Opting for a better future

As a stock-retaining local authority finding the cash to invest in homes has sometimes been tricky for West Lancashire Borough Council but if plans to become self-financing are successful that could all soon be about to change

The council hopes that opting out of the controversial Housing Revenue Account (HRA) subsidy system and adopting a self-financing model will allow it to have greater control over its finances, which will be of benefit to its customers.

But while this may sound like a simple enough plan the major sticking point for local authorities choosing to leave the system is that they are obliged to take on a share of its debt if they choose to opt out.

West Lancashire is currently waiting to see how much of that debt it would have to adopt but as executive manager Bob Livermore explains, if the figures stack up the benefits for the council could be massive.

“We are awaiting an offer letter telling us the amount of debt that we will have to take on as we don’t know what that would be at the moment,” he says.

We currently pay the Government £5.3 million, so if we assume we have to take on £100 million of the debt, it sounds like a lot of money but with interest rates at four per cent if I was to service that debt as a mortgage and not pay anything off the capital that would cost £4 million per year. We would then have £1.3 million per year to do something with and we can make a decision with tenants on whether to use that money to support borrowing and accelerate the work that tenants would like us to do or just invest that £1.3million each year.

“In broad terms we are not frightened by the debt, it just depends on the figures and whether they stack up. It would be a huge change for us to have that level of money to invest in our properties. Also, this would give us the opportunity to operate like a proper business and plan ahead. The way the current system works means we don’t know from year to year what we are going to receive and what rent increase the Government will stipulate.”

Livermore also accepts that there will be pitfalls and if the local authority removes itself from the system, it needs to keep a certain amount of money aside to cope with any unexpected developments that may arise.

“Once we opt out, if the Government imposes higher standards for the future, for example greater energy efficiency standards, which landlords are obliged to meet, if it is not in our business plan then there will be no additional money set aside for it,” he says. “So in order to protect ourselves for the future, we need to make sure there is a contingency set aside to take on the things that will change during the course of our 30-year business plan.”

Whether or not West Lancashire opts out of the subsidy system will obviously have a bearing on future housing services but one thing is for certain – the council is looking to move beyond the Decent Homes Standard.

“Our efforts have been focused on trying to meet the Decent Homes Standard we are on target to do that by the December deadline,” says Livermore. “But I think the biggest watershed for us at the moment is the changes to the subsidy system.”

Looking ahead to post-Decent Homes the council has been consulting with tenants to see what further improvements they would like and where they want the focus to be.

“This year we are in the position where we can pick a ‘tenant priority’ for investment and I think we will be looking at giving people more energy efficient homes with the money that we have available for the future,” says Livermore.

“The sorts of things that we are talking to tenants about include installing double glazing, improving front and back doors which can sometimes be draughty and replacing electric storage heaters with an alternative that is cheaper to run.”

The council has already installed cavity wall insulation and roof insulation into most of its properties after receiving a grant from Scottish Power.

The council is proud of the improvements it has made in recent years. In 2005 a reorganisation of
housing service delivery created the perfect vehicle to improve performance in a number of key areas The collection rates for rent increased almost immediately and the level of current tenant debt reduced significantly. Perhaps the biggest impact though was in relation to the number of properties that were empty and how quickly the organisation got these ready for reletting.

Livermore recalls: “This was a real area of concern for me. In 2004/5 we had 260 empty properties and it was taking an average of 115 days to repair them and find a new tenant but this has changed significantly. In January this year we had only 76 empty properties and our outturn figure for turn around times was an average of 32.5 days.”

He puts the improvements down to hard working staff, Livermore continued: “These improvements could not have been possible without dedicated and hard working staff, who have raised the bar considerably and who are committed to providing the best possible services with the limited resources available”.

Maintaining the standard of existing properties is only half of the story in the council’s mission to provide affordable homes and it is about to embark on its first new-build programme which has been made possible by a change in the way that Government funding is allocated.

West Lancashire successfully bid for a £900,000 grant from the Homes and Communities Agency (HCA) and the rest of the cash for the £1.8 million scheme will be supplied by the council, which will take out borrowing based on the future rental income of the properties. The scheme has been granted planning permission and the contract to build the homes is currently out to tender.

“It is the first new build scheme that we have had as a local authority because local authorities weren’t allowed to apply for the grant mechanism,” explains Livermore. “We are delighted that they [the Government] have created a level playing field and we are also delighted that we are the only district local authority in the whole of Lancashire to get funding for a scheme, which is a feather in our cap.”

The scheme will comprise 17 properties, a mix of houses and bungalows,built on one of the council’s existing estates. The site was originally home to a mix of garages and small single-person bungalows but the properties had proved unpopular with residents because they were not suitable for couples and the area had become a target for anti-social behaviour. As a result the buildings were demolished, leaving the site vacant.

The aim is to target existing tenants, who live in larger homes but may be looking to downsize, in a bid to free up larger properties for people on the waiting list and a key factor for the council is to make sure that the properties are built to Secured by Design standards.

Livermore hopes that the scheme will be the first of many for West Lancashire Borough Council but future new-build programmes will be dependent on Government grants and it is not yet clear if such funding will be available.

“We hope that we can make a success of it so that the Government can consider it as an option for the future because they opened the door and shut it again,” says Livermore. “If it is successful there is no reason, I believe, why local authorities can’t get back into house building, if it suits their strategic approach.”

As a local authority rather than a sole housing provider West Lancashire’s remit, of course, extends beyond the provision of affordable homes, as Livermore explains: “Being a local authority landlord we are also in the business of promoting the strategic side of housing, so our mission statement is to provide good quality accommodation whether that is in the council sector or private sector. But obviously as a landlord we are interested in providing affordable housing for people that need it.”

The council has led plans to create a £17 million older person’s village in Ormskirk offering apartments for rent, sale and shared equity. The scheme, which will be managed by Arena Housing Group, will be part-funded through the Department of Health, as well as benefitting from a housing association grant.

“We have got a population profile in West Lancashire which shows that we have got an ageing population and the aim of this development is to give people a chance to move into a community of like-minded people,” explains Livermore. “There will be leisure facilities on site so they will be able to go to the gym, for a pint of beer and for a meal all within the complex.

“There are also Extra Care facilities for those that need it and the logic isonce people get on site if they need care they don’t have to move house, which is a concern for a lot of people.”

The people at the heart of all of the council’s housing-related activities, be it maintenance or new build, are the residents and making sure that tenants are fully involved in projects and happy with the way that money is being spent is key.

The council has currently got a surplus of £475,000 and has been consulting with residents to establish where they would like to see the money spent. Council members will now vote on the tenants’ recommendations.

“There are four areas where tenants have said they wanted to see investment brought in,” says Livermore. “They asked for a rent and money advisor to advise tenants who are in financial difficulty and they wanted more money to be invested in disabled adaptations, the repairs service and improving communal areas of flats.”

As a council West Lancashire obviously operates differently to a housing association but it still does its upmost to make sure that tenants are able to have their say, as Livermore explains: “With us, rather than having a board it is the council that makes decisions, but members agreed recently that they would have a sounding board of tenants so before a report on housing matters goes to Cabinet for consideration we meet with the tenants and ask them for their opinion, so that members can consider their view before making a decision.

“Tenants accept that they won’t always get what they want but they welcome the fact that they are able to make comments and that members will listen to their views before making a final decision.”

Tenants were heavily involved in choosing the council’s contract partners for improvement works four years ago but Livermore explains that it is often a fine line between accommodating tenants’ wishes and working within the overall budget. He said: “Whenever we come to renew our contracts the first thing we will do is go back to our tenants and ask them if we should stick with our existing specification or improve it. We will then go through quite a tricky discussion because if we improve it there could be cost implications and while everyone wants improvements we have to balance that within the overall budget, so we always try to have a mature discussion and, in the main, we do achieve that.”

Local authorities will come under the remit of the Tenant Services Authority from April this year and part of the regulatory framework is to agree local standards with tenants. The council will be working with tenants to see how standards can be improved and has set aside £25,000 for additional participation services as part of that process.

Livermore is keen to point out that improvements are constantly being made. He says: “We are always looking to improve what we do. We recently carried out a review of our repairs service and we were able to put some improvements in place and to reduce costs.”

He explained that reducing costs, where possible, goes hand in hand with improving services. “While we are always looking to improve services, if we can make some efficiency gains at the same time then we will grab them so that tenants can benefit, and the money can be better spent elsewhere on priorities that have been agreed with tenants.

“For example, had we not gone through that review process with repairs instead of telling tenants we had extra money to spend and asking where they would like to see it spent we would have been going to them and saying they can’t have the current level of provision so where would they like to see us cut back.”

Tenants are obviously at the heart of this ambitious council and everything that it does. Whether or not it chooses to opt out of the subsidy system remains to be seen and any future activities will of course be dependent on the route that the council takes. But one thing is for sure West Lancashire will continue to strive to be the best that it can be.