Regulator’s financial accounts reveal its deficit has swollen by £10 million
Scrapping TSA could cost government £47m
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The government could be slapped with a bill of more than £45 million to wind up the Tenant Services Authority, the regulator’s financial accounts have indicated.
The TSA’s deficit has swollen by 27 per cent from £37 million last year to £47 million, a boardroom report on its 2009/10 accounts revealed.
The lion’s share of this increase and the deficit itself is due to the spiralling cost of its pension liabilities. These have shot up to £44.6 million from the £19.6 million it inherited in December 2008 from its predecessor, the Housing Corporation. The cost of closing the TSA could be further increased by penalty payments to contracted suppliers, it said in a statement. The regulator was set up 18 months ago.
Housing minister Grant Shapps announced in June that the TSA was ‘toast’ before launching a review of its functions. This must conclude ahead of the government’s October spending review.
The TSA review timetable was described last week as ‘dangerously tight’ in a letter circulated to housing association bosses by David Orr, chief executive of the National Housing Federation. ‘Hasty decision-taking, without proper consideration and consultation, could have serious adverse consequences,’ the letter stated.
The pension deficit and the government’s review of its function are named in the TSA’s annual report as its two principal risks. Staff cuts, dwindling income and the prospect of further cuts puts the TSA at risk of having to boost even further its own contributions to the pension fund.
The government review of its function could ‘impact significantly on the TSA’s capacity to deliver effective regulation’, because of the risk of a staff exodus and plunging motivation, the report adds.
The TSA confirmed that the pension deficit could ‘require paying off in full’ if the watchdog winds up. Alternative measures could, however, be explored to avoid settling the full amount, it said in a statement.
Penalty payments to contracted suppliers can be reduced if given sufficient time to negotiate exit deals, the TSA statement added. ‘The longer the notice period of winding up the greater the opportunity for TSA to negate these potential liabilities.’
Snapshot: TSA accounts 2009/2010
£47 million Total deficit
£45 million Pension liability
£36 million Running costs
£17 million Wages bill
£2.8 million Funding cuts for 2010/11
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Readers' comments (14)
Anonymous | 30/07/2010 7:19 am
This strengthens the case for the end of the TSA.
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ILAG | 30/07/2010 7:39 am
Too true.
"the spiralling cost of its pension liabilities. These have shot up to £44.6 million from the £19.6 million it inherited in December 2008 from its predecessor, the Housing Corporation2
Absolutely disgusting. It's long past time something was done about these gold plated final salary taxpayer funded public sector pension schemes. Private sector workers in the real economy now have no such luxury. Why should the paper shufflers at the TSA should receive such largesse funded by you and I? For that they do (ie basically nothing)? Just tell them that there's no more money and they've got what they've got from the old HC alone. What are they going to do? Go on strike? Yeah, well that will make a difference to...nobody really...
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Anonymous | 30/07/2010 8:20 am
"Go on strike?", not likely, they'll be straight off to an employment lawyer. Get real.
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Anonymous | 30/07/2010 9:39 am
this is typical of public sector - first and foremost protect your employees. |Never mind the serice you are providing. A cost of 47million for an organisation less than 2 yrears old, and has done absolutely Zero for tenants up to now - pink camper van my ar*e!
we have had no differnce in servoce or quality, but they have had great pay and perks and look like even more coming their way. These people will all resurface in 'other' quangoes of the future. Get a real job - you parasites
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Anonymous | 30/07/2010 10:05 am
Can't justify their existence - so try scare tactics. Bunch of parasites who produce little else than meaningless glossy brochures. Landlords laugh at regulators and ombudsman who pose no threat to the worst performers.
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Harry Lime | 30/07/2010 10:11 am
Nothing like a pension story to get your blood boiling is there ILAG? Bit like your favourite paper, the Daily Mail, they never miss a chance to have a story about migrants and the rest. I'd imagine if there was a former immigrant in receipt of a final salary pension there's every chance your head would explode.....
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Progressive Solutions Required | 30/07/2010 11:10 am
Whilst the drums are beating, can I point out that the primary cause of the increased cost of the pension scheme will be the loss of returns from the stock market. The rising cost is not because of additional salary, nor increased pension value.
(Perhaps writers would prefer the private sector approach to pensions of 'Sorry, I know you've paid in for years but we've spent the pension pot so now you have nothing - but don't worry we've saved just enough to pay the executives their pension and bonus!' Hardly fair, which is what led to Ford's Workers camped out on their premises in protest.)
This is just another reason why the premature announcement from Shapps was so damaging. Without proper and careful consideration, along with a high standard of prior negotiation with contractors and the like, his smart mouth but small brain could end up costing many millions of pounds of taxpayer cash.
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Michael Read | 30/07/2010 12:04 pm
On the contrary, if it were done best not to tarry but do it quickly.
In all likelihood, the costs of closure might have got even worse the longer the government waited.
The TSA was obviously a target for closure ever since the moment it was set up. The civil service would have known this by looking through the Conservative manifesto and tallking to the shadow ministerial team prior to the election, as they do.
They would have set out the options for minister on the first day when he put bum to seat.
The announcement wasn't premature at all. Indeed, I bet the TSA knew it was over at 00.01am on 7 May.
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Progressive Solutions Required | 30/07/2010 1:37 pm
Often, I'd agree with the get on with it idea. Removing that sticking plaster is best done swiftly. But unfortunately the hapless Minister has not actually done anything other than speak very loudly out of turn, without agreement nor thought, and without agreement. The outcome is that the TSA still exists, but in a false Limbo, and all the vested interests are lining up with lawyers on hold.
Hardly a dynamic start from the boy-wonder! He was wrong, found out, and will be accountable for the mess.
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Anonymous | 30/07/2010 7:46 pm
I dont normally voice my view publicly, but scrapping the TSA has my vote. Amazing how civil servants are able to espouse pension liabilities to keep their heads when all around them other are losing theirs!!! So!!! given that the debate of longer working years beyond retirement is on the agenda, suggest like the rest of us you also work till you drop!!!
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