Item 10
Budget and Audit Scrutiny Committee 6th December 2006
Stock Options Key Financial Messages
The purpose of the financial issues identified below is to aid facilitation of
discussion of those areas where the Committee may wish to have further
details at a later meeting?

Cabinet Approval - report to Cabinet 5th December 2006 on progress
and delegation of key decisions to Lead Members for Housing and
Customer and Support Services

Timescales
o Launch Salix Homes 4th June 2007
o Launch Common Services Provider (CSP) 4th June 2007
o Launch Local Housing Company (LHC) April 2008
o PFI summer 2009
o However still require announcements from DCLG

CSP
o
o
o
o
Staffing structures developed and costed
Staffing and other service costs built into CSP model
Indicative running costs once established for CSP £8m
Costs recharged to Salix £1.2m, LHC £2.1m, HRA £1.2m and
HGF £3.5m and built into respective Business Plans

Local Housing Company
o Staffing structures developed and costed
o Staffing, CSP recharges, other service costs developed to
determine management operating cost £14m
o Stock condition surveys undertaken
o Transfer of DLO to LHC
o Rents have to converge within pricing model
o Above costs fed into DCLG pricing model, gives bid of £98.5m
o Bid gives £165m of investment over next 5 years and £690m
over 30 years
o Discussion with DCLG over gap funding
o Need to consider VAT shelter, Right to Buy Receipts and Land
Transfer

Salix Homes
o Staffing structures developed and costed
o Staffing, CSP recharges, other service costs developed to
determine management operating cost £10.5m
o Consideration given to future development and changes arising
through PFI
o Management costs fed into HRA Business Plan
o Building in regeneration delivery
Item 10

Housing Revenue Account
o Salix Management cost built into HRA
o CSP recharge built in with any other recharges and operational
costs, for example insurances and bad debts
o Stock conditions undertaken for ALMO and PFI areas and built
into HRA Business Plan
o HRA 30 year Business Plan developed that is financially viable
o ALMO bid £69m and PFI credit £102m
o Bids give £163m over next 6 years and £366m over next 30
years of investment

Housing General Fund
o Ensuring strong Strategic Housing structure in place
o Continuation of existing functions, Supporting People
o Develop Housing Policy
o Develop monitoring arrangements with new organisations
o Awaiting DCLG guidance on the functions Strategic service
would provide
o Implications being considered through CSR and Budget process

Corporate Impacts
o Working Group established with Senior representation from all
Directorates
o Considering accommodation, systems and IT requirements,
Service Level Agreements and contracts
o Implications of functions on Business Plans for CSP, LHC and
ALMO
o Implications of functions on Corporate budgets

Implementation Costs of Stock Options
o Forecast expenditure £9.3m over 3 financial years, staffing,
consultants, stock condition surveys, new organisation set up
costs
o Costs are benchmarked with other PFI, ALMO and transfer
projects
o Funded through HRA, Council and DCLG
o Monitored monthly by Project Leads and reported to Lead
Member for Housing
o Considered at Joint Lead Member for Housing and Customer
and Support Services 27th November 2006