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Delivering our independence:A self-contained account for
TMOs
John Paul Maytum, Leathermarket JMB
Martin Green, LB Southwark
A mandate for independence
• Residents vote for TMOs because they want us to do things – differently and better than the Council
• Standard management agreement ties TMO financially to the Council – dependency not independence
• TMOs have tried various models to get more financial independence: ALMO, HA stock transfer – these are now less attractive
Leathermarket JMB
Southwark & the JMB
• Inner city London TMO – in LB Southwark
• Established 15 years
• 1,100 tenants & 400 leaseholders
• Satisfaction 10% higher than council-managed homes
• Strong support for TMOs from councillors
• Collect nearly £6million rent – get back £2million in allowances
The answer: a self-contained TMO account
• Change financial arrangements so the TMO gets our fair share of the HRA – nothing more, nothing less
• Provide financial independence for TMO
• Provide better accountability for residents
• Lets TMO plan and control our destiny better
How the self-contained account would work
• TMO keeps all the rent & leaseholder income
• TMO meets all the costs (including paying off the debt on JMB homes)
• TMO pays for and organizes major repairs and improvements
• TMO financially accountable to Council
Benefits of theself-contained account
• TMO gets clear reward for good performance & voluntary effort
• Residents think JMB keep 100% of rent and service charges- but actually keep less than 40%
• Allows a 30 year asset management strategy
• Stops regular arguments over allowances and costs of services
Key principles
• The Council remains the landlord for tenants and leaseholders
• TMO will develop a business plan/ comprehensive stock condition survey to deliver major repairs/ improvements
• Strong and rigorous financial accountability to the Council and residents
Income
• Rent
• Leaseholder income for services provided by TMO
• Other income (e.g. phone mast rent)
• HRA subsidy
• Proportion of local authorities’ annual permission to borrow for major repairs
Expenditure • Running costs
• TMO percentage of debt repayment over 30 years
• Repayment of new borrowing by the Council for the TMO major repairs
TMO CONTRACTS BACK TO COUNCIL:
• Council services essential to TMO e.g. rent setting, building insurance
• Services that the council can buy cheaper - such as fuel
Issues
• Effect on HRA: at a time of cuts
• What % of central costs should the TMO pay?
• Political consequences of different TMO approach
• Need for trust and understanding between council and TMO
• Need for good governance and financial skills
Is there another way?
• Local authority: ownership and management (now only 34%)
• Stock transfer: new body ownership and management (1.2m homes)
• ALMO: local authority ownership, arms length management by ALMO (1m homes)
Stock transfer
2010 Research shows:
• £19bn invested in major repairs, but £5bn public subsidy required
• Rent guarantees kept for existing tenants
• Cost £430 per property (National Audit Office 2003)
Pawson & Mullins
Stock transfer/ ALMOs
Research shows:
• Effective vehicles for delivering major repairs/ improvements, but……
• Debate about positive performance/ culture change: based on criteria of business efficiency & local control
• Top down approach: could community gateway/ mutual models be an alternative?
Pawson & Mullins
Another way?…we’ve missed the boat
Delivering the Account
• TMO project team working on the proposal
• Council will decide in October 2011 whether we can go ahead from 2012/13 onwards
Self-contained Account
• Local control – delivers the TMO promise
• Allows long term planning – stops short-term rows with the council
• Establishes link between finance & service – improves accountability to residents
• Start up costs negligible compared to stock transfer/ ALMOs
• Money goes to residents and services, not consultants
Any questions?
www. leathermarketjmb.org.uk
enquiries@leathermarketjmb.org.uk
Facebook: LeathermarketJMB
Twitter @LeathermktJMB
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