Waltham Forest's arm's-length management organisation has been awarded the lowest inspection score of any of the first- and second-round ALMOs.
Audit Commission inspectors gave Ascham Homes one star and said it had uncertain prospects for improvement.

Four other ALMOs – all in Leeds – have been awarded one star, but were all judged to have excellent prospects for improvement. Another 20 first- and second-round ALMOs have been awarded the two- or three-star rating needed to access additional funds to meet the decent homes target.

Ascham Homes, which manages 11,177 homes in north-east London, will have to meet the two-star standard by October, when it is due for re-inspection, or lose up to £68m of government funding.

The inspectors found that Ascham's "service standards are not being achieved". Their report, published last Friday, concluded that the quality of some of the ALMO's services had declined since an indicative inspection carried out last year.

Its cleaning and caretaking services were singled out for particular criticism: inspectors felt they were not value for money.

We are making the necessary changes and I am confident of getting two stars

Hassett Auguste, Ascham Homes

Tenants' complaints were also not being dealt with satisfactorily, inspectors found.

Roy Irwin, the Audit Commission's chief inspector of housing, said: "We found that some services had declined or not made sufficient progress, particularly in relation to tenant participation."

The commission has recommended an action plan for Ascham Homes, including measures to ensure service standards are kept and complaints are effectively dealt with.