Third and fourth rounds near certain as accounting trick releases £750m
Details have emerged of where extra resources were found for the extension of arm's-length management organisations promised in the Communities Plan, and how the future rounds of housing association development funding are likely to be allocated.

A £750m deal, struck with the Treasury in the frantic months leading up to last Wednesday's announcement by deputy prime minister John Prescott, means there will be a third round of ALMOs and, almost certainly, a fourth (see factfile).

The news will delight local authorities that have been pondering how best to bring their housing stock up to the decent homes standard by 2010 over recent months.

But housing professionals warned in the wake of the plan that any further rounds of ALMOs will be massively oversubscribed, due to the politically unpopular option of stock transfer and the complex use of the beleaguered private finance initiative.

Gwyneth Taylor, programme manager at the Local Government Association, said: "When the funding is announced there will be a big response – especially as it is now very clear cut that there is no funding available apart from ALMOs, LSVT or PFI."

John Apps, acting head of local authority housing at the Office of the Deputy Prime Minister, said the aim was to "accelerate the programme to have three rounds over two years or even two per year". Apps said guidance would be issued "towards the end of February" giving details on how much will be available for a third round. He said the department had requested information from the existing ALMOs from rounds one and two as to how much of the £2bn they would need.

This information will be collated during the next two weeks and only then will the remainder of the money be offered for the likely crush of third-round bidders.

When the funding is announced there’ll be a big response. There is no funding available apart from ALMOs, LSVT or PFI

Gwyneth Taylor, LGA

Although ALMOs were the big winners in last week's £22bn plan, the only new money that ODPM officials managed to win from the Treasury was the £600m "seedcorn" investment in the four south-east growth areas.

The National Housing Federation has produced an initial modelling paper to analyse the likely allocation of spending by the Housing Corporation over the next three financial years.

It based its analysis on the housing needs index for 2003/04 and the results are shown in the table.

As outlined in the Communities Plan, most of any increased funding will go to London, the South-east and East of England.

Where the ALMO cash came from

The Office of the Deputy Prime Minister managed to find an extra £250m a year to fund arm’s-length management organisations by a clever “switch of resources”. Local authorities are required to set aside 75% of capital receipts and further money as part of their housing revenue account to cover debt to the government. This latter “minimum revenue provision” – around 2% of an authority’s “credit ceiling” – is what the Treasury has agreed to allow to be freed up for capital investment. This has been possible because of the introduction of the £1.59bn major repairs allowance two years ago to allow councils to invest in housing. The ODPM argued to the Treasury that this funding stream meant that the minimum revenue provision was no longer required.

Source

Housing Today

Related files/tables