John Hemming's Web Log John's Reference Website
Friday, January 21, 2005
  City Housing Liaison Board
I attended last Night's City Housing Liaison Board for half an hour. Last time I attended there was an attempt to exclude me from the meeting which resulted in 22 votes for me to remain and 8 votes for me to be expelled.

Last night, however, noone objected to me being there as an observer. It appears that a number of those members of the board who backed Labour when there was a move to exclude me no longer back the Labour Party.

The tenants and leaseholders are unhappy with the Labour Government reneging on their promise of a level playing field for social housing. They also refused to have a briefing from the Housing Department on the "Our Homes Appraisal".

They rightly take the view that they voted overwhelmingly against Stock Transfer and as a consequence the government should accept that.

They agree with us that wasting £1.6 Million on yet another consultation about Stock Options (The "our Homes Appraisal") is a waste of money that noone needs. They were, however, pleased by us sourcing the finance via the Performance Reward Grant rather than Housing Finance Revenue Account.

Housing Finance for Council Housing is quite complex. There is a separate account called the Housing Finance Revenue Account which handles the revenue and expenditure for Council Housing. This has a complex relationship with government who fund costs thorugh the Housing Revenue Account Subsidy. The subsidy basically pays 95% of the rents of tenants on housing benefit and pays all the interest on housing debt, but then taxes the tenants to the tune of £800 per property per year. The ODPM then provides a Major Repairs Allowance.

This arcane arrangement is the reason why many of the arguments relating to Stock Transfer are financially flawed. The council tenants do not actually pay the interest on the housing debt directly in any event. It is, therefore, irrelevant that any stock transfer would clear the debt.

There have been various schemes for housing. I always think the best way of looking at them is on a per property basis. This makes the figures much more comprehensible.

Castle Vale's Housing Action Trust involved a subsidy from central government of about £67,500 per property. Optima's ERCF which covers Lea Bank (aka Attwood Green) had a subsidy of around £17,000 per property. However, Stock Transfer actually took out about £4,000 per property.

Birmingham's big problem (and probably that of other big authorities) is overpaying for work and incompetent work being done. Financially the Housing Stock was not in such a bad state. The debt is actually relatively small compared to the number of properties (about 70,000 now) as being under £10,000.

The current estimate as to funds required for bringing the state of the homes up to "Decent Homes" standard is actually £165 Million (after rents received etc). This is under £3,000 per property.

The big problem with government is a failure to understand the real issues relating to housing. Policies are driven by ODPM in isolation of the realities and the civil servants are not held to account by the politicians.

Everyone gets tangled up in bureaucratic nonsense when the issue is actually quite straightforward generally. Keeping properties in a good state of repair is not that difficult.

In the mean time, however, we now are in a position where people in low paid work cannot afford to find anywhere to live close to their work. Labour look as if they wish to further undermine this situation in the future. Not a good idea.

I am doing my own bit of testing the costs of work. I have collected the costs of working on The Council House and have found the costs are silly. I am, therefore, going back to the basics and reviewing the invoices to find out what has been going on.



 
Comments:
"The current estimate as to funds required for bringing the state of the homes up to "Decent Homes" standard is actually £165 Million (after rents received etc). This is under £3,000 per property."

Good grief, the estimate in Swansea is £300m or £21,000 per property. I know that the 'Decent Homes' Standard is not as exacting as Wales' Housing Quality Standard but either your homes are in an extraordinarly good condition or the surveys you are relying on are inadequate. If this is the true state of affairs then I do not know why the previous Administration went for stock transfer in the first place!
 
I bet a reasonable sum that they are vastly overestimating the costings. If you send me the 25 yr cash flow estimates for housing I shall have a look at them and see what the real figure is likely to be.

The officers in all authorities have a tendency to egg the pudding in the way in which they wish it to appear. They are giving up doing this in Birmingham.

Our headline figure at one stage was £1.2 Billion. I went into the detailed figures and it came down to about £400 million. With the new administration wanting to go for the 4th option it is now down to £165 Million.

It is always worth getting the cash flows because that allows you to compare like with like.
 
This is a task made more difficult by the fact that Swansea Council is a unitary authority created by a merger of the former City Council plus half of the former Lliw Valley Council in 1995. We have spent the last 10 years seeking to equalise rents and I suggest that getting usable cash flow figure for the time before 1995 would be very difficult.

As I said the Welsh Housing Quality Standard is very different to its English equivalent. It involves up-to-date bathrooms and kitchens for a start. It is therefore significantly more expensive to achieve. The Swansea figures are based on a comprehensive physical survey of a substantial proportion of the housing stock and seem to be fairly sound.
 
The forecast cash flow.
 
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