ALMO closures: how are they affecting services?

Ms Rafalowicz corroborates that view. “It boils down a lot to control, even more than financial savings,” she says. “It really depends on the ambitions of the individual local authority, to what extent it wants control over everything.”

So what happens when councils do take back control of their services?

Unsurprisingly, it’s a mixed picture. Our data shows that there can be a spike in average re-let times for properties that become vacant and the number of voids immediately after ALMOs close down. In Sheffield, re-let turnaround had shrunk to 28.3 days by Sheffield Homes’ last year of existence in 2012/13, but has since risen to 68.9 days in 2017/18. Northumberland and Wigan also saw immediate increases in re-let times and voids post-ALMO. However there were also a handful of cases where the opposite occurred.

Analysing cost saving is difficult, not least because HRAs have gone through significant changes in recent years

Of the councils that provided data for this query, re-let times went up in six and voids went up in five. There were improvements in re-let times at two and in voids at three, while levels stayed static for another two or three.

Analysing cost saving is difficult, not least because HRAs have gone through significant changes in recent years, such as self-financing in 2012, and latterly the 1% rent cut. Some cases are nevertheless worth noting. Wigan Council promised an enormous £5.5m in savings in the first four years after closing its ALMO in 2017, but the council’s accounts for 2016/17 and 2017/18 show that, ignoring stock revaluations, its HRA surplus in fact dropped from £6.89m to £3.67m, with less rental income and spending on “supervision and management” increasing from £16.8m to £19.2m.

Redbridge Council, on the other hand, stands out as a success story. It closed its ALMO, Redbridge Homes, in 2012. The relationship did not end happily; Redbridge Homes’ chief executive was sacked the previous year over governance concerns – prompting half the organisation’s board to quit. Before that, a woman was killed by a faulty lift in an ALMO-managed tower block.

Overall tenant satisfaction has crept up in Redbridge, from 77.3% in 2012/13 to 81.5% in 2017/18. Over the same period, the service managed to reduce its average repairs cost per home from £693.42 to £520.83, while voids fell from 62 to just three.

Other ALMO shutdowns have been less successful, according to the data. Slough Council has succeeded in its stated ambition of starting to build following the closure of People 1st Slough in 2010, developing 109 homes in the past six years. But tenant satisfaction dropped to 59% in 2017/18, down from 77% in 2014/15, the earliest date it was recorded. Re-let times and voids have also started to increase in the past two years – which also saw heavy annual HRA deficits of £5.36m in 2016/17 and £5.87m in 2017/18, the first in the past 10 years.

In Havering, development has also started since the ALMO closed in 2012, although tenant satisfaction has slipped slightly, while complaints and voids have risen. Newham Council – which did not provide data for this research – handed much of the responsibility for its 15,000 homes to its Repairs and Maintenance Service (RMS) company following the closure of the ALMO in 2011. Police are now investigating a “financial discrepancy” at RMS amid a saga that has seen several of the firm’s senior managers dismissed for gross misconduct.

Mr McGoldrick recalls being called in to help sort out another council’s housing service after it shut its ALMO. “They had broken up the housing department,” he explains. “They put rent collection in with corporate finance – everything from parking to adult social care. Then they put
tenant management in with corporate resident management – that’s the people who post the glossy through front doors to talk about bin collections.”

Inside Housing has also been told of other councils that handed estates over to tenant management organisations wholesale post-ALMO, only to have to go through expensive bailouts once they encountered difficulties further down the line.

For councils mulling their ALMO’s future, there are important points to consider. “Ultimately, you need to be very clear about what you are trying to achieve,” says Ms Rafalowicz. “And remember that you still have the same staff at the end of the day. Sometimes it’s easy to think it’s the ALMO’s fault rather than [the council’s] fault if the relationship isn’t there. I’m a believer that any structure can work; it really depends on the quality of the people.”

And ALMOs concerned about their survival can be proactive, too. “Being aligned to the council’s corporate objectives is now really important,” says Mr McGoldrick. For instance, Kirklees Neighbourhood Housing has been given 12 months to improve after its council felt the ALMO was drifting away from its own priorities.

“The ALMOs that thrive are the ones that work closely with their local authority,” adds Ms Rafalowicz.

Su Spence, chief executive of Poole Housing Partnership (PHP), which survived a review last year in spite of strong political desire for closure, agrees. “To be successful, an ALMO needs to be good at what it does but it also needs to be doing what the council wants it to be doing, and for Poole that hasn’t always been the case,” she says. “For me, the relationship with the council is now so much better. The review allowed us to air some of the underlying issues and we were able to rebuff some of the myths that had grown up around the ALMO.”

Ultimately, PHP was saved by tenant support, with 350 signing a petition against its closure. Mr McGoldrick argues that the ALMO model – with an independent board always including tenant members – is conducive to good tenant engagement.

Ms Rafalowicz also believes that in general the system gives residents “a more direct link” to those in charge of their homes than an in-house model.

In any case, transparency, accountability and tenant voice are arguably the most pressing focus for social landlords post-Grenfell. Councils would do well to remember that as they consider the future of their housing management.

• An ALMO – which stands for arm’s-length management organisation – is a company created to take on the management responsibilities for a council that owns social housing. The creation of ALMOs was encouraged by the ‘ALMO programme’ of the 2000s which offered funding towards achieving the Decent Homes Standard to councils that set up ALMOs.
• However in recent years councils have increasingly looked to take ALMOs back in house, with 69 in 2009 falling to 31 in 2019.
• Councils have argued that they will make efficiency savings and improve services by delivering the service directly, rather than relying on an ALMO.