ALG Housing Steering Group
Report by: Peter O’Kane Job Head of Housing
Date: 8th September 2004
Contact Alice Ellison / Kirsten Firth
Telephone: 020 7934 9829 Emai Alice.Ellison@alg.gov.uk
/ 9583 l:
Summary: ALMOs have been a reality for over two years.
There are a number of issues which need to be
clarified or addressed by the Office of the
Deputy Prime Minister (ODPM) including:
operational flexibilities; financial freedoms and
flexibilities; and the long term future of ALMOs.
ODPM has recently indicated that it is in a
position to begin to address some of these
Recommendation Members are asked to:
s: 1. Note that 11 boroughs have either set up
ALMOs or are in the process of setting one
up (para. 2.1; Appendix 1)
2. Note that no two ALMOs will be the same in
terms of devolved functions and structures.
Similarly the local authority’s relationship
with its ALMO and its perception of the
local authority housing role will vary from
borough to borough (para 3.1)
3. Note that ODPM has asked the ALG to form a
joint group with the LGA of local authority/
client side representatives. ODPM propose
to use this group as an ad hoc sounding
board for the local authority view on ALMO
issues (para 3.9).
4. Note that ODPM has written to local
authorities and ALMOs in July 2004 to seek
help in establishing the scale and scope of
operational and procedural responsibilities
and activities that it might be sensible for
an ALMO to perform by agreement with their
parent local authority (para 4.1 – 4.4)
5. Note that Keith Hill will make an
announcement in September on the review of
the long-term future of ALMOs. The ALG has
been invited to nominate a representative to
be a member of the review group (para 4.5 –
4.7, Appendix 2)
S:\HOUSING\Public\ALG Housing Steering Group\2004\Executive
Meetings\September 04\Draft reports\Item_6_ALMOs.doc
1.1 Arms length management organisations (ALMOs) have been in
existence for over two years.
1.2 This report considers the borough role from the perspective
of local authorities that have established ALMOs.
1.3 It then goes on to outline ODPM plans to consider freedoms
and flexibilities for ALMOs and the long term future of
2. LONDON BOROUGHS’ PROGRESS ON STOCK OPTIONS
2.1 Nine London boroughs have already set up ALMOs. Two more
ALMOs are due to go live in September 2004. Complete
details on London boroughs’ progress on stock options can
be found in Appendix 1.
2.2 Following the Spending Review announcement, the ODPM
announced in July 2004 new bidding rounds for the three
available stock options of ALMO, PFI and stock transfer.
Boroughs can apply for the first round of extra funding
from October 2004 to January 2005, with a further bidding
round expected to start in late 2005.
2.3 As of August 2004, around 20 London boroughs may have to
have their Stock Options Appraisal signed off by the
Government Office for London. The deadline for sign-off is
3. BOROUGH ROLE
3.1 An ALMO is a wholly council-owned company. No two ALMOs
will be the same in terms of devolved functions and
structures. Similarly the local authority’s relationship
with its ALMO and its perception of its role now that an
ALMO is managing its stock will vary from borough to
Relationship with ALMO
3.2 While some local authorities see themselves as the client
and the ALMO as the contractor in many situations, others
describe the relationship in a different way. One council
acknowledged the client / contractor relationship but
commented that this was managed along partnership lines.
The degree to which there is a hard or soft
client/contractor split varies but all boroughs have
adopted various approached for developing good links
including joint working groups, regular meetings between
the ALMO and council housing at several levels, of
protocols with other council depts, eg social services etc.
3.3 Some local authorities may perceive ALMO interests as being
more narrowly focussed than council interests. For
example, while a council is interested in Comprehensive
Performance Assessment (CPA), ALMOs will focus on Best
Value inspections and achieving three stars.
3.4 Some authorities have established close working
relationships with their ALMOs while managing to keep these
relationships fairly open. One local authority stated that
it saw its role as working with the ALMO on issues around
strategy and moving forward as an organisation. The same
local authority stated that it was supportive of its ALMO
trying to develop potential flexibilities.
3.5 Another local authority commented that having gone down the
ALMO road voluntarily, the ALMOs is very much a partner of
the local authority. While the local authority sets a
broad outline for what it wants to happen, it takes into
account the view of the ALMO as a professional
organisation. For example, the local authority would not
set future performance indicator targets or set budgets
without reference to its ALMO.
3.6 Local authorities are still regarded as being responsible
for performance measured through best value performance
indicators (BVPIs) and HRA accounts etc. This may lead to
a greater monitoring role for some local authorities than
originally anticipated. Other local authorities envisage
that monitoring the ALMO will have a small impact on their
3.7 Local authorities with ALMOs retain a number of operational
roles. Typically these will include: homelessness,
allocations, environmental health, private sector, housing
advice and housing benefit.
3.8 One local authority that has recently established an ALMO
and has strengthened its strategic role by putting in place
a small team of strategic and support staff which did not
previously exist in the same way. Another local authority
that already had a well-developed strategic role commented
that it does not see its strategic role as having changed
except that in terms of service to tenants, they have an
additional partner and a contract to monitor.
3.9 In one borough the council strategic housing team handles
Housing Benefit as well as strategy, the ALMO is contracted
to produce BVPIs and a substantial element of the HRA
remains with the council. The council accountant is still
doing the accounts for the ALMO although there are plans
for the ALMO to recruit their own accountant. In another
monthly finance meetings are held to be important as the
council retains housing funding although all finance is
handled within the ALMO.
ODPM ad hoc sounding board
3.10 The ALG has been approached by ODPM and asked to form a
joint group with the LGA of local authority representatives
from councils which have set up an ALMO. ODPM propose to
use this group as an ad hoc sounding board for the local
authority / client side view on ALMO related issues.
4. FREEDOMS AND FLEXIBILITIES FOR ALMOS
4.1 While ALMO staff were used to performing a number of
procedural and operational functions as employees of the
local authority, the ALMO does not necessarily have the
statutory authority to carry out these functions (see
4.2 ODPM wrote to local authorities and ALMOs at the end of
July to seek help in establishing the scale and scope of
operational and procedural responsibilities and activities
that it might be sensible for an ALMO to perform by
agreement with their parent local authority.
4.3 Areas of difficulty identified by ODPM included:
Anti social behaviour orders (ASBOs). ALMOs are not
listed in current legislation as one of the bodies able
to apply for ASBOs.
Court proceedings. A number of ALMOs have highlighted
difficulties caused by their staff and/or solicitors not
being granted audiences in Court as advocate for
purposes of rent arrears cases, eviction notices etc.
Leaseholder issues. Some ALMOs have reported
difficulties in carrying out duties relating to
leaseholders, e.g. consulting leaseholders on service
charges or bringing leaseholder forfeiture proceedings.
Financial Services Authority (FSA) regulations.
4.4 ODPM state in their letter that were they to enable ALMOs
to conduct some of the functions that have so far been
highlighted, secondary legislation or changes to primary
legislation or Court Rules may be required. In order to
support such action, ODPM state they would need much
stronger evidence than they have currently about why these
changes are necessary and the level of support they would
ODPM review of ALMOs
4.5 ODPM have written to ALG stating that Keith Hill, Minister
for Housing and Planning, has recently agreed the terms of
reference for a proposed review of the long-term future of
ALMOs. A review group, chaired by Neil McDonald, ODPM
Director of Housing, will take stock of what ALMOs are
delivering, consider how to resolve barriers to effective
operation and the role of ALMOs in the long term future of
social housing. The Review Group will provide
recommendations for consultation by the end of the year.
Keith Hill plans to make an announcement about the review
in September, once group members have been chosen. A copy
of the letter from ODPM and terms of reference for the
review are attached at Appendix 2.
4.6 The ALG has been invited to nominate one representative to
be a member of this group.
4.7 The group will also include three ALMO Chief Executives
(nominated by the National Federation of ALMOs) and three
local authority representatives (nominated by the LGA). One
of the local authority representatives will be from a
Financial freedoms and flexibilities
4.8 The National Federation of ALMOs will be working with the
Chartered Institute of Housing (CIH) and HouseMark in the
autumn to identify practical mechanisms to recommend to
ODPM which will work within the broad framework of public
borrowing rules. This work is likely to consider
mechanisms such as prudential borrowing, debt restructuring
and the use of right to buy receipts.
Partnering in procurement
4.9 The Comprehensive Spending Review 2004 announced the
introduction of new partnering arrangements to improve
social housing procurement. ODPM proposes to roll out a
national network of local collective purchasing consortia.
4.10 London’s ALMOs are interested in setting up a purchasing
consortium, which would aim to lower costs for repairs and
capital expenditure by purchasing in bulk.
5. EQUALITIES IMPLICATIONS
5.1 Across London as a whole, local authority tenants include a
greater proportion of BME groups, vulnerable people and
other disadvantaged groups than the general population.
Decisions on procurement of services and housing investment
whether made by councils or ALMOs should take this into
London boroughs’ action on stock options
Update – July 2004
Three London boroughs have transferred all their stock (Bexley,
Bromley and Richmond).
Kingston recently received a no vote on a whole stock LSVT
The smaller transfers of estates or trickle transfers form part
of many authorities’ “mix and match” approach to securing
funding for investment. The 2003/04 transfer programme,
confirmed in July 2003, includes 11 partial stock transfers in
London in addition to the Kingston whole stock transfer.
The 2004-5 programme of stock transfers includes LB Lambeth and
LB Tower Hamlets (17 partial LSVTs).
A new gap funding scheme was announced in May 2004 which will
make LSVT possible for some authorities whose housing stock has
a negative value, bridging the gap with annual payments to the
transfer housing association over 10 years. ODPM will consult
on details of this scheme.
Private Finance Initiative (PFI)
There are three Round 1 Pathfinder PFI schemes in London
(Islington, Newham, Camden), one of which (Islington) has
recently completed negotiations and signed contracts.
There are three Round 2 PFI schemes (Lewisham, Newham,
Islington). The numbers of homes covered by PFI schemes are
relatively small, with the Islington street property scheme of
5,000 units being by far the largest.
Brent has a non-HRA PFI scheme.
There are 3 successful London PFI schemes in Round 3 (HRA PFI
and non HRA PFI), announced May 2004, out of the 6 expressions
of interest. The schemes are in Islington, Lambeth and Croydon.
Nine London boroughs have already set up ALMOs:
Brent - partial (Brent Housing Partnership - Round 2)
Barnet (Barnet Homes - Round 3)
Hammersmith & Fulham (Hammersmith & Fulham Housing Management
Services – Round 4)
Hillingdon (Hillingdon Homes - Round 2)
Hounslow (Hounslow Homes - Round 1)
Islington (Homes for Islington – Round 3)
K&C (Kensington & Chelsea TMO - Round 2)
Waltham Forest (Ascham Homes – Round 2 initially but may have
to reapply for Round 5 following a best value inspection.
Ascham Homes are due to be reinspected in 2005)
Westminster (CityWest Homes - Round 1)
Two more ALMOs are due to go live in September 2004:
Harrow (Round 3 - Spire Community Homes)
Ealing (Ealing Homes –Round 4)
Future rounds of ALMO / PFI /LSVT
ODPM announced on 20 July that ODPM will soon open new bidding
rounds for councils who need extra resources to make their homes
decent. A single invitation to submit bids will be sent to
local authorities in early October 2004. They will have until
the end of January 2005 to submit their initial bids. A further
bidding round is expected to start in late 2005.
Boroughs which may have to have a Stock Option Appraisal signed
off by GOL.
Barking & Dagenham
Corporation of London
Decent Homes Division
Direct line: 020 7944 3712
Dear Mr Pilgrim GTN: 3533
e-mail : Mike.Wilkinson@odpm.gsi.gov.uk
Web site: www.odpm.gov.uk
5 August 2004
REVIEW OF THE LONG TERM FUTURE OF ALMOs
Keith Hill, Minster for Housing and Planning, has recently
agreed the attached Terms of Reference and other details for a
proposed Review of the long term future of Arms Length
Management Organisations (ALMOs). In framing these we have been
keen to explore the opportunities available to ALMOs as they
approach their first key objective of bringing all the stock
they manage up to the Decent Homes standard. We have also been
mindful of the need to focus on realistic and practicable issues
to guide the Review and the subsequent consultation exercise to
conclusions that are likely to be compatible with ALMOs' status
in the public sector.
As you will see, we propose that this exercise should be
overseen by a Review Group, chaired by Neil McDonald, ODPM
Director of Housing. Keith Hill plans to make an announcement
about the Review in September, once the Group members have been
We want the Group to be representative of a cross-section of
stakeholders and so would like the Association of London
Government to be represented. We are therefore inviting you to
nominate one representative to be a member of the Group. So
that we can convene the first meeting of the Review Group in
September, please could you let me have your nomination, with
the agreement of the individual concerned, by the end of August.
REVIEW OF THE LONG TERM FUTURE OF ARMS' LENGTH
MANAGEMENT ORGANISATIONS (ALMOs)
ALMOs were introduced in 2001 as one of the options for local
authorities to secure additional resources to deliver the decent
homes target. ALMOs are companies set up by local authorities
to manage and improve their housing stock, and qualify for
funding from ODPM if they are assessed as "good" or "excellent"
by the Housing Inspectorate of the Audit Commission. Tenants
must support the setting up of ALMOs and play a major role in
their operation, notably by having one third of the places on
ALMO Boards, alongside Council representatives and independent
The first ALMOs have been up and running since 2002 and there
are currently 20 in receipt of funding. Proposals for a
further 29 have been accepted onto the programme, and more are
expected to join in 2005 and 2006.
ALMOs are effective delivery vehicles of decent homes and wider
services to tenants. As with any new type of organisation their
early operation has identified a number of possible barriers
that reduce effective operation. Some ALMOs will soon have
completed their programme of works to deliver decent homes and
need to put plans in place that will ensure they continue an
effective service to tenants and maintain the stock in good
ODPM and the National Federation of ALMOs have concluded that it
would be appropriate to take stock of what ALMOs are delivering,
to resolve barriers to effective operation and consider their
role in the long term future of social housing. The ODPM is
therefore setting up a Review Group to consider these issues and
provide recommendation for consultation by the end of the year.
Terms of Reference
The Review Group will draw up proposals for consultation on:
- how ALMOs can maintain their services to tenants in the long
- a regulatory framework for ALMOs
Under these headings the following issues will be considered:
Maintaining a service to tenants
- how to ensure the sustainability of the improvements carried
out by the ALMO, the continued provision of a high quality
service to tenants and on-going tenant involvement.
- options for increased freedoms and flexibilities for ALMOs
including financial freedoms and operational functions,
looking at the legal, financial and policy implications but
within public expenditure constraints.
- the options for ALMOs after they have achieved decent homes,
ranging from ALMOs taking on ownership of the stock to
management reverting back to the local authority.
- how the provision in the Housing Bill that would enable ALMOs
to receive funding from the Housing Corporation could work in
- the financial framework for ALMOs when ODPM additional funding
- the effect of Right to Buy on ALMO stock profile and future
- whether the long term existence of an ALMO is predicated on
sustaining high performance.
- the appropriate framework for dealing with ALMOs whose
performance falls below 2* rating.
- the role of the parent local authority and the inspection
regime in performance assessment.
- measures to assist failing ALMOs.
The Review Group will produce a paper for consultation covering:
- clear options for ALMOs after they have achieved the decent
- proposed financial and operational freedoms and flexibilities
- a proposed regulatory framework
Review Group Membership
The group will be chaired by Neil McDonald.
Membership will be made up of:
- 3 ALMO Chief Executives (nominated by the NFA)
- 3 local authority representatives (nominated by the LGA)
- 1 NFA representative
- 1 LGA representative
- 1 ALG representative
- 1 Housing Inspectorate representative
- 1 TPAS representative
- 1 CIH representative
- 1 Housing Corporation representative
- 1 Treasury representative
- ODPM representatives
The Review Group will be appointed during August and meet for
the first time in September. Four monthly meetings will then be
held, leading up to the publication of a paper for consultation
in the New Year.
The Group will be supported by a Secretariat which we hope will
be led by a secondee nominated by the NFA, assisted by staff in
the ALMO Branch of ODPM's Decent Homes Division.
Decent Homes Division