Stock Options Appraisal
The movement towards Asset Management and greater long term planning has come at a time when the Council has been carefully considering the long-term future of its housing stock. Within its 2000 strategy the Council committed itself to undertaking a full options appraisal, working closely with the recognised tenant consultative machinery, to clearly identify the options available to the Council in best managing its assets.
The timetable gave the opportunity for the different constituent groups to reflect the changes that the Housing Policy statement was proposing and in particular, to allow full consideration of rent restructuring and the proposals for Arms Length Management.
The appraisal was undertaken with assistance from PCA Management Consultants, following a decision by the Council to undertake an options appraisal of the future of the housing stock within the Borough. It followed an inclusive, consultative approach, involving the Tenants Forum, members and staff. It looked at the wider issues facing the Borough both from a housing and economic perspective, rather than simply concentrating on the investment needs of the properties.
Six potential options were identified for analysis. They were:
- Status quo;
- Private Finance Initiative;
- Arms Length Management;
- Trickle transfer;
- Partial Transfer;
- Whole stock transfer.
The options were considered against four criteria: the investment needs of the properties, the potential benefits for existing and future tenants, the future supply of affordable housing and the Council's responsibility as custodians of the assets. The different aspects of each of the options were initially described, before being considered in a local perspective.
The completed report considered each of the six options, including the Council remaining as it is, against these criteria, and suggested the likely consequences of each of the different options. It also considered the changes that the Council will be faced with irrespective of the choice that it makes.
The appraisal process involved assessment of a considerable amount of historic and current information. In particular, a key element of the assessment involved an evaluation of the condition of the stock and the likely cost of bringing all the Council's stock up to the new 'Decent Homes' standard and maintaining it as such for at least thirty years. The information used within the appraisal is a combination of a previous stock condition survey, which has been updated by officers and approved by the Working Group responsible for the delivery of the report.
The report did not seek to offer recommendations. Rather it set out the issues surrounding each of the options, identifying the extent to which each option was able to fulfill the given criteria and the potential risks that face the Council depending which option was selected.
The final report was also discussed with the Housing Forum. There was a general discussion of the strengths and weaknesses of each of the options, facilitated by the consultants. Following this, there was a clear indication that they recognised that remaining as they were was unlikely to provide them with the levels of service that they expected and had become used to, but a preference nonetheless to keep the Council as their Landlord.
The Housing Committee in June 2001 fully considered the report, and the comments from the tenants and residents who were represented at the meeting. It agreed to submit as part of the 2001 Housing Strategy, an in-principle, non-binding expression of interest for inclusion in the 2002/03 Arms Length Management Organisation programme.
It also agreed to finalise their Option Appraisal report, in the light of the outcome of the in-principle expression of interest and the findings of the 2001/02 stock condition survey.
Although initial observations suggest that the Arms Length Management Organisation proposals offer potential benefits to the Council, the previous aim of becoming a debt free Authority within the next seven years would be compromised. The updating of the options appraisal report would fully consider that position, and would look at the corporate effect on the Council (see background paper: Options Appraisal*).
Selective Options Appraisal
In addition to the stock options appraisal set out above, the Council has started to breakdown stock information within the Business Plan model. At this stage in the development of the model, this has been expanded from the initial single whole stock category into four sub-categories reflecting the three key risk areas for the Council.
These four categories are Sheltered, High-rise, other non-traditional and the remainder of the stock. In particular, this has allowed us to reflect the different characteristics that each category displays, rather than overall Borough averages. This is particularly relevant for maintenance costs, but they also vary through Right to Buy trends, service costs, rents, voids, etc.
The Council is not yet in a position to gather all the information necessary broken down into these categories, and for this year's plan, several assumptions have had to be made. However, the implementation of a new ICT system is currently underway and this will allow information to be collected and aggregated in different formats and for different purposes.
The stock condition survey currently underway will also provide significant additional information that will help to prioritise the works programme and to identify more accurately the potential funding gap.
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