Manchester City Council eyes bringing management of homes back under direct control

Manchester City Council is to consult tenants on bringing management of their homes back in-house in the face of dissatisfaction with the performance and governance of its arm’s-length management organisation (ALMO).

The council also said the ALMO generated extra costs so long as it stayed a separate legal entity.

Northwards Housing was set up as an ALMO in 2005 to manage some 13,000 homes.

But a combination of its shortcomings and government changes to housing revenue account (HRA) have led Manchester to decide to take direct control of the housing service subject to the consultation.

The council said changes to the HRA - largely resulting from the 1% annual rent reduction imposed since 2016 - meant its 30-year business plan will become unviable without intervention.

It needed the resources to invest in continued decent homes-standard improvements, fire safety and carbon-reduction retrofitting.

A report to Manchester’s executive said rent lost through the 1% annual reduction would eventually drive reserves too low if things remained unchanged.

It said of Northwards that there was “cause for concern in regard to core performance, in particular in regard to customer service and repairs targets”.

The report added: “There have now been three consecutive years of under performing in the delivery of the capital investment programme” and that a governance review had found “there is significant room for improvement”.

It said keeping Northwards in being “would require a combination of much more efficient working on their part or a transfer of additional council services to the ALMO to gain a better level of economies of scale, or both”.

Taking housing back in-house would give “immediate savings…derived by the removal of the duplication of costs of running a separate company…the very existence of the organisation as a separate legal entity costs money that simply does not need to be spent”.

ALMOs were created in 2001 by the Labour government as an alternative to stock transfer for accessing decent home standard funding. They are owned by their parent councils but operate separtely.

At their height there were around 70, but only 30 remain with most of the rest having returned in-house.

Mark Smulian