The death of council housing

FRFI 177 February / March 2004

In January, council tenants in Camden, north London, dealt a blow to the Labour government’s housing policy by voting unanimously against the proposed transfer of their homes to a new-style housing corporation called an Arms Length Management Organisation (ALMO). The ‘no’ vote is the first time tenants have rejected an ALMO. What is most significant is that tenants in Camden have realised that the ALMO is nothing more than privatisation by the back door, as BARNABY MITCHEL reports.

Council tenants in Britain who desperately need repairs to their homes have only three options: stock transfer, Private Finance Initiative (PFI) and ALMOs. Ministers have made it clear that councils which fail to adopt one or a combination of these options will be denied resources. What all three ‘options’ have in common is that they are all part of the Labour government’s agenda of privatisation.

The government created the ALMO ‘option’ as a new way to sell off council housing after the previous policy, called stock transfer, met with opposition. A major turning point came in April 2002, when voters in Birmingham, Britain’s biggest council landlord, voted overwhelmingly against the planned transfer of their homes to a housing association. 66.8% of tenants voted against the plan, with only 33.2% in favour. Turnout in the ballot was 65.2%, significantly higher than the 52% turnout in Birmingham in the general election the previous year.

Stockport council in Greater Manchester proposed to hive off its 13,000 council homes to a housing association. Of the 65% of tenants who turned out to vote, 55% voted against the transfer. Indeed, average turnout in these ballots stands at 74%, compared to 59% in the elections. Voters in Dudley, Barnsley and Merton in London have also rejected transfer.

Council housing was designed to provide affordable rented homes for the working class, with a democratically accountable, elected landlord, and is a central pillar of the welfare state. Britain’s council housing has a repair bill of £19 billion after years of neglect and under-investment. The Labour government’s answer to crumbling homes and the repair bill is privatisation. As in other areas of the public sector, the government believes that in order to improve a public service it must be taken out of public control.

There are currently 2.7 million homes owned by councils. By June 2001 almost one million council homes had been sold off to housing associations (The Guardian, 21 June 2001). 97 of the 354 councils in England with responsibility for housing have already sold off all of their housing. If the government continues to meet its target of transferring 200,000 homes each year - double what the outgoing Tory government had proposed in 1997 - there will be no council housing left by 2015.

The government plans to spend £800 million in 2003/4 subsidising privatisation by writing off overhanging council debt. This is just less than the £840 million available as housing investment for all the council homes in England and Wales. The government could double direct investment in council housing if they stopped privatisation.

Housing associations are basically unaccountable private landlords. For tenants, stock transfer involves changing from a ‘secure tenancy’ to an ‘assured tenancy’, which significantly weakens their rights. Rents are generally higher in housing associations. The number of tenants threatened with eviction by their social landlords doubled between 1994 and 2001 when 30,000 possession orders were served. In 2001 27,000 households were evicted in England and Wales (ROOF survey of local authorities).

For years funding for repairs and improvements for council housing has been withheld. Local authorities have deliberately run down housing estates. Tenants, desperate for improvements and repairs to their homes, have been repeatedly told that the money is simply not available. The choice facing council tenants is stark: vote for stock transfer and have your repairs done, or keep your housing under council control and get nothing. Council tenants are being blackmailed. In Glasgow tenants voted 58% to 42% in favour of transfer after the treasury promised to wipe out the city’s £900 million housing debt.

In Islington, north London, the proposed transfer of the Tollington estates to North British Housing Association was rejected by 60% of the 69% of tenants who voted. Local campaigners revealed to tenants that the housing association planned to build 340 private flats for sale, which would have doubled the density of housing on the estate. Between 1997 and 2002 the number of registered homeless families in Islington rose from 949 to 1,314, and the number of families living in temporary accommodation rose from 737 to 1,481. In the same period the number of lettings made available by the council and housing associations fell from 2,000 to 1,084. This shortfall in the building of social housing is in contrast to the building boom of luxury flats throughout Islington.

ALMOs are widely regarded as a stepping stone to privatisation and full stock transfer in the long term. An ALMO is a private not-for-profit company set-up to manage council housing. Council tenants remain as such and the local authority is still the landlord. The day-to-day business of housing management is handed over to the ALMO management board. Councils don’t have to ballot their tenants before setting up an ALMO, but in practice most do because they have to demonstrate that the idea is popular. Only the best performing councils are allowed to compete for ALMO status and the promised millions. So far the government has earmarked nearly £2.5 billion for high-performing councils that set up ALMOs to spend on repairs. The ALMO has a board of directors made up of local councillors, elected tenants and so-called ‘independents’. These ‘independents’ are specialists in the social housing and community development sector. In Islington, a London borough committed to the ALMO road, it has been revealed that one of the proposed ‘independents’ is a director of Circle 33 Housing Association which, thanks to the council’s Private Finance Initiative, already owns much of the social housing in Islington. Tenants in Islington voted yes to the setting up of an ALMO. Of the 24.17% of tenants who bothered to vote, 83% voted yes. The 1,600 tenants from the Tollington estates who rejected stock transfer earlier in the year were not included in the ballot. Ballot papers had the council’s ‘vote yes’ leaflet wrapped around them and local caretakers had been instructed to tear down ‘vote no’ posters.

However, there is no guarantee that local authorities will receive all of the investment that the government has promised them as an incentive to set up an ALMO. Poor performing councils are not given the option of setting up an ALMO and are unable to invest in their housing stock. Tenants in local authorities who lose the battle for funds will continue to live in poor quality housing. If they cannot improve they will be forced to adopt one of the other two options available both of which involve privatisation. The government is using the carrot-and-stick approach.

The government claims ALMOs will improve the condition of housing in line with its ‘Decent Homes’ targets to be met by 2010, and make for more efficient housing management services. Efficiency gains will no doubt be at the expense of council workers’ jobs as the companies rationalise on the workforce. Leeds ALMO immediately recruited 18 new senior managers with an extra wage bill of £1 million per year.

Throughout the country council tenants have been bombarded with propaganda to convince them to vote in favour of the ALMO. Glossy brochures showing smiling council tenants, with shining new fitted kitchens and bathrooms, telling their fellow tenants to vote yes, have flooded through letterboxes. Camden Council built seven show homes to convince the community that the ALMO will make them happy. Groups opposed to the ALMO launched a legal challenge to the ALMO ‘consultation’ process claiming that the council propaganda was one-sided and misled tenants. The judge ruled in favour of Camden Council. Tenants and local campaigners are now demanding that the £283 million offered to the proposed ALMO be made available to Camden Council direct for investment in council homes. This presents the Labour government with a serious dilemma. It cannot be seen to be endorsing the council housing model by providing the funding the tenants are demanding. Such a concession would undermine its commitment to privatisation. If the government backtracks and gives Camden a fourth option of direct investment there would be a potential uproar from those local authorities who have previously been forced into privatisation in the belief that there was no other option.


The number of people made homeless this year is 212,760, the highest since Labour came to power. Homelessness is at its highest level since 1997. However, huge controversy surrounds the accuracy of the official government figures on the number of homeless people and especially those who are living on the streets. Street counts often only look in those obvious places such as doorways and check the number residing in temporary hostel accommodation, therefore those who live in squats or on the streets but away from the established places are not included. It is estimated that 300,000 people make up what can be termed the ‘hidden homeless’ – individuals and families who have a roof over their heads, perhaps staying on friends’ sofas or with family in overcrowded conditions, but not having a secure home of their own.

Hackney council in east London has a new campaign called Park Life. All over the borough, at bus stops and outside schools are huge glossy posters showing an unhappy couple sitting on a bench in a park, their belongings on the floor next to them with the slogan ‘Hackney council will evict tenants who will not pay their rent’. Hackney council is terrorising council tenants. It should be reminded that the average life expectancy of a person living on the streets is 42. People sleeping on the streets are 35 times more likely to commit suicide, and 15 times more likely to be assaulted than the general public.