CPS Urge Government to Increase Investment in Council Housing

5 May 2004

The Case for the 4th Option for Council Housing and A Critique of Arms Length Management Organisations.

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Across the country, tenants associations and federations, local authorities and trade unions (UNISON, GMB, TGWU) are increasingly interested in a 4th option for investment in council housing. The Council Housing group of MPs, who are holding an inquiry into the potential for a 4th Option, have already received replies from 25 councils supporting the fourth option and the Local Government Information Unit also support this position.

The government has established a target for all local authorities to make their housing stock 'decent' by 2010. After 30 years of under-investment and marginalisation council housing is in need of investment and modernisation. However, the government has constructed a scenario whereby local authorities only receive additional financial support if they choose to establish an Arms Length Management Organisation, transfer their stock to a housing association in a Large Scale Voluntary Transfer (LSVT) or use the Private Finance Initiative (PFI).

Without a fourth option, there will be fewer and fewer local authorities able to sustain direct housing management and they are likely to come under increasing government pressure to follow the ALMO, LSVT or PFI route. The future of council housing is under threat.

This report, from the Centre for Public Services, makes a comprehensive case for the 4th Option for Council housing investment, arguing that:

• Council housing is a socially important housing tenure. It is democratically accountable, has a range of economic benefits and provides access to affordable housing.
• Even within the government's own rules for public spending, there is ample room to deliver the needed investment to correct 30 years of under-investment and marginalisation, especially if government subsidies for Large Scale Voluntary Transfer and PFI are diverted into direct investment.
• Arms Length Management Organisations - introduced by the government as a 'third way' for council housing, is in reality a stepping stone to privatisation, undermines democratic accountability and impacts negatively on tenants, staff and the local authority.

Dexter Whitfield, Director of the Centre for Public Services said:

"Council housing has always and can be in the future an important housing tenure, providing good quality, affordable housing and democratic accountability. It can also, as several government reviews have suggested, help to build a sustainable economy.

The government says it listens to local people, that what matters is what works. As the ballot of tenants in Camden shows, Council tenants and local authorities are increasingly demanding direct investment in their homes.

The government should now abandon its preoccupation with council housing privatisation and enable local authorities to invest on equal terms in their own stock. The forthcoming Spending Review provides an important opportunity for the government to create a 4th additional investment option for the future of council housing. It is vital that the injustice of the under investment in council homes over the last thirty years is corrected."

The report has 4 objectives:

• To promote the importance of stock retention as a core option with local authorities being allowed the same additional borrowing as ALMOs.
• To identify the contradictions in the government's approach which faces in two directions simultaneously - on the one hand promising tenants choice, empowerment and participation and the other restricting investment, limiting options and choice and excluding tenants from having a democratic input into the future management of their homes.
• To inform tenants organisations and trade unions about the advantages and disadvantages of ALMOs.
• To examine the longer-term implications of ALMOs. Although an ALMO could be a transitory organisational structure set up to achieve additional short-term investment in order to meet the Decent Homes Standard, none, at least publicly, have been established on this basis. The ALMO debate appears prescribed by the 2010 deadline for Decent Homes, yet they face an uncertain future given government policy to create a single 'social' housing tenure, the need for continuing investment after 2010 and developments in regeneration strategies.

Notes to editors:

• The Case for the 4th Option for Council Housing & A Critique of Arms Length Management Organisations (ISBN 1897692161)is available from the Centre for Public Services, by emailing: mail@centre-public.org.uk. Price: £7.50 (5 for £25) to tenants, individuals and trade unions and £15 (10 for £100) to local authorities.
• The Centre for Public Services is an independent, non-profit organisation. We are committed to social justice through the provision of good quality public services by democratically accountable public bodies implementing best practice management, employment and equal opportunity policies. We operate nationally from our base in Sheffield.
• The Council Housing Group of MPs are holding an inquiry into the potential for a 4th Option for Council Housing Investment.
• On Wednesday May 12 the MPs are holding an open session of their enquiry at Parliament to demonstrate support for the fourth option (12-4pm Boothroyd Room, Portcullis House, Embankment, Westminster). An invitation to the event is available at from www.defendcouncilhousing.org.uk
• Early Day Motion 430, put down by Austin Mitchell supports the 4th Option.
• A recent vote by tenants in Camden, rejected the establishment of an Arms Length Management Organisation (ALMO).
• ALMOs were introduced by the government as a third way for council housing investment after tenants in range of authorities rejected Large Scale Voluntary Transfer.
• The Audit Commission has been critical of the first round of ALMOs.