Agenda item

(i)         Joint report of the Assistant Chief Executive and the Corporate Director          of Regeneration and Economic Development.

(ii)        Presentation by the Housing Directions Manager, Regeneration           and Economic Development.

The Chairman introduced the Housing Directions Manager, Marie Roe who was in attendance to update Members on the Housing Stock Transfer Project (for copy see file of minutes).

The Housing Directions Manager thanked Members for the opportunity to refresh the Committee on why the Council plans to transfer ownership of its homes, and to provide an update on the current position.  Members noted that there were approximately 19,000 houses in Council ownership, split between Durham City Homes an in-house provider (DCH ~6,100) and Dale and Valley Homes (DVH ~4,300) and East Durham Homes (EDH ~8,500), both of which were Arms-Length Management Organisations (ALMOs).  Councillors were reminded that, in 2012, the Council had completed a Stock Options Appraisal that had looked at future financing, ownership and management. 

Members noted that this had been in response to issues such as: having to repay Government the Council’s allocated Housing Debt; the inability to borrow any more money for the housing stock after this year; the extent to which maintenance to housing stock and their environs would cost over the next 30 years; and the shortfall of the rent collected in comparison to the money required to meet Tenants’ aspirations. 

The Housing Directions Manager reminded the Committee that the Authority was servicing the housing debt allocated by Government of £240 million, and the fact investment in the next 30 years was effectively “front-loaded” with the majority needed in the first 10 years of the business plan.  Members noted that there was concern as regards the Council’s ability to invest in housing services and neighbourhoods and that a big difference between the conditions of Council homes and other RSLs properties could occur.  Councillors were informed that any new landlord for the housing stock post-transfer would be able to borrow to invest and consultation with the public had shown that they would wish for those organisations already in place, DCH, DVH and EDH to continue to manage their homes. 

It was added that the plan to transfer to these 3 organisations would be on the basis of them working together as a “group” to maximise investment and efficiencies.    

The Committee noted that discussions with Government were ongoing, with the deadline for transfer being 31 March 2015, the application from Durham to be submitted in October 2013.  It was added that when a response from Government, the HCA, Department for Communities and Local Government (DCLG) and the Treasury, is received in February 2014 then the Council could then ballot Tenants as regards the proposed transfer.  Members noted that every person named on a rent book must be balloted and that the Authority was legally bound not to promote the transfer, rather to present all the information as regards the background, process and options.  Councillors learned that post-ballot, should the result be in support of transfer, there would be work including: transfer of ownership to the new landlord; finalisation of legal agreements; securing of funding for the new group of organisations, registration of each organisation as an “intended provider” by January 2015; and to complete before the March 2015 deadline. 

Members noted that Durham’s process has been one of the quickest with informal consultation with customers having begun to develop transfer promises and that governance arrangements were being finalised to then be submitted to Cabinet in autumn 2013 for agreement.

Members noted that informal consultation events with customers hosted by the Independent Tenant Advisor (ITA) with assistance from DCC had shown several key issues including the continued investment in the stock and surroundings and to make sure landlords are County Durham based.  It was noted that around 300 people attended those sessions with 86% of those completing evaluation forms having indicated they would support the proposed stock transfer.

The Housing Directions Manager explained that consultation on governance arrangements for the new group of organisations would retain the existing boards, with an overarching parent board being established, this to exist in shadow form and comprise of 13 Members made up of 4 Independent Members (one of which to be Chair), 3 Tenant Members, 3 Local Authority Nominees and the 3 Chairs of DCH, DVH and EDH. 

The Housing Directions Manager concluded by noting that the next steps were submission of the Application to Government; to develop a name and identity for the new parent group; development of transfer promises; establishment of the shadow board once Cabinet had agreed the proposed governance arrangements and for more formal consultation to begin with Tenants early in 2014.

The Chairman thanked the Housing Directions Manager for her presentation and asked Members for their questions.

Councillors asked questions as regards: any potential for rationalisation of functions with the 3 organisations coming together; how Members were selected for the shadow board, what the latest sounding was of Government’s position as regards the debt write-off; reassurance as regards the stock not being sold on to an “out of the area” provider in the future; the spending profile over the 30 years projections; a potential for a “washing line” approach to be able to bring on board other RSLs and whether the debt write-off from Government would be in total or part.

The Housing Directions Manager explained that the shadow board would look to appoint a Chief Executive of the new organisation and then they would look to appoint a management team and then look at fit for purpose staffing at that point.  Councillors learned that those appointed to the shadow boards were assessed upon the skills they possess and how they would fit with the new organisation in order to give a robust governance arrangement that would stand up to scrutiny by potential lenders. 

The Committee noted that Government had been the instigator of “self-financing”, discussions having begun in 2011.  It was added that Local Authorities had been told that the options was available up to March 2015. 

As regards sale of stock to an organisation outside of County Durham, it had come back overwhelmingly from consultation with tenants that they did not wish for a large “out of the area” company to take the stock.  Members noted that there was continual “tests of opinion” throughout the process and this would be able to steer direction as regards the ballot process.

The Housing Directions Manager noted that the County Durham Housing Forum was chaired by the Council’s Head of Economic Development and Housing, Sarah Robson and this forum included the Chief Executives of the RSLs with the benefits of a “washing line” approach such as economies of scale having been discussed. 

The Committee learned that the debt write-off from Government first required a valuation of the housing stock, as this would be the maximum amount the new organisation would be able to borrow up to, with Government then to write-off the difference between that valuation/borrowing amount and the housing debt allocation.

Resolved:   

(i)         That the report be noted.

(ii)        That the Economy and Enterprise Overview and Scrutiny Committee continues to receive regular updates in relation to the Housing Stock Transfer.