03 February 2006
A Northern council may be forced to merge some of its housing companies after being hit by the government's retreat over the way funds are allocated across the country.
The Office of the Deputy Prime Minister announced in December that a major reallocation of housing management and maintenance allowances will take at least two more years, instead of being completed in April as originally intended.
This leaves Leeds City Council, which has six arm's-length management organisations, about £2.3m per year worse off than expected.
According to an independent evaluation by accountancy firm PricewaterhouseCoopers, the Almos were already facing an overspend of almost £12m by 2010.
Paul Langford, the city's chief housing officer, said Leeds already loses £34m per year through the housing subsidy system, but was expecting the situation to improve slightly before the government delayed changes to the allowances.
Early ODPM rules meant that when the Leeds Almos were set up four years ago, no Almo was allowed to manage more than 12,000 homes. This restriction no longer exists.
Since 2002, Leeds has lost about 10,000 homes through right to buy — reducing the money its Almos receive in rental income. In theory, the Almos could merge into a single company with about 60,000 homes although stock transfer remains another, if unlikely, option.
Langford said the council was awaiting the ODPM's consultation paper, which may offer greater financial flexibility. 'We are right behind the Almo option. We believe there should be a future for them,' he said.
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