Delivering our independence A self-contained account for TMOs

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 £ 6 million rent – get back £ 2 million 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 the self-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. 2 m homes) • ALMO: local authority ownership, arms length management by ALMO (1 m homes)

Stock transfer 2010 Research shows: • £ 19 bn invested in major repairs, but £ 5 bn 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 shortterm 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 Facebook: Leathermarket. JMB enquiries@leathermarketjmb. org. uk Twitter @Leathermkt. JMB