Arm's-length management organisations began as a means to an end. In 2001, ministers introduced ALMOs as a relatively painless way for councils - unable to borrow money privately - to access the cash needed to upgrade their housing to meet the government's new decent homes standard.

If its tenants voted in favour of an ALMO, the council retained ownership of its stock, but transferred management responsibility to a separate organisation, which it also owned. As soon as the ALMO received two or more stars from Audit Commission inspectors, the government would hand it the cash to upgrade its homes.

Now the 2010 deadline for the completion of those decent homes upgrades is looming. So far, more than £4 billion has been invested in homes managed by England's 69 ALMOs. Insulation and heating systems up and down the country have been brought up to modern standards, and kitchens and bathrooms have been given makeovers. Last year, information reported by ALMOs showed that 69 per cent of homes had been brought up to the decent homes standard.

While it's 'job done' for those local authorities that set up ALMOs early on, for those which joined the party later, decent homes for all remains an aspiration.

Last month, councils with ALMOs in the sixth, and final, funding round for decent homes cash announced they were seeking a judicial review over a recent government decision to defer £150 million for refurbishments until 2011/12. The government decided to shift the money earmarked for round six to pay for new homes instead.

So the story of ALMOs and the decent homes programme is one of two halves. The first is a generally happy tale, of smiling tenants like Maureen McAvoy, pictured, living in decent homes. Ms McAvoy, a Homes for Northumberland tenant, says the ALMO has empowered residents and that they are anxious for it to remain their landlord.

The waiting game

But the second half is a frustration-filled yarn. Of the million-odd homes managed by ALMOs, 250,000 have been brought up to decent homes standard. Many of the remaining 760,000 homes will already have been of a high enough quality not to have needed investment. However, a sizeable chunk - 198,647 homes collectively owned by 14 ALMOs - still awaits investment. This includes some of the 10 councils with round six ALMOs awaiting deferred funding. These alone are responsible for 137,265 homes - 13.5 per cent of all ALMO stock.

With two such contrasting story lines, and a rapidly approaching decent homes deadline, how might the ALMO tale end?

‘We are only about half way through the decent homes programme,' says Gwyneth Taylor, policy director at the National Federation of ALMOs. Unsurprisingly, she believes the arm's-length model has proved more than a means to decent homes. It provides, she says, greater accountability to residents than the stock transfer route taken by other authorities seeking decent homes cash (Inside Housing, 6 November).

But numerous councils disagree. Now their decent homes programmes are complete, Hillingdon and Ealing councils are among those considering collapsing their ALMOs and bringing stock management back in-house, deeming the arm's-length model no longer beneficial. Meanwhile, local authorities in Bolton, Oldham, Warrington and Stockton-on-Tees are all considering transferring their ALMOs' stock to housing associations. It's hardly a ringing endorsement.

Force for good

Success stories are not hard to find, however. Back in 2001, the government's premise for the arm's-length movement was that once established, ALMOs could access funding on one condition: a two or three star inspection rating from the Audit Commission. 'This drove standards up,' argues David Hall, a director at housing consultancy Tribal. 'ALMOs had to focus on service standards or they couldn't get the money. It's fair to say that ALMOs have achieved higher standards than local authorities generally,' he says.

ALMOs are the best performers when it comes to impressing the Audit Commission - there are 34 two-star ALMOs and 21 with three stars but just four housing associations have three stars, a feat managed by not one stock-retaining council. ALMOs contribute two-thirds of all local authority housing efficiency savings, although they manage just half the stock.

Ray Boycott, managing director of Homes for Northumberland, says the £50 million spent on its decent homes programme, completed last year, provided a 'huge step forward' for the community.

‘Accountability, efficiency, local labour schemes and tenant satisfaction were driven by people's homes being in good repair,' he says.
In 2001, 74 per cent of his tenants were satisfied - a figure that rose to 88 per cent post decent homes.

Some ALMOs have enjoyed a happy ending, then. But for those in round six of the programme the picture is not so rosy. The threat to them comes from central government, which has deferred £150 million of their funding.

Joe Willis, deputy chief executive of Salix Homes, Salford Council's ALMO, expected to be able to draw down £15 million in decent homes funding between 2010 and 2011. That has been delayed at least a year. It's a blow to tenants, who were led to expect a lot from their ALMO.

‘We had begun consultations about which improvement works should be done on one estate,' explains Mr Willis. Tenants had started to imagine their improved homes. 'They have had their expectations dashed,' he adds.

Other round six ALMOs in Sutton, Sedgemoor, Redbridge and Havering want a judicial review, arguing that withdrawing funding at short notice and with almost immediate effect significantly damages their ability to deliver services.

Ms Taylor says the treatment of round six ALMOs puts the completion of the decent homes programme in 'enormous jeopardy'. 'There is no guaranteed funding for anything beyond 2011 and the Conservatives say they would probably not continue with a decent homes programme in its current form [if they come to power],' she says.

‘By saying they have only deferred funding the Communities and Local Government department are being disingenuous. They cannot guarantee any funding beyond 2011 so in effect this is a cut.'

The round six organisations may be in limbo, but councils which formed ALMOs in the early rounds and have now achieved decent homes are footloose and fancy free. Cabinet members at Hillingdon Council, which achieved decent homes through its ALMO Hillingdon Homes in 2008, for example, agreed to wind up the organisation in September.

Neil Stubbings, deputy director of adult social care, health and housing at the council, says the ALMO served its purpose. 'We got sufficient funding to meet our decent homes target, so it was the right thing to do at the time.'

Other ALMOs, however, believe their decent homes work has acted as a springboard to greater things. Six ALMOs have HCA grant funding to build homes after achieving investment partner status.

Several more, including Homes for Northumberland, are bidding for HCA funding.

As the end of the decent homes programme approaches, ALMOs are at a crossroads. '[The government] never thought beyond 2010. It had a singular narrow focus [which was achieving decent homes],' argues Tribal's Mr Hall. When the programme ends, more local authorities may be tempted to collapse their ALMOs - particularly as they require more staff and overheads than an in-house service.

But Mr Hall, among others, argues the ALMO story should continue:

'In a lot of cases you are getting better value for money and better performance standards.' He suggests that one option for the future of ALMOs would be to look at converting them into 'locally municipally owned landlords' in which 'assets are owned by the company, but the company is owned by the council'.

Suggestions are welcome, but 2010 may well have another obstacle in store, in the form of next May's local elections.

‘ALMOs can fall foul of local political changes,' concludes John Perry, policy advisor for the Chartered Institute of Housing. 'Especially now decent homes has [almost] ended.'

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