Making arms-length easier

5 Apr 01
The government has bowed to pressure from local authorities and agreed to make it easier to set up arm's-length housing management companies.

06 April 2001

Councils wishing to establish companies to run their housing stock will be told in advance how much money they will get if they meet all the criteria, which includes receiving a three-star (excellent) rating from the Audit Commission's housing inspectorate.

They will receive a 50% payment if they are awarded a two-star (good) rating and inspectors state that they are 'likely to improve' or 'will improve'. The remaining money will be paid once a council achieves a three-star standard.

Local authorities had complained that the procedure for setting up arm's length companies was fraught with uncertainty. The Department of the Environment, Transport and the Regions has set aside £460m for the initiative, seen as an alternative to stock transfer.

But it was doubted whether any council would meet the criteria in time to claim money next year, when the first £160m is available.

Replying to a Parliamentary question on March 30, housing minister Nick Raynsford stressed extra resources must be linked to high standards of service but added: 'We recognise those authorities that develop the first arm's-length proposals face a particularly challenging task.'

The concession was welcomed by the Chartered Institute of Housing. 'It has removed one of the main obstacles for councils that want to pursue the arm's-length option without feeling they could be doing a lot of abortive work,' said John Perry, the CIH's director of policy.

A consultation paper published by the DETR makes it clear there will be flexibility over whether individual companies can manage more than 12,000 homes. But a council's strategic functions must be clearly defined and separate from the work of the management company.

The Audit Commission is currently consulting over what will be expected of authorities hoping to achieve the required rating to set up a housing management company with government funding.


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