ALMO funding issues prompt move to insource housing services

The only arm’s-length management organisation to oversee homes in multiple councils faces closure with all the councils involved intending to take the service directly in-house.

East Kent Housing (EKH) serves Canterbury City Council, and Dover, Folkestone & Hythe and Thanet district councils.

Canterbury and Dover have already decided to leave the ALMO and the other two councils were expected to take the same decision this week.

SAVE THE DATE – LATIF NORTH
March 25th, 2020, Manchester
Council treasury investment & borrowing

EKH manages some 17,000 homes for the councils but has been plagued by controversy over safety issues.

It is working with the four councils’ section 151 officers to identity the cost of dealing with EKH’s safety issues, put in one report at £1m.

A report to Canterbury’s policy and resources committee noted: “There were serious issues of non-compliance on the part of East Kent Housing in relation to tenant health and safety.

“More generally, there have been ongoing concerns regarding the performance of East Kent Housing in terms of asset management, procurement and the delivery of the capital programme.”

The report said that in July the joint East Kent Audit Partnership found “major failings by EKH in relation to the internal control of health and safety including faulty emergency lighting, carrying out electrical safety checks, fixing faults found in lift inspections and taking action following regular legionella risk assessments”.

Auditors further found “limited assurance” or “no assurance” on these areas of compliance, and recommended urgent management intervention.

It had earlier emerged that there were serious issues of non-compliance in EKH’s management of gas safety.

Reports to the other three councils all raised similar concerns.

A report for Folkestone & Hythe’s cabinet this week – again in similar terms to those for other councils – suggested EKH had suffered from inadequate funding, with its management fee income rising only from £8.62m in 2011-12 to £8.90m this year.

It said: “For a number of years, staff cost increases or pay awards were directly absorbed by EKH and this has been addressed recently with a proportion of the additional funding made available for the improvement plan for this purpose.”

Any proposed future operating model, should be considered against each council’s HRA business plan in terms of viability and sustainability.

The councils will still have to deal with safety issues left by EKH, which commissioned a report on these from the consultancy Housing Quality Network.

These findings have been challenged by the councils which have in turn commissioned their own investigation due to report by late November 2019.

Folkestone & Hythe’s report noted: “The councils continue to work closely with the Regulator of Social Housing to ensure continued compliance.

“The matter has challenged the relationship and trust between council members, officers and EKH as a result of a decreasing standard in contract and performance management and adherence to statutory health and safety compliance.”

It said EKH was working with the four councils’ section 151 officers to identify the additional staffing resources required to address these issues and initial estimates had identified an initial investment in excess of £1m across the councils being needed, “which may rise as a result of ongoing compliance works. “

Among advantages cited for the in-house route by all the councils were having direct control and direction of the service, faster and more responsive decision-making, service improvements shaped and delivered locally and savings from removing a layer of management.

The Room151 Weekly Newsletter covers local government treasury and pension investment, funding, development, resources and technical finance. Register here. 

The LGPS Quarterly Briefing focuses purely on pension fund investment. Register here.