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Mears boosted by housing benefit cap

2 Nov 10 Mears believes the Government's proposed cap on housing benefit will be good news for its social housing business.

Mears believes the Government's proposed cap on housing benefit will be good news for its social housing business.

In a trading update, the public sector contractor said “the proposed changes to the system for housing benefit will, in our opinion, promote the migration away from private dwellings towards social housing."

It added that “the changes to the housing finance system will provide local authorities opportunities to invest further in their housing stock which can only be positive for the leading service providers.”

The Government also announced plans to build 150,000 new social homes and to meet funding commitments on the Decent Homes Programme during the next four years.

Mears said its social housing operations “will continue to benefit from increased outsourcing opportunities in the sector as local authorities look to achieve further efficiency gains, particularly in the supply of essential repair and maintenance services. The significant majority of our social housing revenues are non-discretionary spend for services which our clients have a legal obligation to provide.”

The group also sees opportunities for its domiciliary care business, after the Government committed an extra £2bn of annual funding to local authorities for social care by 2014/15.

Since July, Mears has begun mobilising contracts it acquired from stricken rival Connaught, including a £48m deal with the London Borough of Islington.

Additionally, the firm has secured two housing contracts with Exeter City Council worth £13m to provide responsive repairs and voids services, and to install replacement heating systems.

Mears' order book stands at £2.6bn, with secured revenue of 95% for 2010, and 90% for 2011.

It said the anticipated outcome for the full year results remained in line with management's expectations, though there would be costs of £600,000 incurred in mobilising recently awarded contracts.

Chairman Bob Holt said: "Following the Government Spending Review, which we see as positive for the Group, we see substantial opportunities across the public sector. Our order book and bid pipeline have never been healthier.

"The provision of value for money services to the public sector is vital both for the UK economy and the future of Mears.

"We continue to see unprecedented levels of opportunity within the public sector. We believe that the demand and opportunity for our two growth markets will continue to be strong and that Mears is very well placed to benefit from this."

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