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CDS Housing and Hornby Homes came together to form Plus Housing Group in January. The group and its members now own more than 6000 homes in Merseyside and manage another 4000 for 34 other organisations.

Group chief executive Ken Perry says the two associations had different reasons for wanting a group structure: "CDS wanted to take on a broader role in terms of neighbourhood management," he explains. "It was also looking to become stronger financially, to get the maximum value out of services such as IT, human resources and development and to be more flexible." Hornby Homes wanted to strike a balance between being a customer-focused, smaller outfit and achieving economies of scale. It also recognised that it lacked influence locally and wanted to play a bigger part in delivering the housing and regeneration agenda on Merseyside.

The change also led to the creation of a group board that was able to focus on the big strategic issues, which Perry admits had been a weakness in the past.

The choice of structure
Informal discussions between Perry, then chief executive at CDS, and Eileen Bale, then his counterpart at Hornby, led to the two boards working together on a strategic review. In April 2000 the boards agreed on the group structure, preferring it to joint venture or outright merger because:

• it allowed both associations to retain their identities and independence
  
• it minimised disruption to the way "front of house" services were delivered
  
• it encouraged more efficient and focused "back of house" services
  
• it offered greatest flexibility for future growth and partnership working.

The two boards then began building their proposals, working with the Housing Corporation local regulation team.

Between May 2002 and January 2003, several key milestones were passed:

• gaining the support of staff and tenants
  
• annual general meetings to allow rule changes for CDS and Hornby to reflect their new status as subsidiaries of Plus
  
• application for registration of parent and group arrangements with the Housing Corporation and the Financial Services Authority
  
• staff, board and external launches.

Sharing costs means more money
So, what are the financial benefits of the group structure? Perry says: "I think not going for a merger saved money because tenant consultation was less, there was no need for tenancy agreement changes, name changes and so on. The main costs were in staff and board time 鈥� I was putting in 72 hours a week for a time."

As for future savings, he adds: "Hornby has the potential to save hundreds of thousands through joint procurement within the group. We have also issued a funding prospectus and are actively considering refinancing options, from which both Hornby and CDS will benefit."

CDS cut 40 staff through a programme of voluntary severance, saving just under a million pounds of operating costs.

All group members now share the cost of core services such as treasury management, ICT and human resources while being free to buy in other services such as development, marketing, asset management and public relations.

"Back of house" services have also been given the freedom to sell their services externally, generating income.

Perry believes the group will help secure the future for tenants through more money for repairs, a wider choice of stock, increased neighbourhood management and stock rationalisation. He is responding to several expressions of interest from organisations that want to join up.