Battle of the ALMOs

Arms Length Management Organisations have been in place since 2002, but their future is now uncertain. Neasa MacErlean reports.

Half of the country’s two million council homes are managed through ALMOs (Arms Length Management Organisations) which, in theory, should have achieved what they were set up to do by next year. So a question mark hangs over the ALMO system – and some councils are now going into a freestyle phase to resolve the uncertainty for themselves.

ALMOs were created by the government in 2002 in order to raise all council housing up to a given level of warmth, modernity and overall decency by 2010. About £6.1bn of “Decent Homes” funding was made available or earmarked for the programme, accessible only to ALMOs. In 2003 there were fewer than 20 ALMOs, but now there are 69.

Hillingdon Council, however, has started to make other authorities think about their futures. It has begun consultation with residents about the way forward and seems likely to close down its ALMO, Hillingdon Homes, and take the management back into the council.  

Neil Stubbings, Hillingdon’s deputy director of adult social care, health and housing, believes that better value for money can be achieved by disbanding the ALMO, a cost centre in itself. While ALMOs did indeed set up better consultation and service systems for tenants across the country, Stubbings believes that councils such as Hillingdon have learnt a lot about customer service in the last five or six years. “Times have changed,” he says.

A mixed experience

The City of Westminster is taking a different view, however. “You have to develop what works for you,” says Melvyn Caplan, cabinet member for finance. “We are quite comfortable with the ALMO model.” So even though City West Homes is approaching completion of the Decent Homes project, Westminster will retain, for the foreseeable future, the ALMO structure in order to administer its council housing.

In Durham county, however, the experience is very different. The East Durham Homes ALMO operates in a zone of 90 per cent non-decency. About 54% of its residents classify themselves as having a disability. Many residents are retired miners who get coal as part of their pension entitlement – a perk which backfired in discouraging some of them from accepting gas facilities at home when they were first offered. Council efforts to keep the rents down as low as possible in the 70s and 80s left little margin for investment in the properties.

On top of this, East Durham Homes under-performed when first set up, getting under the Audit Commission two-star rating needed to qualify for funding. Chief executive Paul Tanney was put in two years ago to turn it round, and this July it reached the required two stars. “We are just embarking on that journey of delivering decent homes,” he says. “Services have significantly improved and we have got excellent prospects.”

Discussions have, however, started about the future of East Durham Homes and about other council-owned property-management vehicles. Tanney says: “I would like us to continue to grow. You need to make sure there is some local delivery to meet local needs.”  

Some of East Durham’s funding has been delayed because of its performance problems, but it is due to receive £117 m in total in order to finish its Decent Homes programme for 2014. Many changes have already been made, Tanney says. For instance, in the past, residents waited 18 months for aids and adaptations. Now, grab rails are fitted “in a couple of weeks” and walk-in showers are fitted “in an average of 12 weeks”. “Our customers would not be supportive of our being closed down,” he says.

Back at the national level the future is not clear. While the Department for Communities and Local Government has been consulting on reforming the Housing Revenue Account system, it seems highly unlikely that the required legislative changes would come through before the general election.  

And while Conservative housing spokesman Grant Shapps is well-disposed towards ALMOs, whom he has referred to as the “unsung heroes in housing”, it is not clear how a Tory government would proceed. Shapps sounded very positive at a conference last year. “We will look to give you guys more flexibility to be able to do much more with our housing stock in future,” he told representatives at a meeting organised by Inside Housing. But whether, how and when a Conservative government would proceed are all still open questions.

Ian Doolittle, head of the public sector and communities department at solicitor Trowers & Hamlins, has been following ALMOs closely right from the start. He is still waiting for clear signals from the Tories. “They may see ALMOs as a Labour party creation,” he says. “But, ALMOs – as a mechanism for outsourcing – are attractive to Conservatives. So, for different reasons, Conservatives might keep ALMOs in place.”

Rearguard action

The National Federation of ALMOs clearly wants the structure to remain in place – although its lead officer Alistair McIntosh accepts that “some [ALMOs] will inevitably go back to the council”. But he thinks that, in general, they have proved themselves as a highly effective mechanism. There are some issues at the moment – such as the delay of funds to under-performing councils and a judicial review case being taken by some of them in response at the moment – but the National Federation understands that government purse-strings are tight.  “The credit crunch is a problem,” admits McIntosh.

Some experts in the ALMO field will hope, however, that the next government can do more with ALMOs or whatever they decide to put in their place than the present one did. “The main advantage of ALMOs was to get the Decent Homes money,” says Neil Stubbings of Hillingdon. While the government promised more powers, it did not deliver, he adds. “The debate on flexibilities and freedoms fizzled out and almost created a vacuum.”

Not everyone would agree with that view, however. Doolittle at Trowers & Hamlins is following Hillingdon’s progress with interest, and says: “Whether that is the start of a series, I do very much doubt.” The ALMO idea “was not simply about getting money,” he adds. It was also about separating housing strategy from management, clarifying the landlord role and improving services to tenants and leaseholders.

The big problem facing the ALMO world may be that the next government, while interested in the idea, simply does not have the time to make it a priority. On the other hand, ALMOs affect residents of one million homes and those people, partly thanks to the ALMO process, have become far more knowledgeable about their rights and dues since 2002. The power of public opinion could play some role in this debate, something that was pretty much inconceivable before ALMOs came into existence.

Neasa MacErlean is a freelance journalist