Memorandum from the National Federation
of ALMOs (NFA) (BDH 47)
BEYOND DECENT HOMES: DECENT HOUSING STANDARDS
POST 2010
1. SUMMARY
— The decent homes programme has been an
effective programme but will not be sustained if both the backlog
and the long term financing needs are not addressed.
— The decent homes standard is a minimum
standard—at local level many providers have higher standards
but resources need to be made available to achieve these.
— The decent homes programme has delivered
more than just new kitchens and bathrooms. It has delivered many
other objectives. However, this now needs to be taken a step further.
— The ALMO model demonstrably delivers
better services, tenant empowerment, major programmes and efficiencies.
However, it is still a new sector and we expect it to diversify
further in accordance with local priorities.
— The current HRA subsidy system is no
longer fit for purpose and self financing should be implemented
as soon as possible.
— The Government should review the current
fiscal barriers that inhibit a fair market in housing management
services.
2. THE WIDER
BENEFITS OF
THE DECENT
HOMES PROGRAMME
2.1 The decent homes programme has been
a remarkable success and has so far improved the lives of many
tenants. While it is essential that resources continue to be made
available to bring the remainder of the social housing stock up
to the decent homes standard this only addresses part of the problem.
2.2 The decent homes programme has delivered
much more than simply upgrading stock that has suffered from years
of under-investment. It has been a key driver in service improvement
and tenant empowerment and has also achieved a number of other
key impacts including:
— Providing local jobs and apprenticeships.
— Improvements to the health of residents
and consequent reduction in calls on the health service, particularly
at GP level.
— Greater pride within local communities
with some indication of reduced crime rates.
— Improved energy efficiency and reduced
carbon emissions.
— Impact on general poverty, eg through
reducing fuel poverty.
— Better community cohesion and empowerment.
Overall, the level of subsidy on decent homes
provides benefits for more people than new build programmes.
2.3 However, although the decent homes standard
has been successful in upgrading the stock it does have its limitations
since it does not address common parts, lifts, environmental works
or the degree of energy efficiency requirements that will be needed
in the future to meet government targets.
2.4 Most ALMOs, therefore, tend to work
to higher, local standards. The implementation of national and
local standards under the new regulatory system in April 2010 will
still enable those decisions to be made by residents and councils
at local level. However, ALMOs are managing some of the most intractable
council housing and resources will need to be found for retrofit
in much of the stock.
2.5 The government must recognise that,
however much new housing may be built, the current housing stock
will continue to provide the majority of housing provision for
decades to come. It is vital that the work of bringing the current
local authority housing stock up to acceptable standards is continued.
In 2050 the existing housing stock will still constitute
70% of council homes, many of which will be over 120 years
old.
3. DELIVERING
THE DECENT
HOMES PROGRAMME
THROUGH ALMOS
3.1 The main focus of ALMOs up to now has
been to improve services to residents and to deliver the much
needed improvements to tenants' homes. The results so far have
shown that ALMOs have excelled in delivering decent homes. The
combination of clear objectives, good project management and real
resident involvement has ensured that ALMOs now have a great track
record of delivering excellent services alongside major repairs
and refurbishment projects on budget and on schedule. ALMOs are
also delivering the majority of local authority housing finance
efficiencies.
3.2 In order to access the Government funding
for decent homes all ALMOs have to first achieve a two star or
higher rating from the Audit Commission. This performance related
regime has delivered real service improvements to residents and
as at October 2009 out of 61 published ALMO inspection
results there were 21 three star and 34 two star ALMOs.
3.3 ALMOs have to deliver a two star or
higher service in the first instance with the same level of funding
and mainly the same staff as the previous local authority housing
department. This illustrates that it is not just an increase in
funding or new staff that makes the fundamental difference to
performance but the ALMO model itself with the focus on performance,
delivery and customer service together with a new closer relationship
with residents. Interestingly, no traditional local authority
housing management service and only four housing associations
have achieved three stars in the last five years.
3.4 ALMOs deliver more than just a housing
service—they are inextricably linked to people and communities
and to delivering functions at local authority level. They can
deliver other benefits to their home council and local strategic
partnerships through activities aimed at addressing worklessness,
tackling and preventing anti-social behaviour, working with young
people, financial inclusion etc.
4. CONTINUING
THE DECENT
HOMES PROGRAMME
4.1 The NFA welcomed the government's continued
commitment to the decent homes programme in the last spending
round. However, a similar level of funding to the £2.4 billion
allocated in this CSR period will be required to complete the
ALMO programme, which will itself need to extend to 2015 if
it is to be fully completed. Further investment will also be needed
in the future if the existing stock is to be brought up to decent
environmental standards.
4.2 The stop start-nature of the programme
has created major difficulties. Over the whole decent homes funding
period ALMOs have repeatedly been asked by CLG to re-programme.
Sometimes they have been asked to bring forward spending (as in
March this year), other times they have been asked to reprofile
spend (as in July this year and also in 2006). However, ALMOs
have always delivered although it is very difficult to manage
large scale programmes efficiently in these circumstances. For
example Round 6 ALMOs were invited to apply for the programme
in June 2006 with a promise of funding decisions in September,
yet then had to wait eighteen months until April 2008 before
being told they could go ahead [and two have still not had their
bids approved]. Yet, according to a PQ in March this year, a total
of £29 million over 2006-07 and 2007-08 had
been transferred out of the decent homes ALMO programme and into
the budget for the Olympics.
4.3 The latest announcement on the deferral
of round 6 funding for non two star ALMOs will mean that
ALMOs who have heavily invested in preparing for their forthcoming
Audit Commission inspections, including several currently in the
middle of the inspection process, will effectively have wasted
their money as there will be no funding forthcoming as a result
of a successful outcome. Promises made to tenants in housing desperately
in need of renovation will now be reneged upon. This will be a
devastating blow to them and cause them not just to question the
integrity of the government but also of the ALMO as the vehicle
which they supported to provide them with a better standard of
housing.
4.4 It is also vital that the government
urgently addresses the problems with the housing revenue account
subsidy system. The success of the decent homes programme will
be undermined if future revenue streams are insufficient to maintain
both the management service and repair of the dwellings at an
appropriate standard. The major repairs allowance is nowhere near
keeping pace with the requirement to cater for properties that
fall outside the decent homes standard post 2010 while management
and maintenance allowances are considerably below that which is
needed to maintain current levels of service and day to day repairs.
4.5 Unless action is taken quickly much
of the good work so far will be undone and residents will face
cuts in services and a decline in the condition of the stock.
It is ironic that early round ALMOs that have achieved decent
homes may find their stock falling out of decency in only a few
years time as there is insufficient revenue currently coming through
the subsidy system to carry out the necessary improvements.
5. DIVERSIFICATION
OF THE
ALMO SECTOR
5.1 ALMOs have been incredibly successful
in managing the council housing stock since they first began operations
just over seven years ago. As a sector ALMOs are likely to diversify
further in the future. What is needed and what works best in one
local authority area will differ from another. The strength of
the ALMO model is its ability to adapt to local circumstances
and its focus on tenant involvement and an aspiration to deliver
excellent services.
5.2 However, with restrictions on the resources
available to ALMOs after the ending of decent homes funding, a
small number of local authorities with ALMOs are already contemplating
large scale voluntary transfer as the only means to enable their
housing to retain financial viability. Other councils may consider
bringing their ALMO back in house or opening it up to tender.
Nevertheless, most ALMO authorities and their tenants would prefer
to retain their ALMOs because of the service improvements they
have consistently delivered and their proven commitment to engaging
tenants. The NFA believes it is essential that tenants are fully
involved in future decisions on the management of their homes.
5.3 The final outcome of the Government's
current review of council housing finance will be critical to
the long term future—not just of ALMO managed housing—but
of council housing. The review is directly attributable to the
findings of the self financing pilots which themselves arose out
of the joint NFA/CIH/HouseMark report ALMOs—a new future
for council housing published in 2005. Following on from this
work in April 2009 the NFA produced a further report A future
for ALMOs—within local communities illustrating the financial,
legal and structural challenges to the growth and future of the
ALMO movement and looking at the different options for the future,
building on the successful ALMO model, and without the need for
stock transfer.
5.4 With the completion of the Decent Homes
programme, many ALMOs are considering a number of new activities
using their existing structures eg:
— Decent homes plus, retrofit and energy
efficiency measures.
— Neighbourhood management, including services
such as cleaning, grass cutting, addressing anti-social behaviour,
graffiti removal etc.
— Providing services for other organisations
eg housing associations.
— New build, replacement or remodelling
of the existing stock.
— Rationalisation of stock management in
an area, eg managing other landlords' properties within the ALMO
locality.
— Regeneration activities on behalf of
council or market renewal partnerships.
— Managing private sector properties under
Housing Act 2004 selective licensing powers.
— Offering services to home owners including
decent homes in vulnerable private sector properties.
5.5 Greater tenant and community involvement
in the management and even ownership of ALMOs is a change that
might be considered both in its own right and as a way of adapting
ALMOs' status whilst preserving their current style of working.
Empowering tenants and communities is government policy and is
likely to be an aim which is rigorously pursued by the TSA. Possible
models or approaches for greater tenant involvement include:
— Tenant Management Organisations—structured
form of tenant ownership
— Housing co-operatives—could account
for part of a council's stock
— The Community Gateway Model—already
some examples in operation
— Community Land Trusts—non-profit
structure for owning land
— Development Trusts—independent
of a local authority
— Community Associations—form of
joint venture with tenants and local community.
6. A FAIR AND
EQUITABLE FUNDING
REGIME
6.1 Many councils have recently started
to look again at their stock options. Given the success of ALMOs
and the excellent services they deliver to residents, we believe
that changes should be made to ensure the sustainability of the
sector in the future.
6.2 A number of things really limit ALMOs'
ability to sustain themselves long term but the main issues are
linked to the inherent problems of the Housing Revenue Account
subsidy system which means that they are subject to a high level
of volatility in their funding from year to year depending on
ministerial decisions, changes to the formulae and other Government
policy changes.
6.3 As tenants' rents rise and the national
Housing Revenue Account goes into surplus, many tenants, councils
and ALMOs are questioning the validity of a subsidy system that
does not deliver sufficient resources to sustain decent homes
or give the flexibility required to innovate and deliver efficiencies.
6.4 Self financing rebuilds the link between
rent paid by tenants and services provided by landlords. This
means the rent paid by tenants will have a real relationship to
the services provided by the landlord. Self financing would offer
long-term financial stability, enabling ALMOs to better manage
assets, to better deliver services and to better assist in developing
new housing and regenerate and renew communities.
6.5 The basic ALMO model is relatively simple
and efficient for both VAT and Corporation Tax; ALMOs can qualify
for a beneficial corporation tax status—namely, that their
relationship with their parent Council does not amount to a trade
for corporation tax purposes and can recover its input VAT on
its management services provided it only supplies this to its
parent council.
6.6 However, once ALMOs start to try to
do some of the things that both government and their parent authorities
would like them to do, such as manage properties on behalf of
housing associations or build their own properties the tax regime
is not so simple or fair.
6.7 ALMOs are subject to VAT if they want
to take on the management of housing association properties and
if housing associations want to subcontract services to an ALMO
then VAT is also payable. For example a small housing association
or one with a small amount of dispersed stock in an area might
find it more efficient, as well as delivering a better service
for tenants, to pay the local ALMO for full or part management
services. Because the ALMO is the major provider in the area it
has more people on the ground and can offer a suite of services
to other landlords and tenants in its area.
6.8 However the VAT rules are a fiscal disincentive
to this kind of rationalisation of management and an obstacle
for tenants who may want to opt for a better management service,
something which could be promoted by the new social housing regulator,
the Tenant Services Authority.
6.9 The Government should also consider
changing the classification of borrowing for council housing investment,
recognising that council housing is a trading activity and that,
under European accounting conventions, its borrowing need no longer
count towards the main measure of general government debt.
7. LONGER TERM
MANAGEMENT CONTRACTS
WITH PARENT
LOCAL AUTHORITIES
7.1 The current 5-10 year contract
term reduces efficiency and long term planning and makes it harder
to keep excellent staff and retain the focus on long term improvements,
especially for those ALMOs who have achieved the decent homes
standard and are nearing the end of their contract terms.
7.2 It compares unfavourably to the other
stock options that councils can consider such as PFI (a 30 year
contract) and LSVT (a permanent management and ownership change)
and inhibits the ability of ALMOs to push ahead with innovative
ideas and deliver real change in their neighbourhoods.
7.3 ALMOs deliver high quality services
and value for money. Their local focus means they are embedded
in, and have an understanding of, of their community as they only
work in one local authority area. With a culture of service improvement
and real tenant involvement in decision making ALMOs have already
demonstrated their willingness to innovate and proactively engage
in initiatives that go beyond the management and maintenance of
the stock and are designed to enhance the lives of all those living
in ALMO neighbourhoods.
7.4 However, in order to deliver on national
and local policy agendas it is essential that ALMOs are given
longer term stability and financial freedoms. It is simply not
possible to build new homes or manage existing assets effectively
on short term five year contracts while being subject to an erratic
and annual subsidy system.
7.5 It is also important that the government
implements its commitments to tenants in terms of meeting decent
homes and ensuring that councils cannot substantially change or
wind up their ALMOs without tenant support and involvement.
8. GETTING THE
MOST OUT
OF PUBLIC
SECTOR INVESTMENT
AND ASSETS
8.1 ALMOs are proven delivery vehicles that
have delivered large scale major projects on time (in many cases
ahead of programme) and have produced both significant improvements
in service delivery while also delivering the majority of local
authority housing efficiencies.
8.2 ALMOs combine a local community base
with a business like, entrepreneurial attitude. Their size and
composition, and their non political status, allows for faster
decision making and a more dynamic approach to service delivery.
They are able to focus on the tasks that fall within the remit
of their agreement with the local authority. At the same time
they must be able to deliver local authority objectives and work
in partnership with other agencies.
8.3 They are the potential first choice
partners for regeneration and are well placed to make better use
of public sector assets, including demolition and replacement
of stock where necessary. ALMOs, because they work within the
local community, would also be suited to the promotion of mixed
tenure solutions and to delivering broader neighbourhood functions
on behalf of their home councils.
8.4 ALMOs have an excellent record on procurement
and obtaining value for money both in terms of investment and
management. They need to be given further opportunities to make
the most of this expertise and experience in order to improve
the supply of affordable homes using their unique local knowledge
and service base. ALMOs already have partnerships with suppliers
and developers which provide economic and social benefits locally
while regional and sub-regional procurement partnerships are currently
being developed.
October 2009
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