Memorandum by the Association of London
Government (ALG) (DEC 55)
1. INTRODUCTION
1.1 The Association of London Government
(ALG) is committed to getting the best possible service for London's
tenants.
1.2 The evidence set out below has been
compiled by the ALG and is based on information provided by London
boroughs.
2. SUMMARY
2.1 The ALG welcomes the Government's focus
on tackling the needs of tenants by improving social sector stock
condition, as set out in the Decent Homes standard. It also welcomes
the commitment to providing extra funding through a variety of
channels, and the greater flexibility for local authorities which
should accompany the introduction of prudential borrowing. However,
the context for achieving the Decent Homes target raises a number
of issues of particular concern to London councils. These issues
and concerns are set out below.
3. TENANT CHOICE
AND THE
OPTIONS APPRAISAL
PROCESS
3.1 The social housing Decent Homes standard
is concerned with the living conditions of tenants in the social
sector. The Government has made clear its desire for close tenant
involvement in the process of meeting the target. In its "Sustainable
Communities" plan published in early 2003, the ODPM declared
that "Tenants must be at the heart of plans at all stages
in the process" of choosing options for investing in stock
to meet the target (p. 16). Furthermore, in guidance to local
authorities on Arm's Length Management Organisations (ALMOs) it
is stated that "Engagement should start with tenant involvement
in option appraisals. They should be engaged in shaping the options,
not just consulted on the outcome".
3.2 We agree that it is important for tenants
to have the maximum reasonable choice over the future of their
homes. But for choice to be credible it has to be real choice.
Tenants will recognise the constraints imposed by financial circumstances
but it is important that any other restrictions are as reasonable
as possible. It is worth noting that many tenants have tended
to regard the three stock options promoted by the Government as
complex, costly and a time-consuming distraction in their own
particular circumstances.
4. TENANT PRIORITIES
4.1 Boroughs have made the point that the
national decent homes standard does not always accord with the
preferences of local tenants, who frequently cite wider issues
such as security, communal areas and environmental condition as
priorities.
4.2 This would suggest a need for flexibility
to respect local occupier preferences, with the understanding
that this flexibility would not include the option to invest less
in the stock.
5. REDUCTIONS
IN CAPITAL
FINANCE ALLOCATIONS
5.1 In London the regional government office
have not made guarantees of any housing investment funding for
boroughs after 2005-06. The absence of minimum investment guarantees
is inconsistent with the requirement from another part of ODPM
for proper long-term business planning.
5.2 This long-term uncertainty has been
compounded in the short term in London by the willingness to contemplate
reductions in housing investment allocations for 2004-05 of up
to 40%. It has taken considerable discussion to confirm a 70%
funding floor.
6. CHANGES IN
REVENUE FINANCE
6.1 There had been concern that the Government's
July proposals on Management and Maintenance allowances could
result in sharp reductions in revenue resources for local authorities
in London. The Government's recent announcement of increased revenue
protection for London boroughs is to be welcomed.
7. PRUDENTIAL
BORROWING
7.1 The ALG welcomes the additional flexibility
that prudential borrowing allows for local authorities to manage
their funds in a business-like way and the potential to bring
forward investment in council homes.
7.2 However, it is not clear that many London
boroughs will be able to take advantage of the benefits of prudential
borrowing. New limits on Management and Maintenance allowances
may not leave enough secure income to enable local authorities
to take advantage of the full potential of prudential borrowing.
7.3 The ALG also welcomes the additional
flexibility afforded by the abolition of the Minimum Revenue Provision
(MRP), which gives councils more discretion in managing their
finances. The redirection of these funds towards ALMOs will contribute
towards meeting the Decent Homes target.
8. THE EXTENT
OF NON-DECENCY
AMONG COUNCIL
STOCK IN
LONDON
8.1 According to an ALG analysis of London
boroughs' Housing Investment Programme statistical returns for
2002-03, 53% of the council stock in the capital (around 264,000
dwellings) was below the Decent Homes standard in April 2003.
8.2 London boroughs' brought 28,194 council
dwellings up to the standard during 2002-03, at a cost of £220
million. A further £108 million was spent on preventing 45,710
falling below the standard, with 13,728 dwellings becoming non-decent
during the year.
8.3 London boroughs are fully committed
to meeting the decent homes target by 2010 and are not diverting
housing funding to other areas: ALG research indicates that in
2002-03 100% of Basic Credit Allowances (government-approved borrowing)
was spent by boroughs on housing. Boroughs spent £733 million
on HRA housing in 2002-03, including major works, urgent repairs
and improvements, all contribute towards meeting the decent homes
target. In the same year boroughs spent 35% more on management
and maintenance than they were allocated in allowances, illustrating
the high priority that is given to ensuring tenants' homes are
maintained.
8.4 Based on boroughs' statistical returns,
ALG calculate that the total cost of bringing all council dwellings
in London up to the Decent Homes standard is around £2.3
billion. To this must be added the costs of preventing decent
dwellings falling below the standard as they age. As things stand,
several boroughs are not expected to meet the target of eliminating
all non-decency by 2010.
9. CONCLUSION
9.1 To meet the decent homes target, London
boroughs first need to be reasonably sure of the levels of future
funding. A significant step in this direction would be for the
Government and its regional offices to guarantee that some proportion
of future regional housing investment pots will go to boroughs
to spend on their stock.
9.2 Secondly, while boroughs are spending
as much as possible on Decent Homes, analysis indicates that the
level of funding from the Government will have to be increased
to ensure the target is met across the capital.
9.3 Thirdly, there is a need for greater
flexibility and choice in setting investment priorities and deciding
on the vehicles for achieving them.
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