'No more freedom' for ALMOs, says government

The government is "unlikely" to give arm's-length management organisations the freedom to borrow money in the way housing associations do.

The request is the centrepiece of a series of freedoms and flexibilities that the 25 first- and second-round ALMOs have been pressing for since last February.

But a senior Whitehall source has said the government is set to deny this particular proposal.

The news came as the ODPM named the 12 councils that had been successful in bidding for round four of the £2bn programme (table, right). Bury and Manchester were the two surprise omissions from the list, although both confirmed they expected to be in the fourth round.

Steve Rumbelow, director of housing at Manchester, said: "It is only minor issues that remain to be resolved and we expect these will be dealt with in a matter of weeks rather than months. The ODPM will definitely look to include us in round four."

Of the other five councils who had expressed an interest, Salford and Hackney withdrew their bids (HT 28 November, page 9) and Stafford and West Lancashire chose stock transfer instead.

Wear Valley withdrew after getting an extra £1.5m a year after the ODPM boosted management and maintenance payments.

The existing ALMOs had hoped that an ODPM and Treasury paper outlining the freedoms – due to be published last summer – would allow three-star ALMOs to do more than bring their homes up to the decent homes standard, such as borrow against rental income.

It is understood that the ODPM has shied away from this because "they were likely to have taken up the lion's share of the borrowing available to councils".

The source said: "The ODPM and Treasury have realised the prudential borrowing regime will restrict any meaningful borrowing by ALMOs.

"They wanted to be able to do the same thing as associations and, ultimately, this will not be possible as they are still part of the public sector."

The other freedoms under discussion are:

• the ability to trade services and manage other landlords' stock
  
• freedom to build
  
• the chance to use their own rental income rather than pay it to the housing revenue account
  
• to have outstanding debt written off.

It is understood that ALMOs may get the first two of these reforms.

Gwyneth Taylor, policy officer at the National Federation of ALMOs, said: "If the government limits freedoms, it reduces ALMOs' spur to get three stars."

An ODPM spokesman said: "We are still discussing this. There is no date for when we will announce anything."