Key Workers Initiative: Affordable Housing Scheme

Report: 3
Date: 12 March 2002
By: Commissioner

Summary

Finance, Planning and Best Value Committee (FPBV) has been considering the MPS application for Starter Homes Initiative funding for which an allocation of £15.3m over two years has been made on a pro-rata split to the MPS and the City of London Police.

The administrative costs to the MPA for the scheme were initially calculated incorrectly and subsequently confirmed at about £400k per annum (estimated £770k in total).

The FPBV has proposed that the applicants individually fund the administrative fees for their particular property. The Home Office has confirmed in writing that neither this, nor its funding from the allocation, is acceptable under the terms of the offer. This was reported to the FPBV meeting of 2I February 2002. Members requested that a proposal for the funding of the administrative fees be established. It was agreed that this proposal should be put to the Co-ordination and Urgency Committee in order to allow the scheme to start at the earliest opportunity, if agreed.

A. Recommendation

Members' views are requested to approve that the administrative fees be funded from an earmarked reserve created from the projected underspend from 2001/02.

B. Supporting information

1. Property Services Department (PSD) negotiated a partnership with Tower Homes Housing Association, the City of London Police and others in order to formulate a bid under the Government's £250m Key Worker Homes Initiative. This bid was successful.

2. At the FPBV at its meeting on 6 December 2001, Members considered the report Starter Homes Initiative and determined that the administrative cost of £240k be met directly by the individuals participating in the scheme. As a consequence, discussions were held with the lead partner, Tower Home Housing Associations, and with the Housing Corporation. When the initial scheme was formulated in order to bid against the Government's allocation the administration cost and details were required as part of the bid. This was included at 1.25% (a competitive level compared to other bids). It was expected that this would be funded by the MPA and the City of London Police Authority (pro rata). However, funding including in the Land and Buildings Revenue bid to the MPA for 2002/03 was not endorsed.

3. In an update report at the FPBV meeting of 17 January 2002 Members were informed that funding would have to be found by the MPA if the scheme was to proceed as it could not be self-funded by qualifying applicants meeting the administrative costs. It was indicated that this would not be acceptable to the Housing Corporation for a low cost housing scheme and that the MPS would be likely to lose its allocation.

4. Members were also informed that the administration cost figure had been calculated wrongly, based on the grant whereas it should be calculated on the future purchase price of properties. This equates to a max administration fee of approximately £400k pa (£770k in total) which had been renegotiated from1.75% of the purchase price to £1600 per property. (The Housing Corporation authorise a scale which is 3%).

5. At the FPBV meeting of 21 February 2002 under 'matters arising', Members were informed that the Home Office wrote to the MPS Personnel Department on 29 January 2002, PSD having progressed this request with the DTLR on behalf of the MPA. They stated that:

'The allocation which we made to the joint bid from the Metropolitan Police and the City of London Police with Tower Homes was made on the basis of the material in the bid document. That document included a commitment by the forces to meet the administration cost. If the Met Police now seeks to alter this basis, we will have to withdraw this allocation and re-assign it elsewhere'.

6. In view of these comments Members were asked to give further consideration to the funding of the administration costs which are in addition to the normal fees and charges on the purchase of a property, which are met by the purchaser.

C. Financial implications

1. Members requested for a further report, which included a proposal of a method of funding the administration fees without the loss of the allocation. Following consultation, the MPS Director of Resources and Head of Finance and the MPA Treasurer advised the FPBV at the 21 February 2002 meeting that this funding requirement could suitably be fulfilled by creating an 'earmarked' reserve from the projected underspend for the Financial Year 2001/02.

2. It was agreed by Members that the proposal be put to this meeting of the Co-ordination and Urgency Committee in order to allow the scheme to start at the earliest opportunity.

3. This proposal has been indicated in a report to the Human Resources Committee of 7 March 2002, but it is not a recommendation to that committee as it does not have delegated authority to agree funding.

D. Background papers

Reports to MPA and FPBV 21 February 2002 and HR 7 March 2002.

E. Contact details

Report author: Trevor Lawrence, MPS.

For information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

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