Councils must become “more business-orientated” in managing housing stock - QC

Councils need to run their council housing with a more “business-orientated mind-set”, according to a report produced for Southwark Council by an independent Housing Commission chaired by leading housing and social welfare law QC Jan Luba.

The QC - arguably the leading claimant silk in housing cases - and the other 10 members of the commission were asked to take a long-term, 30-year view of options for the council. The report will be of interest to other authorities as Southwark is able to consider a broad range of options because, as the report says, despite having to pay for past investment mistakes, it is “in an extremely favourable position compared with other landlord authorities”.

Among the conclusions of the report are that the council must:

*    improve its housing repairs and maintenance service
*    strengthen tenant and leaseholder engagement
*    increase its strategic and project management capacity
*    manage its housing finances and borrowing “in a manner appropriate to a landlord with significant housing assets and rental income”
*    recognise that it cannot meet all the housing demand in the borough but could explore proposals with other boroughs for a new approach - including pooling land and housing assets to create common housing investment funds
*    recognise that its future housing investment plans need to be “not only affordable and sustainable, but deliverable and effective”
*    accept that it “will be paying for the legacy of its past investment strategy mistakes for years to come”

Rather than being prescriptive, the report presents numerous options and scenarios. These include:

*    refinancing historic housing debts (“all of which have interest rates above current public-sector borrowing rates”)
*    earning extra income from planning gain and from void and land sales
*    co-ordinating its plans with neighbouring boroughs and the Greater London Authority (“not least because...welfare reforms are set to cause more cross-borough movement of low-income households”)
*    probably accepting that extreme investment scenarios (“such as doubling the stock or transferring the stock”) are unlikely
*    chosing between long-term options to maintain stock (at the current level of around 39,000 homes) or to decrease to 30,000 or 20,000 homes over the next 30 years. *    considering introducing reward and loyalty schemes for tenants (perhaps based on a loyalty card principle to give “bonuses to good customers”)

Southwark Council - which is formally receiving the report at its October 23 cabinet meeting - says the report “breaks new ground in its analysis of the challenges and opportunities facing Southwark and will be of great interest to all local authorities that retain a large housing stock”. Councillor Peter John, leader of Southwark Council, says: “This research will be the catalyst for opening out the discussion more widely and to develop a long-term strategy for Southwark. A wide reaching community engagement plan to discuss the report over the coming months will be agreed by Cabinet in December.”

Neasa MacErlean