Housing Revenue Account Delivery model - Northwards ALMO Review
Report of the Chief Executive attached
This report informs of the outcome of the recent “due diligence” review of the Arms Length Management Organisation (AMLO), Northwards Housing, undertaken by Campbell Tickell. The report provides a summary of the findings and goes on to propose to develop a service offer to tenants in light of the findings in order to move to a full consultation and “test of opinion” of tenants and leaseholders to the service being brought in-house.
The Committee considered a report of the Chief Executive, which informed Members of the outcome of the recent “due diligence” review of the Arms Length Management Organisation (AMLO), Northwards Housing, undertaken by Campbell Tickell. The report provided a summary of the findings and a proposal to develop a service offer to tenants in light of the findings in order to move to a full consultation and “test of opinion” of tenants and leaseholders to the service being brought in-house.
The main points and themes of the report included:-
· A summary of the rationale for the establishment of Northwards Housing Limited (NHL) in 2005 and its primary objective;
· The current and predicted financial position of the Council’s HRA at the end of the 30-year business plan which was projecting a deficit in excess of £400m.
· The methodology used by Campbell Tickle in undertaking the review of the HRA and Northwards ALMO;
· The main findings from the review, including the current service baseline and challenges to be addressed;
· A summary of the financial and non financial benefits of three options for consideration:-
· Retention of the ALMO;
· Return of the Housing service to MCC; or
· Stock transfer;
· An outline of the next steps in developing the tenants offer, which was a critical part of moving to the test of opinion ballot; and
· An indicative timescale of the next steps should the Executive support the proposal to develop a tenants offer.
The report would also be considered by the Executive at its meeting on 9 September 2020.
Some of the key points that arose from the Committees discussions were:-
· Whilst acknowledging the financial savings returning the housing service to the Council would bring, It was not clear what the benefit to tenants would be by bringing the housing stock back into the Council or how they would receive a better service;
· There was no mention in any of the proposals of how the repair contract would be managed;
· It was questioned what the scope of the brief given to Campbell Tickle to undertake the survey was and what qualifications did they hold to undertake the survey;
· There was serious concern that the proposed financial savings by bringing the housing service back into the Council would result in the loss of jobs to Manchester residents;
· What would happen if the tenants did not agree with the proposal to return the housing stock to the Council;
· It was commented that the savings difference between improving the existing service and removing it, which was reported to be £77m, equated to only £45 per property per year over the 30 year business plan and it was felt that this needed to be clear to tenants on the level of impact this saving would have;
· Some Members were not convinced that the interests of the tenants living in Northwards managed properties were paramount in the proposals being put forward; and
· It would be essential not to lose the best elements of the current service provided by Northwards if the management of the housing stock was brought back under the control of the Council.
The Interim Director of Housing and Residential Growth advised that the report did not refer to how tenants would benefit from bringing the housing stock back into the Council as this was the next stage of the process. This stage was to validate previous assumptions that had been made that there was substance to the indicative and projected savings to be made and improvements to service. In order to deliver the aspiration to improve services to tenants, there would need to be a test of opinion to see if there was support for the move of the management of the housing stock and to do this there would need to be an offer presented to tenants of what the service would look like if managed by the Council and how they could be engaged with and influence the service in the future.
He advised that the financial savings of returning the housing stock to the Council would be through various components, including shared back office/corporate core functions, achieving significant economies of scale.
It was reiterated that doing nothing was not an option so If the tenants didn’t agree following the test of opinion, then other ways would need to be identified to tackle the financial pressures that the HRA faced.
The Leader commented that he felt there was sufficient evidence to maintain the HRA, improve the level of services and improve the overall neighbourhood management of areas by bringing the housing stock back in control of the Council.
The Executive Member for Housing and Regeneration acknowledged the positive from the survey of Northwards tenants undertaken by Campbell Tickle had identified some areas of concern that needed to be looked at in more detail. She also commented that whilst the Business Plan put forward by Northwards identified savings, the Council had had to use HRA reserves for the last few years in order to balance the budget, so questioned why these savings hadn’t been identified previously.
(1) Does not endorse the proposal that the Executive confirm insourcing the service remains the preferred option and the intention to take over direct management of the Housing Service into the Council from 5 July 2021 subject to a “test of opinion” involving all tenants and leaseholders.
(2) Notes the review concludes that doing nothing is not an option and that there is an opportunity to achieve savings of at least £77m over the 30-year business plan by ending the current arrangements under which the Council’s housing stock is managed by Northwards Housing Limited (NHL).
(3) Notes the proposals contained within the report about how the new council controlled service offer will be developed and how, in future, tenants will be involved and empowered in the decision making about services to homes and communities.