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Local housing authorities are wrestling with difficult choices. Options reviews often produce very few options, at least not options acceptable to politicians on the one hand and tenants on the other. Housing professionals want to respond positively to these challenges. Waiting for "something to turn up" is risky in the extreme and anyway does not commend itself to a vigorous, proud, housing department. On the other hand, confronting tenants with stock transfer too early can put serious solutions back by many years.

A model needs to be developed which avoids shipwreck on these two dangerous rocks. It will need to be tailored to reflect local circumstances, but at least some of the following will be relevant to every authority.

Any model must be transparent and confront stakeholders with their responsibilities. It must show all councillors and tenants how the Housing Revenue Account business plan works (or does not). The fierce financial constraints applied to council budgets need to be manifest. The only way to do this is to set up "real" business arrangements which replicate the commercial and contractual disciplines faced by the private sector.

This is the challenge that the then-DTLR presented to authorities wanting to secure additional investment through arm's-length management organisations. There are a number of features of ALMOs which are inappropriate for many authorities; but there are undeniably core elements that offer attractive ways to address most councils' priorities. When the social policy legal unit at Trowers & Hamlins drew up the contract on behalf of the (then) DTLR, the Local Government Association and the pilot authorities, we made provision as follows:

• the "delivery plan" – not "specification", you note – is the driver for the contractual obligations. For a whole-stock ALMO, the delivery plan would essentially be the Housing Revenue Account business plan
  
• the results of the council's best value reviews are fully incorporated to influence the shape of the delivery plan
  
• out-performance of the plan is highlighted, not just for the benefit of the Office of the Deputy Prime Minister and Housing Inspectorate, but also as an incentive in the form of released surpluses
  
• under-performance is also highlighted, not to lead to meaningless contractual sanctions but to demonstrate to the council, ODPM and inspectorate where the housing service is in difficulty and needs help.

Where there is no option of setting up an arm's-length organisation, even if wholly owned by the council, the more appropriate model might be an in-house management organisation. An IHMO would have no separate legal existence and its "contract" would take the form of a service-level agreement or equivalent. It would, however, be as real as councils wish to make it.

Shadow or simulated arrangements, from internal accounting treatment through to external contracting, could be adopted to create a challenging business environment without the usual risks or anxieties. If there is a local-service agenda, it would be possible to create local delivery plans. Responsibility for these would be "delegated" by the IHMO to locally based managers and staff.

How much constitutional "reality" is introduced is a matter for judgment. Even shadow arrangements will be redolent of stock transfer and may be inappropriate. It might be best to allow the IHMO "contract" to become established before formalising constitutional matters. At least initially, tenant/customer groups would seem the most acceptable form of surrogate boards; they can then develop at their own pace.

Most councils will want to use their current challenges to move forward. This positive approach needs to take practical form. Service delivery mechanisms have to be developed in a way that confronts tenants and staff with reality. An IHMO model provides a basis for challenging everyone involved, from bottom up as well as top down, to put themselves, at least to some degree, in charge of their future.

Housing will never have the same political or social clout as, say, health. There will never be a budget for housing, even in the aftermath of the Birmingham ballot result. Housing professionals, tenants and members are on their own. But the IHMO model offers, if not a get-out-of-jail card, then at least one of the keys.