Saturday, 29 April 2017

Fight for survival

With critics suggesting that arm’s-length management organisations are nearing the end of their natural life, Inside Housing invited some of the movement experts to come out fighting and share their survival techniques. Isabel Hardman reports.

Arm’s-length management organisations are at a crossroads. Many have completed their decent homes programmes, which were the original reason they were set up. So how do they sell themselves to their tenants at a time when council budgets are under more scrutiny than ever?

There is no shortage of ideas at Inside Housing’s ALMOs round table. In association with Kier Building Maintenance, nine ALMO experts (see panel, below) have gathered to debate the future direction of the council-owned housing management companies.

But before looking too far ahead, there is the thorny issue of whether ALMOs have any chance of surviving at all. After all, Slough Council was the first local authority to bring its ALMO back in-house, and over the coming months, three other councils will follow suit. Is this a sign of things to come?

An unfair impression

Helen McHale, chief executive of Stockport Homes, is swift to counter any such suggestion. ‘There are a lot of ALMOs that do really good things, a lot that are successful,’ she says, adding that, although recent coverage may suggest the sector is slowly winding down following decent homes, most organisations are supported well both locally and politically.

Alison Inman, chair of the National Federation of ALMOs, chips in. ‘You shouldn’t sit me next to Helen,’ she jokes. ‘We’ll work each other up over the press that ALMOs receive. The picture of ALMOs closing all over the country is not the picture that we’re really seeing.’

Ms Inman recalls a recent meeting of the all-party parliamentary group on ALMOs, where tenants accosted their local MPs to tell them just how wonderful they think the management of their homes is. And there are new ALMOs appearing: East Kent Shared Housing Landlord Services, a super-ALMO in east Kent, and Welwyn Hatfield Community Housing Trust, the new community housing trust in housing minister Grant Shapps’ Hertfordshire constituency.

‘These new ALMOs have got nothing to do with decent homes,’ Ms Inman emphasises. ‘Yes, decent homes is important, but it is not the only thing that ALMOs deliver, although they do deliver it very well.’

For those ALMOs that are more than 90 per cent of their way to bringing their stock up to standard, decent homes is still extremely important. In mid-November, Inside Housing reported that the government would not provide any additional funding for landlords upgrading the last
10 per cent of their stock.

Clive Betts, Labour MP for Sheffield South East and the chair of the all-party parliamentary group on ALMOs, says this shock announcement will put ALMOs in the later round of decent homes work in a tricky position as they will be forced to explain to the tenants who have been waiting longest for their decent homes improvements that they will have to wait longer still.

Beyond decent homes

Though round table members disagree about plenty of things throughout the debate, they all agree that ALMOs need not be confined to repairs and maintenance. Before the coalition government’s decision to scrap the building schools for the future programme, some, such as Barnet Homes, were considering taking over the rebuilding and refurbishment programmes of schools in their boroughs. This isn’t the only area that the organisations are looking to move into.

Dennis Rees, vice chair of Derby Homes, suggests that the organisations are suited to taking over adult social care contracts. ‘Councils are looking to outsource more and more facilities,’ he says, adding that authorities could consider managing library and leisure facilities at arm’s length.
Although there are lots of suggestions about council services that ALMOs could take over, the discussion continually loops back to the biggest new challenge: managing the housing revenue account. ‘The new test for us is to show how in the self-financing regime ALMOs are the way forward,’ says Ms McHale.

John Townend, board member at Tenants’ and Residents’ Organisations of England, adds a warning for those ALMOs currently negotiating new contracts with their parent local authorities. ‘The one thing we need to make sure of is that with self-funding we are not looking at five years [ahead], we are looking at 25 to 30 years,’ he says.

Mr Rees has achieved something in the middle with Derby Council, which has decided to renew the ALMO’s contract for the next decade. Key to winning the council over was arguing that a £300,000 projected saving from closing Derby Homes would be eclipsed by the efficiency savings that the ALMO itself could make to housing services. Mr Rees points triumphantly to a £500,000 saving that the ALMO made to the council’s direct labour organisation after taking it over.

It is these sorts of savings that will help ALMOs stand out and persuade their parent councils that they are worth keeping, says Paul Bridge, chief executive of Homes for Haringey. ‘The attitude of government is that social housing has been drip-fed resources, so they are saying “you sort this out yourselves. You have got assets, you have got people who have got energy”.’

Peter Brynes, managing director of Kier Building Maintenance, agrees: ‘ALMOs are more focused and they are going to deliver well at inspections and when it comes to the new housing regime. What I’d like to see is them making this case to local authorities.’

Not a political game

But what if an ALMO’s arguments fail, and councillors decide to close it? Labour-controlled Ealing Council, for example, recently voted to bring its ALMO back in-house. The ALMO had already been doomed under the previous Conservative administration, which had also planned to move the housing services out to private sector contracts. Jo Rowlands, director of housing at Ealing Council, finds herself defending her organisation from the assessments offered by those around the table. Any suggestion that the ALMO was subject to a political game receives short shrift.

‘I do not think that it is fair to say it’s a political issue,’ she says with some force. ‘We are bringing it back following a test of opinion that had overwhelming support to bring it back in.

‘The vast majority of our tenants did not even know the ALMO existed. They simply understood that they were tenants of the council.’

Though Ealing’s tenants were offered the opportunity to choose whether management of their homes returned to the council, local authorities are not obliged to launch a large-scale consultation of their tenants when deciding to close an ALMO. This is something that Mr Betts says he worries about. ‘We want to raise it with ministers that if ALMOs were created by the wish of tenants then we should not be able to reverse that proposal without a similar consultation with the tenants.’

The case for conversion

Last week, Golden Gates Housing in Warrington became the first ALMO to transfer to a housing association. It will be followed in close succession by three other large, successful ALMOs: First Choice Homes Oldham, Bolton at Home, and Tristar Homes in Stockton-on-Tees. These were the only ALMOs to receive approval from the secretary of state to transfer their homes before the reforms to the housing revenue account were unveiled. The case for HRA reform is clear, and everyone is confident that the new government will proceed with Labour’s plan to redistribute the £25 billion of HRA debt to the 100 councils in the system in exchange for financial freedom over rents. Less clear is whether more ALMOs will look to become standalone housing associations following this deal.

The panel splits over whether more stock transfers will take place.

Mr Bridge believes they will, while others suspect that the decision not to write off debt if housing stock transfers from a council more or less signals the death of the practice.

The fear of a snap judgement by politicians is threaded throughout the discussion. Mr Townend warns: ‘I think that tenants would be a little cautious about political parties coming into such big decisions. My concern is whether they are coming back in-house for the right reasons. Have local authorities improved their services enough to give tenants the confidence about going back? Some ALMOs have been a real driver for change.’

Ian Doolittle, partner at law firm Trowers & Hamlins, believes councillors could also be tempted by short-term savings of only a few hundred thousand pounds. He says: ‘A decision based on them saving small funds is a decision which is very short-term and politically motivated.’ That crossroads ALMOs find themselves at is starting to feel more like a spaghetti junction.

Round table members

Peter Brynes
Managing director, Kier Building Maintenance

Dennis Rees
Vice chair, Derby Homes

John Townend
Board member, Tenants and Residents Organisations of England

Alison Inman
Chair, National Federation of ALMOs

Jo Rowlands
Director of housing, Ealing Council

Clive Betts
Labour MP for Sheffield South East

Ian Doolittle
Partner, Trowers & Hamlin

Helen McHale
Chief executive, Stockport Homes

Paul Bridge
Chief executive, Homes for Haringey

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