REPORT OF THE LEAD MEMBER FOR HOUSING, LEADER OF THE COUNCIL,
LEAD MEMBER FOR PERSONNEL TO CABINET
Subject:
ARMS LENGTH HOUSING MANAGEMENT
ORGANISATIONAL ARRANGEMENTS
Purpose of Report
(i)
To advise Cabinet of organisational changes which will become necessary arising from
the transfer of housing management functions to an arms length organisation.
(ii)
To recommend to Cabinet a revised structure and organisation for the strategic housing
function.
(iii)
To recommend interim arrangements for a period of approximately 18 months prior to
assimilation of the Strategic Housing function into the Chief Executive's Directorate.
Background
The council has considered a wide range of housing options to attract additional resources.
Briefly these have included:
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Large scale stock transfer
Selective stock transfer
Other financial models e.g. quasi corporations and securitisation
Disposal and demolition
Large scale stock transfer has not been a financially viable proposition for the City Council and
has to date been unpopular with tenants.
The council following discussion at Cabinet decided that the opportunity provided by
Government in the Housing Green Paper to bid for arms length housing management resources
represented a pragmatic opportunity to attract additional resources, to accelerate achievement of
decent homes targets and the Council's corporate regeneration agenda.
Provisional Funding
The Government has announced the pre-allocation of resources for Round 2 ALMO bids of
which Salford’s is one.
The allocation announced is for the first two years of our four year bid i.e. 2003/2004 and
2004/2005.
We have been allocated £53.5m for these two years, which represents 60% of our £89.11m bid
for the first two years.
This is the second largest allocation made in this round (Leeds has received £55.4m).
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The Government has further said that its “intention” is to make the additional funds available to
make up the shortfall between the amount allocated and the full bid for 2003/2004 and
2004/2005. The timing and the sums involved will be subject to the comprehensive Spending
Review which, I understand, will take place in July this year.
The Government has also said that it “hopes” to be able to make funding available for the
remaining two years of our bid but this cannot be guaranteed at this point.
This is clearly a very good outcome for our bid.
 The Government has acknowledged the validity of our full £180m bid at this stage (the final
figure may vary over time and depending on more detailed stock survey work, and the
Government reserves the right to review our costs and our programmes).
 Given that the Government cannot guarantee longer term funding, this is as strong a
commitment to funding our Decent Homes Programme as we could reasonably have
expected at this point.
 If the net effect of this announcement is that we receive all the funding we need, but over a
longer period than anticipated, this may well be to our advantage in that it gives us longer
to implement our programmes.
 This appears to be a ringing endorsement of the ALMO option and a clear indication that the
Government sees it as a viable and attractive funding alternative to stock transfer.
Caution
All funding is provisional and will depend on: Our setting up an Arms Length Company which meets the Government’s criteria, enables us
to receive Section 27 consent in July and passes a final inspection next year by the Housing
Inspector.
 We must achieve a 3 star (excellent) assessment at our final inspection.
This latter challenge will be particularly daunting. We are not yet a 3 star service and we will
need to work hard over the next 12 months to improve our services.
Timetable for Organisational Arrangements
The following is a brief recap of the key stages in forming an arms length company.
END OF FEBRUARY 2002. Submission of our round 2 outline bid for additional funding
under the Government's arms length proposals.
The parent board established in shadow mode from February onwards and will, therefore, be
fully trained and able to take on its full role immediately.
APRIL 2002. Completion of current review of front line Housing Services which include: Day to day repairs
 Void management and allocations
 Rent arrears and cash collection
 Estate management
 Caretaking and cleaning
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APRIL 2002 – DECEMBER 2002. Additional best value review of programmed maintenance.
This is required to complete the best value review process for the major services to be delivered
by the proposed ALMC.
JUNE 2002. Initial best value inspection which will:
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Provide feedback on the best value work carried out to date
Give an indication of likely score for the services reviewed
Give an indication of the areas for improvement required to bring services up to a high
standard
JULY 2002. Submission of Section 27 notice to Government along with the delivery plan etc.
for the arms length management company.
SEPTEMBER 2002. The arms length management company formally established and becomes
operational. The five local boards will be in place by September 2002 although the logistics of
training may mean that they may not play a full role until December 2002. At this stage the
existing Housing Directorate will separate into two separate organisations i.e. ALMO and
Strategic Housing Organisation and the roles and responsibilities of the Director of Housing,
Deputy Director of Housing (Chief Executive Designate of the ALMO) and the Assistant
Director Strategy will change completely. This is expanded later in the report.
MARCH 2003. Final best value inspection which will:
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Determine the final score for front line services reviewed up based on the Best Value
improvement plan agreed in May 2002
Inspect services reviewed within the best value review of programmed maintenance
Review the establishment of the arms length management company and its current position
A vast amount of detailed work is required both within the Housing Department and with other
Council Departments to develop revised working arrangements and establish a realistic ALMO
delivery plan. The work will be organised on the basis of:
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Setting up and delivering Arms Length Housing Management Services
Developing the functions of the strategic housing organisation to achieve the Government's
broad housing priorities
Realistic transitional arrangements to ensure a smooth transfer of responsibilities and
establish long term strategic and performance monitoring arrangements
Work to Establish the Arms Length Housing Management Company
This work led by the Chief Executive (Designate) of the ALMO includes:
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Setting up the main board and local boards
Delivery of local housing services based on the plan agreed by the council and arms length
management organisation
Delivery of the ALMO business plan and local business plans based on the five geographical
board areas
The section 27 submission
Application for registration of the companies
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Budgets for 2002/03, delegated authorities, revision of standing orders, preparation and
agreement of SLAs etc.
Revised organisational arrangements within the ALMO
Training board members
TUPE arrangements for Housing staff and currently outstationed support services staff
Revised service targets and performance review arrangements for reporting to the Board and
monitoring by the Council
Detailed financial evaluation between ALMO, residual housing organisation and corporate
support services
Functions of the Strategic Housing Organisation
This work will be led by the Assistant Director Strategy under the direction of the Director of
Housing.
Appendix 1 separates the functions between the arms length parent company, arms length local
companies and the City Council. Government have been prescriptive and have stressed in recent
guidance that they expect a strong housing strategic role and an Arms Length Organisation,
independent and equipped to make future decisions. In broad terms the functions that will
remain with the housing body will be:
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Housing strategy
HRA business plan
HRA management and statutory responsibilities
Monitoring ALMO, Best Value improvement programme and achievement of the Council's
housing pledge
Private sector housing including contribution to corporate regeneration, enforcement,
standards and housing advice
Links to corporate strategic work
Housing resource procurement
Option appraisal and project development
Disposal and marketing processes in respect of surplus housing stock
Management of non-housing assets e.g. land, shops and other assets via Development
Services
Right to Buy
Homelessness and housing advice services including the management of hostel
accommodation at Belmont and Petrie Court
Home Energy Conservation Act strategy
Communications, marketing and public relations
Integrated housing investment programming
Housing research
Supporting people strategy
The Authority's capacity to effectively provide an interface with and monitor the performance of
the ALMO will be dependent on the residual structure and it is crucial that this is a strong
organisation.
The remaining Housing Strategy function will continue to have a formidable range of functions,
responsibilities and an overall staff in excess of 100 people. In the long term it is considered
appropriate to strengthen the links with regeneration by relocating the function to the Chief
Executive's working closely with the Director of Regeneration. In the short term the emphasis
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of the strategic function will be to refine working arrangements with the ALMO and develop
practical monitoring arrangements for achieving the council's broader housing aspirations as
identified by the Pledges. The mechanism for monitoring will be the ALMO delivery plan.
This is a crucial document which will establish clear arrangements for performance
management.
Transitional Arrangements
The Director of Housing will concentrate on transitional arrangements specifically focusing on
establishing effective delivery arrangements between the council and the ALMO. The reorganisation comes at a time when there will be unprecedented demands on both the ALMO and
the Residual Housing Organisation. The Government is driving changes which will have both a
medium and long term impact.
It will be necessary to:
Ensure continuity and improvements in service delivery for both the ALMO and strategic
housing organisation
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Work up existing programmed best value reviews e.g. homelessness, urban renewal
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Maintain momentum on area regeneration projects
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Continue to contribute to national and regional policy development e.g. Homeswap, Housing
Market Renewal Fund
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Develop long term arrangements e.g. accommodation, support services for the residual
organisation, whilst maximising arrangements for economies of scale with the ALMO
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Develop monitoring arrangements to ensure that the ALMO delivery plan contributes
significantly to the achievement of the council's pledges
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Work up new Government driven initiatives which will have practical working arrangements
between the ALMO and residual housing organisation (see below)
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Deliver a wide range of projects over the next 18 months which will require close detailed
working arrangements between the strategic organisation and the ALMO. Projects are
summarised below, whilst they will be led by the strategic organisation, most cannot be
delivered without the direct involvement of the ALMO as the main service provider
Projects – June 2002 – October 2003
Housing Market Renewal
Homelessness – service – targets
Private Sector – policy, approach, service, targets
Supporting People
HIP Strategy
Business Plan
Area Regeneration Projects
BV Review Homelessness/Housing Advice
Option Appraisals
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Lead
Strategic
ALMO
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Demolition/Disposal Projects
Energy Target
Best Value Improvement Plan
Comprehensive Performance Assessment
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Interim arrangements will be necessary for a period of approximately 18 months to ensure
capacity for a smooth transition (with effective monitoring arrangements) from one to two
separate organisations and effective integration into the Chief Executive's Department.
During this period the Director of Housing will work closely with the Chief Executive
(Designate) of the ALMO to agree the ALMO Best Value Improvement Plan and delivery plan
with precise monitoring arrangements which he will lead on behalf of the Council. He will
establish arrangements to:
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Ensure that the ALMO take account of the council's strategic objectives
Provide adequate arrangements to protect the Authority's financial interests?
Develop equitable arrangements for the ALMO to access HRA reserves?
Clarify sanctions if the ALMO behaves unlawfully?
Involve tenants in developing performance standards?
Re-align its tenant involvement strategy to reflect the movement to an ALMO and determine
arrangements for strategic and operational responsibility for tenant participation?
Agree and monitor the required standard of service?
Manage expectations if the ALMO is unsuccessful in securing additional resources?
Ensure consistency of approach between the ALMO and the residual housing organisation in
the achievement of the Government's comprehensive performance assessment for housing
The Director of Housing Services will continue to strengthen the regional and national links via
the LGA where Salford are achieving national recognition. Examples include input to the
Government's Policy Action Teams, Homeswop, pioneering landlord accreditation/licencing in
the private sector and promotion of regional/sub-regional housing strategies e.g. Housing
Renewal Fund, before formal handover to the strategy function.
The following corporate activity will continue to be led in the short term and co-ordinated by the
Housing Director. These include:
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Co-ordination of the Blackfriars/Broughton Community Strategy
Leadership of the Chapel Street Regeneration Strategy
Input to corporate strategies e.g. crime and disorder
This will allow the Assistant Director Strategy to concentrate the strategic functions whilst
continuing to improve services in the private housing sector. He will from September 2002 to
October 2003 deputise in the absence of the Director and it will be necessary to decide the grade
for this post.
An urgent and planned refocus of activities over the next 18 months is required, to achieve a
smooth transition to ALMO arrangements (a more detailed phased project plan is shown in
Appendix 2).
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At the end of this period (approx. October 2003) the transition will be completed, there will be a
formal handover of functions from the Director of Housing to the Deputy and the role of the
Assistant Director Strategy will be reviewed taking account of the corporate and regional
responsibilities which will be absorbed into his new role. (Initial ideas on a high level interim
structure are shown in Appendix 3).
CONCLUSION

Arms Length Housing Management requires extensive organisational change
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Proposed changes are unlikely to be reversed in the context of National Housing Policy, the
recent ALMO announcement and provisional ALMO investment resources

A formal strategic/operational split is imminent and formal delegation of housing
management functions to the ALMO Board will commence in September 2002. The roles
and responsibilities of the Chief Executive designate, the Director of Housing and Assistant
Director Strategy will change permanently

Interim arrangements are necessary to focus activity over the next 18 months to achieve a
smooth transition to Arms Length arrangements and ensure effective performance delivery
and assimilation within the Chief Executive's Directorate.
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Long term integration within the Chief Executive's Directorate will be achieved at the end of
this 18 month period
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Further reports will be necessary as detailed monitoring arrangements are developed.
RECOMMENDATIONS
That Cabinet:(i)
endorses the organisational changes necessary from September 2002 to transfer housing
management functions to the Arms Length Organisation.
(ii)
Supports the interim arrangements (for a period of approximately 18 months) set out in
this report.
(iii)
Notes the high level interim structure and supports detailed work on the long term high
level residual structure for assimilation into the Chief Executive's Directorate.
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