Part 1 – Open to the Public / ITEM NO.

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REPORT OF THE ASSISTANT MAYOR FOR HOUSING AND ENVIRONMENT

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TO THE CITY MAYOR AND CABINET

ON 14TH MAY 2013

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TITLE:Housing Option Appraisal – Outcome of the test of opinion and stage two recommendation.

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RECOMMENDATIONS:

The City Mayor, in consultation with his Cabinet is recommended to:

  1. Note the contents of the report from the Customer Panel (at Appendix two) and its recommendation on their preferred option.
  2. Approve the development of a detailed offer to tenantsthat proposes thetransfer of the Council’s remaining housing stock (excluding the stock to be managed by the PFI contract) to a Registered Provider (RP).
  3. Approve delegated authority to allow the Chief Executive to move to Stage Three and invite Salix Homes andup to three of the Council’s strategic housing partners to submit bids and allow the Chief Executive to put in place a process to enable a detailed evaluation of the bids.

EXECUTIVE SUMMARY:

The Council agreed a three stage approach to the Housing Options Appraisal Project. In summary:

  • Stage One - focussed on raising awareness of the need for an options appraisal and determining how customers could have an input to and influence the process. This stage also involved a financial review of the Council’s Housing Revenue Account (HRA) and the financial impact of the available options.
  • Stage Two - has involved communicating the priorities that customers identified during Stage One; outlining how each of the options would deliver these priorities; aTest of Opinion, and survey of all tenants; the Customer Panel hearing evidence from key stakeholders, and evaluating of the options to arrive at a recommendation.
  • Stage Three - once the decision to consider the detail of a preferred option is made at the end of Stage Two, it was agreed that should it be necessarya process is put in place to enable a decision on the most appropriate tailored delivery vehicle for Salford.

The purpose of this report is to outline the outcome of the Test of Opinion (the survey of tenants), the Customer Panel’s evaluation of all the evidence and the Customer Panel’s final recommendation.

In January and February 2013, the Housing Options Appraisal Project Board, considered evidence presented by the Council’s financial adviser, Sector. Sector were commissioned by the Council to complete a formal financial appraisal of the investment and management options for allremaining non-PFI Council owned homes in Salford and were asked to consider the optionsavailable to the Council.

The financial review explored two options, the Council retaining the housing stock or transferring homes under the large scale voluntary transfer process (LSVT).

The outcome of the financial review concluded that the Council’s HousingRevenue Account (HRA) business plan cannot borrow beyond its current level of debt and as such cannot meet the investment needs of the stock. The review concluded that if the Council decided to retain the housing stock currently managed by Salix Homes, the Council would need to significantly reduce its costs, which would lead to a reduction in service level and would mean that the Council would be unlikely to achieve decent homes for all the stock.

Sector concluded that the transfer of the stock managed by Salix Homes can achieve the Government’s Decent Homes Standard (DHS) subject to the write off of HRA debt at the point of transfer and the availability of the funding facility required.

In January 2013, the Housing Options Appraisal Project Board also considered the findings of Stage One of the Housing Options Appraisal. The first stage involved a survey to identify customers’ priorities and views on their homes and environments; what they value about the services currently provided by Salix Homes; and their priorities for changes and improvements in housing service delivery. The survey was carried out and analysed by M.E.L Research (Measurement Evaluation Learning) Ltd.

Stage Two of the Housing Options AppraisalProject involved feedback from the wider customer body on the available options through a Test of Opinion survey. The Test of Opinion has been led by independent tenant advisor (ITA), TPAS (Tenant Participation Advisory Service).

During Stage Two, the Customer Panel considered this wide range of evidence, including the independent financial review commissioned by the Council and has heard evidence from a range of key stakeholders. A full list of the stakeholders that provided evidence is set out at Appendix One.

The Customer Panel agreed to reach their recommendation by secret ballot. Eleven of the twelve members voted in favour to develop a transferproposal. The twelfth member has since confirmed they are also in favour of transfer.

The Customer Panel recommendation is that the Council “approve the option of transfer of all remaining non-PFI Council owned homes in Salford be progressed to the next stage”. A copy of the Customer Panel report is at Appendix Two.

Following detailed consultation with tenants and the Customer Panel, the Housing Option Appraisal Project has now reached a crucial stage. Preliminary discussions are being held with the Homes and Communities Agency (HCA) and the Department for Communities and Local Government (DCLG) ahead of, newformal transfer guidance being issued to all local authorities. Moving the Housing Option Appraisal Project to the next stage is therefore required to enable the momentum built up through the consultation process to date be maintained and discussions with HCA and DCLG to progress ahead of wider publication of the LSVT Programme.

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BACKGROUND DOCUMENTS:

  • Cabinet Report 12th June 2012: Salix Homes: Investment and Management Issues.
  • M.E.L Research (Measurement Evaluation Learning) Ltd, Your Home Your Say survey consultation results – December 2012.
  • Test of Opinion Survey – TPAS (Tenant Participation Advisory Service) April 2013.

Please see the attached appendices:

Appendix one– Key stakeholders providing evidence to the Customer Panel.

Appendix two – Report from the Customer Panel.

Appendix three – Community impact assessment.

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KEY DECISION:YES. Two or more wards impacted.

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DETAILS:

  1. Background

1.1The purpose of this report is to outline the outcome of the Test of Opinion (the survey of tenants), the Customer Panel’s evaluation of the evidence and the Customer Panel’s final recommendation. The report of the Customer Panel’s recommendation is at Appendix Two.

1.2Stage Two of the Housing Options AppraisalProject involved feedback from the wider customer base on the available options through a Test of Opinion survey. The Test of Opinion has been led by, independent tenant advisor,TPAS (Tenant Participation Advisory Service).

1.3During Stage Two, the Customer Panel has considered a wide range of evidence, including the independent financial review commissioned by the Council and has heard evidence from a range of key stakeholders. A full list of the panel that provided evidence is set out at Appendix One.

  1. Test of Opinion Survey

2.1The survey adopted a mixed method approach combining the collection and analysis of quantitative and qualitative data. In summary:

  • A short postal survey was sent to all tenants and tenants were provided with the option to complete the survey on-line.
  • A random selection of tenants was chosen for interview – the target number of interviews was 800.
  • A telephone interview, based on the interview schedule was carried out with 300 respondents.

2.2 A total of 9,912 tenants (including joint tenants) were included in the survey.

Total response (tenants only):

  • 724 face to face interviews completed.
  • 161telephone interviews completed.
  • 1,419 postal survey returned.
  • Total responses 2,304, which represents a response rate of 23%.

Total all responses (tenant and non tenant):

  • 725 face to face interview completed.
  • 301 telephone interviews completed.
  • 1,467 postal survey returned.
  • Total responses 2,493, which represents a total response rate of 25%.

2.3In summary:

2.3.169.2%of all respondents said that it was either extremely important or very important that whichever option is chosen, that their home is improved.

2.3.270.2% of all respondents said that if everything was equal between the two options, they would prefer to stay with the Council.

2.3.348.1% said that if staying with the Council meant that many of the things that are important to them couldn't be delivered, they would support transfer to a new landlord that could deliver them. 27.6% said no and 20.1% said they didn’t know.

2.3.474.1% said whichever option is chosen, the service they get from their landlord doesn't get worse is either extremely important or very important.

2.3.556.9% of respondents said that whichever option is chosen that building new homes is either extremely important or very important.

2.3.661.9% said it would be important to have tenants on the Board of Management.

2.3.770.9% said it would be important that the landlord is based in Salford.

2.4The summary results set out above have been provided by TPAS (Tenant Participation Advisory Service). 48.1% said they would support transfer if staying with the Council could not deliver many of the things that were important to them and a further 20.1% said they didn’t know. 27.6% said they would not support transfer.

2.5TPAS (Tenant Participation Advisory Service) has suggested that the Test of Opinion result should be viewed as suggesting a strong appetite for change, if that change brings with it the necessary investment to deliver the things that are important to tenants. TPAS have interpreted this as giving the ‘green light’ to pursue the development of a suitable stock transfer proposal.

  1. The Customer Panelevaluation process

3.1The Customer Panel has considered the results of the Test of Opinion and to help reach a decision on the preferred option, the Panel heard evidence from a number of key stakeholders and professionals.

3.2The Customer Panel agreed a set of questions for each of the essential tests and the desirable tests. Each question was then marked out of 10 against both options – retention and transfer. The tests are summarised below.

Essential test / Weighting
1.Will the option provide all the investment needed, and at the right time, for the remaining council owned homes in Salford? / 30%
2.Will the option satisfy the government’s requirement for a value for money solution? / Yes/No
3.Will the option maximise customer involvement, customer led self regulation and place customers at the heart of governance? / 20%
4.Will the option at least maintain the current service standards and performance levels achieved by Salix Homes? / 25%
5.Will the option enable the council to fully fund a 30 year Pendleton PFI business plan? / 15%
Additional test
6.Will the option meet the needs and aspirations of customers? / 10%
Total / 100%
Desirable test
1.Will the option have ability to provide new homes? / High/Medium/Low
2.Will the option be recognised as a strategic partner within the City? / High/Medium/Low
3.Will the option have wider neighbourhood responsibilities than housing provision alone? / High/Medium/Low

3.3Eleven Customer Panel members scored each question and these were then aggregated up to create an average score against each test. Each test was then weighted for its relative importance.

3.4The combined scores for each option against the essential tests are as follows:

Retention / Transfer
Unweighted / Weighted / Unweighted / Weighted
14.5 out of 50 / 3 out of 10 / 38.9 out of 50 / 7.8 out of 10

3.5The combined scores against the desirable tests are summarised below:

Retention / Transfer
Will the option have ability to provide new homes? / Low / High
Will the option be recognised as a strategic partner within the City? / Medium / High
Will the option have wider neighbourhood responsibilities than housing provision alone? / Low / High
  1. Conclusion

4.1 The Customer Panel’s recommendation is that the Council “approve the option of transfer of all remaining non-PFI Council owned homes in Salford be progressed to the next stage.”

4.2 The Customer Panel has considered all the evidence available and the combined evaluation scores support the development of a proposal to transfer homes to a registered provider as the preferred option, subject to Government agreement to write off the Council’s HRA debt.

4.3The results from the Test of Opinion survey confirm that there is wider tenant support for stock transfer as the preferred option to meet the needs and aspirations of tenants.

4.4The Customer Panel is satisfied that the retention option does not have sufficient funding to deliver the investmentrequired. The Council cannot borrow sufficient money to maintain homes as requiredwhich will lead to a higher level of day to day repairs costs and the Council will not be able to reduce the debt over this period.

4.5The Customer Panel isalso satisfied that the transfer option could borrow the required level of investment, but is reliant on the Government writing off all or a significant amount of the existing HRA debt. The ability to borrow money at the required times will mean that the level of investment required will be available at the right time which allows the landlord the opportunity to maintain the decency level and spend less on day to day repairs. The transfer option would require the landlord to pay the debt over the life of the business plan.

4.6As part of Stage Two the Customer Panel has identified the key features it would like to see in the preferred delivery structure, they are as follows:

  • Protect the Salix Homes vision, aims and ‘customer first’ culture.
  • Enhance service delivery.
  • Maintain and enhance customer governance, involvement and co-regulation.
  • Explore options that could maximise customer ownership in the future.
  • Deliver enhanced ‘Invest to Save’ programme of investment and service improvements.
  • Maintain local emphasis and local presence.
  • Build new homes to meet future needs.
  • Remodel existing homes.
  • Maintain rents at an affordable level.
  • Deliver environmental improvements.
  • Create employment and training opportunities.
  • Deliver community investment.

4.7Given the knowledge and experience acquired through the process to date, the Customer Panel would be keen to be involved in Stage Three of the Housing Option Appraisal process, and the selection of the preferred delivery structure.

4.8Following detailed consultation with tenants and the Customer Panel, the Housing Option Appraisal Project has now reached a crucial stage. Preliminary discussions are being held with the Homes and Communities Agency (HCA) and the Department for Communities and Local Government (DCLG) ahead of formal transfer guidance being issued to all local authorities. Moving the Housing Option Appraisal Project to the next stage is required to enable the momentum built up through the consultation process to date be maintained and discussions with HCA and DCLG to progress ahead of wider publication of the Transfer Programme.

  1. Next steps

5.1.Key milestones for the project are monitored and the next steps take the project to completion of Stage Two. In summary the headline timeline proposed by Project Board is as follows:

Meeting / Meeting date
Recommendation formally adopted by Customer Panel / 4th April 2013
Recommendation considered by Project Board / 12th April 2013
Recommendation considered by City Mayor and Cabinet / 14th May 2013
If Recommendation approved decision confirmed / 22nd May 2013

5.2.Stage Three – once the decision to consider the detail of a preferred option is made, it’s proposed that the Project moves to Stage Three and that a process is put in place to come to a decision on the most appropriate tailored delivery vehicle for Salford. It is proposed that a brief will be issued to Salix Homes and an appropriate shortlist of the Council’s strategic partners to invite proposals of how key requirements for the investment and service needs of the properties will be met over the next 30 years. The development of the brief and the measuring of partners against the brief will be carried out in conjunction with a Salix Customer Panel.

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KEY COUNCIL POLICIES:

Shaping Our Place … Our Strategy for Housing in Salford 2008-2011

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EQUALITY IMPACT ASSESSMENT AND IMPLICATIONS:Supplied by Michaela Haines, Strategy and Partnerships Manager. Contact: 0161 793 2303

A full Community Impact Assessment has been carried out comparing the impacts of the various options as part of the appraisal process – see Appendix Three.

Salford is a diverse city and it is essential that the Housing Options Appraisal process does not discriminate against any sections of the community. The approach from the outset was to structure the Housing Options Appraisal process so that it is compliant with the provisions of the Localism Act 2011 and equalities objectives, whilst ensuring that scarce social housing in the city is used to assist people who cannot afford private rented sector rents but who are in housing need.

At all times throughout the Housing Options Appraisal process to date the Council has ensured it has due regard to the equalities implications of the new policy and how this impacts on various diverse sections of Salix Home’s residents.