Set up housing firms, DETR tells councils

28 Sep 00
Local authorities are being urged to press ahead with setting up arm's-length housing management companies 18 months before they will be allowed to spend any extra money on their stock.

29 September 2000

Arm's-length companies were proposed in the housing green paper as an alternative to stock transfers and the Private Finance Initiative.

Speaking at a conference in London this week, Hilary Chipping, head of local authority housing at the Department of the Environment, Transport and the Regions, said there was no reason for councils to wait until the fine print of the new companies was agreed before they separated their day-to-day landlord role from strategic decision-making.

While councils will retain ownership of homes, landlord functions such as maintenance and rent collection will be delegated to the company.

Councils that carry out a Best Value performance review and are rated 'excellent' by housing inspectors will be able to borrow money from April 2002. A total of £160m has been set aside in 2002/03 and £300m in 2003/04 – equivalent to £5,000 per home for more than 90,000 dwellings.

Chipping urged councils to invite inspectors in as soon as possible, so that they would be first in the queue when the new money becomes available.

She even held out the possibility that ministers might find resources before 2002/03, and that funds over and above what had been set aside might be found if sufficient councils meet the performance criteria.

'The government wants to see an improvement in the quality of service being delivered to tenants,' she told the conference, organised by the School of Business and Industrial Management, on September 26.

'If a local authority finds itself in that position, then I'm sure they [ministers] would want to find the resources.'

A DETR working group, including representatives from the Local Government Association and the Chartered Institute of Housing, is looking at how arm's-length companies might work in detail. Draft guidance is expected in two months.

Some councils had opposed the word 'company' as it suggested privatisation, Chipping said. She also stressed that the government would be flexible: 'We are not going to be too rigid about what a company should look like, but nor do we want to provide too much work for the consultants and lawyers.'


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