Housing service hit by cash crisis

Housing chiefs now have difficult choices to make on the best way forward to clear a £150m backlog of repairs and invest the £800m needed to bring its 22,000 properties up to 21st century standards and maintain them. The Government, after decades of under-funding, gives them just £1m a year to spend.

The radical plans to create a separate organisation to take control of its housing stock - known as the Community Regeneration Company - would have meant hundreds of millions borrowed from the private sector during a lease period of 35 years.

The CRC would have been free of borrowing restrictions which apply to local authorities allowing them to take out massive loans to fund repairs and environmental improvements. Why the scheme was rejected THE CRC offered long-term certainty to the council, but Lord Falconer said he was not convinced. He only sees security in a freehold transfer to a registered social landlord who will have the incentive to plan for the long-term future of the housing and its tenants, or the government's other initiatives such as ALMO.

Amongst other concerns the minister said that the CRC model could become a long-term burden for the authority. He said it would offer a right to buy but how this would operate was uncertain.

While he admitted that these issues could be resolved, he said: "given the uncertainties and lack of any material benefits to tenants" he felt agreeing to Bolton's request would give an "inaccurate signal that the Government had reduced its commitment to freehold transfer which could have a "major impact on the government's housing transfer if other councils decided to follow suit."

During a meeting with housing minister Lord Falconer last week the government's own initiative, of an 'Arms Length Management Organisations was discussed'.

This new type of organisation is also intended to tackle the existing repairs backlog.

But Bolton Council is anxious to extend its regeneration activity and one positive thing which has come out of it is that Lord Falconer invited Bolton to help the Government develop this work.

He said: "I know Bolton's housing department is well regarded and therefore the ALMO should be a realistic option. Whichever option you choose I would expect Bolton to retain an interest in the housing as part of its wider strategic responsibilities. Councillors fight decision COUNCILLORS and officers are both very disappointed with the rejection. They are now in the process of writing to the minister providing a full explanation as to why the scheme will work in answer to each point Lord Falconer raised.

Executive member for housing Councillor Noel Spencer says that he is disappointed that the council has constructed a model which government officials recognise as being technically, legally and financially sound - yet they appear to be confounded by a "judgement call."

He hopes to reverse the decision - but head of housing George Caswell warns this is unlikely.

"We are having to look at the other options and discuss them with our customers," said Councillor Spencer.

"We want to get the views of customers. What we also want to do is to see whether or not we can get some additions to the other options."

What options are available Staying the same - the council would continue to own and manage the stock within existing wholly inadequate resources

Arms Length Management Organisation (ALMO) - the council's housing services would become a Council-owned company, with the chance of bidding for extra money to invest in the whole stock.

Private Finance Initiative (PFI) - one or two estates might receive private funding with a company managing the properties for 30 years.

Large Scale Voluntary Transfer (LSVT) - the council sells off the stock to a Registered Social Landlord which would then raise private finance to carry out improvements to the whole lot.

A combination of the above.

If the council goes for the ALMO option they will be able to bid for some of the £800m needed. For this they must prove that the service can run at the highest possible standard.

"In my view, of all the options the one which is closest to our original aims is the ALMO," said Councillor Spencer.

"A lot of the work which has already been done can be replicated for the ALMO."

But opposition councillors say all the other schemes, including ALMO, are not good enough.

Councillor David Wilkinson said: "They do not provide the resources to do the jobs which the tenants deserve. Unless Lord Falconer is prepared to fund nearly £1bn then we are only going to go backwards. We already have tenants in unfit properties and the problems will continue. It's a quality of life issue for our tenants. I have been saying it right from the beginning, the suits in Whitehall are not prepared to take their blinkers off. "

The council will now start a series of meetings with tenants and residents.