Delivering our independence: A self-contained account for TMOs John Paul Maytum, Leathermarket JMB Martin Green, LB Southwark

A mandate for independence Residents vote for TMOs because they want us to do things – differently and better than the Council Standard management agreement ties TMO financially to the Council – dependency not independence TMOs have tried various models to get more financial independence: ALMO, HA stock transfer – these are now less attractive

Leathermarket JMB

Southwark & the JMB Inner city London TMO – in LB Southwark Established 15 years 1,100 tenants & 400 leaseholders Satisfaction 10% higher than council-managed homes Strong support for TMOs from councillors Collect nearly £6million rent – get back £2million in allowances

The answer: a self-contained TMO account Change financial arrangements so the TMO gets our fair share of the HRA – nothing more, nothing less Provide financial independence for TMO Provide better accountability for residents Lets TMO plan and control our destiny better

How the self-contained account would work TMO keeps all the rent & leaseholder income TMO meets all the costs (including paying off the debt on JMB homes) TMO pays for and organizes major repairs and improvements TMO financially accountable to Council

Benefits of the self-contained account TMO gets clear reward for good performance & voluntary effort Residents think JMB keep 100% of rent and service charges- but actually keep less than 40% Allows a 30 year asset management strategy Stops regular arguments over allowances and costs of services

Key principles The Council remains the landlord for tenants and leaseholders TMO will develop a business plan/ comprehensive stock condition survey to deliver major repairs/ improvements Strong and rigorous financial accountability to the Council and residents

Income Rent Leaseholder income for services provided by TMO Other income (e.g. phone mast rent) HRA subsidy Proportion of local authorities’ annual permission to borrow for major repairs

Expenditure Running costs TMO percentage of debt repayment over 30 years Repayment of new borrowing by the Council for the TMO major repairs TMO CONTRACTS BACK TO COUNCIL: Council services essential to TMO e.g. rent setting, building insurance Services that the council can buy cheaper - such as fuel

Issues Effect on HRA: at a time of cuts What % of central costs should the TMO pay? Political consequences of different TMO approach Need for trust and understanding between council and TMO Need for good governance and financial skills

Is there another way? Local authority: ownership and management (now only 34%) Stock transfer: new body ownership and management (1.2m homes) ALMO: local authority ownership, arms length management by ALMO (1m homes)

Stock transfer 2010 Research shows: £19bn invested in major repairs, but £5bn public subsidy required Rent guarantees kept for existing tenants Cost £430 per property (National Audit Office 2003) Pawson & Mullins

Stock transfer/ ALMOs Research shows: Effective vehicles for delivering major repairs/ improvements, but…… Debate about positive performance/ culture change: based on criteria of business efficiency & local control Top down approach: could community gateway/ mutual models be an alternative? Pawson & Mullins

Another way? …we’ve missed the boat

Delivering the Account TMO project team working on the proposal Council will decide in October 2011 whether we can go ahead from 2012/13 onwards

Self-contained Account Local control – delivers the TMO promise Allows long term planning – stops short- term rows with the council Establishes link between finance & service – improves accountability to residents Start up costs negligible compared to stock transfer/ ALMOs Money goes to residents and services, not consultants

Any questions? www. leathermarketjmb.org.uk Facebook: