Councillors received the enclosed letter today regarding possible changes to the way that Council owned housing is managed in the county. Residents are to be consulted on this.

MESSAGE:

I would like to update you on progress with the Council’s appraisal of the options available for the future financing, ownership and management of its 19,000 homes.

Since April 2011 the council has worked very closely with its three housing management organisations (Dale & Valley Homes, Durham City Homes and East Durham Homes) and with expert financial advisers Consult CIH to develop a 30 year business plan and to identify potential options for the future of council housing. The business plan will enable the authority to understand how it can repay the £216M of HRA debt allocated to the authority (in order to introduce a new self financing arrangement for council housing) and determine how much investment is required into the housing stock and services over the long term. We’ve found that:

·         We need to invest around £797 million in our homes over the next 30 years. This works out to around £40,000 for each home; and

·         We must spend around £388 million on our homes in the first 10 years of our business plan. However only £333 million is available to us (in rents, funding and other allowances). This leaves us with a shortfall of £55 million, which rises to £63 million with inflation.

The shortfall between the resources available to the council and the investment it needs to make in its homes unbalances the 30 year business plan. The council will also struggle to afford improvements in the first 10 years of its business plan because the Government will limit its ability to borrow above the £216 million of debt they’ve allocated to the authority.

Consult CIH and the council’s legal advisers Trowers and Hamlins have identified a number of potential options to develop a balanced and affordable business plan that enables the council to repay its £216 million debt and to invest in its housing stock. The options are:

·         The council retains ownership of the housing stock and stays the landlord. This would mean the authority would need to make efficiency savings and could mean that it would need to defer some works to customer’s homes. The council would not be able to borrow privately and so a basic improvement programme is all the authority could commit to over the next thirty years.

·         The council could transfer the ownership of its homes to an existing or new Registered Provider (Large Scale Voluntary Transfer) or to a newly established council owned community owned organisation (CoCo). Transfer of ownership would mean that the new owner of the housing stock could borrow above the debt cap and a more extensive range of improvements could be undertaken to customer’s homes and neighbourhoods. At the moment the Government have not issued any policy guidance on their approach to stock transfer. The council will meet with representatives of the Department for Communities and Local Government in August 2011 to discuss their views.

It is important to note that all of these options would mean that the council’s homes will staff as social housing with a landlord who must (by law) operate as not for profit.

The council is currently consulting on these options with customers, staff, Board members, Councillors and other key partners. Details of a full consultation programme (on the options for the future financing, ownership and management of the Council’s housing stock) have been published and sent to Councillors representing communities living in affected areas.

There are also a variety of opportunities for all councillors to get involved in the consultation process. A suggestion box is available in the Member’s Library and a newsletter will be issued shortly. The option appraisal team will be available in the Durham Room to answer questions from 10.00am on Monday 8 August 2011. Two focus groups will also be held on the 8 August at 10.00AM and at 2.00PM. If you would like to attend a focus group please contact. (FOR COUNCILLORS)

In the meantime the Council’s webpage is regularly updated with information relating to the stock option appraisal. You can also keep up to date on the project’s progress by logging onto a website for customers –www.itsyourhomecountydurham.org

You can also follow our progress on twitter and facebook.

If you have any questions about the stock option appraisal or you would like a copy of the consultation programme  for customers and Councillors please contact the Stock Option Appraisal Project Team on 0191 3018220 or e-mail either housingdirections@durham.gov.uk