Round two

ALMOs are the latest housing buzz word, but what are they and what does it take to create one? Arm's-length organisations are council-owned companies which manage the council's housing stock. Brent Housing Partnership is one of 13 such organisations to have funding approved in May, following eight councils that were successful in the first round last November.

The story of Brent's success begins in August 2001, when its first application was turned down due to over-demand from applicants.

The north-west London council decided then that, to be successful in the second round, it had to show its housing management was one of the country's best. It earmarked £150,000 for set-up costs. Since a three-star rating is a pre-requisite for ALMO approval, Brent set tough targets in order to improve on the two stars it received in 2001.

Tenant polls during that summer found widespread support for the council's plan, with 90% of the 600 people interviewed wanting to remain council tenants and 60% supporting the idea of the ALMO. But housing staff were tougher to convince. Despite already having held a round of consultation for the initial bid, the council held another 20 meetings with staff. The result: the 250 staff transferring to the ALMO will keep their existing conditions, with pensions to remain within the local government pension scheme.

It’s a major opportunity, not just for tenants but for housing staff, too

Helen Evans, chief executive, Brent housing partnership

Evans says transferred staff have more job security than ever: "There is a certainty in the medium term that hasn't been there in years."

In January this year, the council set up a shadow ALMO board. That didn't go entirely smoothly: two independent members resigned very early on, unable to commit to the massive, unpaid workload and huge responsibility of the role. Then, in February, the council put in its second bid for ALMO funding and gained approval in May.

On 10 September, Brent Housing Partnership got the final government go-ahead. It was already prepared to spring into action. Legal details had been sorted out by housing solicitor Trowers & Hamlins in advance based on templates it had drawn up covering memoranda, articles of association and agreements between the council and the ALMO. The new company was incorporated on 12 September and launched on 1 October.

For Brent tenants, this means £30m from the government over the next two years from a fund set up specifically for councils setting up ALMOs, and an expected further £15m from the pot after that, provided the ALMO passes a fitness test set by the housing inspectors.

We have £40-odd million that we wouldn’t otherwise have had

Martin Cheeseman, director of housing, brent council

"We have £40-odd million that we wouldn't otherwise have had," says Martin Cheeseman, the council's director of housing.

Apart from the financial advantages, says Evans, setting up the ALMO gave Brent a chance to rethink its housing service from scratch and to force through long-demanded changes. For instance, BHP will make it a priority to gather staff in two regional offices, one in the north and one in the south of the borough. Housing staff had long been dispersed on different floors of a building and in satellite offices. The council hadn't tackled the issue as other premises issues were a higher priority, but now the ALMO can move out of council buildings to offices elsewhere.

In its first three months, BHP will concentrate on getting the tenants to recognise the ALMO, to understand how it will work and to be aware of when changes will be seen. Building work should begin next summer on the 5348 homes that will have works done in the first three years, but contracts for this work won't be signed until the ALMO has had a satisfactory inspection, expected in six months' time. Getting the building work to the right standards at the right price will be vital. With the construction industry experiencing a boom, prices are high and labour scarce. To achieve economies of scale, work may be concentrated in certain areas rather than disparate work across the whole of BHP's stock.