03 September 2004
Council-owned housing companies set up last year have reacted angrily to a government plan to change the way they are funded.
Some arm's-length management organisations, currently funded through the housing subsidy system, could lose millions of pounds if the government moves to a system of grants.
The Office of the Deputy Prime Minister asked the National Federation of Almos to consult its members over a possible switch. But the proposal is likely to be firmly rejected by many Almos set up in 2003.
The first eight Almos, established in 2002, along with 18 set up last year, all receive subsidy at a fixed rate of 10% – regardless of market rates. The benefit was withdrawn for later Almos.
First-round Almos will not be affected by any change as all the extra money they are owed to meet the decent homes target will be paid by next year.
'The government seems to be honouring its original promise,' said Phil Davies, director of Derby Homes, which is some £3m a year better off while interest rates remain below 10%.
But Bolton At Home, which is due to receive money through the subsidy system until 2006/07, estimates it could lose up to £13m. 'All our plans are based on the funding regime agreed,' said chief executive George Caswell. 'After that, we would be interested in talking about capital grants.'
Not all second-round Almos would be as badly hit. Mike Owen, director of Carrick Housing in Cornwall, said the effect would be marginal because of his Almo's relatively low debts. 'We want to see the merits of what the government is offering,' he said.
Gwyneth Taylor, NFA policy officer, said a grant system would be more transparent as Almos would know well in advance exactly how much money they were to receive. 'We are still collecting the information but every Almo seems to be in a different financial position,' she said. 'What's good for one is not so good for another.'
PFsep2004
