Decent homes standard: The fourth way

“There are three options available – transfer, PFI and ALMO,” said housing minister Keith Hill in January. “This has not changed in the light of recent events in Camden. There will be no so-called ‘fourth way’.”

Hill was alluding to the resounding rejection by Camden council tenants of a proposed arm’s-length management organisation, a vote that left the authority unable to unlock the cash it needed to reach the decent homes standard.

But whatever Hill said, he couldn’t prevent a year of speculation. Was there to be another option for drawing down extra money to pay for improvements needed to meet the decent homes target, outside of the three stipulated by the government: transfer, arm’s-length management and the private finance initiative?

The ODPM’s own select committee warned in May that more money was needed to meet the standard, saying that otherwise the policy would fail in large cities like Birmingham. When tenants there rejected stock transfer in 2002, “Birmingham was effectively left with no available route to achieving the decent homes standard by the target date of 2010,” according to the ODPM. “Two years down the line, a complete solution still remains to be found,” it added.

A spokesman for Birmingham council added: “As things stand, we have a gap of £165m to meet the decent homes standard by 2010. We are exploring all the options for closing this gap, but we won’t force tenants into any options they don’t support.”

Kingston council soon joined the shivering crowd when its tenants rejected stock transfer, opening a £40m hole in the finances. Mike England, head of housing at the council, said: “We were depending on transfer to meet the decent homes standard. As we stand today, we don’t have the resources to get there. Right now, we have no idea how we can take it forward.”

By June, hairline cracks were appearing in the government’s intransigence. An ODPM select committee drafted a report that contained the tantalising suggestion that the 2010 deadline might be relaxed for councils who had exhausted their options – but the paragraph was cut before publication.

Austin Mitchell MP, the chair of the Commons council housing group, slammed the move: The government’s position “tells tenants to rot in decaying housing as a punishment for not choosing the option the ODPM wants”.

“Is there a fourth way?” asked Housing Today the next week. “The fastest way to meet the decent homes standard would be to allow councils to invest directly in their stock,” argued Janet Sillett, a policy officer at the Local Government Information Unit and a leading campaigner for the fourth way.

“How can the government deprive high-performing authorities such as Camden from receiving the same subsidy as two- or three-star ALMOs?”

But housing minister Keith Hill was adamant. “There is no fourth way,” he reiterated. And in July the ODPM rejected the main recommendations of a report by the select committee for decent homes, again ruling out a “fourth way”.

But then, hopes were raised by an unlikely source. As the government’s housing finance policy suffered a humiliating defeat at the Labour party conference, deputy prime minister John Prescott said he would look again at the policy. He said: “The public financing of housing does not treat local authorities on a level playing field and I want to see that changed and I promised I would do that and look at an inquiry into it.”

But ODPM insiders back-pedalled: “We are still trying to get clear what precisely has been said. Prescott made it very clear there would be no fourth way.”

For a while, confusion reigned. Councils called on Prescott to clarify what he meant and speculated about a fourth-way-that-isn’t-a-fourth-way: an investment allowance that councils could borrow against, or simply allowing councils to borrow against their major repairs allowances, as was suggested in an Local Government Association and LGIU pamphlet in June, seemed a model for a possible alternative.

But the government still felt this would force up public spending. Allowing high-performing councils access to ALMO funds was considered “unlikely”. When Keith Hill again insisted there was no fourth way, but hinted that there might be some “flexibility” for smaller councils, Liverpool councillor Richard Kemp commented:

“I’m bemused.” He wasn’t the only one.

But early in November, John Prescott took the growing hopes of a fourth option – and crushed them. He said: “There is not, and will not, be a ‘fourth option’ for providing direct additional funds to local authorities to meet the decent homes standard.”

Excuse me, but haven’t we heard that somewhere before?