29 July 2005
Newly merged housing associations are coming under increasing pressure from their regulator to make efficiency savings over and above those identified in their business plans.
The Housing Corporation is renewing its efforts to ensure that registered social landlords meet their target of achieving £835m in efficiency savings by 2007/08 under the programme drawn up by Sir Peter Gershon.
Circle Anglia, which began operating on July 1 following a merger between the Circle 33 and Anglia housing groups, has been told to look at its books again to see if it can improve on the savings of £2.8m per year already identified.
The corporation has issued its new instructions even though it approved the merger, based on a business plan submitted earlier in the year, only in May.
Rosemary Farrar, group finance director at Circle Anglia, said the corporation's new demands were the result of efficiency moving higher up the political agenda.
She added that, while the association was happy to work with the regulator, it needed breathing space to consolidate the new organisation.
'The corporation is looking to exact more efficiency than we had originally put in our statement but it is not requiring it,' said Farrar. 'We have a co-operative relationship with them, but we don't want to set targets that are unachievable and then fail.'
Circle Anglia has now drawn up a medium-term statement looking at possible further gains.
It is thought that other associations planning mergers could face similar demands.
Two months ago, Housing Corporation chair Peter Dixon warned all large RSLs that merger proposals must demonstrate savings as well as better services to tenants. The corporation feared that some RSLs were merging solely to increase their chance of winning development grants.
Clare Miller, the corporation's director of regulation, said merged RSLs must demonstrate they can make savings over time.
'We recognise there will be costs associated with any changes but there should be a reasonable expectation of efficiency gains as well,' she added.
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