Insider Media Limited

Social housing provider Sandwell Homes has been hit by the government's funding cuts as revenue slipped by about £15m in its latest year-end results. Chief executive Paul Field told Insider the not-for-profit organisation expected to lose another £15m in its 2011/12 results as the public sector axe continues to fall.

Sandwell Homes, based in West Bromwich, provides social housing for Sandwell Council's 29,000 council tenants. The organisation also provides services under the government's Decent Homes programme, but faced a shortfall last year as the council cut Sandwell's expected funding for the scheme by £26m over three years.

In a statement, the organisation said it was a priority to "ringfence and maximise savings for Decent Homes". Over the year, £56.3m was spent on the Decent Homes programme, including an £8m refurbishment of Lancaster House and the construction of two high-rise buildings. In its 2011/12 budget, the organisation will spend £34.6m on the scheme.

For the year to 31 March 2011, Sandwell secured revenues of £118m, down on its 2010 result of £133.2m. However, despite the drop, the company increased profits by more than £4m to £6.4m.

Field said: "Unfortunately, the fall in revenue is a pattern which is likely to continue as government funding falls. It dropped this year, and we're expecting it to fall by another £15m next year. There's just less money to be spent on the Decent Homes programme."

Over the year, the company invested more than £733m in equipment – a marked decrease on its 2010 figure of more than £1bn.

Field said the company, which is owned by Sandwell Council, was sustainable despite its slashed budget.

"We can retain our revenue stream from our day-to-day operations which do not come under the Decent Homes programme, like repairs and maintenance of the council houses. Income from those operations is quite stable. And for the moment, the indication is that the government will continue with the Decent Homes scheme, albeit at heavily reduced rates."

Sandwell Homes employs more than 1,700 people. The company submitted its year-end results to Companies House.