Harrow council to drop ALMO plans in pursuit of better financial deal

The council’s cabinet voted on Monday that it was “seriously minded” to drop the ALMO plan because it could get better value for money by raising its stock of 5200 homes to the decent homes standard using “prudential borrowing”.

A surprised ALMO shadow board, which was expecting to go live within weeks, said tenants should have “an equal opportunity to express their views” on the new alternative after voting for the ALMO earlier this year.

The council is to turn down an already approved grant of £11.8m for the ALMO, that could have risen to £16m to take into account additional costs identified after approval. It will now borrow up to £40m on its own account.

The government introduced a prudential borrowing regime in April. It allows councils to borrow without seeking ODPM approval. They must instead convince their auditors that their scheme represents value for money and that they have the capacity to make repayments.

Keith Burchell, cabinet member for housing at Harrow, said keeping housing within the authority would save it £3.6m over 30 years since the running costs of the ALMO were expected to exceed £15m over this period.

The low numbers of council homes owned by Harrow made ALMO overheads particularly noticeable.

Under its new plans the council could start work on its refurbishment programme in April instead of having to wait until the ALMO had been in existence for six months, when it would have to win a two-star rating before gaining access to government grant. “With prudential borrowing, we’ll get going a lot sooner and we’ve got guaranteed funding,” Burchell said.

Karen Wilson, chair of Harrow ALMO’s shadow board, said: “We fully support seeking the best financial deal but we don’t want to close down options. We want more time to see whether there are routes that will allow the ALMO to proceed cost-effectively.”

Mike Owen, coordinator of the National Federation of ALMOs, said: “It’s disappointing for tenants of Harrow and now they’re not in a position to contribute to the decision not to press ahead with the ALMO.”