time to re-assess the options

Government officials have hinted that the prospective changes to the borrowing rules may offer some scope for the authority – although how much this might generate is not yet clear.

I understand that a lot of work was done on assessing Birmingham's investment needs at quite a detailed level. This will, I hope, form the basis of new local solutions for the different communities in Birmingham, subject to the resources available.

Some other authorities will also be re-examining their options, although clearly the Birmingham result needs to be put in the context of the many large scale urban transfers which are now successfully moving forward.

Some focus will inevitably switch to the other options available pending the detail behind the new borrowing proposals. Arm's-length management remains an option where an authority is likely to achieve the required performance targets, and the private finance initiative is still worth examining for specific stock – especially if the proposed new funding arrangements provide extra support for these projects.

A further option is partial transfer, since this is a more locally based solution. It has been used by a number of authorities to date – although others have resisted it for financial reasons.

Partial transfer is often looked at where some of the property needs major redevelopment, although tenanted stock transfer will not always be the best solution if the rebuild programme is too significant.

Where redevelopment is required there will generally be a need for some form of subsidy to make the scheme stack up.

In recent years there has been no specific government pot available to fund these projects, and consequently local authorities have had to find other more imaginative ways, or other sources of public funds, to meet the gap.

Quite often the solution has relied on combining the redevelopment with refurbished stock and/or separate site disposals alongside some implicit subsidy from the new landlord. There is only so far this can stretch though, and some schemes might not get off the starting blocks if the gap is too big.

The G15 group of the largest London housing associations recently indicated that it was pressing the minister to set up a new fund. At the very least some loosening of the social housing grant rules would merit consideration.

If this is to be explored, it would also be appropriate to re-examine the way partial transfer affects the local authority.

Transferring the worst stock does let the authority focus its capital on other investment needs. But partial transfer, like right to buy sales, can also put incredible strain on the housing revenue account.

Experience has shown that many authorities struggle to 'downsize' as their stock reduces. A change in the subsidy rules would therefore help to ease the transition.

More local solutions will be the way forward for some – but a change in the current funding rules would certainly give them more chance of success.