Agenda item

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

(ii)        Presentation by Marie Roe, Housing Stock Option Manager.

The Chair introduced the Housing Stock Options Manager RED, Marie Roe who was in attendance to update Members on the Stock Option Appraisal (SOA) Project (for copy of presentation, see file of notes).

The Housing Stock Options Manager thanked the Members for the opportunity to speak at the Committee and reiterated the purpose of the SOA for those Members that were not familiar with the Project.

Members were reminded that there was a need to review the investment requirements in the Council’s housing stock over the next 30 years, with around 19,000 properties across the three areas administered by Durham City Homes (DCH) an “in-house management organisation” (IHMO), and the two “arms-length management organisations” (ALMOs) of Dale and Valley Homes (DVH) and East Durham Homes (EDH).  Councillors noted that there was a need to secure investment and to be confident that all potential options had been explored, together with the need to ensure that DCC was well placed to be able to adapt and respond to the changing policy landscape, both locally and nationally.  The Committee were informed that it was important to be able to secure adequate funding to be able to continue to deliver the Decent Homes Standard (DHS) and maintain that standard in the future.  The Housing Stock Options Manager added that there was a need for DCC to be able to deliver sustainable communities, to meet customer needs and aspirations and to contribute positively to regeneration issues.

It was explained that, last year, independent Legal and Financial Advisors had been appointed in order to look at the potential future financial options for the housing stock and governance arrangements.  Members were asked to recall that the management options would be to retain the stock, or to look for a transfer of the stock, either via a traditional “large scale voluntary transfer” (LSVT), to a “community owned, council owed (CoCo) organisation, or a combination of LSVTs/CoCos.  Councillors were reminded at this point that modelling had shown that there would be shortfall of between £30-60 Million in years 1 to 10 of the 30 year period and therefore, a full consultation process was decided upon to evaluate the potential options.  The Committee noted that all relevant parties were involved, including customers, staff, Board Members (IHMO/ALMOs), Councillors and other key stakeholders throughout the Summer of 2011 and Members were reminded of the several updates provided to the Committee at meetings in the late Summer and Autumn.

The Housing Stock Options Manager explained that “Phase 1” of the SOA Project including all research and feedback gathered so far was presented to DCC Cabinet on 14 December 2011 in a 30 page report that had two main recommendations that were agreed; to continue to make arrangements for the implementation of self-financing in April 2012, in line with legislation; and to continue to explore options for a transfer of the Council’s housing stock.  Members noted that the change to self-financing meant that from 1 April 2012, the rental income generated could be retained, however, there would need to be a one-off “settlement” in order to allow for this and that the idea of a stock transfer was a potential solution to “plug the gap” in relation to the financial position in years 1 to 10 of the 30 year period being considered. 

The Committee learned that guidance on stock transfer had not yet been issued from Central Government, the “Revised Housing Strategy” having been originally scheduled for Autumn 2011, and then January 2012, now put back until April/May 2012.  The Housing Stock Options Manager explained that Government had indicated in November 2011 that they would still be offering the possibility of stock transfer, and therefore since agreement at Cabinet in December 2011, DCC have continued to look at the issue of transfer, together with those around the quality of the stock and the required investment in order to ensure that quality, renewal/regeneration and economic growth.

Members were informed that as the SOA was a major strategic project, it was being overseen and lead by the Council’s Assistant Chief Executive, who chaired the Project Board. 

Councillors noted that there were revised governance arrangements to ensure inclusiveness and the Major Consultancy Group continued to work with customers, partners and other stakeholders to ensure the best option for the future of the housing stock was identified.

In respect of self-financing, Members learned that DCC was on track to be able to implement self-financing arrangements in April 2012 and had developed a 30 year Housing Revenue Account (HRA) Business Plan and a 5 year Medium Term Financial Plan (MTFP) for the HRA.  Councillors were made aware of the work undertaken to set rent levels and to agree service charges together with the decision making on borrowing in order to make the settlement payments to the DCLG. 

Members noted that the MTFP had projected a need for £3 Million of savings to be made within the Housing Service, with the current position being that £2 Million worth of savings had been achieved, meaning the Housing Service was on track to meet its MTFP obligations.  The Housing Stock Options Manager explained that there would be also a need to ensure that the future management arrangements were also robust so that any possible further savings beyond the £3 Million for the MTFP could be achieved, with a transparent review of self-financing looking at those management arrangements.

The Housing Stock Options Manager added that, as previous stated, Government had announced that they intended to continue to offer a programme of stock transfer, guidance was now scheduled for April/May 2012 and DCC was working with the appointed Advisors to revisit the financial projections and produce transfer business plans for the housing stock. 

The Committee were made aware that there were 8 recommended project objectives, for example keeping local services and regenerating areas, and there was a need to continue to work in partnership with stakeholders in order to pin down the best transfer option. 

Councillors learned that DCC was in regular contact with DCLG and the Homes and Communities Agency (HCA) with DCLG being very interested in the SOA Project being carried out by DCC as it was the largest being carried out in the country.  The Housing Stock Options Manager added that a Business Case for Stock Transfer would be submitted in December 2012, and this mirrored the commented made in the earlier presentation by Professor S Fothergill in respect of the Government looking for “opportunities” rather than at issues of deprivation.

The Committee learned that the process of engagement with key stakeholders would not be slowed down or cut back, with regular newsletters, briefings, additions to the websites and meetings with Tenants and Residents’ Associations to continue, the DCC Design Team currently working on the newsletters.  Councillors were also asked to note that the use of the Independent Tenant Advisor (ITA) would continue, in line with established best practise, to ensure independent and impartial advice and support for customers.  The Housing Stock Options Manager added that the Communication and Consultation Strategy for the SOA Project would be revised in order to reflect the next phase of the Project.

The Housing Stock Options Manager concluded by outlining the next steps of the SOA Project, those being:

·        To implement self-financing arrangements from April 2012

·        To refresh financial projections and finalise the outcomes DCC and stakeholders expect to achieve from a stock transfer

·        To establish groups to complete a review of existing housing management arrangements, develop comprehensive long term investment plans and determine the best transfer option

·        To submit a Business Case for Stock Transfer to the HCA and DCLG by the end of December 2012

The Chair thanked the Housing Stock Options Manager for her presentation and asked Members for their questions.

Mr A Kitching asked whether there would be any “council houses” in 5 years time and whether there would be protection for sheltered housing as there was for the Transfer to Sedgefield Borough Homes.  The Housing Stock Options Manager noted that depending upon the outcome of the SOA Project; it could be that there would be 19,000 albeit under whatever new management arrangements are deemed to be appropriate.  In relation to the issue of sheltered housing, the Housing Stock Options Manager explained that any protection could be wrote into new management / stock transfer agreements, however, advertising this to the public would be important so that they are aware of the protection being afforded to those valuable assets.

Resolved:    

(i)         That the Economy and Enterprise Overview and Scrutiny Committee   note the information provided in the presentation in relation to the    Stock Options Appraisal Project.

(ii)        That the Economy and Enterprise Overview and Scrutiny Committee   receive a further progress update in relation to the Stock Options      Appraisal Project at a future meeting.