survey by auditing firm Baker Tilley, it was reported
this week, found that half of ALMOs had been asked to cut costs
by 6-12 per cent over the last twelve months, twice as much as the
average of 2-5 per cent revealed by an earlier survey of housing
In most cases, pressure from the local authority was cited as the
main motivating factor. Staff costs have been most affected; all
ALMOs responding to the survey reported a drop in head count
compared with the previous year.
Given a ring-fenced HRA, opportunities to use revenue savings to
help relieve General Fund pressures are limited. As Philip Toni,
finance director at Wolverhampton Homes, is quoted as saying,
savings are most likely to stay within the housing account and be
used to support additional capital expenditure.
Self-financing puts most councils with housing - with or without
ALMOs - in a situation where there is no driving imperative to cut
housing management expenditure. Housing departments are largely
insulated from the pressure for cuts being experienced by other
parts of the council hit by the withdrawal of government
But it would be a mistake to think that they can afford to ease up
on the search for savings. There may be no immediate fall in income
that demands a cut in spending, but failure to liberate resources
to maintain and improve the housing stock can build up serious
trouble in the future.
Part of learning to operate within the context of a 30-year
business plan is recognising and acting on the fact that future
risks must be taken just as seriously as those which are clear and
present. The planning horizon must extend beyond next year, or the
next election, to look much further ahead.
The not-so-distant future, however, includes a major threat to HRA
income from HB reforms and the move to Universal Credit. Somehow
councils must contrive to find resources for the likely sharp
increase in rent collection costs and bad debts, and to beef up
their welfare advice, in a context of cuts.
The main losers from the government's welfare reforms will be the
households whose HB entitlement is cut. But if councils fail to
manage the impact of the changes effectively, the impact will
ultimately fall on other tenants - present and future - whose homes
will not get the investment they need.
Self-financing was intended to provide a once-in-a-generation
opportunity to end the cycle of disinvestment and decay that has
afflicted council housing for so long and enable councils to ensure
that their homes are maintained to an acceptable modern standard
throughout their lives. That opportunity must not be allowed
to slip away.