Is this the end of Brent Housing Partnership?

There was a bit of a jamboree at Brent Civic Centre as Brent Housing Partnership showed their film Stories of Brent LINK but beneath the public relations glow things are not well with BHP, Brent Council's arms length management organisation (ALMO) for housing.

BHP was put under 'special measures' in March due to under-performance. LINK

Now the Brent Cabinet is to consider the future of the organisation LINK in the additional context of the government's housing reforms  which include high value council housing disposal,where the council is forced to sell high value stock;  'pay to stay' in which council tenants with an income of more than £40,000 income will have to pay higher rents from April 2017 - moving towards market rents, 'right to buy' and a 1% reduction in social rents.

In addition the volume of housing stock has been reduced by the South Kilburn regeneration and redevelopment and existing right to buy.

A further pressure, the potential cost of which is not revealed, is a claim for 'significant additional costs' from Wates, the BHP's asset management service which has been carrying out extensive refurbishment on the BHP's estates. 

The question arises as to whether the BHP is fit for purpose in this new situation. Officers recoemmend that the period for BHP's Recovery Plan be extended until September 30th 2016 while a review of options takes places.

These are the options:

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Continuation with BHP .  

   
3.29 Formally this is the most straightforward option but practically will require further and significant reform to assure continued progress, to generate significant cost reductions and to achieve wider outcomes. New operating arrangements and service structures will be needed to achieve this. Preliminary examination of a new Target Operating Model has recently been completed that may provide an initial basis for the development of these. In addition a reformed council client-side function will be required to provide strategic direction and greater assurance, and opportunities to generate additional efficiencies and savings through improved integration between the council and BHP will also be needed. The scope of services to be provided will also need to be considered including what contribution BHP could, in time, make in other areas to the council’s objectives.

 
Bringing the Service Back In-house

 
3.30 The majority of stock-holding councils provide housing management services directly. Simply bringing the service into the council will not in itself assure improved performance and while there may be some direct savings the challenge to generate significant further savings and service could be more fully integrated across a range of council services and functions and this could also support the achievement of wider outcomes but specific expertise and coherence in the service would need to be maintained

3.31 A number of councils with ALMOs have in recent years brought the service in- house. This would require termination of the existing Management Agreement. From the experience of other authorities a minimum period of 6 months would be needed and in a number of cases the process has taken a year. Consultation with tenants and leaseholders would be required in advance.

Service Provision through a Partnership

3.32 A housing management partnership would be formed with another housing management provider with an existing high-quality housing management service in order to raise performance and generate significant economies and efficiencies. This could be a significant local housing association provider. The scope of the partnerships activities (e.g. whether it included affordable housing development) may also be a significant consideration in choosing a suitable partner and in the extent of interest from prospective partners.

3.33 There are two main routes by which this partnership could be established. The council could directly select a suitable partner in place of BHP and enter into the necessary legal arrangements with them to establish a jointly owned housing management company. Alternatively BHP could itself be converted into a partnership housing management organisation, jointly owned and governed by the council and the selected partner. Again consultation with tenants and leaseholders would be required in advance.

4.0 Financial Implications

4.1 The HRA expenditure Budget is £56.9m. This budget is used for the management and maintenance of the HRA stock and for the repayment of the HRA debt. BHP Management Fee for the current year is £7.5m. This fee is for managing and maintaining the HRA properties on behalf of the Council.

4.2 The Housing and Planning Act will have a significant impact on Brent’s council housing and its financial position in coming years. The implications for which are currently being scoped with more comprehensive analysis to follow once the details are published.

4.3 The three options outlined in this report for the management of the council’s stock will each have differing implications in terms of the impact on the HRA and will need to be developed through the formal review process. However, it should be noted that all of the options will result in an initial cost of change, which will need to be factored into the each appraisals.