星空传媒

In the last bidding round, There was a pretty even split between applications for the arm's-length management organisation route and the stock transfer option. And with a new private finance initiative round to be announced shortly, the government seems keen to stick to what it said in the Communities Plan and keep all three options open.

The evolution of the ALMO will pose some interesting questions over the next couple of years. In particular, the Office of the Deputy Prime Minister's offer to give three-star ALMOs additional freedoms will generate considerable interest.

But the key questions are: how far will the government be prepared to go and can ALMOs ever realistically get close to the freedoms enjoyed by housing associations?

The proposal to take high-performing ALMOs out of the subsidy system poses an immediate problem: their starting points will each be very different. Once rent rebates and the associated subsidy are finally removed from the housing revenue account, perhaps next year, these differences between authorities will become clearer.

Some authorities, largely those with debts, will still receive a substantial amount of housing subsidy whereas many others will contribute back into the system.

At the moment, the funding rules mean ALMO authorities will be taking on more debt to support their stock investment programme. They therefore attract more subsidy in order to meet the loan costs. Taking them out of the system is unlikely to be helpful unless, in some cases, it is substituted with something else.

There are therefore five basic alternatives available:

• repay some or all of the housing debt
  
• provide the ALMO allocations through a capital grant
  
• substitute the current grant with a new revenue subsidy
  
• reduce the amount of capital receipts to be pooled
  
• a combination of some or all of the above.

The most obvious and cleanest route is probably the first, combined with one of the others where necessary.

The next question is how to calculate the relevant figure. When exploring this a number of other issues need to be born in mind, including:

• How much will the authority be able to borrow in practice through the new prudential arrangements?
  
• What are the long-term investment needs of the stock, how are these defined and over what period?
  
• What level of exposure to inflation/interest rates is acceptable?
  
• What will be the arrangements for future right-to-buy sales and receipts?
  
• What arrangements, if any, will the ODPM use to control rents under the rent restructuring regime?
  
• Will the local authority or ALMO be able to bid for grants to acquire or build itself?

The exposure to interest rates will be particularly important since currently the housing revenue account bears very little risk in this area.

Only when some of these answers are known will it become clearer whether authorities with high-performing ALMOs are going to be able to operate on a similar plane to housing associations. But the challenge is there.