ALMOs: DCH prediction - two-stage privatisation of council housing - confirmed.

The housing press this week reports that the Chartered Institute of Housing (CIH) and the trade organisation representing Arms Length Management Organisations (ALMOs) is working with the Office of the Deputy Prime Minister (ODPM) on a proposal for ownership of the council homes to be transferred to the arms length private companies set up to run council housing in 49 areas around the country.

Alan Walter of Defend Council Housing said in response:

“They won’t get away with it but these proposals vindicate our argument that ALMOs have always a two-stage strategy to privatise council housing. We weren’t scaremongering – it was an obvious assessment to make.

We are not surprised that some ALMO chief executives and directors are now making this move. They stand to gain personally and this has always been their agenda but they will face massive resistance. Tenants were specifically told by government Ministers, as well as elected local councillors, that ALMOs would remain in council ownership. It was only on this basis that tenants have gone along with ALMOs. With a general election looming tenants should be asking their elected politicians for categorical assurances that the original commitments will be honoured.”

DCH has produced ’10 questions and a pledge’ for candidates in the general election. We will now be also asking candidates to commit to keeping ALMOs under council ownership and allowing them to revert back to direct council management once the decent homes target is met.

The joint CIH/NFA/Housemark report argues for a change in policy as the only way to keep the ALMOs going and stop the homes reverting back to council management when improvements have been completed. But exactly who wants to see the ALMOs take ownership? The answer, of course, is the senior managers and consultants who, if they haven’t already done so, are looking to get the massive salary increases that go with stock transfer.

Back in 2001 Defend Council Housing described ALMOs at ‘two-stage privatisation of council housing’. DCH argued that the new formula had to be assessed in its specific context. Government was failing to achieve its target of stock transfering 200,000 homes a year. Tenants in a number of areas, including Birmingham, had voted against selling off their homes and Ministers were desperate to keep their privatisation strategy alive. Government insistence that councils should set up a private company to manage their homes made no sense. Separation goes against the mantra of joined up services and since borrowing is via the local authority it makes no difference in terms of Treasury economic rules.

Tenants in the areas affected have been told that the council would continue to own their homes and the change would only be cosmetic. In many authorities senior officers and elected councillors specifically assured tenants that the homes would revert back to council management at the end of the five years after the government’s ‘decent homes’ target had been achieved.

In most of the 49 authorities involved there was no proper debate before the private companies were formed. ALMOs were sold as a win-win solution that was a pragmatic way of bringing in the much needed investment. Councillors in many areas publicly disagreed with the government’s arguments that separating housing management from strategy would bring benefits but argued that the cost and inconvenience was worth the trouble to get the additional investment. Propaganda put out by authorities promoting ALMOs carried high profile assurances that it wouldn’t fundamentally affect the relationship between tenants and their landlord and guaranteed the council would retain ownership. In fact tenants in many areas have said that they haven’t noticed any change except for the new logos and letterheads.

The Registered Social Landlords sector is facing growing economic and political pressure for companies to merge and diversify into building private homes for sale and regeneration. Ambitious ALMO chief executives will want to be right in there and may be worried that they could miss the boat. But if ALMOs are allowed to take ownership of council homes it means that council tenants will be subjected to all the risks and dangers of companies overstretching themselves and getting into financial trouble and are likely to find themselves part of a regional or national group structure with no meaningful control over their landlord..

When Parliament returns after the General Election the Minister of Housing is going to face renewed calls for a level playing field for council housing and the ‘fourth option’ of direct investment. That offers the most secure and accountable future for all councils tenants - including those currently managed by ALMOs.

Further information see Background on ALMOs and www.defendcouncilhousing.org.uk/