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White doves being released in December 2005 at the launch of the Arlington House project, backed by Suggs |
Investigators pore over books of charity behind £22m revamp at hostel
Arlington House project faces handover of historic building and probe into its landlord
THE Housing Corporation has launched an investigation into the accounts of Novas Scarman Group, landlord of the historic Arlington House hostel in Camden Town.
The government regulator ordered a statutory inquiry into the business affairs of the group, one of the country’s leading social care charities.
Mystery surrounds the issues at the heart of the investigation and what prompted the Housing Corporation probe.
A spokesman for the regulator said the Corporation had “met representatives of the board of Novas Scarman Group to advise them” of the proceedings. He confirmed: “The inquiry will investigate aspects of the financial management of the group.”
The Corporation has the power to demand any financial document it wants as part of its probe.
The inquiry comes on the heels of the revelation that Novas Scarman plans to sell the hostel in Arlington Road.
One Housing Group (OHG), one of Camden’s biggest housing associations, is in talks about taking over the hostel, which is undergoing an extensive £22million refurbishment
A spokesman for Novas Scarman said the property would be transferred at “nil cost”, with a further £11million “gifted” to the new owners on condition they finish Arlington House’s biggest-ever overhaul.
The project was launched with a fanfare when Suggs and Chas Smash, from Madness, backed the scheme with an acoustic gig in a marquee at the car park three years ago. They marked the hostel’s 100th birthday by helping to release white doves into the air. But it has not been plain sailing since.
The refurbishment is not expected to be completed until November next year, 11 months later than first forecast in the charity’s 2006-7 audit report.
The same report warned that “Novas did not have experience of delivering major building projects on this scale” and concluded it was “a potential area of risk”.
Since 2005, the charity has sold off the majority of its portfolio, openly changing its emphasis from accommodation for rough sleepers or ex-offenders to providing outreach services for the needy.
Despite a £22million government grant for the Arlington House remodelling project, a Housing Corporation report last year found Novas Scarman had poured “substantial investment” into the hostel from its own funds, the trade press has claimed.
Around £5million of the grant was later withdrawn, however, because it “had not been required”, according to Novas Scarman.
The group’s annual report for 2006-7 showed an operating deficit of £277,000. Only asset sales of more than £2million in the same year brought it back in surplus. The group has still not released its latest accounts, even though they were due on September 30.
Arlington House has been a shelter for the homeless and destitute since 1895. Writers George Orwell and Brendan Behan laid down their heads there. It was name-checked by the band Madness in their song One Better Day.
It was brought into public ownership in the 1980s and sold to what was then known as the Novas Overtures group in 1991 for £1.73million, with the covenant – effectively a planning rule – that the building must be used to provide “social housing at affordable rents for single homeless people”.
One Housing Group is a non-charitable conglomerate with an emphasis on residential housing. It has declined to expand on what it might do with the building, although the onus will be on it to complete the refurbishment as soon as possible.
Two members of the Novas Board, Keith Bird and Labour councillor Pat Callaghan, left shortly after the sale was announced internally in July. Cllr Callaghan, who represents Camden Town ward, confirmed the sell-off had prompted her departure.
“Arlington House was the basis of the expansion which happened at Novas,” she said. “It was doing a lot of good in the community. Whatever housing association takes it over I don’t think the quality of service will be so holistic. I felt that if it wasn’t in the portfolio then there was no point in my being with Novas.”
Company insiders said the sell-off decision was taken to keep Novas afloat after it inherited operating debts from its merger with the Scarman Trust in December 2007. Novas chairman Michael Wake is also chairman of the Scarman Trust.
The charity’s change of emphasis has seen it pour millions into a huge arts complex in Liverpool, two London art galleries and Rough Sleepers, a haute couture boutique in Chalk Farm.
Last year it announced that the “fashion store with a conscience” in Chalk Farm Road – designed by Japanese artist Sonoko Obuchi – was closing, citing poor sales and putting the blame on location.
Novas Scarman received about £3.3million in revenue in 2006-7 from Camden Council’s Supporting People programme. The reduction in bed numbers from 390 to 130 as part of the Arlington House refurbishment could see that income reduced.
Novas Scarman’s dependence on the Supporting People revenue was a “key risk”, Housing Corporation assessors reportedly warned last year.
A Novas Scarman spokesman denied financial reasons were behind the decision to transfer Arlington House. He insisted the support the charity currently provided at the hostel would continue and that standards would be maintained.
“We welcome this [inquiry] as we are pleased to be able to clarify matters on some areas of our work,” the spokesman said. “This includes the original structure of capital funding for Arlington House, which we are currently redeveloping.”
In its own words, Novas Scarman Group prides itself on its “robust balance sheet, with assets of over £40million with no loans against these, and as a voluntary organisation is viable, maintaining a small surplus/break-even revenue position”. |
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