No 9 – WHQS & the options: the
‘No Vote’ Local Authorities
9 – WHQS & the options:
The ‘No Vote’ Local Authorities
Introduction
CIH Cymru / i2i provides support to housing organisations to help them achieve WHQS. This includes working
with all stakeholders – tenants, staff and elected members – to be fully involved as well as maximising the
jobs, training and wider regeneration opportunities that housing investment provides. This briefing paper will
focus on the support required from local authorities who have received a negative ballot to their Housing
Stock Transfer proposals.
The Welsh Government initially required all social landlords in Wales to achieve WHQS by 2012. In some
cases this target has been extended by agreement with Welsh Ministers to 2020. All local authorities in Wales
have now either been through the process of a housing stock transfer ballot of their tenants or have opted to
retain their stock. The five local authorities who have received “no votes” - Caerphilly County Borough
Council, Vale of Glamorgan Council, Flintshire County Council, Wrexham County Borough Council and the City
and County of Swansea – have faced the common challenge of developing viable alternative proposals to
deliver WHQS.
In May 2012 Huw Lewis AM, Minster for Housing, Regeneration and Heritage, announced that a Ministerial
Task Force was being established with an initial focus on working with authorities facing difficulties in
achieving the Standard and helping identify options available to them.
In June 2012 CIH Cymru / i2i organised a Chatham House Capturing Lessons session for all five authorities
involving Heads of Housing & Finance and this Active Response is a reflection of discussions held. It aims to
reflect comments and suggestions as well as identifying a number of recommendations to help the
authorities achieve WHQS.
It is important to stress that tenants in each of the five authorities gave a clear mandate for the retention
of the stock and each promoted good practice and followed all of the relevant guidance in an open and
transparent manner throughout the option appraisal and ballot process.
The comments and themes contained within this report ranged from those having consensus from the
entire group to views expressed by a minority of participants and where appropriate we have made
reference to this.
Rachel Honey Jones
Email: [email protected]
Mobile: 0750 735 1906
CIH Cymru / i2i
October 2012
1. Funding:
Housing Revenue Account Subsidy Review
Opportunities for Borrowing
2. Innovative Options:
Land and Planning
Partial Transfer
An All Wales RSL
ALMOs
Collaboration
3. Other issues
Political commitment
Support required
Wider strategy
1. Funding
By 2012 sixteen of the 22 local authorities in Wales had been through the housing stock transfer ballot
process as the preferred option for fully delivering WHQS investment with 11 having received tenant
consent for a stock transfer. The five “no vote” authorities have inevitably had to review options for
achieving WHQS and in particular look at the financial options available.
Housing Revenue Account (HRA) Subsidy Review:
There was consensus that a swift resolution is required to current negotiations with Treasury to enable
local authorities to factor any changes into their future planning on WHQS works. Some individual
concerns were aired:
There was consensus that Councils with stock should have a seat around the table during negotiations
with WLGA having a key role. There was also a view that the HRA should be able to focus more on
regeneration & development in the future.
Opportunities for Borrowing:
Linked to the HRA subsidy review is the notion of borrowing for local authorities. The majority of
discussion focused around the lack of borrowing headroom (especially since the Prudential Code for
Borrowing 2004), meaning that for some prudential borrowing is not an option.
The Major Repairs Allowance (MRA) currently helps authorities greatly in their achievement of WHQS
work and the fact that Welsh Government is committed to continue to support was welcomed. There is
understandably a concern that with the review pending, there is a risk to any future borrowing.
“The Welsh Government policy is to encourage councils to improve their housing stock to
meet the Welsh Housing Quality Standard by whatever means they consider appropriate.
The transfer of stock to a Registered Social Landlord (housing association) is one of the
available options.”
5 February 2008
“Will redistribution be based on need?”
“Will it adversely affect “no votes”, and if so, what support will be available?”
“We are unsure if Welsh Government truly understand our financial position, there has been talk
of ‘support’ but the support we need is financial”- Head of Housing
“Can the risk be shared?” – Head of Finance
“Could, should, would we allocate borrowing headroom and MRA on the basis of need if it was
possible? If you have a three-way deal between Westminster, Welsh Government and Local
Authorities, then Welsh Government could allocate headroom debt and MRA differently” - Observer
1. Funding cont.
A key ask is whether the Welsh Government would be willing to underwrite any money that was
borrowed. This would be more palatable to local authorities finance departments. Due to the current
borrowing cap and lack of headroom could Welsh Government introduce a policy to slightly loosen
these constraints to allow for greater borrowing in order to achieve the Standard? Is there the
possibility of any grant funding for particular aspects of delivering the Standard, such as the tenant
empowerment grant (TEG) programme administered by CIH Cymru? Are there any options for the
exploration of any other innovative approaches to new financing models?
A key challenge faced is the amount of revenue contribution that is committed to the capital
programme. Improving service delivery is a key requirement of tenants—but with the amount of
revenue support (plus other services and corporate commitments) many have little money to achieve
this. All authorities have already reduced costs significantly to ensure efficiency savings. These have
been ploughed back into the HRA enabling WHQS work to take place; however this has lead to a drop
in service in some areas of housing e.g. closure of area offices, redundancies and restructures. Rents
are at benchmark in the majority of authorities and cannot gather any additional resources to place
within the WHQS budget.
There was also a suggestion that the “no vote” authorities could participate in a business plan
benchmarking exercise with LSVTs and retention authorities. This would ensure that the assumptions
within these business plans match those which have already been through the process, and to ensure
that there is no further uplift in costs once the plans have been agreed by Welsh Government. This
would mean authorities knew exactly what capital was needed to deliver WHQS. One such issue that
has been seen anecdotally with LSVTs is that repair costs have gone up as a result of improvement
works, whereas many business plans assumed these would go down. Comparing experiences will help
challenge these assumptions and ensure any mistakes are not replicated.
Improving service delivery is a key driver for all local authorities, but there is often a lack of corporate
support for diverting funding from other activities that the local authority is responsible for. Does
there need to be support from Welsh Government to ensure the responsibility for the achievement of
WHQS is not just that of the Housing department, but of the local authority as a whole?
Some concerns were expressed around additional funding of £3.8m being made available (as per the
Wales Infrastructure Plan, Annex 1, page 135) to cover costs that had not been agreed up front. It was
felt that in the future any funding for Housing, and in particular WHQS works must be agreed prior to
any projects commencing as to not reward authorities or organisations going over budget.
“We need to manage expectations with Members” – Head of Housing
1. Funding cont.
Summary and Recommendations:
Quick resolution of HRAs / MRA issues and a clear timetable to allow local authorities to
plan delivery of WHQS in a timely manner
Better involvement of “no vote” local authorities in the HRAS review process; WLGA to
also be involved
Need to safeguard “no vote” / retention authorities from any HRAS changes
Open discussion on whether redistribution should be based on need
Exploration of future borrowing headroom
Recognition that reduction of internal costs have allowed efficiency savings which have
enabled some WHQS works to take place but at the cost of service delivery
Clear message from Welsh Government that WHQS is a corporate local authority priority
Exploration of using HRA to fund regeneration & development
Identification of new models of financing including grant funding
Benchmark “no vote” authority business plans with those who have already been
through the improvement programme to ensure assumptions are realistic
2. Innovative Options
Some local authorities will have difficulty in reaching the Standard given the current financial constraints. A
number of innovative ideas were raised by participants:
Land and Planning:
When a local authority is approving planning permission for new builds, under section 106 agreement, could
developers and RSLs be asked to fund the improvement of adjacent properties? Would it be possible to ring-
fence a percentage of the capital gained from selling land for a new build programme within the local
authority?
Partial Transfer:
Where transfer has been rejected by tenants, is it possible that a partial transfer of assets such as those
properties in the greatest need of investment or specific estates / geographical areas could take place?
Historically partial transfer has worked well in areas where there is a strong community identity and there is
genuine partnership between the local authority and an RSL. Could this be via a leasing arrangement with an
existing RSL? If Welsh Government considers this an option then could it be included in the Housing Bill?
There was a concern that where partial transfer is proposed there may need to be a ballot all residents, not
just tenants of the properties
An All Wales RSL
There was a suggestion that one of the possible options that could be explored would be an all-Wales RSL.
This might be set up as community mutual or a cooperative to take on housing stock where there is no viable
plan to achieve the Standard, are hard to treat or there are non-acceptable ‘fails’. More detail will be needed
to carry this suggestion forward as we are unaware of any currently available models.
“If you want an innovative model, it needs to be in the Housing Bill, not discussed after” – Observer
“Rationalising resources by results” – Observer
“If we, tenants and Members know that the only way to bring certain houses up to WHQS was through
a partial transfer, then a Welsh Government vehicle would be more palatable, and would reduce the
average cost per unit significantly, thereby allowing us to upgrade the other homes at a fraction of the
overall cost” – Head of Finance
“£12m will need to be spent across our entire stock to bring the non-traditional housing up to WHQS”
– Head of Housing
“Partnership wasn’t seen as a choice, it was seen as the only way forward” – Head of Housing
Arms Length Management Organisations (ALMOs):
ALMOs have been seen to work well in England but tenants and members may not find it an
acceptable model due to previous ballots against transfer. In addition is a review or exploration of this
and other ‘third options’ even permissible owing to the requirement of capital and incentives to
achieve this? Members need to be given the full facts on the implications of an ALMO versus. This
should include information on the current business plans, conditions of the properties as well as
Welsh Government’s views. i2i could be used to deliver Member briefings and would be happy to
support and facilitate these.
Collaboration:
Local authorities feel that closer specific support is required from Welsh Government to foster a
working relationship, to enable practical discussions on non-acceptable business plans, and what the
options for these are. In order to achieve economies of scale should local authorities be looking at
joint procurement exercises? Wrexham and Flintshire are already pursuing this idea.
A partnership approach with housing associations in the local authority area could also help with the
welfare reforms / under occupancy issues, as seen with Denbighshire County Council & Cartrefi
Conwy, for example, by having a shared housing register. Partnerships such as Gwynedd County
Council & Isle of Anglesey County Council, or City and County of Swansea and NPT Homes should be
seen a way forward as noted in the Homes for Wales: A White Paper for Better Lives and Communities.
Local authorities could have a partnership with transfer and traditional RSLs on new build schemes to
allow for properties in the locality to be upgraded to WHQS as part of the contract.
2. Innovative Options cont.
“We don’t see the ALMO model working due to the lack of capital investment” - Head of Housing
“We have identified tenants who are under-occupying, which amounts
to approximately 2300 properties. We are hoping [political support permitting] to set up
a team of debt advisors to work with these tenants who could be required to contribute
an additional £1.3m per annum to meet their shortfall in benefits" – Head of Housing
“We don’t have the stock numbers to move people who are under-occupying, and foresee
a massive problem of current tenants asking to move. Due to the proposed reforms, we
have also seen a higher percentage of refusals of two bed accommodation from homeless,
single individuals with no children.” – Head of Housing
Summary and Recommendations
Local authorities, developers and RSLs should explore innovative approaches, such as
making land available for new builds ,receiving in return improvement works to local
authority properties in nearby areas
Partial transfer options should be explored either to an existing RSL or by leasing
arrangement to a cooperative model set up by the local authority?
Consideration by Welsh Government to set up an all-Wales housing association to take
on stock which is hard to treat or may never reach WHQS
Exploration of any ‘third options’ and capital incentives
Closer support required for authorities who have unacceptable business plans such as
the Ministerial Task Force
Political sensitivities in regards to any re-balloting tenants on the future of their homes
should be acknowledged
Joint procurement between the local authorities to achieve economies of scale should
be encouraged
Initiatives and guidance for non-traditional housing stock from Welsh Government is
needed
Partnership approaches to the future between traditional RSLs and the local authority
should be explored
2. Innovative Options cont.
Politics
Following the 2012 local elections, all five “no vote” authorities now have a Labour majority or are
Labour-controlled Councils and therefore politically aligned with Welsh Government. An initiative led by
Welsh Government to raise the profile of WHQS with members might be productive.
A key issue for all local authorities is whether the revised 2020 target for the achievement of WHQS will
be waived in the same way that the original 2012 deadline was. Welsh Government should be clear on
what monitoring procedures and sanctions will be in place for all social landlords, as indicated in the
White Paper. There also needs to be an honest debate with councillors and tenants on the self-financing
model if the HRA subsidy review in Wales reflects what has happened in England.
Support required:
The establishment of the Ministerial Task Force is welcomed by the local authorities. It is hoped that this
will lead to tailored, extra support for the three local authorities who have not currently got acceptable
business plans. Each of the local authorities is in a very different position, so it’s important that Welsh
Government is flexible in its approach for the support that is offered. It would be beneficial if this was
detailed to ensure there is no duplication of current support.
Welsh Government must support landlords to achieve the Standard, but also have some form of penalty
if they are not making progress towards it. In England landlords face penalties if not making legitimate
attempts to reach the Decent Homes Standard. To ensure this is taking place WLGA should be involved,
as they are best placed to reinvigorate the relationship between local authorities and Welsh
Government.
Clear guidance by Welsh Government on an asset management strategy would be a good starting point
for support, covering for example non-traditional stock. The regulatory regime should also be looking at
the wider picture of strategies to incorporate WHQS, rather than be led by it.
3. Other Issues
“Our biggest challenge will be political, as we may get to the point of needing to demolish and
rebuild, rather than even attempt to maintain”- Head of Housing
“Make better use of the HRA on the back of self- financing”
“With three unacceptable business plans on the table, we need something new from Welsh
Government” – Head of Finance
“Not only is this an issue of WHQS, but of a long-term strategy that includes new builds, welfare
reform, under-occupancy… we just don’t have the places to put people” – Head of Housing
“Threat of sanction can be more useful than actual sanction”- Head of Housing
Whilst WHQS is an important part of the there must also be a focus on homelessness, new build and
housing management initiatives such as digital and financial inclusion. WHQS as noted by one attendee “is
not the be all and end all of housing - we must look at the wider picture”.
Could ‘payment by results’ for the achievement of WHQS be an incentive that will help local authorities
without acceptable business plans deliver?
There is a lack of advice for authorities on what is being asked for by Welsh Government, and a feeling
that they receive conflicting information on what is most important to Government. The Ministerial Task
Force can make recommendations on how to utilise the support mechanisms available to authorities, to
ensure that those in a limited financial position are aware on what should be made a priority.
Under WHQS guidelines, tenants may refuse improvement works and in some areas refusal rates are high.
Hence a significant percentage of properties are not being brought up to the Standard. Is this acceptable
to Welsh Government?
Wider Strategy:
The central discussion of this Active Response has been around the achievement of WHQS and although
the Standard has been a fundamental aspect of Welsh Government policy, it should not be the all-
encompassing focus of Housing. WHQS should be thought of as part of the wider ‘whole housing system’
strategy which includes housing need, new builds, welfare reform, under-occupancy and the lack of
affordable housing. How these relate to overall asset and housing management strategy is something that
also needs to be explored.
The implications of welfare reform must be made clear to tenants, including the impact of under-
occupation as well as ensuring that landlords themselves factor in likely effects on rental income.
Although some authorities have the funds to achieve the internal aspects of WHQS, there is a clear line of
thought that external regeneration is just as important. WHQS explicitly states the need for tenants to
“feel safe and secure” – if the internals of the property are upgraded but there is still major flaws in the
external environment then WHQS is not being met satisfactorily.
3. Other Issues cont.
“One site with non-traditional housing that was surveyed would required approximately £80,000 of
investment per property to bring them up to WHQS” – Head of Housing
“Freeing up the HRA legislatively will allow for more regeneration work” – Head of Housing
“It has never just been a question of WHQS for us, but the wider implications. We don’t relish the
thought of improving properties without the regeneration of estates but we just don’t have the
money to do so” – Head of Housing
3. Other Issues cont.
Other ways to tap into regeneration resources for these types of improvements should be explored e.g.
ensuring core requirement of grant for planning and regeneration; or making better use of Tenant
Empowerment Grants.
Some authorities who have received a negative ballot on transfer are looking at breaking down the WHQS
elements to see which can be achieved by a 2020 deadline and which will be achieved thereafter (i.e.
internals versus environmental / estate improvements). On a positive note smart procurement by one
authority delivered a 4.5 year guarantee on prices. However cost efficiencies can be at the expense of
other benefits e.g., three out of the four contractors are national, not local. It appears to be a very fine
balancing act to ensure the Standard is delivered cots effectively whilst at the same time creating
opportunities for local contractors.
Another challenge faced by all social landlords, is the stock that will never achieve WHQS, may need to be
demolished and rebuilt. Further, some of the hard to treat stock which could be brought up to the
standard may be hard to maintain in the long run so the choice of demolishing and rebuilding might also
apply.
A key additional success of the WHQS works has been tenant engagement and better profiling. Many
social landlords, whether stock transfers or retention authorities now have tenants at the heart of their
services and included in decision making processes throughout.
Summary and Recommendations
The political alignment of Welsh Government and the five “no vote” authorities could offer opportunities
Clarity is needed on the monitoring and measuring of WHQS against the 2020 date including the use of sanctions and / or incentives
Each local authority is in a very different position and any support needs to be tailored
to suit this
Self financing models– there needs to be an honest and open discussion with tenants
and members on implications
Wider housing management strategies needs to be taken into account
Compliance with WHQS means the regeneration of estates. However due to the
financial position of the authorities this may not be something that will be achieved
within the timescale set. The option of including core requirements in grants for
planning and regeneration to ensure these improvements take place should be
considered
Clarity needed on how high levels of tenant refusals of works can be dealt with by
Welsh Government
Tenant engagement mechanisms have been significantly enhanced as a result of
improvement works
Welsh Government:
Consider the recommendations and issues raised in this Active Response
Continue to reinforce the message that WHQS is a priority for Welsh Government and
that it should be a corporate local authority priority
Support benchmarking of “no vote” authority business plans with those who have
already been through the improvement programme to ensure assumptions are
realistic
Resolve the HRAS / MRA issues and provide a clear timetable for this
Continue to support the exploration of new models of financing
Consider the feasibility of innovative options including an all-Wales housing
association to take on stock
Continue to support the “no vote” local authorities through the Ministerial Task Force
– current political alignment could offer opportunities?
Ensure wider housing management strategies are taken into account when
monitoring compliance of the WHQS works
Develop guidance on dealing with high levels of tenant refusals of works
i2i will:
Continue to support Local Authorities and RSLs in the process of achieving WHQS, and WHQS plus
Provide support for the sector to monitor the wider value of their WHQS investment, and report to Welsh Government on this
Continue to promote good practice within the sector
Continue to provide support to the sector to use the Can Do Toolkits on supply chain development and targeted recruitment and training
Work closely with Community Housing Cymru ,Chartered Institute of Housing Cymru, the Welsh Local Government Association, Registered Social Landlords and Local Authorities to support collaborative working
Liaise with partner organisations including Value Wales to ensure co-ordination
Customise support for individual authorities to progress towards achieving the standard
Local Authorities:
Continue to work with partners to progress towards achieving the standard Liaise with i2i and Welsh Government on support required
Explore options for collaborative approached to delivery
4. Recommendations…
5. Further Information
Acknowledgements
Thanks to the following organisations for their input and time in the production of this briefing:
Caerphilly County Borough Council,
Vale of Glamorgan Council,
Flintshire County Council,
Wrexham County Borough Council
City and County of Swansea
CIH Cymru
Merthyr Valley Homes
Contact Us
For information on the guide or the work of i2i in general please contact:
Rachel Honey-Jones: [email protected] or 07507351906
Rachel Morton: [email protected] or 07534 527544
Elen Grantham: [email protected] or 07506 562193
Visit the i2i website: www.whq.org.uk/i2i