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 theself-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

enquiries@leathermarketjmb.org.uk

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Twitter @LeathermktJMB