Management vehicle '99

Last year's housing and regeneration policy statement by John Prescott made it clear that the government wants councils to separate their strategic housing functions from their day-to-day responsibilities as landlords. It referred to the continuation of stock transfers, but also said that the government is interested in other ways of making this separation without councils losing their stock. The statement signalled continuing interest in looking at options for "arms length" management - such as the ideas which had been promoted by the Chartered Institute of Housing and the Local Government Association for local "housing corporations" or "quasi-corporations". But at the same time the government underlined its message that present borrowing rules are here to stay.

Is there any mileage in this for councils who are not keen on stock transfer but who still want to make progress in adopting a more business-like approach to their landlord role, and are also desperate to bring in more resources to improve their stock? We set out to investigate these possibilities in a report prepared for the institute and the association by HACAS and Trowers and Hamlins, published today.

The report's starting point is that separating the strategic and the landlord roles is something that can be done operationally (and in many larger many councils, already has been done) without creating new organisational set-ups. However, some councils are already looking at more arms-length arrangements and there may be some benefits to be gained in helping to develop a more business-like approach to the landlord role. At the same time it must be acknowledged that many local authorities consider that there are distinct advantages in keeping their strategic and landlord roles in close proximity and would need some convincing of the merits of a more autonomous approach.

The report examines five options, involving progressively greater degrees of separation. The first is the Housing Operations Division model. This would be a self-contained landlord operation within the local authority, but with its own manager and business plan. An example already up and running is Ipswich Borough Homes, which manages the council stock and acts as client for the repairs and maintenance contract. A model like this might be suited to the new local government arrangements in which strategic and service roles in the council are separated out at "cabinet" level with separate reporting lines.

Option 2 is the Housing Business Board, which would have formally delegated powers to manage the stock and run the capital programme.

The board would be part of the council but would operate a ring-fenced business. Subject to legislation, it could have tenant members with equal voting powers to councillors. It would operate under a business plan agreed with the council and have separate accounts.

A third option is modelled on the arrangements for local management of schools. Under this approach, a Local Housing Organisation would be set up, probably on an estate basis, with a delegated budget and management responsibilities. It would provide a further variant to Tenant Management Organisation models.

Option 4 would involve setting up a private company wholly or majority owned by the council. The Local Management Company would manage and maintain the stock under contract, and (unlike the previous models) would directly employ staff. Tenants could be board members alongside councillors. In many respects it would be similar to the borough-wide TMO set up by Kensington and Chelsea, except that it would also manage the capital programme. Ownership of the stock would stay with the council, however.

In the final option, ownership itself would be transferred, to either a Local Housing Corporation or a Local Housing Company. In the Local Housing Corporaton approach, the council would either own the new body or having a controlling stake. In the Local Housing Company variation, a conventional company would be set up as under stock transfer, registered with the Housing Corporation, but with the council retaining a "golden share" - the ability to initiate or veto changes in its constitution.

Readers will already have realised that the more ambitious options require legislation and, to be attractive, would also need to lead to wider borrowing powers or - at the very least - more certainty in capital allocations. Furthermore, the last two options would require tenancy changes under present legislation, which would be likely to make them unpopular with tenants.

Council housing managers already grappling with the respective virtues of stock transfer and PFI, or trying to work out what resource accounting may have to offer, are unlikely to welcome another raft of potentially confusing possibilities, especially faced with the task of assessing them for councillors or tenants. But the purpose of the report is not to set out options that councils could adopt immediately. It is to provoke debate on how council housing is administered where it is retained by the local authority and in a way which is in step with the local government modernisation agenda. Councillors, tenants and housing professionals are united in their desire to achieve better housing conditions, as well as the highest possible standards of housing management. The test of whether any of these options are workable will lie in the government's willingness to link them to measures to bring in more investment or, at the very least, to create more certainty for councils in the planning of their capital programmes.

Hilary Armstrong has already signalled her interest in such a debate, and has welcomed the institute and association initiative. The the institute and the association will be making the point that the report's ideas build on the government's stated objectives in the Comprehensive Spending Review, and fit well with developments such as beacon councils. If the government now wants to pursue changes of this kind, how can it make them as attractive as possible to those at local level who actually decide council housing's future?

New Structures for Council Housing? is available price £10 (plus £1.50 p&p) from CIH Publications on 01203 851752.