Corporation orders financial inquiry
The Housing Corporation has announced an independent inquiry into the financial management of the Novas Scarman Group.
The group, which provides support services to groups including rough sleepers, asylum seekers and offenders in the north west, south west and London, was given three green lights for viability, governance and management following a Housing Corporation inspection in December last year.
But the group, then called Novas Ouvertures, was warned that exposures existed which made it ‘vulnerable to deterioration’.
In the 12 months to March last year, the group made an operating deficit of £277,000 for the first time, with funding losses on Supporting People schemes being a major factor. The Housing Corporation has not yet received the groups’ latest audited accounts, which were due on 30 September.
Assessors warned that dependence on Supporting People cash was a ‘key risk’ for the group. And they said the profitability of the group’s efforts to branch out to other income-generating activities such as social enterprise ‘had yet to be established’.
The group’s annual turnover is around £21 million, of which £14 million comes from revenue grants. In December last year, it owned 190 homes and managed a further 480.
The group is overhauling its business strategy by moving away from accommodation with housing management and support and providing floating support services instead.
It is ploughing the proceeds from the sale and transfer of homes into regenerating its largest remaining hostel, Arlington House in Camden.
Phil Rego and Simon Bevan, partners at BDO Stoy Hayward, will be conducting the inquiry.
What is Novas?
Novas Scarman Group is a social justice charity formed in December 2007 from Novas Group, Path, and Scarman Trust.
Before the merger Novas mainly ran large hostels for homeless people. But it was in the process of transforming itself into an organisation more involved with supporting communities through arts, enterprise and support.
Novas’ 2006/07 annual report reads: ‘We are currently remodelling our remaining large hostels to raise the living standards for people who are homeless, within buildings that will become a part of their local communities through business, market space, cultural quarters, performance spaces, retail and restauraunts.’
It also outlines the work Novas did, working with around 6,000 people a year through homelessness services, drug and alcohol support, and floating support for people in their own homes.
Financial results for the period were poor, with turnover down from £33.5 million in 2006 to £22.3 million in 2007.