Salford Council considers future of ALMO
Salford Council is considering the future of its arm’s-length management organisation because the self-financing debt cap will present a ‘major problem’ for the local authority.
Under the reform of the housing revenue account subsidy system, which came into force on 1 April, the council has been set a borrowing ceiling of £12.5 million based on the value of its 8,500 homes.
A report to the council’s cabinet this month said: ‘Unfortunately this is not enough. The investment needed for the homes managed by [ALMO] Salix Homes will be delayed significantly (between nine and 15 years) as a consequence of the limited headroom to borrow.
‘Over 30 years an investment shortfall of £93 million builds up under self-financing; it is highly unlikely that the Salix Homes managed stock will ever achieve and/or maintain the decent homes standard.’
The report adds: ‘This restriction is a major problem for Salford.’
The cabinet agreed to start a formal appraisal of the investment and management options for the non-private finance initiative council-owned homes in Salford.
A tenant-led options appraisal board will be set up to make recommendations to the city mayor and the cabinet on the preferred option to be considered later this year.
The options are for the council to retain the stock, either with Salix Homes continuing to manage it or bringing it back ‘in-house’, or transfer the ownership of the stock to a housing association
The council report notes: ‘There is likely to be a lot of interest in stock transfer and only limited, if any, funding will be made available to support a transfer programme; the earlier Salford puts a marker down the better to ensure that transfer is a realistic option during the appraisal process. Putting a marker down does not commit to the transfer route but allows it to be treated as an equally weighted option alongside the options for retention.’
Barbara Harper, chair of the Salix Homes customer senate, said: ‘It is disappointing that, through no fault of the council or Salix Homes, we now have to go back to the drawing board. Significant improvements have been made to many homes and to the quality of housing services since Salix Homes was set up.
‘However it is crucial that we find a way to safeguard the improvements already made and to find the shortfall in funding to finish the job we started in 2007.’
If the preferred option is a transfer a tenant ballot will be held.