ÐÇ¿Õ´«Ã½

London's arm's-length management organisations have warned the government they will be forced to cut services and rewrite their business plans if it goes ahead with proposed changes to management and maintenance allowances.

A letter sent to the ODPM last month by a group of London ALMOs said the cumulative changes to the management and maintenance resources and rent restructuring would cost the capital more than £290m by 2006/07, the first year the proposed changes would apply (HT 3 October, page 7).The worst-hit boroughs would be those that either have an ALMO or are hoping to set one up.

According to group's initial calculations the proposed change could cost Westminster's CityWest Homes £925 per dwelling by 2006/07. Camden, which is set to ballot tenants on the idea of an ALMO before the end of the year, could lose £725 per dwelling.

The letter adds: "[The losses] will seriously affect our ability to continue to provide high-quality management services. The loss cannot be made up by rents and can only impact on the quality of services to tenants … [and] our ability to meet the decent homes target."

The proposals follow recommendations made by research body BRE, which was commissioned by the government to investigate possible reform of the management and maintenance allowances in April 2002. BRE's plans for a new formula were outlined in a government paper that closed for consultation in October.

London authorities are expected to lose out because the proposed formula includes less weighting in favour of high-rise properties. Northern councils, which tend to have higher proportions of low-rise homes, stand to benefit.

Meanwhile, Hackney council have withdrawn their expression of interest to join the fourth ALMO bidding round in order to have more time to complete its options appraisal.

Newcastle tenants voted in favour of the council's proposed ALMO on tuesday. The 87% vote in favour follows a similar ballot result in neighbouring Gateshead last month.