The ALMO odyssey

For some, the story of the arm’s-length management organisation movement started in 2002 at a motorway hotel near Ashfield, Nottinghamshire. The first crop of newly formed ALMOs from towns and cities across the country had just embarked on a groundbreaking journey managing housing services for their local authorities. Now a group of them were getting together to form a representative organisation.

‘It felt like a new dawn,’ recalls Ross Fraser, chief executive of benchmarking organisation Housemark, who joined the road-side gathering, along with the chief executives of ALMOs, including Kensington and Chelsea Tenant Management Organisation, Ashfield Homes and Derby Homes, among 12 others.

‘There was a lot of optimism and excitement,’ remembers Alistair McIntosh, chief executive of the Housing Quality Network.

The National Federation of ALMOs, as the group came to be known, was officially formed the following year. Over the next five years, its initial eight members multiplied more than eightfold to 69 organisations, managing more than 1 million homes.

Ashfield Homes, the ALMO of the Nottinghamshire town where the sector’s leading lights converged, became the first to bring all of its stock up to decent homes standard in 2005.

Half a million improved homes are just one part of the legacy left by ALMOs’ £6 billion investment during their first decade. For some the journey has now ended, but for others the ALMO story is still evolving.

ALMOs made their entrance into government policy in 2000, in Quality and choice: a decent home for all, New Labour’s housing green paper.

The option to form ALMOs was something the housing sector was hungry for. Over previous years, there had been mounting angst about an estimated £19 billion backlog of council housing repairs and frustration that town halls were powerless to access the funding they needed to tackle it.

A new solution

Councils had the option to transfer their homes to housing associations, which were free from the borrowing restrictions imposed on councils, but there was strong ideological opposition to taking homes out of council ownership in many areas.

‘We hadn’t tried [to ballot tenants on transferring their homes to a housing association], but we knew what the feeling was among them and it was going to be an absolute no,’ recalls Ashley Crumbley, chief executive of ALMO Wigan and Leigh Housing, who was deputy director of environmental health and consumer protection at Wigan Council at the time.

The government believed that housing management could be improved by councils setting up separate arrangements for it, enabling housing directors to focus on strategic matters such as homelessness.Its green paper set out the target of getting all council homes up to a ‘decent’ standard by 2010, and introduced a new option alongside stock transfer or private finance initiatives: the formation of council-owned arm’s-length organisations to manage their homes under contract.

The best-performing ALMOs would be given extra scope to borrow to improve their homes – but only a small number of councils would be able to pursue this option each year.

They would have to show that tenants approved the move and give them a central role in running the organisation. And they would have to achieve at least a ‘good’ two-star rating from the now defunct Audit Commission before they could access a share of the £2.8 billion made available for ALMOs, between 2002 and 2007 to improve their properties.

Making it happen

Wigan and Leigh Housing, was one of eight organisations set up in the first round of ALMOs in 2002.

‘There was a real focus on doing this in the best interest of the tenants,’ remembers Mr Crumbley. ‘How could they find a model which secured extra borrowing, which meant that the outcome was that tenants lived in decent neighbourhoods and decent homes?’

Wigan and Leigh achieved its two stars in 2002, enabling it to secure £137 million in decent homes funding. By its fifth year, it had spent £230 million on improving its stock – more than double the amount it would have been able to access without an ALMO. Ninety nine per cent of its 22,300 homes are now ‘decent’, compared with less than half 10 years ago.

The decent homes programme ‘was not just an injection of cash, it was an injection of confidence’, remembers Housemark’s Mr Fraser.

‘Homes that have been unrepaired for years suddenly having new kitchens, bathrooms and so on created such a feel-good atmosphere and was very motivating for staff,’ says Gwyneth Taylor, policy director at the NFA.

‘Chief housing officers who took the helm of ALMOs, said they had previously only spent two or three days a week on housing because they had so many other things to do. But in an ALMO, the job is entirely focused on managing the housing service.’

Between 2002 and 2004, a further 25 ALMOs were set up and the rise of this new movement meant a steep learning curve for the tenants from across the country who were elected on to ALMO boards. One of these was Tony Alcock, board member at Barnsley’s ALMO Berneslai Homes.

Mr Alcock was elected on to the ALMO’s shadow board, before it went live in November 2002. He recalls the high he felt when the organisation achieved two-star status, enabling it to tap into £140 million of funding in 2004. Berneslai Homes achieved three stars in 2009, and by December 2010 £210 million had been pumped into making its 19,400 homes decent.

Tenant board members have had to learn the balancing act between fighting fellow tenants’ corners and their duty to act in the best interest of the organisation, he says. ‘I’ve seen tenants develop into very knowledgeable and articulate individuals,’ he adds.

Ashfield Homes completing its 7,500-home decent homes programme in November 2005, three years after it formed and five years ahead of the deadline, became a landmark moment for the sector.

But the organisation has not been twiddling its thumbs in the seven years since achieving the target. Its managing director Steven Houlding insists that keeping homes decent is a continual process. It has gone on to show the potential of ALMOs beyond just improving people’s homes. It delivers cross-tenure sheltered housing support services and has taken on housing management services for other social landlords.

A new path to financial self-sufficiency was laid for councils and their ALMOs in 2005. ALMOs – a new future for council housing, a report published by the NFA in partnership with the Chartered Institute of Housing and consultancy Housemark, paved the way for the introduction of the self-financing system for local authorities seven years later in April 2012. This gives councils more financial control over housing investment by enabling them to retain their rental income.

The NFA’s Ms Taylor says this has put ALMOs on a more secure footing by opening up the long-awaited possibility of ‘proper long-term business planning’ for local authorities.

In 2007, Stockport Homes opened the door to a new development role for ALMOs when it became the first to be approved to receive grant money from the Housing Corporation to build new homes. Since then, 1,400 ALMO homes have been developed in England.

Some setbacks

‘The early round ALMOs were the leaders in the field and got their two stars quite quickly,’ recalls Ms Taylor. ‘With the later round ALMOs, it wasn’t always so easy. Some were coming from much further back, so they had more work to do.’

This was true for round five Southend ALMO South Essex Homes, which became operational in 2005. The organisation didn’t get its two stars until November 2009, after its first inspection in March 2006 left it languishing with zero stars.

Tenant chair Phil Lyons recalls receiving ‘lots of support’ from the Audit Commission on its journey to two stars, but the length of the trip meant the ALMO didn’t receive any decent homes funding until April 2010. ‘It was frustrating,’ he says.

Mr Lyons says around 80 per cent of the 6,800 homes were non-decent when the organisation formed seven years ago. It now aims to get to a 90 per cent proportion of decent homes by the end of this financial year.

Among the ALMOs that faced the most severe setbacks were the 12 organisations in round six of the programme, set up between 2006 and 2008. A bombshell was dropped on them in July 2009 by the then housing minister John Healey, who announced that £150 million was being cut from the decent homes budget to help fund then prime minister Gordon Brown’s aspirations to build more social homes. Mr Healey warned that round six ALMOs would have to wait a further two years for their funding.

Also hit was East Durham Homes, which achieved a two-star rating the month before the announcement. Interim chief executive Paul Mains recalls the announcement sending staff from euphoria to something closer to despair. ‘Everybody had pulled together, the council, all of our partners and staff and tenants and been told we’d got two stars, which would release the funding,’ he recalls. ‘But the announcement made it seem all for nothing.’

The NFA banded together with others to fight the corner of the ALMOs affected, which led to a chunk of the promised cash being restored. By the end of March next year, 850-home East Durham will have received £43 million, just over a third of the £117 million it bid for. It hopes to receive a further £37.3 million over the next two years, but this is not guaranteed.

The legacy

Since those first intrepid pioneers converged on the motorway a decade ago, the road travelled by ALMOs has not always been smooth. But most would argue that the journey so far has been worth it. HQN’s Mr McIntosh says the legacy of these organisations goes beyond decent homes.

‘A lot of people think that ALMOs and the inspectorate [the Audit Commission] was a needless layer of bureaucracy, but in the context of the late 1990s, it would have been a cold day in hell before the government gave a council any money or power to borrow without conditions.

‘ALMOs restored the reputation of local government, in particular housing services, in the eyes of central government and the Treasury.’

So what of the future? The decent homes deadline may have passed two years ago, but work to bring homes up to standard is still under way. By the end of 2010, 8 per cent of social housing still needed to be improved to meet the standard (although this compares with 39 per cent a decade ago).

In its 2010 spending review, the coalition government announced £1.6 billion for council landlords to help them tackle the backlog, but the money was no longer limited to ALMOs.

Some local authorities argue that the near completion of the decent homes drive, coupled with the ending of the requirement to be an ALMO to receive funding, has removed these organisations’ reason for existence.

Arguing that it will cut costs, they have started to disband their ALMOs and are taking housing services back in-house. By the end of July, this will have happened to 10 ALMOs. This move was fiercely opposed by people living in areas including Islington, north London, where the council dismantled its ALMO in April – a decision it said could save £2 million a year.

‘I just think they’re mad,’ says Theresa Coyle, former tenant chair of ALMO Homes for Islington. ‘We thought nobody in their right mind would stop us, with our performance and our achievements.’

There is concern among some that councils have made the decision to bring housing management back in-house too hastily. ‘In my view, some that have terminated their ALMOs have not fully looked at all the advantages which ALMOs have created,’ says John Perry, policy advisor at the Chartered Institute of Housing. 

Indeed, some local authorities have seen further mileage in the ALMO model as a vehicle for delivering a broader range of services. These include Barnet in north London, which entrusted its ALMO with the delivery of a range of adult social care services in February this year. The ALMO’s chief executive Tracey Lees now heads an expanded organisation called The
Barnet Group, which has separate arms for housing and social care.

Other models

Other councils have set up organisations to manage their stock within the past two years, even though decent homes funding is no longer available. Welwyn Hatfield Community Housing Trust was set up in 2010. And the following year, four councils grouped together to form East Kent Homes.

There are currently 55 ALMOs, 14 fewer than there were four years ago The bulk of these, as discussed already, have gone back in-house. Five meanwhile have seen their stock transferred to housing associations. Those that remain now find themselves at a crossroads, as councils decide on their future direction over the next few years.

In its Building on the potential of ALMOs to invest in local communities report, published last year, the NFA floated a new type of organisation which ALMOs could evolve into: ‘COCOs’ (shorthand for council-owned, community-owned). Gloucester Council is the first to pursue this model, which would see the organisation’s ownership shared equally between tenants, independents and the local authority. As the council would only have a third share, the organisation would be freed from public sector borrowing restrictions to invest in its stock.

Rob Wharton, director of resources at 4,800-home ALMO Gloucester City Homes, says the council needs to get the go-ahead from the Treasury and secure backing from a tenants’ ballot before it can get it off the ground next year. ‘This is a way of getting the best bits of that stock transfer, while retaining the council input and the tenants’ input,’ he says.

Steve Partridge, managing director of CIH Consultancy, believes the housing sector shouldn’t get too hung up on the question of whether ALMOs are the best means of delivering housing management. ‘Increasingly, we won’t prescribe models as ALMO or direct management, but much more in terms of what works locally,’ he predicts. ‘We will see quite a number of high performing, dynamic local authority housing companies that used to be called ALMOs, but that do a lot more than manage council housing stock.’

ALMO staff feeling unsettled by the mixed patchwork of housing management arrangements likely to emerge over the next few years can take comfort from one thing: the tenants they have empowered over recent years could prove a formidable force in helping to protect their future.

Carol Thipthorp, secretary of Southend Tenants’ and Residents’ Federation, says she and others will fight any attempts by their council to dismantle their ALMO South Essex Homes. ‘It’s our lives and it’s our homes,’ she says. ‘And we’ve got a say in how they’re managed.’