Preparing for a long wait

Council housing stands at a crossroads. Even with the government's welcome boost to capital spending and the introduction of resource accounting, it is hard to see how 3.3 million council homes in England can be repaired and improved to meet modern standards - let alone compete against 2st century expectations. As a result, all over the country, and with varying degrees of enthusiasm, councils are examining the stcok transfer optionas the means of generating investment. To date, the programme has been opportunistic and "first come, first served" and the greatest benefit has not been directed to the areas of greatest need, More subsidy is now being put in - at the expense of the housing budgets - to make it a more realistic option for a new appraoch .

Over the next 20-30 years, the pattern of ownership of existing council housing should be determined by a set of principles through a participative, rigourous and transparent process. "First come first served" is not good enough. We need to be just as concerned with those areas that are not coming forward with proposals to access new forms of investment as those who are. It matters to everyone because all of the available options carry significant costs to the public purse and they are all subject to treasury constraints or consents. Without substantial additional resources, queuing will be a feature of the stock transfer and PFI programmes and they will be rationed just as HIP and ADP are now.

The future pattern of ownership should also be determined by a more substantial argument than the currently popular assertion that "modernisation" means that councils should get out of direct housing provision. There is little doubt that current arrangements are unsustainable, but councils will own stock for many years to come under almost any policy option. Transfer even at the current, highest-ever rate would take 30 years to remove all the stock to new owners. Some options (including most housing PFI schemes and the emerging "securitisation" arrangement) have the potential to raise the investment and leave the stock in council ownership. It would also seem perverse to beat the drum for tenants to have more choice and influence and then arbitrarily deny them an option that many favour - to stay with the council.

The evidence seems to suggest that different solutions may be appropriate in different circumstances, and that in some places a mix of solutions may be the best option. To ensure that all councils consider the available options rationally, it would seem logical to subject decisions about the future of stock in any locality to a Best Value fundamental review process. Every council would be required to undertake a Best Value review of their ownership of housing stock and to develop a plan. This could be - indeed would need to be - staggered say over a 10-year period, thereby dealing with around 300,000 dwellings a year in England.

The Best Value review should be genuinely strategic and look at the big picture, including factors such as:

• how the options would promote or otherwise the social, economic and environmental well-being of the community
  
• the value of the stock and its long term investment needs
  
• the views of tenants and residents and their preferred level of involvement in the ownership body, and the views of other stakeholders
  
• the implications for estate or neighbourhood regeneration (ie not simply housing capital investment) and for neighbourhood management
  
• the prospect of sustaining demand for stock
  
• the impact on future supply, and the ability of the local authority to meet its statutory duties especially in high demand areas
  
• how the options will affect the prospects of homeless people and other people with housing and social care needs
  
• the long term impact on public spending in the round, taking account of the flow of subsidies, benefits and taxes
  
• impact on the financial position of the council, taking account of debt redemption and the cost to the general fund
  
• impact of the options on affordability
  
• projected availability of capital and revenue resources
  
• ability to attract suitable partners with sufficient capacity
  
• ability to obtain financial backing

In future, the options available for consideration might be:

• transfer to existing RSLs or a new RSL
  
• transfer into resident ownership
  
• Public/private partnership (PFI)
  
• transfer to a local housing company
  
• transfer to an arms length local authority housing corporation
  
• transfer to an urban regeneration company or special purpose vehicle
  
• a mix of solutions to suit local conditions

As with other Best Value fundamental reviews, the point is to challenge the existing arrangements and compare them with other options. The status quo is therefore the comparator against which other options are assessed, and it will be the default option if other options are rejected for whatever reason.

Assuming that current audit and inspection arrangements stay in place, the Best Value fundamental review would be operated under central guidance on methodology and would be supervised through the Audit Commission, and any new RSL would be subject to the Housing Corporation's registration procedure.

Tenants are currently the gatekeepers and not the drivers of change. Under Best Value, tenants and other stakeholders would be involved from the start and would have influence throughout rather than when the die is cast. The process would be much more open and transparent and there would be fewer opportunities for the ballot to be turned into a political battlefield about "privatisation". There is a manifesto commitment to retain ballots for stock transfer and it would be wrong for authorities to be influenced in favour of an option because it would avoid the requirement for a ballot. An affirmative ballot should therefore be required on the outcome of the Best Value review, whatever option or options come out best.

To enable authorities and tenants to have a full range of options available to them, legislation will be needed to introduce the local authority corporation. If that is done, it would be possible to foresee the long term pattern of ownership being determined by a combination of objective assessment and the preferences of tenants - the embodiment of the "what works is what counts" philosophy.