Why housing has to keep the right company

These are difficult times for companies set up by local authorities to manage and, in theory, improve their council housing.

Arm's length management organisations (almos) first appeared on the scene nearly 10 years ago, primarily to attract government money for bringing homes up to the decent homes standard. An admirable aim and one for which Labour probably isn't given proper credit, the standard usually involved installing new kitchens and bathrooms in what were often rundown flats and houses.

Almos were the main alternative to councils transferring their homes to a housing association (which could then raise money for the work via private borrowing). However, they would not have been necessary in the first place if Labour had stubbornly refused to give money directly to local authority housing departments.

A decade or so later, many of the 60 councils with almos have started to question whether they are really necessary, especially where decent homes work is complete. A few councils have gone so far as to abolish their almos and take management work in-house again.

In the meantime, the coalition government has annoyed councils that went to the lengths of creating an almo by suggesting that, when it comes to claiming grants for outstanding decent homes work, an almo is no longer necessary. Last month, the Homes and Communities Agency gave £379m of the £1.6bn it was handing out in grants to non-almo authorities. At the same time, 11 councils with almos that bid for money received nothing.

But that does not mean almos have no future whatsoever. Next month, in East Kent, a so-called 'super-almo' will start managing 18,000 homes owned by four district councils, including Canterbury and Dover. All four have completed their decent homes work, and so the motive now is saving money, not raising grants from the government.

The 'super-almo' model appears to be in line with the government's policy of councils sharing services and so cutting overheads. East Kent Housing, as it was named by tenants, aims to save £2.5m during the next three to five years.

Whether it will be first and last of its kind remains to be seen, but those that have waved the almo banner so enthusiastically since 2002 will be hoping that it represents a way of making sure they are still around for a few years yet.