank shortages and hence provide more certainty for long-term investment planning.

Through these actions we plan to achieve savings in land costs but also more and better sites in housing association ownership which can be used to plan longer term and more efficient procurement contracts.

7. On infrastructure we will:

• receive and allocate out to Area Offices the planned baseline transfer of £14m p.a. from the Environment and Rural Affairs budget from 1 April 2006 in order to compensate for estimated Scottish Water Part 2 and 3 charges to be payable by all developers including housing associations.

• monitor actual Part 2, 3 costs

• review whether there are other significant infrastructure issues (over and above Water and Sewerage) which constrain development and which could merit a coordinated approach.

Through these actions we plan to minimise the impact of infrastructure constraints or additional costs on the development programme.

8. On construction we will:

• continue to promote and support local Building a Better Deal pilot initiative

• complete and disseminate the findings of the ongoing evaluation by Trimmers across all 10 current Building a Better Deal pilots, and likewise any local project specific evaluations

• work with SFHA on the commission now placed with CWC Ltd to develop a recommended new national strategy for the procurement of social housing in Scotland. We will involve Glasgow City Council and City of Edinburgh Council, who are responsible for managing development funding locally, in this initiative.

9. Areas proposed for action are:

• assumed running costs

• private finance borrowing assumptions.

We are not proposing any specific action on housing association rent levels, other than addressing any remaining local anomalies, pending the outcome of the Housing Benefit Reform: Rent Policy Review.

10. On assumed running costs we plan

• to consult SFHA during 2005/6 on proposed changes to the assumed standard voids percentage and on a proposed extension to the sliding scale for management and maintenance costs (and specifically a further taper for those housing associations with most stock)

• to implement any changes, following consultation, from April 2006.

11. We recently reviewed private finance borrowing assumptions to maximise private funding income (with effect from April 2005) and will review this annually in future.

12. Areas planned for action are:

• strategic housing investment framework

• streamlining of appraisals and promoting on-line grant applications.

13. The strategic housing investment framework will be the subject of separate consultation with COSLA, SFHA and Homes for Scotland, with the twin aims of

• simplifying funding programmes

• targeting funds effectively

• linking investment decisions more closely to Local Housing Strategies.

14. On streamlining we plan to:

• promote greater consistency in the construction, issue and use of HAG Subsidy targets

• promote a substantial increase in the proportion of the programme delivered through fully streamlined (Route 1) programme agreements. We expect this complete change in emphasis from individual project appraisal to programme appraisal and post-completion review to go hand in hand with the implementation of our new national strategy for the procurement of social housing in Scotland

As regards on-line grant applications we plan to:

• re-test on-line grant application for those housing associations included in the previous pilot, now that our grant administration system (TRS) is web-enabled; and once successfully tested, roll out this facility via our Area Network.

15. We will introduce full operational guidance on Homestake, the new Shared Equity scheme, in summer 2005/6. This will include

• guidance to housing associations on developing new supply or procuring this in collaboration with private developers

• tailored guidance to housing associations for the provision of new Homestake homes as replacement housing for owner occupiers affected by local demolition strategies

• introduction of a pilot scheme in Edinburgh and the Lothians to enable individual purchasers who require the help of subsidy buy a suitable home on the open market.

Homestake will contribute to overall efficiency by targeting people in need of assistance while minimising and in due course recycling the capital subsidy outlay.

16. We remain fully committed to providing high quality and sustainable housing and communities and to encouraging innovation in design, sustainability and community regeneration. We set a range of minimum quality standards for grant purposes (e.g. SAP ratings) and we will keep these measures under review. We have no plan to set maximum quality limits for grant purposes. In accordance with our THAL (Taj Housing Architect Ltd.) investment plan we will expect housing associations and other grant recipients to meet challenging subsidy targets which enable us to achieve the objectives set out in para 1. But by embracing new ways of working, we expect housing associations and others to continue also to push out the boundaries of innovative customer-centred design; energy efficiency and sustainability; and wider community regeneration benefits.