Voluntary Sector
Rent Subsidy Review
CONSULTATION
1
CONTENTS
1.0
INTRODUCTION .................................................................................................. 3
1.1
Property Strategy .............................................................................................. 3
1.2
Reason for Change ........................................................................................... 4
1.3
Principles .......................................................................................................... 4
1.4
Moving to cash payments for rent ..................................................................... 5
1.5
Advantages and disadvantages of this approach.............................................. 5
1.6
Timing ............................................................................................................... 6
1.7
Consultation questions ...................................................................................... 7
2.0
HOW TO SUBMIT YOUR RESPONSE ................................................................ 9
2
1.0
INTRODUCTION
The Council is committed to sustaining a vibrant voluntary and community sector and
recognises its valuable contribution to civic life. As part of its support to the voluntary
and community sector, the Council has for many years allowed groups the use of
Council owned or leased property.
In the majority of cases the market value is identified and in the majority of cases a
notional rent is agreed based upon the market rental value of the premises. No money
changes hands, but groups sign a lease or licence for the property and the amount of
the notional rent is recorded as a benefit in kind in their accounts. For one property, (55
Heath Road) Richmond Council for Voluntary Service has taken a lease and receives a
cash payment from the Council to cover the rent.
A list of voluntary sector occupied, Council owned and subsidised property can be found
in the Appendix. The total amount of rent subsidy is approximately £700,000.
The purpose of this paper is to review the current rent subsidy model and seek views
from stakeholders on future arrangements.
Property Strategy1
1.1
The Council agreed a property strategy for voluntary and community use of Councilowned property which ended in 2010. This strategy identified the need for greater
efficiencies in the use of Council assets and its aims were:
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greater independence and sustainability of voluntary and community
organisations;
more sharing arrangements, both of properties owned by different public
agencies and by different voluntary and community sector groups agreeing to colocate;
co-locating between the statutory and voluntary sector to gain service efficiency,
for example, in hubs or using extended schools;
improved annual reporting on property tenancies and openness in the way that
they are allocated and managed;
securing the number of properties available and their geographic distribution in
the borough; and
reinvestment from funds realised through disposal and other means, in order to
modernise, replace or extend some of the retained properties used by voluntary
and community sector groups, should provide better quality of premises, better
value for money and embed the control of such properties firmly with the
community.
Voluntary Sector Property Strategy 2005 - 2010
3
The strategy also stated that priority will be given to those presenting plans for colocation or that confirm their willingness to share resources and optimise usage of the
property under consideration.
1.2
Reason for Change
The Council is further embedding its approach as a Commissioning Council and
therefore its need to ensure resources are allocated on a commissioning basis.
This requires there to be a mechanism for identifying and comparing costs of the
services offered. Organisations are now being asked to include a proportion of their
overheads when costing their services in funding applications. This means that costs
will be borne by all the organisations’ funders, not just the Council and means a move
away from the current rent subsidy model.
The Council is being more focussed on the services it wants to buy and the
organisations it wants to support. Priorities change over time and we need to ensure
that organisations currently receiving a rent subsidy are still providing services we want
to support or buy.
There is a drive for greater transparency in funding, both to drive choice and to ensure
that organisations are competing on a level playing field. We need to have a
mechanism that moves away from being attached to a building and is attached to the
organisation.
1.3
Principles
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Transparency – information about the level of support the Council gives to
individual organisations should be publicly available.
Accountability – the responsibilities and obligations of property holding are clearly
set out for the Council and the voluntary or community organisation.
Money follows our priorities – the Council is clear why it is funding each
organisation occupying Council owned premises
Fairness – the Council will communicate with organisations about its long term
property strategy and give sufficient lead in time where this affects a voluntary or
community organisation. The Council will provide a reasonable level of support to
help organisations cope with changes prompted by Council policy. In a
competitive funding environment, organisations are treated fairly and funding for
accommodation is transparent.
Efficiency – the Council will promote efficient use of space within its property
holdings and encourage sharing arrangements where appropriate.
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1.4
Moving to cash payments for rent
There has been initial discussion with a range of organisations currently in receipt of
rent subsidy. The consensus was that a move to cash payments is the most
transparent and fair method of funding. This would need to follow the organisation, not
the building. The organisation would calculate the costs of providing its service,
including rent and other overheads and include this in its funding application. If
successful, the amount awarded would include sufficient funds for property overheads
that are proportionate to the service under full cost recovery principles.
1.5
Advantages and disadvantages of this approach
Transparency
Organisations will have a better understanding of the true costs of their service. We
would have to charge rent and invoice organisations so there will be a small
administrative cost to the Council. Organisations will need to pay us the rent, so there
will be an administrative cost to them. There is the possibility of the Council incurring
further costs in the event of non payment.
Accountability
All organisations occupying Council property will need to have a formal tenancy
agreement, either in the form of a lease or a license. This has been difficult to enforce
with a small number of tenants and the Council will renew its contact with organisations
to ensure an appropriate agreement is in place. With the move to cash payments for
rent, organisations that do not pay their rent will have to be dealt with like any other
defaulting tenant.
Money follows our priorities
If an organisation fails to obtain funding (either from the Council or other funding
source), they will still need to pay rent for use of the accommodation. This will
encourage them to diversify their funding. If a contract to an organisation occupying
Council property is awarded to another organisation and they need the property to
deliver it, they would need to negotiate with the existing tenant.
In a few instances, voluntary organisations, currently housed in Council property, might
have a lease expire. The lease arrangements would then be reviewed against Council
priorities and most effective use of Council assets. It is therefore not guaranteed that
existing tenants will continue to be offered a lease on a specific property. Organisations
that are leasing Council property will be required to pay the full market rental value.
However, in implementing full cost recovery principles some organisations may have
difficulty in securing the appropriate level of funds within the timescale outlined in this
paper. In cases of demonstrated need, rental charges could be introduced
incrementally over a period of time; any such arrangement would need the approval of
the relevant London Borough of Richmond upon Thames Cabinet Member or a director
with delegated powers to take such a decision.
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Fairness
In a commissioning environment this new approach will help to create more equity
between service providers and give them flexibility to move premises. This can help
providers to develop a competitive edge through driving down costs or achieving better
value in their service.
Efficiency
If the money follows the organisation, they may choose to move into other
accommodation because it is better or cheaper.
Some organisations in Council owned property do not get a grant and would be required
to bid for funding that is then repaid to the Council as a rental agreement. For smaller
organisations such as uniformed groups this circular transaction may be inefficient. An
alternative proposal is therefore to agree a set of criteria to underpin the arrangement
and keep the current system in those circumstances.
Sustainability
Voluntary organisations may not be able to secure sufficient funding at an early part of
the year to ensure that they have secured sufficient funding to cover the
accommodation costs. Unlike the private sector, they do not have access to credit
which would allow them to spread out their cash flow over the whole year. To assist in
this the Council would adhere to its normal practice of quarterly invoicing.
1.6
Timing
It is proposed that we move to this system for groups alongside the commissioning
timetable. It is proposed that the subsidies are grouped together and considered sector
by sector in line with the relevant commissioning streams. For example the uniformed
groups will be considered together. The broad timetable is as follows:
Adult services
Infrastructure
Children and Young People
(including uniformed groups)
Environment and Culture
April 2012
April 2012
April 2012
October 2012
There will need to be consultation with individual groups to understand the affect on
current tenants.
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1.7
Consultation questions
Consultation Question
1.
Do you agree that this is a fair and transparent approach to organisations’
need to secure accommodation?
Consultation Question
2.
What are the key challenges for your organisation in adopting this
approach and what support or assistance could the Council provide to help you
manage the transition?
Consultation Question
3.
Where the market value is very small and no grant funding is currently
received what criteria could be used for ongoing rent subsidy agreements?
Consultation Question
4.
Organisations currently in receipt of a full rent subsidy will need to ensure
their accommodation costs are included in all of their services under Full Cost
Recovery. How will you ensure that your organisation can meet the
requirement?
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Consultation Question
5.
Please use this section to add any other comments regarding the new rent
subsidy arrangements
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2.0
HOW TO SUBMIT YOUR RESPONSE
Thank you for your help. Your responses are enormously helpful and will assist in
enabling a vibrant voluntary and community sector and achieving real benefit for
residents in London Borough of Richmond upon Thames.
Please enter your details in the table below and return your completed consultation
(preferably via email) to:
Melissa Watson
Voluntary Sector Partnership Manager
London Borough of Richmond upon Thames
Civic Centre
44 York Street
Twickenham
TW1 3BZ
Email:
Telephone:
melissa.watson@richmond.gov.uk
020 8487 5225
Consultation Submission Deadline: Tuesday 14 June 2011
If you have any queries about the consultation please contact Melissa Watson at
melissa.watson@richmond.gov.uk or on 020 8487 5225.
Respondent Details
Name of organisation
Name of respondent
Address
Email address
Telephone number
9
Appendix
Table of voluntary sector occupied, Council owned and subsidised property
Occupier/ Tenant
Property Name
Street
Area
Post Code
Three Wings Trust
Croft Centre
Windham Road
Richmond
TW9 2HP
Sheen Old Grammerians
Queen Elizabeth Walk
Queen Elizabeth Walk
Barnes
SW13 9SA
Age Concern
Barnes Green Day Centre
Church Road
Barnes
SW13 9HE
Age Concern RUT
Church Rd, The Arc (The
Meadows)
Upper Church Road
Richmond
TW10 6LN
EMAG (sub lease to age concern)
Whitton Day Centre
Kneller Road
Whitton
TW2 7DT
Linden Hall Day Centre
Association
Linden Hall
Linden Road
Hampton
TW12 2JG
Teddington Old Peoples Welfare
Committee
Elleray Hall
Elleray Road
Teddington
TW11 0HQ
Age Concern Whitton
Whitton Library
141 Nelson Road
Whitton
TW2 2BB
Whitton Network
Whitton Library
141 Nelson Road
Whitton
TW2 2BB
Richmond Furniture Scheme
Fortescue Avenue, Premises At
Fortescue Road
Twickenham
TW2 5LS
Barnes Sorting Office Centre
Sorting Office
Station Road
Barnes
SW13
Lincoln Avenue Residents
Association
Crane Community Centre-Meadway
Meadway
Twickenham
TW2
Whitton Community Association
Whitton Community Centre
Percy Road
Whitton
TW2 6JL
10
ETNA
Rosslyn Road 13, E Twickenham
13 Rosslyn Rd
East
Twickenham
TW1 2AR
Museum of Richmond
Old Town Hall, Richmond
Central Reference
Library
Richmond
TW9 1EH
Riverside Nursery
York House
York Street
Twickenham
TW1
Riverside Playgroup
York House
York Street
Twickenham
TW1
Maria Grey Nursery School
Field House, Vineyard School
Friar Stiles Road
Richmond
Scamps
Teddington Former Youth Centre
65a Strathmore Centre
Teddington
TW11 8UH
Mortlake Community Association
Mortlake Training Centre
Lower Richmond Road
Mortlake
SW14 7HH
CAB
Sheen Lane Centre
Sheen Lane
East Sheen
SW14 8LP
HANDS
Bath House
The Embankment
Twickenham
TW1 3DX
Richmond CVS
Heath Rd,55/61-Vol Org Offices
55/61 Heath Road
Twickenham
TW1 4AW
Richmond CVS
Petrocon House
1 Princes Street
Richmond
TW10 6DQ
RAID
4 Waldegrave Road
4 Waldegrave Road
Teddington
TW11 3ES
Various groups
Old Deer Park (Crown Land)
South Side Twickenham
Road
Richmond
Middlesex Young Peoples Club
Clubs Clarendon Crescent
Clarendon Crescent
Twickenham
TW2 5LN
TAVR Association
Queen Elizabeth Walk
Queen Elizabeth Walk
Barnes
SW13 9SY
Sea Cadets
South Side Twickenham
Road
Richmond
TW9 2RA
Scouts Trustees
Queen Elizabeth Walk
Barnes
SW13 9SA
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First Hampton Hill Sea Scout
Station Road
Hampton
Middlesex
Hampton District Girl Guides
Station Road
Hampton
Middlesex
16th Twickenham Sea Scouts
Fortescue Road
Twickenham
TW2 2LS
1st Richmond Scouts
Queens Road
Richmond
TW10 6HF
3rd Hanworth Scouts
Oak Avenue
Hampton
TW12 3QD
6th Whitton Scout group
Springfield Road
Whitton
TW2 6LQ
7th Hampton Scout group
South Road
Hampton
Middlesex
Girl Guide Association
Woodville Road
Ham
TW10 7QW
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