Audit Commission pressure leads to ALMOs looking to private sector for better deals
Kirklees Neighbourhood Housing may become the first arm's-length management organisation to stop buying some technical and support services from its parent council.

The Yorkshire ALMO will examine procuring services from the private sector by next April. The news emerged in an Audit Commission report, Learning from the First Housing ALMOs, published yesterday.

The report said: "ALMOs need to constructively challenge council-provided services with the long-term aim of obtaining best value for both partners and service users."

Derby Homes is also understood to be examining its council service agreements, and the other 19 ALMOs are believed to be undertaking similar reviews.

Alistair McIntosh, chief executive of the Housing Quality Network, said: "Councils have been looking at services critically since 1999. The ALMOs are just stepping into their shoes, although the Audit Commission is giving them even stronger encouragement."

Kirklees Neighbourhood Housing, which manages 27,000 homes, is bound by service level agreements under which it pays the council £1.7m a year for strategic and support services. These include legal and financial work, payroll and personnel.

However, a review commissioned by the ALMO identified a number of areas in which the agreements failed to provide sufficient value for money.

Kirklees Neighbourhood Housing, set up in April 2002, had agreed to purchase the services for its first year of operation, after which it would be free to renegotiate the agreements or buy services from elsewhere.

Chief executive Simon Rogers said the ALMO would continue to review its services in the coming months, but had yet to draw up a list of services requiring improvement.

Tony Hood, director of housing at Kirklees council, said it was a "legitimate process for the ALMO to explore value for money", and added that it was "no major problem" for the council.

Hood declined to say what impact he would expect a switch of suppliers to have on the council.

However, housing consultant Brian Queen said contracts to supply legal and financial services were the most likely targets for ALMOs looking to improve value for money.

He said: "Unlike something like housing benefit, in the legal services sector there are lots of people who know what they are doing and could offer comparatively cheap rates."

Source

Housing Today