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The two reports “A Choice for NEL” (TP21) and “Housing Options Appraisal” (by Beha Williams Norman) both point to the benefits of postponing a decision on privatisation of NEL`s council housing stock.
Both agree that the situation is manageable in the immediate future. BWN indicates that the council will be able to bring its stock up to Decent Housing Standards by 2010, though improvement beyond this and such desirable benefits as double glazing, new kitchens and bathrooms, etc., are considered attainable only through LSVT.
Another argument for waiting, which neither mentions, is that government housing policy is becoming more generous both to councils which retain their housing stock, and in respect of better transfer terms because government is finding it difficult to reach its target of 200,000 transfers a year. It is also is having to face up to the issue of what it needs to do for tenants who vote against transfer. A new Housing Bill will be introduced this autumn which may well give even more help to councils of the type the Government is giving to A.L.M.O.S.
Terms can only get better. That means that the only justification for early privatisation in NEL is either an ideological desire to get rid of housing, or a feeling that the council is neither competent to handle it and improve its own management nor able to use the new funding, such as Major Repairs Allowance, for the benefit of its tenants.
TP21 makes it clear that tenants are against transfer: “It would be wrong and potentially expensive for NEL to underestimate the strength and depth of opposition to stock transfer felt by tenants”. This means that if tenants vote against transfer the council will have wasted a lot of money and effort as well as neglecting the task of running and financing its housing properly all to no purpose. The BWN report is naturally more favourably disposed to LSVT, indeed it naively sees it as a new dawn. Yet it warns that in NEL even this faces problems.
(1) Negative equity – NEL would sell at a loss to itself. This could be £565 per dwelling.
(2) A cost to general funds in respect of a possible contribution or “dowry” as well as continuing costs from remaining housing responsibilities.
(3) The government has not yet decided on whether and to what degree it will finance negative equity and dowry responsibilities. The report ignores the most recent development that the Local Government Act gives councils power to borrow. Though not as extensive as the powers of Registered Social Landlords this could be used to raise loans on the security of rents or, more likely, service charges, then use the money for housing improvement.
BWN assumes that a LSVT will work wonders in terms of improvements, though there is no evidence for this. It neglects to consider problems peculiar to NEL, such as
(1) Will a housing association partner prepared to take on NEL`s housing problems be found?
(2) Is it possible to find more than one so that NEL can generate some competition to offer better terms?
(3) How is the council to achieve a fair balance between getting good terms and improved conditions for tenants and yet a fair price for its housing?
(4) Will the government be tough on the issues of overhanging debt, redemption charges, negative equity, finance for remaining responsibilities and the dowry which may be necessary, or will it be generous to NEL?
Both reports indicate that there is no easy or quick answer to NEL`s housing problems and that an LSVT can make little contribution to solving the over-arching financial problem. Indeed, it could make it worse by eliminating the forthcoming ability to borrow and imposing a further drain on the general fund. The reports, therefore, provide no justification for going for an LSVT, with all its attendant risks and problems, at this time. They do, however, show the need to get a grip on housing finance and do what can be done to give a better service to tenants and improve the stock within the slowly liberalising constraints of the present system. NEL should not push its own problems onto the shoulders of its tenants. |
