APPENDIX 2
CITY OF SALFORD
HOUSING REVENUE ACCOUNT
BUSINESS PLAN 2001 - 2031
EXECUTIVE SUMMARY
Each year the Housing Services Directorate produces a Business Plan
that sets out the financial implications of present and future resources and
expenditure. It is essential that local people are involved in developing
and commenting on the content of this plan and that our tenants are
consulted. The Business Plan for Council Stock is a vital part of the
overall housing strategy so it is important also that Local People and
Partners are aware of what it contains and can also comment upon it
OUR VISION
Our vision is “Quality Homes for All”
We will help to ensure that every person in the City lives in a decent
home. We will achieve this by :

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Investment in the management and maintenance of council and
registered social landlord owned homes
Working with home-owners and private landlords to help them
manage and maintain their properties effectively for the benefit of
the community
Work to the governments target of ensuring that all council housing
achieves a 'decent' standard 2010
Work with private sector partners to reduce unfit and empty private
sector housing by one third by 2004
HOW WE WILL ACHIEVE QUALITY HOMES FOR ALL
FOR THE COMMUNITY

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Work with the Salford Crime Reduction Partnership to reduce
Domestic Burglary through a combination of target hardening and
advice and joint operations with Greater Manchester Police.
Development and promote our service for resolving problems of
Nuisance and Anti-Social Behaviour.
Work with the Energy Saving Trust, other Greater Manchester
Councils, Fuel Providers and Network Installers to provide warm
and energy efficient homes and reduce fuel poverty.
Provide a network of support for people who are vulnerable and/or
have special needs. Work with specialist providers and the Health
Authority to provide a range of housing options
Provide people with choice in seeking their housing solutions. Give
access through local housing offices, a Housing Shop and the
Internet to a range of housing choices.
2



Provide a strategy for the housing for Elderly Residents of the City
Of Salford
Ensure there is a sufficient supply of housing by analysing what
people want and what they need. Use the community consultation
network to gather together local views on housing requirements.
Look ahead 30 years and provide a vision for housing needs of the
City over that period of time. Provide a clear five year strategy for
the Housing Market in Salford.
PUBLIC SECTOR HOUSING



Maintain and improve popular housing in our ownership. Ensure
that our estates and high rise properties have good environments
and are safe and secure
Review all our unpopular and empty housing. For those properties
for which there is no demand to either demolish or dispose of it, or
seek alternative solutions. For properties for which there is a good
chance of improving popularity to target investment and market
effectively.
Continue to investigate and pursue alternative methods of investing
in Council owned stock so as to maximise the ability to bring in
additional resources for management and maintenance.
RESOURCE CONSTRAINTS
The present commitment to improving the condition of the housing stock
and the surrounding environment is directing the financial reserves
towards the most needy areas. The spending plans use up the available
reserves within the next three years, at which point there will be no option
but to reduce capital spending. In order to maximise the use of the
reserves the present spending plans are to be reviewed with the intention
of reducing expenditure by £2 million per year. This will create a business
plan that is sustainable over the next thirty years
OUR PRIORITY AREAS
The business plan sets out how resources will be used to meet the
objectives set out in the housing strategy. As a result analysis of the
business plan establishes the financial priorities for housing. These are:


To refine spending plans to improve the stock in order to maximise
the numbers of properties achieving the decent homes standard
To address the present overspend on capital budgets in order that
a sustainable level of expenditure can be achieved
3




To use the information provided in the stock condition survey to
improve the cost effectiveness of the maintenance strategy and
release resources for improvements in the stock to be made
To maximise resources where ever possible with a key target of
accessing additional funding through the decent homes standard
To direct additional resources accessed to the improvements of
council housing and the meeting of the decent homes standard
To develop the service to customers and excel in the provision of
housing.
4
CONTENTS
1
WHAT IS HRA BUSINESS PLANNING
6
2
THE BUSINESS PLAN IN CONTEXT
7
3
MISSION STATEMENT AND KEY OBJECTIVES
8
4
KEY ACHIEVEMENTS DURING 2000/2001
10
5
ASSESSMENT OF CURRENT AND FUTURE LIKELY POSITION 11
6
PRIORITIES FOR ACTION
22
7
FINANCIAL ANALYSIS
28
8
FINANCIAL PROJECTIONS
33
9
OPTIONS AVAILABLE TO ADDRESS AREAS OF CONCERN
36
10
OUR FUTURE STRATEGY
52
11
STRATEGIC IMPLICATIONS OVER TIME
54
5
1.0
WHAT IS
PLANNING
HOUSING
REVENUE
ACCOUNT
(HRA)
BUSINESS
The government have recently introduced major changes to the way that
local councils run and manage their council housing stock. Not only have
they made more money available to councils to look after their housing
stock, they have set a number of important targets and aims that all
councils must achieve. These include;

The need to clear the large backlog of repairs which are needed to
council housing across the country by 2010

The need to ensure that all council housing is of a decent standard
by 2010

Made councils change the way in which council rents are set

Made councils think about the way in which houses are let to
people

Insisting on Improving the services offered to tenants

Increasing the participation of tenants in the running of their homes
In order to ensure that the new money available is used in the best
possible way, each local council is expected to provide a 30 year business
plan which outlines how much money will be needed to look after council
housing, how much the council can expect to receive from the
government and collect in rents, and how it will deal with any gap between
the money available and the money needed. Councils are expected to
look at a wide range of different ways of making sure that money is spent
wisely. This might include;



Carrying out improvements to homes
Demolishing unpopular housing
Getting a new landlord to manage the housing stock
This is the City of Salford's Housing Revenue Account (HRA) Business
Plan which covers the period from April 2001 to March 2031. Each year,
the Council will need to produce a new business plan covering the next 30
years. The plan will be updated to take account of changing demand for
council housing, changes to the amount of money that will be required to
repair the council's housing and changes in government policies.
6
2.0
THE BUSINESS PLAN IN CONTEXT
Salford's HRA business plan 2001 - 2031 sets out the city council's
medium and long-term aims and objectives for the delivery of our HRA
housing service. However, it is important that the business plan fits in
with the aims and objectives of the city council as a whole. To make sure
this happens, the plan has been written having made sure that it fits in
with other major strategies such as;

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


The City of Salford Strategic Plan - 1999 towards 2007
The City of Salford Corporate Regeneration Strategy
The City of Salford Capital Investment Strategy 2001 - 2006
The City of Salford Corporate Best Value Performance Plan
The City of Salford Housing Services Best Value Performance Plan
The City of Salford Corporate Housing Strategy
The City of Salford Crime and Disorder Strategy
The City of Salford Tenant Participation Compact
The Salford Partnership Community Plan.
The Housing Services Directorate will also, in implementing the above
strategies, produce an Annual Housing Plan for each Community Service
Delivery Area. These plans will provide local operational and strategic
objectives with performance standards that ensure the department is
focussed upon improving service delivery.
The major aims and objectives of the HRA business plan mirror those set
out in the documents identified above. All of these strategies have been
developed after detailed consultation with a wide range of stakeholders
including the other public sector organisations, private companies and the
voluntary sectors and the people of the City of Salford.
We have also taken note of Regional Planning Guidance, Regional
Housing Statement and recent research on the issue of the future housing
market for the North West of England as it is becoming clear that we can
no longer look at Salford alone when trying to predict how demand for
council housing in Salford will change in the future.
7
3.0
MISSION STATEMENT AND KEY OBJECTIVES
In accordance with the City's Strategic Plan, '1999 towards 2007', the
main objective or mission statement of the HRA business plan is the
following;
'To assist in the delivery of the best possible quality of life for the people
of Salford by giving all citizens of the city the opportunity to live in a good
quality home'.
In order to make sure that we do this, a number of key objectives have
been identified that flow from the City's Corporate Housing Strategy.
These objectives are set out below;

Finding solutions to the problems caused by low demand for
council housing within the City of Salford.

To invest in council housing in areas where demand can be
maintained by improving the quality of the housing stock.

To ensure that new council housing initiatives assist in the overall
regeneration of the city.

To continue to plan maintenance investment in council housing
stock where demand is secured for the medium term.

Wherever possible, to respond to the needs of customers and to
facilitate the effective involvement of tenants and other
stakeholders in the development of the HRA business plan.

To respond to the needs of the people of the city, particularly those
with special housing needs in terms of quality, location,
affordability, size and design of council housing within the city.

Working with other housing providers and external partners to
develop sustainable mixed tenure communities.

To provide value for money and a responsive council housing
service to our customers.

To match the housing and support for supported housing with
needs.

To provide a sustainable housing stock
8
The city council will continuously endeavour to achieve these objectives
throughout the life of the business plan. Progress towards providing a
good quality home for every citizen will be monitored. Each new business
plan will outline the steps that have been taken during the last year to
achieve this.
9
4.0
KEY ACHIEVEMENTS DURING 2000/2001
During the year, nearly £22.5 million was spent on improvements to the
city's council housing stock. A further £14.5 million was spent on repairs
and maintenance issues, bringing total spending on council housing to
£37 million. During the year, the council;






Carried out environmental improvements to 500 council homes
Carried out internal improvements to 1900 council homes
Replaced 270 roofs
Installed 465 central heating systems
Re-wired 200 homes
Installed new windows and doors in 2800 homes
Additionally, in order to reduce the numbers of unpopular council homes
in the city, a further £300,000 was spent in demolishing and landscaping
over 300 council homes. Nearly 150 tenants were re-housed as part of
this process. Our aim is to ensure that the council housing available for
new tenants more accurately matches the current and future needs of
those seeking council accommodation. This means that we need to
reduce the number of homes we currently manage and also reduce the
numbers of increasingly unpopular housing types.
10
5.0
ASSESSMENT OF CURRENT AND LIKELY FUTURE POSITION
In this section of the plan, we outline the measures that have been taken
to identify the current situation facing Salford's housing revenue account
housing stock. Information from a wide range of sources has been used
to predict the emerging areas for action and the appropriate solutions into
the medium and long term.
5.1
STAKEHOLDER CONSULTATION
The city council is continuing to develop it's approach to stakeholder
involvement and consultation in the business planning process. At
present, the business planning approach is discussed with a range of
partners and stakeholders, including;


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Private developers
Registered Social Landlords
Private Landlords
Local Health Authority
Other Council Directorates
In terms of consultation with tenants and residents, the following approach
has been taken;

A summary of Salford's approach to business planning has been
discussed with members of the Salford Strategy Panel - a group of
over 500 Salford citizens from all tenures who have agreed to act
on a consultancy / participatory role on major policy issues
requiring consultation.

The purpose and main objectives of the HRA business plan has
been featured in an article in 'Salford People', the city councils
magazine which was delivered to every home in the city during
June 2001.

The content of the HRA Business Plan will be reported to Salford's
network of Area Housing Committees, all of which contain strong
representation form active tenant and resident associations across
the city of Salford.

A copy of the business plan and a summary document will be
made available to Tenants groups and also to the general public
via council offices throughout the city and on the Council web site.
11

We will ensure that feedback from individual tenants and organised
groups are seriously considered and where appropriate, acted
upon in future HRA business plans
It is accepted that there is a need to improve the way we consult with
tenants as part of the business planning process. Over the coming
months, further ways of improving tenant participation and consultation
will be explored, paying particular attention to the Good Practice
Guidance on Tenant Participation, recently published by the Department
of Transport and Local Government and Regions (DTLR). The city council
has recently established a tenant's forum in order to facilitate improved
tenant consultation and participation and this will be involved in
development of the business plan.
Option appraisal is and will continue to be an important part of the
business planning process. This is simply a way of looking at the cost of
each option available to the city council to deal with a specific problem
relating to it's HRA housing stock. However, detailed tenant consultation
forms a vital part of this process. Every tenant whose home is subjected
to this option appraisal process is consulted individually in order to find
out what they think the best thing to do with their homes is. This
qualitative data provides a separate element of the appraisal from the
quantitative or 'hard figures' part of the appraisal. The views of individual
tenants are taken and the general views of tenants gauged before any
final decision is made regarding the option to be selected.
The housing services directorate has a well-developed Tenant
Participation Service including a Principal Tenant Participation Officer and
a team of area based tenant participation officers who liaise with the
network of over Tenant and Resident Associations across the city.
The city council has recently completed a detailed tenant satisfaction
survey in order to identify ways in which we may improve our service. The
following information summarises the major findings:

69% of tenants were satisfied with the area in which they live;

82% of tenants felt that the condition of their home was very good
or fairly good;

problems with litter, rubbish, crime and vandalism, stray dogs and
graffiti were the major concerns expressed by tenants;

69% of tenants had contacted the housing directorate during the
previous year. 64% were satisfied with the outcome of their contact;
12

75% of tenants expressed satisfaction with the service provided by
the city council;

75% of tenants had reported a repair to the council during the
previous year. 80% of these were satisfied with the quality of the
work undertaken;

71% of tenants felt that council rents represented value for money;

77% of tenants felt that the council kept them informed on major
issues and 67% felt that the council listened to their views when
making decisions.
The survey indicates that the majority of tenants are satisfied with most
aspects of the councils' housing service. Although this is pleasing to note,
the survey also identified areas where efforts must be made to improve
the quality and responsiveness of the service. The aim will be to secure
continuous improvement in the service offered in order to meet the needs
of the 'best value' regime and to eradicate those areas of dissatisfaction
that can be influenced by the authority.
5.2
PREPARING FOR BUSINESS PLANNING
In the 2000/01 business plan - the first that Salford had to prepare - we
identified the ways in which the city council was getting ready for business
planning. Since this time, substantial progress has been made to develop
the business planning process and implement a more business like
strategy over the forthcoming years. A summary of the progress to date is
provided below:

During 2000/1 and 2001/2 the Housing Services Directorate was
restructured in order to create a clear split between the housing
management function (i.e. the service provided to tenants primarily
via area housing offices) and the strategy function (i.e. the
development of the corporate housing strategy, management of the
major housing improvements projects across the city and
production of the HRA Business Plan). This meets the requirement
set out in the governments recent housing green paper, 'Quality
and Choice - A Decent Home for All';

Within the Strategy Division, a new post of 'Head of Investment
Strategy' has been created. The primary role of this post is to
develop the city's HRA business plan and ensure that investment
options and decisions reflect the available resources, options
available and the problems and opportunities faced by the city
council in respect of it's council housing stock;
13

A new research officer post has been created to improve the
collection of the facts and figures necessary for option appraisals
and the HRA business plan;

Within the Housing Management Division, the number of
management areas has been reduced from 9 to 5. Each area is
responsible for the delivery of a comprehensive management
service to approximately 6000 council properties. Each area is
headed by a Group Housing Manager who not only takes ultimate
responsibility for the management of the council housing within
his/her area, but also looks at city wide issues and holds regular
discussions with officers from the Directorate's strategy division in
order to ensure that the objectives of the local and city wide
housing strategy are effective and deliverable;

Elderly Services Division has taken on the function of recruitment,
training and management of mobile and residential warden
services in order to provide a more cohesive and uniform service
across the city. The service is currently being re-structured in order
to offer services to residents which are more effective and
responsive. It is also intended to seek to extend the service to
other housing providers within Salford;

A new 'Best Value' team has been established in order to ensure
that our services show continuous improvement and meet the
needs of the people of the city of Salford;

A new anti social behaviour intervention team has been
established in order to tackle unacceptable behaviour so as to
improve the quality of life for our tenants;

A new computer system will be implemented by October 2001.
This will facilitate the storage and retrieval of statistical information
and other data necessary for the completion / update of the HRA
business plan;

A detailed stock condition survey has been undertaken in order to
identify the backlog of repairs and improvements. This has been
completed on the basis of the five new management areas. By the
submission of the next business plan, the breaking down of all data
to an area basis will be possible.
This will facilitate the
implementation of the recommended option for the entire council
housing stock - i.e. establishment of a structure to facilitate Arms
Length Company status;
14
5.3

Consultants have been engaged to review Salford’s stock option
and have indicated that an arms length company model will greatly
assist Salford'’ delivery of this plan;

The way in which council houses are let within the city has been
reviewed to make sure that it reflects the current needs and
choices of those requiring council housing accommodation. The
system's flexibility has been increased and changes made which
reflect the revised structure of the housing management division.
Consultation on hee changes will take place in he summer of 2001;

A valuation of all HRA assets has been undertaken both to inform
the business planning process and to facilitate the new financial
framework of resource accounting, recently introduced by the
government to coincide with the new way of funding housing
repairs and improvements.
BEST VALUE PERFORMANCE
Another major government initiative is the requirement for all local
councils to achieve 'Best Value' in all of it's services. This means that we
must strive to improve the quality of the services we provide whilst doing
so in the most value for money way. All of the services we offer will be
reviewed with a focus on creating the best services in a value for money
way. We will also involve citizens in the development of services which
are identified as being demanded. A number of performance targets or
'performance indicators' are set and all council's must not only improve
their own performance but also be capable of being compared to the
performance of other similar councils or 'benchmarks'. The indicators
show that our performance is improving. However, we are committed to
ensuring that improved service delivery is continuous and also
increasingly cost-effective.
This review process takes in to account all of the options available to the
Council in providing services. The resources available which are outlined
in this business plan are of paramount importance in deciding what can
be achieved by in-house services. The business plan informs the reviews
on resources available whilst individual service reviews provide the
operational focus upon how best those resources can be used and set
priorities for investment across housing for achieving service delivery
improvements.
15
5.4
ASSESSMENT OF HOUSING NEED / DEMAND
In 1998, the city council appointed the Northern Consortium of Housing
Authorities (NCHA) to carry out a detailed study of the housing market
within Salford in order to predict demand for housing across all tenures
until 2004. A review of this study is to be undertaken in 2002 which will
report housing needs on a city wide basis and by the five management
areas.
The methodology utilised was based on historical movements in the
housing market over the preceding five years. It was felt that this was a
more accurate means of assessing housing demand compared to
information based on proposed future housing movements. These often
involve decisions based on aspiration rather than reality and are,
therefore, less reliable.
Across all tenures, the study predicts a net reduction in the number of
households of 1917 by 2004. The reduction in the number of households
in local authority accommodation is projected to decline by 802 during the
same period.
Demand by sub-area varies significantly, with the area including the
wards of Claremont, Langworthy, Pendleton, Weaste and Seedley
projected to see a decline in the number of local authority households of
1019. The Swinton, Kersal and Pendlebury Wards are set to see an
increase in demand for council housing by 326.
The demand for one bedroomed accommodation across all tenures is
projected to increase by 381 with reduced demand for 2 and 3 bedroomed
homes (total net reduction 7295) with increased demand for larger (4
bedrooms plus) sized accommodation (increase of 5034). Although
increased demand for smaller accommodation is in line with demographic
trends and trends on household dissolution, it does not mirror the current
situation where one bedroom council accommodation is increasingly
unpopular. The review of the market demand study will focus on how
accurate the initial study was and also whether location is a more
important factor than actual physical size / type of accommodation.
The market demand study will be updated regularly and it's accuracy
continuously assessed in order to ensure that demand information is
sufficiently robust to inform both the HRA Business Plan and corporate
housing strategy.
Existing demand and vacancy rates amongst the council's housing stock
are a necessary starting point for an assessment of future demand.
16
Across the city, there are 2252 void council properties, representing 7.1%
of the total housing stock. In order to ensure that all investment decisions
are made on the basis of the best evidence available, a system of
assessing the status of void properties has recently been introduced. This
system classifies voids as A, B or C.
'A' voids are those in estates where there are no major structural
problems with the housing stock and where present and future demand is
projected to be maintained. Such properties are repaired and re-let as
quickly as possible.
'B' voids are those who's future sustainability is in doubt. This may be due
to the fact that the property type, size or location are unpopular or that
major repairs are required to bring the stock to the 'decent' standard.
Whatever the reason, the stock concerned is subjected to a detailed
option appraisal. All relevant quantitative and qualitative issues are
considered and other available options (e.g. stock transfer) tested in order
to assess what the most suitable course of action is in respect of the
future of the stock in question. An assessment of the wider citywide and
regional housing market is also undertaken. This option appraisal acts as
a vital tool in the decision making process. Actions taken after option
appraisal may include improvement, demolition, disposal or conversion,
depending upon the unique circumstances of the stock in question.
Whilst awaiting the results of option appraisal, the housing stock in these
areas is not generally marketed. However, should an individual express a
desire to be re-housed in an area identified for option appraisal, this is
allowed although potential tenants are told of the fact that the future of the
estate is uncertain prior to acceptance of the tenancy. This approach is
taken to prevent disruption to new tenants who may find themselves
having to move out of a home they only recently moved into.
'C' voids are those in respect of which a decision has been taken to
demolish or dispose. Tenants are re-housed with full eligibility to
homeloss compensation and disturbance allowance and the services
such as gas and electricity are 'capped' to avoid danger to others,
properties secured and fly tipping cleared regularly pending completion of
the selected option.
The classification of void properties as A, B or C voids is undertaken by
officers within the Housing Service Directorate's Strategy Division after
detailed discussion and consultation with local housing management staff,
maintenance staff and others.
17
If investment is identified as the most appropriate option for stock subject
to option appraisal, all attempts are taken to let vacant units and the
Strategy Division commissions a scheme of improvements aimed at
tackling the issues identified specifically for that estate. The aim of the
process is to provide a specific solution to specific local problems whilst
delivering those basic improvements which the city council has
established as an essential part of all future improvement schemes.
5.5
THE CONDITION OF THE HOUSING STOCK
In January 2001, the city council appointed an independent consultant to
carry out a detailed survey of the condition of the city's housing stock.
This is important if we are to accurately assess the value of all of our
assets as well as find out the extent to which repairs and improvements to
our houses are necessary.
In accordance with existing practice, the consultants carried out an
internal survey of a 10% sample of the city's housing stock. And a 100%
external survey of all-purpose built blocks of flats. The survey looked not
only at the condition of the housing concerned, but looked at how energy
efficient they were and how they met the latest guidelines on the subject
of crime prevention. The final report was delivered during July 2001.
The final report provided a detailed schedule of maintenance and
improvement that will be required over the next five years and a full
schedule of improvement / maintenance requirements over the next thirty
years.
The report indicates that

19,700 council properties already meet the governments 'decent
homes' standard. 10,600 or 35% currently fail to meet the standard

The report indicates a total maintenance bill over the next thirty
years of £1,465,678,815.

over thirty years £386,090,882 is required for internal works

over the same period, £210,054,238 is required for external works

in the remaining twenty five years, 62% of expenditure is on
internal elements, 36% on external and 1% on communal. The
remaining 1% is on capital replacement of mechanical equipment.
18

the ‘average’ catch-up expenditure across the stock is £837 per
unit per annum (which is higher than the benchmark figure of
between £500-550)

Catch up repairs constitute nearly 10% of the total maintenance
expenditure

The conclusion is that there is a large amount of catch up works to
be undertaken in the first five years.
The total forecast expenditure is £48,350 per property for the thirty year
plan period, or an annual cost of £1,610 per dwelling per year.
Savilles consider the unit cost figure of £48,350 as being above the
average, comparing with a benchmark of about £39,500 for the 30 year
period or £1,320 per unit per year. The benchmark includes a range of
larger authorities, and with the type of stock found in Salford we would
expect a figure towards the top end of our benchmark range.
The following represent benchmark figures for costs per unit. They are
shown as 'can-openers', and are not a challenge to the survey findings.
Salford
Benchmark
Range
Expected
Benchmar
k
£ per unit
£ per unit
£ per unit
Salford
as
%
benchmar
k
%
Catch-up repairs
Future major works
£4,189
£16,002
£1,850
£16,200
226%
99%
Estate costs
Improvements
Responsive and void
Cyclical maintenance
Contingencies
Exceptional extensive
Preliminaries
£1,296
£3,199
£11,724
£3,939
£502
£1,343
£2,711
£200-£4,000
£12,000£20,500
£0-£2,000
£900-£5,400
£7,000-£14,700
£3,000-£8,400
£0-£4,500
£0-£2,100
£0-£3,000
£850
£2,500
£9,800
£5,650
£1,325
£580
£1,460
152%
128%
120%
131%
39%
232%
186%
£33,000£48,500
£39,500
122%
Total
unit
cost
per £48,353
19
The stock condition survey reflects an overall impression that the stock is
in a generally serviceable condition and has been well maintained within
the resources available. However, whilst a proportion of the housing
stock has benefited from programmed replacements/upgrades over recent
years, many are now considered to require further updating and improving
to bring them up to a modern day standards. A significant financial
injection is required to bring the properties up to modern standards with
the focussing on the replacement/replanning of the older kitchens and
bathrooms, renewal/updating of central heating and electrical systems
and replacement of the original roof coverings and single glazed windows.
5.6
VALUE AND USE OF HOUSING REVENUE ACCOUNT ASSETS
In order to run the business of HRA housing effectively, and also for new
accounting procedures brought in by the government, it has been
necessary to undertake a valuation of all of the council's housing assets.
This includes not only the housing stock, but shops, garages, land, leases
and other ground rents etc. that the housing services directorate holds.
However, rather than value the assets based on the true market value, we
are required to indicate the value taking into account the fact that tenants
occupy our houses and our shops. The 'Existing Use Value' of housing
assets has been estimated to be in the region of £520 million.
The value of our assets is important to the business planning process
because it can identify areas where the council can benefit from selling off
assets and investing the money into the housing stock. It can also help to
assess whether an asset should be sold or retained as part of an option
appraisal. It is also important in terms of rent re-structuring, because in
future, rents will need to reflect the value of individual value of council;
properties. The council will utilise the asset valuation in order to ensure
that housing resources are used to the best possible advantage, thus
tackling disrepair whilst increasing the value of the housing stock.
5.7
RENT RE-STRUCTURING
It is the aim of the government to ensure that all social housing providers
rents are affordable, fair and less confusing for tenants. They also aim to
remove the differences in rent levels between local authorities and other
Registered Social Landlords (mainly Housing Associations). There is also
to be a closer link between the size, condition and value of a property and
the rent level set for that particular property. The local rent levels will also
reflect local earnings in order to ensure that the rents can be afforded.
20
The city council is currently investigating the impact of this rent
restructuring in accordance with recent government guidance on the
subject. Indications are that the city's average rent will need to reduce in
real terms over the next ten years in order to fall in line with other
providers rents and the governments aims, briefly outlined above.
The government is presently consulting council on it's proposals and it is
intended that clearer guidance will be issued in time for next year's
business plan. The city council's approach to rent restructuring will be
developed in next year's business plan.
5.8
SUMMARY OF CURRENT AND LIKELY FUTURE POSITION
The council has made many major changes aimed at ensuring we can
provide the best possible service to the tenants of Salford. The structure
of the directorate has been changed to make the service more
responsive. New teams have been established to deal with 'best value'
and ensure continuous improvement is achieved and also to tackle major
problems associated with anti social behaviour. We have carefully
considered what housing we will need in the future and we have also
looked at what condition our housing stock is in and how much it will cost
to bring all of our housing to the standards set by both tenants and
government. We have looked at reviewing the way we let properties to
tenants to ensure that people have more choice and we are in the
process of changing the way in which we set rent levels so that they more
accurately reflect the size and quality of the property concerned.
We have, as part of all of this process, continued to consult and involve all
our stakeholders, including tenant and resident representatives. We have
also made a commitment to improve the way we involve tenants in the
future.
21
6.0
PRIORITIES FOR ACTION
Having identified the current position regarding the Housing Revenue
Account asset base, in this section, we seek to outline the priorities
identified for action in order to deliver an efficient and effective service to
the tenants of Salford.
6.1
BALANCING HOUSING SUPPLY AND DEMAND
In order to deal effectively with issues revolving around low demand for
council housing in the city and in light of the predicted future decrease in
demand for council housing, it is essential that supply and need / demand
for council housing in future is balanced. Consequently, it is a major aim
of the city council to review it's stock levels to reflect future demand for
council housing. This will be achieved by identification of dwellings for
which there is low or no demand due to it's location, type or size. Utilising
the ABC voids procedure identified above, as a starting point, areas or
estates which face an uncertain future will be subjected to option
appraisal. This appraisal will consider all of the options open to the city
council in respect of the stock, be it transfer, PFI, investment, conversion
or demolition. Option appraisal will identify the most cost-effective solution
whilst also considering the views of tenants. It will provide an effective tool
in the decision making process.
Decisions to demolish an area or estate will be taken where strong
evidence can be provided that shows;




That there is little / no demand for council housing in that area
That investment is unlikely to influence demand
That stock transfer is non viable / undesirable
That all other options do not provide a reasonable alternative
Demolition will become a more viable option if the resulting site can be put
to some strategic use. Therefore, if demolition facilitates land assembly or
provides opportunities for development by other providers in the social or
private housing sector, the case for demolition will be stronger. The
ultimate aim of demolition however, is to provide a balance between
supply and demand for council housing. The Directorate estimates that in
addition to the annual number of 'Right to Buy' dwellings (145 per annum
is forecasted - a total of 4350 over the life of the plan), a further 6250 is
forecasted to be lost via either disposal or demolition. Years 1-10 will see
stock reduced by 500 dwellings per year, reducing to 250 per annum until
year 15. Clearly, this estimate will be kept under constant review to take
account of changing demand for housing and also in order to ensure that
22
the action taken to dispose / demolish stock reflects the best course of
action for the directorate as a whole.
In attempting to balance supply and demand across the market we have
been working closely with all housing partners. Within the housing subgroups detailed analysis has been undertaken by the functions
constituting the housing providers. Most recently a focus has been in the
areas of housing the homeless and working towards supporting people.
The present homeless provision has been reviewed and will be outsourced in order that a better value service will be provided. Through
supporting people the authority is presently developing a comprehensive
knowledge of the services provided and will over the next two years be
assessing needs with a view to improving services and their cost
effectiveness.
6.2
IMPROVING THE CONDITION OF THE HOUSING STOCK
It is the aim of the city council to provide every tenant with a decent home.
However, we recognise that people now have choices in terms of where
they live. As a result, council housing has to compete with what is
available from registered social landlords (RSL's), private landlords and
also new-build and 'second hand' accommodation in the private sector via
owner occupation. Consequently, the city realises the importance of
providing a 'product' which is competitive in terms of facilities, location and
quality and also the importance of marketing the image of the city
generally and council housing within the city specifically. In addition, the
housing management and ancillary services which can be provided must
be competitive, of the highest quality and accessible.
In terms of the quality of the housing stock, the council intends to use it's
major repairs allowance to improve the quality of it's housing in areas
where current and projected future demand indicates that the area /
estate is sustainable at least into the medium term. Identifying housing
stock which is considered 'sustainable' is a task which is undertaken
utilising a number of different tools;






Existing level of empty (void) properties are considered
Demand for the housing stock in the area is considered
Tenant 'turnover' (how long people stay on the estate) is examined
Projected demand for council housing in the area is considered,
based on the housing market demand study.
The condition of the stock is taken into account utilising information
from the recently completed housing stock condition survey.
The views of tenants and also housing management and
maintenance staff are considered.
23
The above criteria are also used in order to prioritise the requirement for
improvements to council stock. It is well recognised that we should no
longer invest heavily in those estates which are in poorest condition or
where demand is lowest as a priority. A detailed assessment of the impact
of investment and the suitability of other options is an essential prerequisite before investment decisions are made.
Although the specification of works will primarily depend upon local
conditions and problems, identified after detailed tenant consultation,
there are number of basic improvements which the city council will
endeavour to deliver in respect of all improvement schemes. These have
been identified as 'benchmark standards' within the recently completed
housing stock condition survey and include;











6.3
Externally
The installation of individual driveways and gates for cars
(where possible)
Improvements to off street parking (where drives are not
possible)
Securing the front boundary of properties by means of
secure and attractive boundary fencing and gates.
Internally
Electrical rewire
Double glazing
Central heating
Insulation
New kitchen units
New Bathroom units
IMPROVING SERVICE DELIVERY
The city council aims to continuously improve the way it provides services
to it's tenants. Although a major re-structure of the housing management
division has recently taken place. This is an interim position, to be
reviewed after Best value and Housing Inspectorate reports are
completed. Any further re-organisation required to improve or enhance
service delivery will then take place. However, the interim structure
already provides a framework for improved services.

The creation of a best value team will ensure that performance is
monitored and reviewed in order to deliver improved / cost-effective
performance.
24

The establishment of a neighbour nuisance team will aim to
improve immeasurably the quality of life of tenants affected by antisocial behaviour.

Teams in housing management areas have been divided into
specialist teams in order that they may concentrate their efforts on
their particular sphere of work. Separate teams have been
established in the following areas;



Marketing and letting
Void repair and maintenance
Housing management and arrears
The creation of group management areas maximises the effectiveness of
the staffing resources in each area and also provides the basis for the
division of the city into five areas for the purpose of establishing the Arms
Length Management Model.
6.4
CORPORATE REGENERATION INITIATIVES
When investment decisions are made, the presence of corporate
regeneration initiatives is a major factor. In order to maximise the
resources available for an initiative housing stock requiring attention
within such an area will be given priority. Consequently, necessary
resources can be identified and fed into the delivery plan(s) of the
initiative, thus ensuring that regeneration is 'joined up' and holistic. The
importance of 'bending' programmes - that is, committing financial
resources to an area benefiting from government / other regeneration
initiatives - is recognised. Housing Services Directorate is committed to
contributing towards the comprehensive regeneration of the city and will
play it's part to ensure that regeneration is sustainable. In terms of council
housing, the following areas represent priorities due to the existence of
major corporate regeneration initiatives;





6.5
Little Hulton
Broughton (SRB 2)
Eccles (Renewal Area)
Kersal / Charlestown (New Deal for Communities)
Langworthy / Seedley (SRB 5)
ESTABLISHING PRIORITIES
Having established that an area is in need of action in order to bring it to
the required standard (outlined above), it is necessary to prioritise the
work in order to ensure that those areas requiring immediate action
25
receive it. Prioritising work is a sensitive issue, particularly for tenants
who, quite understandably, feel that their particular estate should receive
attention at the earliest possible moment.
The prioritising of improvement and/or repair work is undertaken by the
Directorate's strategy division in conjunction with maintenance staff and
also housing management staff. The views of tenants are also borne in
mind when the prioritisation of works takes place. Ultimately, the priority
list of works is approved by the Lead Member and Deputy Lead Member
for Housing Services.
However, there are occasions when it is sensible and / or cost effective to
undertake certain types of work on estates which do not represent the
most pressing priority. An example of this is the replacement of lead water
mains. In normal circumstances, priority is given to those areas where the
local water authority have indicated suffer from a higher lead content in
their water supply than other areas. However, where lead mains exist, the
work to replace them is brought forward on estates where kitchen
replacement or environmental improvements takes place. It is sensible to
aim towards complete replacement of all lead mains across the city and
this is something that the city council aims to deliver. However, where the
replacement of lead mains will occur after other major improvement works
and will lead to disruption to the recently completed works or to the
tenant, then that work is brought forward, to be undertaken before the
improvement programme starts. This prevents damage to newly installed
kitchens, newly installed tarmac drives or to tenant's decoration.
In light of the government's campaign against social exclusion, the socioeconomic position of the community affected is also taken into
consideration when deciding upon priorities.
The following list represents the primary criteria (in descending level of
importance);
a.
Where works are necessary in order to ensure property meets the
minimum fitness standard
b.
Where the area / estate is considered to be sustainable for
residential use into the medium term, but demand for housing is in
decline or there is an emerging problem with void properties, and
where it is believed investment can reverse this trend
c.
Work is necessary in order to support a wider regeneration
initiative
26
d.
The area / estate under consideration is within the 20% most
deprived wards across the city and the necessity for improvement
works has been identified but not otherwise prioritised
e.
Work is taking place in the estate / area and it is necessary to
undertake additional works in order to prevent future disruption to
the newly completed work or tenants
f.
Additional resources are available from external sources which
must be used in specific areas and / or for specific types of work.
Given the sensitive nature of this issue, it is difficult to involve tenants on
individual estates in the process of establishing priorities for action.
Consequently, the criteria identified above will, during the next 12 months,
be put to the tenant's forum in order to obtain their approval to the criteria
used. Any amendments suggested by tenants, leaseholders etc. will, in
future, be included within the criteria for establishing priorities. The way
that this process works in practice will be constantly monitored and
reviewed in order to ensure that it continues to represent the most
efficient and effective means of repairing and/or improving the council's
housing stock.
6.6
SUMMARY OF PRIORITIES
We have set out what the priorities of the council are in respect of the
future of council housing. We have identified the need to ensure that the
property we have available more accurately reflects what existing and
potential future tenants will want in the future. We have set out how we
intend to improve the quality of the council housing stock in future years
so that our homes compete with what other housing providers in the city
can offer and we have set out ways in which the housing management
service will be improved to cope with the challenges currently facing the
council.
We have outlined how we will respond to initiatives which are given
priority by the city council as a whole and how our future investment will
reflect the importance placed on the regeneration of these areas.
We have identified the way that we plan to prioritise areas for works so as
to ensure that communities may be sustained and social exclusion tackled
whilst continuing to improve the overall quality of our housing stock.
The information provided sets out a list of priorities for the council to
tackle in respect of it's housing stock and the ways in which these have
been arrived at. The council will continue to keep the way it identifies
priorities under review in order to ensure that the system remains effective
27
and reflects the needs and resources available to the city council and also
the demands of the tenants of the city council.
28
7.0
FINANCIAL ANALYSIS
This section will provide an explanation of the Business Plan Model and
how present strategies will change Salford’s financial position over the
next thirty years. As the financial viability of present strategies cease to
be achievable within the next two to three years, detailed analysis will
focus upon steps that can be taken within that period. The appraisals set
out:




how the present housing revenue account has fed into the business
planning model;
the financial projections in the short, medium and long term;
how far strategies go to achieving the goals of the Housing
Department;
what steps can be made to optimise the achievements of the
objectives of the Housing Department through using a variety of
strategies.
The level of analysis throughout the business plan allows for
consideration of the global strategic issues but does not offer an analysis
by stock type or area. This work will be completed by the end of the year.
Income and expenditure analysis has been achieved which highlights the
key issues facing the Housing Department and allows for analysis in
terms of both capital and revenue resources.
INCOME (Revenue)
Rental income is the main source of income to the HRA. It is anticipated
that rents will create an income of approximately £70 million. This is
projected to rise to £73 million in five years and £123 million over thirty
years. These figures increase slowly in real terms due to the decreasing
stock. This is due to the effects of stock clearance and right to buy sales.
150
100
50
29
29
27
25
23
21
19
17
15
13
11
9
7
5
3
0
£
year 1
7.1
£
Rental income is substantially affected by the level of voids and bad debts
which make up 4.7% of rental income from stock and relate, in the first
year, to approximately £3 million. Bad debts and voids rates are key
target areas for improvement. Voids rates are accounted for in BVPI 171.
Our targets for this area are set out below.
BVPI 68
Actual
99/00
Est
00/01
Average.
94
77
Relet timesAverage
days Weekly
days
Target
01/02
Target
04/05
56
days
29
days
Top
Quart.
99/00
29 days
Rent £ (real terms)
Steps to reduce the level of voids include a marketing policy and seeking
tenants from outside the local area. Recent partnerships have been
developed with the Manchester Consortium and supported by the inhouse asylum team. However, as already outlined demand for housing
across the Salford area is expected to continue to fall short of supply and
attracting demand to fill the housing stock will not be feasible within the
present market.
Other rental income arises from fees, tolls, charges, shops and other nondwelling rents. This constitutes an annual income of nearly £4 million.
Within this capital resource the shops constitute a realisable capital
opportunity that would assist in meeting some of the more immediate
capital expenditure needs for the housing stock. However, the low
financial cost of supporting this resource makes it a strong revenue
producing resource grossing £0.5 million a year. Further, although the
realisable value of the shops would assist in providing much needed
funding it would not significantly extend the viability of the HRA or have an
impact upon an investment strategy relating to the need to improve the
stock over the next five years. A more detailed analysis of the value of
the properties is currently being undertaken. Once this work is completed
the opportunity cost of realising the assets will be revisited
Right to buy sales are set at 145 properties per annum and are not
expected to drop due to the effects of stock clearance as purchases are
predominantly in areas of higher demand. Stock clearance is set at 500
properties per year for the first ten years, then dropping to 250 per year.
This is intended to reflect the housing strategy of stock clearance in areas
of low demand in order to reduce the costs of maintaining unoccupied
stock.
30
A change in the rents charged and rents policy is anticipated to be in
place next year bringing Salford’s policy in line with recent government
guidance on rents. However, prior to tenant consultation, the anticipated
rise in rents over the next five years can not be confirmed and have not
been added into the model.
7.2
CAPITAL AND OTHER INCOME
Major sources of capital within the model are the major repairs allowance
at £16 million in the first year with a gradual increase to £23 million over
the thirty years and the HIP allocation. Receipts of around £1.3 million
over the first few years also make a significant contribution along with
nearly £2 million of one off SRB and lottery funding. As a debt authority,
with a low level of council house sales, capital income from this source is
not anticipated to create any significant changes to the future funding of
capital expenditure. Future initiatives to raise funding through SRB,
lottery and PFI funding will be sought and may become key to improving
housing conditions. As the outcome of such bids are unknown they have
not been included beyond the present approved funding.
7.3
EXPENDITURE
7.3.1 Expenditure(management costs)
Management costs constitute £17.5 million. The inputs require greater
analysis in order that the fixed and variable costs can be separated.
However, for present purposes the need for radical change in the income
or expenditure of the HRA has made the priority of refining the
management costs to fixed and variable costs a task to be completed for
later this year.
Below is the present BVPI for the weekly costs per local authority dwelling
of repairs.
BVPI 65a
Actual
99/00
Mngt.
£10.14
Costs per
week/per
property
Est
00/01
Target
01/02
Target
04/05
£10.92
£11.31
-----
31
Top
Quart.
99/00
£7.24
These figures reflect present service costs that relate to the dedication of
the Council to providing an excellent service in management intensive
areas. This commitment will in future years be more realistically analysed
through comparison with our benchmark group.
7.3.2 Expenditure (responsive and cyclical)
Expenditure is anticipated to be £527 per property. This constitutes the
revenue expenditure on the stock. These figures have not been
decreased to reflect stock changes and the resultant change in per
property cost of maintenance. The identification of properties and
resultant affect on costs has still to be achieved. However, it is
anticipated that the figure will marginally rise as the stock that is
demolished is that which is presently in the ‘band C’ void category and
receives little investment.
In addition, information from the stock condition survey, as explained
earlier, demonstrates the need for extensive work to be undertaken to
bring the condition of homes up to the decent homes standard. Without
this investment, the revenue cost of maintaining the stock will increase
with the non-capitalised work increasing to extend the life of failing
components that are in need of renewal. An estimate of the rising costs
anticipated have not been included due to the difficulty of making realistic
estimates and the commitment of the Housing Department to improve the
standard of housing.
BVPI 65b
Actual
99/00
Repair
£14.93
costs per
week/per
property
Estimat
e
00/01
£13.78
Target
01/02
Target
04/05
Top Quart.
99/00
£16.25
-----
£10.74
As shown in the target set for repair costs, it is anticipated that they will
rise as a result of our general progression towards a just in time
maintenance strategy.
7.3.3 Expenditure (catch up and planned maintenance)
In line with the findings in the stock condition survey expenditure on the
stock of a planned nature are in fact primarily catch up works and are
accounted as such in the model. Present capitalised expenditure is £837
per property.
32
Expenditure is shown in the first nine years which reflects the need to
catch up on existing planned programmes of work and outstanding
problems of disrepair. Expenditure from year ten onwards is then passed
over to the major repairs budget.
7.3.4 Capital finance and the major repairs reserve
Present capital spend is resourced through capital income and is assisted
by revenue contributions to capital. By making cuts in budgets it is
intended that capital expenditure will fall over the next three years in order
to make a sustainable investment strategy.
The major repairs reserve has been a valuable boost in enabling capital
expenditure. It has been dedicated to improving the stock. However, the
stock condition survey, undertaken by FPD Savilles reports the resources
needed for repairs and maintenance as well as improvements based upon
the condition of the stock. The report highlights a need for a substantial
injection of resources. The projected underspend on capital is nearly
£185 million capital over the next five years plus approximately £56 million
in revenue.
7.4
SUPPORTED HOUSING COSTS
An assessment of the cost and future charges necessary under
supporting people are presently being assessed and will be highlighted in
next years plan. It is anticipated that a small net saving will be made but
that it will not constitute a significant change in the operating account.
7.5
RENTS
Rents are expected to be increased by one pound fifty next year and work
begun on implementing a new rents structure.
33
8.0
FINANCIAL PROJECTIONS
Operating and Capital Account, Year 1
When income and expenditure for the year 2001/2002 a net revenue
surplus is anticipated of nearly £13.5 million but does not take into
account the expenditure necessary to cover the cost of external loans of
£5.5 million. The result is a net operating deficit for the year of £1 million.
This is supported by a surplus of £5.6 million built up in previous years.
Following present strategies the result is a surplus in the year of £5
million. The capital account shows a expenditure and financing staying at
around £27 million.
Year 2
In year 2 the effects of the year on year overspend continue to use up
reserves. The deficit for year 2 is £2.6 million leaving a surplus for the
year of £2.5 million pounds.
Year 3 to 30
In year three the surplus on the operating account is £2.6 million. This
reduces the surplus to £2.5 million. Then in the following year the
overspend of £1.5 million decreases the surplus to just under a million
pounds. This remains the case until year 12 when the account falls in to
deficit. The capital account falls in to deficit at a rate of £2 million per
year. This will need to be resolved through reductions in capital spending.
Operating Account Surplus/Deficit in Pounds Over Fifteen Years
6000
4000
2000
0
-2000 1
2
3
4
5
6
7
8
-4000
-6000
-8000
34
9
10
11
12
13
14
15
Surplus/deficit
Major Repairs and Improvements Financing
This account shows a check out total of £2 million in year 3. This reflects
a need to reduce capital spending an overspend of £2 million that must be
reduced and highlights how present spending plans are unsustainable in
the near future for capital and in total expenditure terms within five years.
Surplus/Deficit Shown in Pounds Over Five Years
0
-1000
1
2
3
4
5
-2000
-3000
Surplus/deficit
-4000
-5000
-6000
Below is an outline of the necessary and anticipated expenditure over the
next five years. The figures represent a spending strategy that will seek
to bring the stock up to the decent homes standard by 2010. Expenditure
will be targeted at those elements of the stock that affect the standard with
an element of exceptional expenditure investing in response to tenant
consultation. This adds clarity to the financial picture demonstrating how
the low spending policy of the Council has created a need to improve the
stock.
Estimated expenditure
condition survey
Capital
Year
Catch
Prelim
up
on s
current
major
plan
repairs
contin.
2001/2 45
8
2002/3 14
3
2003/4 30
5
2004/5 9
2
2005/6 29
5
Total
127
23
needed to meet the needs set out in the stock
Estat
e
Exception
al
contingent
works
Improve
ments
Total
2
2
1
1
1
7
7
7
7
1
1
23
17
19
20
20
19
94
79
45
63
33
54
274
35
Catch
up
works
for
DHS
0
28
42
57
57
174
9.0
OPTIONS AVAILABLE TO ADRESS THE AREAS OF CONCERN
9.1
WHOLE STOCK OPTIONS
In September 2000, the city council appointed HACAS Chapman Hendy to
consider the most appropriate long-term option for the HRA housing stock
within the city. The consultants considered the following options:

Continued management and investment by city council

Transferring management to Arms Length Companies. (ALC)

Revising maintenance strategies

Identification of additional funding sources

Stock Transfer
The achievements of each strategy is judged against the position should
the present spending strategy be continued and against the objectives of
the Housing Department as set out by the Mission Statement and Key
Objectives.
Highlighted below are some of the key factors affecting the success of
any strategy as set out throughout this report:







there are large areas of deprivation;
the housing stock needs around a £1.4 billion investment to bring
the condition of the housing stock up to the standards set out by
the government in the decent homes standard;
crime and fear of crime is causing people to move out of their
homes and out of Salford;
there is a need to continue to perform to high standard reaching a 3
star rating under the best value regime should the Housing
Department wish to access all the new funding resources being
made available;
there is an over supply of housing across Salford although
significant shortfalls in demand are area specific and relate to the
areas with the poorest housing;
that where possible costs have been cut to bring reduced
resources in line with expenditure;
that when compared to other similar authorities the service we
provide is above average when faced with similar resource
constraints.
36
9.1.1 CONTINUED MANAGEMENT AND INVESTMENT BY CITY COUNCIL
Short term
The present strategy enables a further two years of investment in the
housing stock and service before spending cuts will need to be
implemented to avoid deficit. Such a policy will create:









the present level of continued work in partnership with private
sector initiatives that is beginning to combat the low demand for
housing across the City;
the continued investment in key areas and clearance of unused
stock;
the targeting of investment towards the stock tenants would/are
presently keen to occupy;
the present level of involvement of tenants in decision making and
continue the development of tenant involvement;
the gradual improvement in the provision of facilities and services
for people with special needs;
the continuance of present initiatives to encourage investment in
the City creating more sustainable and mixed tenure communities;
provision of a value for money service to customers;
continued slowing of the migration of population out of the housing
stock and Salford;
provision of programs that allow for the investment in the popular
areas of the stock over the next two years.
The present strategy is effective in meeting the objectives for the City and
the housing department within the resource constraints. However, a lack
of resources is acknowledged as being the restricting factor in enabling
progress. Present strategies are only effective in slowing present decline
of the housing stock and the sustainability of the City's communities.
Medium term
Taking the medium term as being a period from 2003/04 to 2010 spending
cuts, largely of a capital nature, are necessary. In order to achieve these
cuts it would need to reduce spending where possible whilst providing the
best service possible and achieving at least the minimum standards of
house condition and landlord service.
Areas where such savings can be achieved would radically cut community
based targets and government objectives to improve the standard of living
through restricting both community and housing development. These are
37
areas that are already under considerable resource pressure and in
cutting these budgets further there is great concern for the welfare of the
community and the standard of housing provided.
The clearest opportunity for change would be to restrict environmental
works which would need to be cut by around 50%. Existing commitments
may mean that it is necessary to also look to reducing the responsive
repairs service in order to fund the existing commitments on the
environmental program. These options are considered in more detail in
the maintenance strategy set out below.
Over the medium term the option will create:




limited ability to target investment at the stock tenants are presently
keen to occupy in addition to failing to invest the additional £28
million in the stock in 2002/3 and £42 million in 2003/4 as set out as
being required by the stock condition survey to raise the condition
of council homes to the decent homes standard;
the continuance of present initiatives to encourage investment in
the City creating more sustainable and mixed tenure communities.
However, initiatives would be limited to seeking new resources as
there are no significant areas of spending that can be reduced to
enable the redirection of budgets;
the provision of a value for money service would increasingly come
into question as the effects of under investment in the external
environment of properties and potential requirement to move to a
just in time planned maintenance strategy and limited response
maintenance results in poorer condition housing and particularly
and poor environments;
the potential of increased migration out of the City;
It is anticipated that the effects of the decreased investment in the housing
stock will result in the City becoming a less desirable area and the
properties increasingly failing to reach the decent homes standard. In
addition the lack of investment in the housing stock is expected to cause
increased repair and maintenance costs, increased voids and an
exacerbation of the present problems with creating a sustainable
communities.
Long term
The problems arising in the medium term continue to develop. The
analysis of the medium term also indicates how the strategy of decreased
investment in the housing stock is likely to lead to a long term resource
crisis.
38
This would be caused by falling rents revenue due to out migration and an
increasing gap between the condition of the stock and the requirements of
the decent homes standard and the standards sought by tenants.
Conclusion
Ongoing investment and management by the City Council will continue
the excellent work done across the City and allow the network of
community links that feed into the Councils strategy and service delivery
to continue to develop.
This option is preferred by both tenants and Councillors who also consider
the Council to be the best placed organisation to deliver the housing
service. However, all parties are aware that the housing service operates
in a rapidly changing environment and preferable options for service
delivery will always be considered and much of the commitment of
stakeholders in continuing to back the Council as the preferred service
provider is based on the service that is currently provided and the
commitment to improve.
The present spending plans and, as a result the service provided is not
sustainable beyond two years with our anticipated income and
expenditure. It is not possible to improve the condition of the housing
stock and services whilst achieving the necessary cuts. Our commitments
to improve and meet the standards being set by tenants and through best
value would also not be met. Cutting expenditure and limiting the
potential for improving services is not seen as an acceptable option. In
the long term this option will result in a fall in the quality of the service
provided and the need to look to other, presently less able, providers to
take over the stock.
9.1.2 ARMS LENGTH COMPANY
Short Term
Due to the set up time involved in establishing an Arms Length Company
that can benefit from additional resourcing the short term is assumed to
be 2003-2008.
Establishing an arms length company model to cover all of the stock
would, subject to meeting the relevant performance criteria provide
Salford with the means to access funding and undertake extensive works.
A study of this option was completed in June assessing the opportunity
cost of pursuing arms length status. The report assumes that a
successful bid for additional funding for 2000 properties receiving £5,000
each.
39
This would allow us to make some headway in to the 10,000 dwellings
that do not meet the decent homes standard. Taking the assumptions
from the HACAS Chapman Hendy report such a policy will enable:











a review of the work in partnership with private sector initiatives that
are beginning to combat the low demand for housing across the
City with a view to developing new initiatives and creating demand
for long term investment in the area;
the level of investment in key areas could be fully resourced in
terms of providing decent homes, a service required by tenants and
an investment in creating a sustainable environment for housing
and commerce;
the targeting of investment would fund the necessary work to the
properties in order that they are brought up to a decent homes
standard and the removal or adaptation of properties to create a
supply of accommodation that meets demand;
tenant involvement would be radically increased in order that local
people establish what needs to be provided in a newly developed
area and by the enthusiasm of tenants for developing their
communities when the appropriate resources are available;
the improvement in the provision of facilities and support for people
with special needs will enable a strategic partnership between
service providers and housing to create sustainable high quality
homes and services. Strategy setting will also take into account
the detailed analysis of needs and value of present service
provision through the information gathered by the supporting
people initiative;
the development of initiatives to encourage investment in the City
creating more sustainable and mixed tenure communities;
provision of a value for money service to customers;
continued slowing of the migration of population out of the housing
stock and the City;
provision of programs that allow for the investment in the popular
areas of the stock over three to five years;
meeting the standards established in the decent homes standard;
create a sustainable financial strategy.
This strategy should enable the renewal of an area of significant parts of
Salford and bring the standard of accommodation up to those required by
the decent homes standard whilst fundamentally improving the standard
of living for the community. The stock condition survey highlights the
need to spend £374 million over the first five years and 1.4 billion pounds
over thirty years. This equates to £1,610 per property per year and over
thirty years approximately £48,350 per property.
40
In this context the guideline figure of 5,000 pounds per property will offer a
significant resource in meeting the need to improve the condition of the
stock.
Medium Term
The medium term for this strategy is seen to be 2007-2015
The assumption has been made that the investment in the housing stock
will create:








a review of the work in partnership with private sector initiatives that
are beginning to combat the low demand for housing across the
City with a view to developing new initiatives and creating high
demand for investment in the area;
the level of investment in key areas could be fully resourced in
terms of moving towards decent homes, a service required by
tenants and an investment in creating a sustainable environment
for housing and commerce;
the removal or adaptation of properties to create a supply of
accommodation that meets need;
tenant involvement to develop as the responsibility of the arms
length company and the involvement of tenants would be seen as a
key requirement of the organisation;
the development of initiatives to encourage investment in the City
during this period is seen as the key to success of the medium and
long term strategies. Housing and the environmental works will
have been resourced to raise standards. The resources to
maintain this standard will also be in place through the additional
rental income coming from low voids rates caused by the
additional interest and value of the area. In addition it is expected
that an area will have been created where its own economy will
support unsubsidised growth and development;
the provision of a value for money service to customers should be
enhanced by the interest of the private sector in investing in the
area;
migration is anticipated towards the end of this period. Primarily
driven by commerce and then by people moving into the area as it
will be desirable area to live;
investment in the stock during this period should be resourced by
existing sources of funding. Any additional resourcing needed
should be accessible through private investment.
41
Through the medium term it will be for the arms length company to have
used the investment in the housing stock in the initial years in such a
manner as to create a desirable location for both commerce and
homeowners are attracted into the area.
Future investment that is needed in the area should then be accessed
from the private sector with a view to resourcing both improved standards
of living and the growth of industry.
Long Term
In the long term it is intended that a structure of an umbrella arms length
companies will have been established covering the whole of the stock. It
is believed that by this time the present over supply of accommodation will
have been resolved through regenerating industry, creating a safer
community, improving the condition of all housing and by clearance of
stock for which no demand is perceived regardless of the quality of that
accommodation,
Conclusion
The Arms Length Company model offers the opportunity for the Council to
access the funds necessary to undertake much of the capital
improvements works that have been highlighted as needed by the stock
condition survey. The requirements for obtaining the funding focus upon
the resource needs of the Housing Department, a new organisational
structure and way of operating and a high standard of service delivery.
The service standards required meet with those presently targeted and
the present structure already lends itself to the structure required.
As a result it appears that the Housing Department is capable of
accessing the funding available providing sufficient resources and officer
time are dedicated to meting these goals.
Should all of the stock access the guideline level of funding available over
the next five to ten years approximately 150 million pounds of additional
resources will be made available.
This will pay for significant
improvements in the stock, customer satisfaction and performance.
9.1.3 REVISED MAINTENANCE STRATEGIES
The present maintenance strategy sets out a program of:

a repairs strategy of repairing as component parts fail. This often
includes replacement prior to that dictated by the industry standard;

repainting programmes;

a ten year cyclical program for windows and doors;
42

full modernisation in regeneration areas.
This mixed approach to maintenance is broadly based upon seeking to
maintain industry standards as a minimum.
Movement towards a just in time maintenance strategy and a decreased
planned program of work would create savings and either prevent or
substantially delay the HRA falling into deficit.
Short Term
This initiative could be implemented by the next financial year and in the
short term could constitute the next five years. The would result in:








continued partnership working across the district with broadly the
same level of limited resources except in areas where present
programmes include pro-active work that is intended to assist in
meeting the wider objectives of partners;
a position where the standard and quality of properties would
decline causing problems for initiatives aimed at creating more
sustainable communities;
limited opportunity to target resources towards areas where
demand for stock can be identified and a failure to make any
progress towards meeting the decent homes standard;
a situation where tenant involvement would continue, however
groups will have limited enthusiasm for agreeing to and monitoring
standards that go little way to meeting the standards of
accommodation they are presently seeking;
little by way of investment into specialised accommodation which
raises particular concerns for people who are vulnerable or less
able in the community should the condition of the environment and
housing stock be allowed to fall;
provision of a value for money service to customers in the longer
term as this strategy would save sufficient sums to sustain the
housing revenue account in the short to medium term although the
poor condition of the stock would allow for competition from the
private sector;
little work to slow and may result in the acceleration of the
migration of population out of the housing stock and the City;
the potential for the major repairs reserve to be the sole source for
capital spend and allow for a reserve to be established to fund the
expenditure necessary in planned programs as components need
replacing.
43
Initially this strategy will create reserves within the housing Revenue
Account.
However, the cost will be a fall in the standard of
accommodation and the environment of Salford. As this is a significant
factor in reducing tenant satisfaction and causing the migration out of the
district and increasing levels of deprivation it is inevitable that there will be
a significant cost of using this strategy.
Medium term
The medium term for this strategy is seen to be 2005-2015
An assumption has been made that the just in time strategy results in a
fall in the condition of the stock and surrounding environment. Just in time
in the medium term will include only minimal work that would enhance the
environment or the quality of life of the community as the condition of the
stock is increasingly dependant on repairs as components traditionally
replaced are maintained for longer. The potential for increasing
deprivation also causes concern for migration of people out of the stock
and Salford.
The need to offer a value for money service is also a concern with a fall in
the service and maintenance provided whilst tenants will be facing year on
year rent rises. Through the medium term the condition of the stock is
expected to worsen with increases in response maintenance being
necessary. The ramifications upon the quality of life for people in Salford
cause concern and fail to meet the corporate objectives and attack the
long term goals of creating sustainable communities.
Long Term
In the long term the benefit of reserving the finances to fund future
maintenance of the stock will have enabled the Housing Department to
continue to provide a housing service above the statutory fitness levels
and where possible to have funded as prudent a spending plan as
possible. However, in doing so decline across the district is likely to have
adversely affected the quality of life across Salford and created a
migration out of the area and more particularly the Council stock. This
has obvious and concerning affects on the income upon the revenue
streams upon which this spending strategy is based and is likely to create
its failure over a thirty year period.
Conclusion
The present maintenance strategy has been successful in providing a
value for money service across the stock and maintaining it to a high
standard with the resources that have been available.
44
Increased knowledge about the condition of the stock and their
component parts is now providing the information needed to refine our
maintenance strategy. At present the maintenance strategy works on a
combination of traditional spending programs, industry standards, and
standards set by members and tenants aimed at providing customer
satisfaction. The present strategy, however, is no longer financially
sustainable.
A review of the maintenance strategy is presently in progress with a view
to making the necessary cuts in expenditure whilst maintaining the stock
to as high a standard as possible.
The maintenance strategy will to take into account the additional
resources that are needed to achieve the changes required to access the
funds available under arms length status and any match funding other
additional government initiatives as in the past with SRB funding.
The maintenance strategy will target attaining the decent homes standard
where ever possible and will focus expenditure accordingly. However,
with present resources there is concern that little progress can be
achieved and customer satisfaction adversely affected.
9.1.4 IDENTIFICATION OF ADDITIONAL FUNDING SOURCES
We have presumed any successful bids e.g. N.R.F, N.W.D.A would result
in funding from 2004. Bids will relate to small numbers of stock but could
be essential to a comprehensive strategy.
Short term
From 2004-2008 successful bids would assist areas across the City
enabling:

work on developing dedicated initiatives to regenerate areas, where
possible, in partnership with others;

investment in key areas and unused stock;

localised improvement of the stock and environment with the
decent homes standard as a realisable objective;

increased involvement of tenants as part of the work on the new
initiatives;

improvement in the provision of facilities and services for people
with special needs;

continuance of present initiatives to encourage investment in the
City creating more sustainable and mixed tenure communities;

provision a value for money service to customers;

continued slowing of the migration of population out of the housing
stock and the City;
45

provision of programs that allow for investment in the popular areas
of the stock.
These strategies although piecemeal are of substantial benefit in meeting
our goals. The size of the initiatives is the limiting factor in meeting the
goals for the whole of the community.
Medium term
Taking the medium term as being a period from 2008 to 2015 the
investment in the areas will have enabled their growth and development.
Appropriate planning and programs of development will enable these
areas to sustain themselves however, their affect on the remainder of
Salford is limited and the corporate strategies for regenerating the Salford
and making a sustainable community are limited.
Over the medium term the policy will enable:







partnership working and private sector initiatives where the level of
development in the area has created an environment that would
attract private sector funding;
having received the injection of funding over the initial years limited
resources within the Housing Revenue Account will restrict the
potential of future investment;
the present level of involvement of tenants in decision making and
that developed through the initiative would continue;
through initial investment much of the capital resources necessary
to support those with special needs will be in place. Funding of the
services necessary will constitute part of the development
proposals and should be sustainable. Development of these
services and other capital resources will be limited;
the continuance of present initiatives to encourage investment in
the City creating more sustainable and mixed tenure communities
through offering a more appealing environment however limited
ongoing resources and may restrict progress;
the provision of a value for money service due to the improved infra
structure;
a decrease in migration out of the City.
Long term
It is in the longer term that concerns with these strategies arise. Should
the environment of Salford as a whole not improve the revenue
implication for the Housing Revenue Account as movement out of the
decaying stock occurs creates great concern.
46
With decreased revenue expenditure would have to be reduced and as a
result the housing service provided.
Conclusion
These additional resources offer value for money and make considerable
contributions to improving the environment. They also offer improvements
that are sought by local people and tenants.
However, due to the need to match fund these initiatives out of HRA
resources results in cuts having to be made in other areas and an
adverse impact upon efforts to meet the decent homes standard. The
value for money offered by these initiatives raises the issues of
opportunity cost in selecting between improved maintenance or match
funding initiatives. Once the maintenance strategy has been put in place
the opportunity cost of bidding for additional resources under such
initiatives will be carefully considered. Presently this choice is not a
difficult one as the combination of cutting expenditure in order to match
fund these initiatives is achievable whilst still providing reasonable service
standards and gaining local improvements at half their true cost. As
resources become increasingly limited this choice may not be as easily
achievable whilst maintaining an acceptable service.
9.1.5 STOCK TRANSFER
This option could provide, through the ability to have debt written off many
opportunities for the partner registered social landlords to work towards
meeting the objectives of Salford. However, given the size and age of the
debt held by the authority there are concerns over our ability to cover the
cost of having that debt released and the size of any capital receipt that
would be realised and could be put to the benefit of the community. Such
a strategy would take at least until 2004 to put in place and it is difficult to
assess it viability at this stage.
Short term
A short term policy running from 2005-2010 will create:


increased partnership with private sector initiatives that are
beginning to combat the low demand for housing across the City as
the stock is shown to be more appealing
the continued investment in key areas and clearance of unused
stock;
47







the targeting of investment towards the stock tenants would/are
presently keen to occupy with the ability to fund major
improvements in the stock but probably not to the decent homes
standard or to the standards sought by tenants;
the present level of involvement of tenants in decision making and
continue the development of tenant involvement;
the improvement in the provision of facilities and services for
people with special needs;
the continuance of present initiatives to encourage investment in
the City creating more sustainable and mixed tenure communities
although the more business like footing of registered social
landlords moves them away from a focus upon the wider
community strategic goals;
provision of a value for money service to customers through an
increased ability to invest;
continued slowing of the migration of population out of the housing
stock and the City;
provision of programs that allow for the investment in the popular
areas of the stock and clearance of less popular areas in order to
ensure their financial viability over the foreseeable future.
This strategy is effective in meeting the objectives for the City and the
housing department presuming funding is accessible.
Medium term
Taking the medium term as being a period from 2010 to 2020 it would be
necessary for the registered social landlord to maintain the improved
stock and finance its debt. Assuming the level of investment the RSL is
capable of accessing is sufficient to meet the investment needs of the
community then a sustainable plan that maintains rental incomes and
stems migration out of the City is plausible. However, the level of funding
necessary does not fit with the level of spending that is needed to achieve
sustainability.
Over the medium term the policy will enable the development of the
Housing Departments goals following on from the recent investment in the
housing stock and the financial breathing space that it provides to
undertake pro-active work.
Long term
Concerns over this strategy extend to concerns over the viability of a long
term strategies to improve the quality of life of people in Salford through
the transfer of its housing stock.
48
Limited funding would pass to the general fund and a registered social
landlord will have to focus upon financial strategies that preserve the
value and financial viability of the stock. This will constitute a major
challenge and will not allow for a broader strategic focus on the long term.
Conclusion
Stock transfer will continue to be considered as an option. Above is an
outline of the factors influencing decisions over transferring the whole
stock.. This highlights the potential that the nature of the debt relating too
the stock may make this an unaffordable option. In addition it is not an
option preferred by stakeholders. However, should the financial position
change then the opportunities transfer may offer in terms of providing
access to funds and improving the stock may become preferable.
However, both financially an in terms of service standards the present
strategy is providing the best all round service available in the City.
9.1.6 A COHERENT LONG TERM STRATEGY
Having assessed local needs and the available resources it is inevitable
that the future will hold many challenges. A strategy of seeking to access
all of the potential strategies must be adopted with resources targeted at
meeting these objectives.
In some circumstances such as with SRB, NDFC, NRF initiatives match
funding is needed from the HRA and the limit on funds may restrict such
options being adopted. The position faced is one where a review of
spending plans is necessary to resource the necessary commitment to
accessing new funding over the next five years with the intention of
securing funding to develop the majority of the stock. Such funding is
most likely to be accessed through establishing arms length status and
accessing the additional funding that is available. As outlined above the
affect of not seeking new sources of funding is likely to have a dramatic
and adverse across the whole of Salford.
Through a range of strategies it appears possible to deliver a strategy for
long term regeneration of Salford. To achieve this there is a need to
sustain and perhaps improve the Housing Departments performance.
With little additional resources this may be difficult to achieve. Reducing
environmental works and possibly moving towards a just in time
maintenance strategy does not achieve the service that is hoped for, nor
will this meet tenant aspirations.
Consequently, the opportunity cost of providing the present level of nonstatutory services must be put into question and answers provided as to
where tenants see savings would be best made.
49
The only alternative to such a strategy is to look for other ways of raising
funds whilst meeting the best interests of the community. A small scale
transfer of some of the more valuable stock may assist in funding the
future.
In order to assist in showing the position more clearly, below is a table
showing the individual strategies. The areas marked in green show where
the strategy is fundable and would result in an improving service; orange
is affordable but puts into question the quality of the service; red indicates
affordable but not a good service and black indicated not affordable.
9.2
USE OF AVAILABLE RESOURCES
The consideration and selection of available options will ensure that the
housing service provided is able to respond in a flexible manner to
emerging priorities whilst ensuring that the resources available to the city
council are maximised.
The housing directorate receives money from several sources to improve
it's housing stock. However, they can be broken down into two major
categories;


Major Repairs Allowance
Capital allocations
The council has decided that the housing capital allocation will be used to
improve the quality of the private sector housing stock - owner occupied
and private rented housing - due to the high level of disrepair amongst this
stock in some areas. Basically, the major repairs allowance - given by the
government especially to improve council housing - will be used to
improve the council housing stock.
The overall aim is to carry out the demolition of properties which do not
have a viable future, either due to the condition of the property or a lack of
demand. The backlog of repairs and improvement works will then be
carried out on the basis of identified priorities, utilising the methods
outlined in section 6.5 (above). The works undertaken will reflect the need
to ensure that all properties meet the decent homes standard and also to
ensure the long term sustainability of the housing stock by providing a
'product' and environment which is capable of competing with that of other
housing providers across the city.
50
Conclusion
As outlined in the above conclusions a mixed strategy is to be developed.
This strategy has grown from the decision that the best placed
organisation for providing social housing in the present council stock
continues to be the council. In order to continue to provide the service the
housing revenue account must refine its use of resources, performance
must be improved and as a result additional resources must be accessed.
There are a number of sources available. The largest pool of new
resources available is through the arms length option and as a result this
is the focus for the departments efforts.
In addition the department will be seeking all opportunities for increasing
resources. Match funding initiatives will be considered on their individual
merits and funding dedicated where appropriate.
9.3
SUMMARY OF AVAILABLE OPTIONS
The city council response to business planning has ensured that there is a
three tier approach to the selection of the most appropriate options for the
future of the housing service.

At a city wide level, all of the major options have been assessed
and arms length company status identified as the most appropriate
vehicle for the future management of the council's housing stock.

This will be complimented by a range of options which will be
implemented at a more local level in order to maximise the
resources available to the city council to improve it's stock and also
to ensure that the supply of council housing more accurately
matches identified demand for housing. A system of identifying
stock whose sustainability is under threat has been identified in
order that a detailed assessment of the future of the area and
options available to the city council identified. Consequently,
Private Finance initiative, demolition, investment and potential
small-scale stock transfer will all be considered in order to ensure
that the objectives of the HRA business plan are met.

Maintenance strategies will largely reflect the need to maximise the
life of components by moving towards replacement on a 'just in
time' basis. However, priorities will emerge where replacement is
necessary ahead of the time of major component failure. The
circumstances under which this will be necessary are identified at
section (above).
51
52
10.0
OUR FUTURE STRATEGY
Earlier sections of this document have identified the current issues facing
Salford's housing service and the priorities for action which have been
identified. We have also identified the options which have been
considered to ensure that service delivery and the quality of council
housing is improved in the future.
In this section, we shall set out our short, medium and long-term strategy
to ensure continuous improvement and ensure that all of our council
housing meets the decent homes standard by 2010.
10.1 WHAT WE INTEND TO DO
Over the next year it is intended that the development of the business
planning process will have achieved:





10.2
Analysis of the financial viability of the existing stock by
geographical area and, where possible, stock type;
profiled the different strategies for stock investment or transfer
initiatives and established a timetable for implementation of these
various initiatives;
a continually updating process by which the housing needs
information, the stock condition information, rental charges and
maintenance programs feed into the business plan and strategy;
a detailed analysis of HRA assets and spend;
performance targets for developing the business plan and targets
for both raising income, implementing spending programs and
improving the standards of accommodation and service.
MARKETING STRATEGY
In line with the development of the housing strategy the marketing
strategy develops a more business like approach and focuses on the
needs of the market in a much broader sense. This is being resourced
through the creation of a marketing team and the development of a
marketing strategy. The strategy was completed in September 2000 and
has set in place a strong base for revitalising our core business of housing
and housing service provision.
A housing market study has been undertaken set in the context of our
core strategy of reducing the number of void properties and creating
sustainable communities. The study highlighted opportunities for market
penetration in to the growing areas of specialist housing for the elderly
and young adults as well as emphasising the need to bring together a
53
mismatch between the perceptions of the public and the service being
provided. This has required a dual process of, firstly, staff training to
develop skills in identifying customers needs and highlighting the housing
options that are available and appropriate and, secondly, advertising to
make the community aware of the housing and services that are provided.
Research has also led to the conclusion that there are some areas where
the opportunity cost of targeting resources in to an area clearly points to
the need for stock clearance and the development of sustainable
alternative housing solutions for the households that subsequently need
relocating.
A process for monitoring the marketing strategy has been implemented.
This monitoring will establish performance standards for:






the knowledge of staff about the services provided and objectives;
the satisfaction of staff ;
the readership by staff of the monthly staff news;
the number of lets created through advertising;
the raising of awareness in the target markets of the availability of
accommodation and services and enhance the image of social housing
working in partnership with other local authorities;
the standardisation of image across the directorate leading to increased
brand identity.
In addition two key objectives have been identified as objectives for the
future. Firstly, the development of a segmented marketing policy. This
will target research at gaining more knowledge about the diverse needs of
the community in order to establish a segmented marketing strategy
aimed at linking local people to the housing they wish to access.
Secondly, to increase the accessibility of services to those in local
authority accommodation and those seeking accommodation.
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11.0
STRATEGIC IMPLICATIONS OVER TIME
The implications of the financial projections are considered to be of
paramount importance to the long term success of the housing provision.
Capital expenditure is being reviewed with the intention of reducing the
capital spend and resultant need for unaffordable contributions from
revenue to capital.
These refinements are going to be achieved partly through reducing
spend in the areas that have the least adverse influence on the service
provided to tenants and stock condition, and partly through improving our
present spending strategy.
11.1
REDUCING SPENDING
A view as to the areas where reductions in spending is most appropriate
has highlighted spending on environmental works and increasing the
clearance of properties for which there is no demand but maintenance
costs are being incurred. In addition the traditional spending plans that
have been established to reflect the needs of each area are to be
reviewed to consider the areas requiring less investment.
An
approximation of the potential savings shows a £3 million pound reduction
in budgets would have only a marginal affect on achievements under the
decent homes standard but may not be the areas that tenants would wish
to see cuts.
11.2
IMPROVING SPENDING STRATEGIES
This change in approach will largely be based upon the information
provided by the stock condition survey. Unfortunately analysis of the
necessary spend detailing particular properties is still to be provided by
Savilles. Once this is provided the information will be used to set
standards for planned and response maintenance that achieve a refined
just in time approach to maintaining the stock.
11.3
CONCLUDING A BALANCED BUDGET
The balanced budget will be achieved for a thirty-year period using the
above approach to maintaining the stock and reducing our capital
expenditure. An accurate picture of how this can be achieved will not be
provided until the database of the stock condition survey analysis has
been provided. This should be achieved very soon and is dependant on
the imminent delivery of an effective database.
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11.4
SERVICE STANDARDS AND STOCK CONDITION
As outlined the available resources are expected to fall short of meeting
the stock condition survey needs or the requirements of tenants. Once
figures have been refined and balanced budgets produced spending
plans will be considered by tenants and options within the present
resources constraints offered. In addition the implications of successful
bids for additional resources projected.
11.5
CONCLUSION
The present shortfall in resources between what tenants want, meeting
the decent homes standard, and our present spending strategy is to be
met by balancing the accounts through refining spending plans and
seeking additional resources.
Arms length status is to be applied for this September and the main
source for additional resources is hoped to be accessed through this
initiative. In addition all other available sources of funding are being
targeted continuing the strong track record of gaining funding through the
Single Regeneration Budget and New Deal.
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Elements
Strategy
of Opportunity/Cost of Strategies
Arms Length Assuming additional funding can be accessed. Investment strategies can be implemented
Company
enabling the improvement of the stock aiming at the decent homes standard and the
creation of sustainable communities.
The resource implication of achieving a successful transfer will impact on the position of he
resources available within the HRA to maintain the stock. It will take between five and ten
years to transfer a large proportion of the stock and access available funding.
SRB/NWDA
There are a range of piecemeal initiatives that go part way to achieving the necessary
etc
improvements to the stock and developing sustainable communities. Again, achieving
change will require dedicating resources to making successful bids. Savings may then
result from new resources being targeted at high cost areas of the stock. In the short term
there will be an adverse impact on the HRA through needing to resource the work.
Additionally, many of the available initiatives need unsustainable additional funding.
Stock Transfer Stock transfer will be limited by the financial position of the HRA at present and the long
term nature of the debt. More valuable segments of the stock will be considered for
transfer and the opinions of tenants sought. As a small scale transfer strategy may enable
the funding of improvements when transferred. The receipt could also benefit the HRA and
fund work on other initiatives. However, it is anticipated that the resources released will be
limited and tenants have historically been opposed to transfer.
Maintenance
Maintenance strategies would target reducing costs. A move towards a just in time
Strategies
maintenance strategy would be implemented and the current spending plans reviewed. It
is anticipated that the environmental works would be reduced by over 50% by limiting the
number of new schemes taken on. This strategy, however, causes massive concerns
about the sustainability of the community. The affects of migration out of Salford would be
costly in the long termin order tat short term savings are provided.
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