Executive
Future of London Housing Unit (LHU)
Report by:
Genevieve Macklin
Date:
29 September 2006
Contact Officer:
Nick Day
Telephone:
020 7934 9544
Item no: 11
Job title:
Director of Housing Policy
Email:
[email protected]
Summary
This report explains how the housing services provided by the Housing
Division within the ALG are currently funded and sets out the background
to the London Housing Unit (LHU). The report asks the Executive to make
a decision in principle to fully integrate the ALG and LHU housing
services, without prejudice to the overall budget setting process for
2007/08. Three options are set out for the Executive to consider.
Recommendations
The Executive is asked to consider the following options for the
future of the ALG Housing Service
 Option 1 – Keep the Status Quo
 Option 2a - Establish a 33 borough LHUC with equal
subscriptions or
Option 2b - Establish a 33 borough LHUC with variable
subscriptions
 Option 3 – Dissolve LHU and mainstream the LHU services and
subscriptions into the core ALG services.
Background
1. The LHU (London Housing Unit) was established in 1987 and provides housing research,
policy analysis, information and publicity to LHUC (London Housing Unit Committee) member
boroughs. It also provides a service to support borough officers and a projects programme
for individual boroughs. A summary of LHU activity is attached as Appendix A.
2. There are currently 24 LHUC member boroughs paying an equal subscription per borough of
£39,022. The subscribing boroughs are listed in Appendix B.
3. The options contained within the body of this report are based on 2006/07 costs. The options
recommended are without prejudice to the overall budget setting process for 2007/08.
4. The ALG started moving to an inclusive 33-borough housing service in 2000, when the LHU
and ALG housing functions were combined. A new dedicated Housing Division was set up in
early 2002, incorporating the both ALG housing policy function and LHU. The Housing
Division within the ALG continued to attempt to provide an enhanced service to the boroughs
subscribing to the LHUC. However, the proportion of LHUC work benefiting all 33 boroughs
increased as the regional perspective became more pronounced, with changes including:

for housing funding arrangements, the establishment by ODPM (now DCLG) of a regional
capital pot, and allocation of funding for housing supply to sub regions rather than
individual boroughs

the growth of the sub regional and regional approach, with the development of Regional
Housing Boards, and the introduction in London of a London Housing Strategy and subregional housing strategies.

the increasing priority given by the Mayor of London to housing matters. The government
announced in July their intention to give the Mayor new housing powers including
producing a statutory London Housing Strategy and a strategic Housing Investment Plan,
along with broad allocation of funding from the Regional Housing Pot. The GLA Housing
and Homelessness Unit have 15 staff directly working on housing issues and a further 5
working on housing planning and data management issues (a total of 20 staff) compared
to the 16 ALG housing staff.
5. These were the reasons behind the increasing focus on 33-borough work. However, there
was still a separation between the 33-borough housing policy work and the dedicated LHU
services still existed due to the funding arrangements. Twenty four London boroughs are
currently contributing a higher level of funding for the housing services provided by the ALG.
Very often the evidence base and data derived from the bespoke projects undertaken by the
LHU for individual boroughs informs the wider strategic lobbying work which directly benefits
all of the 33 boroughs. If these individual pieces of work were not undertaken, the ALG
London wide housing lobbying case would be severely weakened, or the ALG would very
likely incur additional costs if the work had to be externally commissioned without the benefits
of the current borough focus.
6. The remaining 9 non subscribing boroughs are therefore receiving subsidised housing
services from those 24 boroughs.
7. In 2002/03 a review of the London Housing Unit (LHU) and pan-London housing policy work
was undertaken by the ALG. On 28 November 2002 a letter was sent to all Borough Leaders
and copied to all Lead Housing Members from the ALG Chair, Mayor Sir Robin Wales, and a
similar letter was sent to all Chief Executives and copied to all Chief Housing Officers from
the ALG Chief Executive. This explained that a review had been undertaken on the role of
the LHU and its relationship to pan-London ALG housing policy work. A prospectus was
attached identifying the need for a unified housing division providing an equal service to all 33
boroughs and setting out the funding options.
8. A report to Elected Officers in September 2003 set out proposals to integrate fully the LHU
and ALG 33 borough services. The report identified the need to create a fully integrated
housing service to provide services to the 33 London Boroughs on an equal basis and
showed that there was widespread support for this in the boroughs. It concluded that a single,
unified service should be created by merging the LHU and ALG housing functions and that it
should be funded by, and available to, all 33 boroughs. The report included options for
distributing the subscription charges amongst the 33 boroughs. However in private
discussions these proposals were not accepted by non-LHU boroughs so the proposals were
not taken further.
9. However, in November 2005, it was agreed by LHUC and Leaders to align the financial
arrangements between LHU subscribing boroughs and the ALG to better reflect the balance
of work provided to the 24 subscribing boroughs and all 33 boroughs.
10. This was done by an assessment of the officer time spent on services to and for the 24
London Housing subscribing boroughs compared with all London boroughs. The assessment
identified that 65% supported London Housing Unit work, and 35% supported all-borough
work. In staffing terms this equates to 10.5 FTE and 5.5 FTE respectively (a total of 16 FTE
posts).
11. This resulted in a reduction in overall LHUC expenditure of £68,417, which in turn led to a
lower LHU member borough subscription of £39,022 being proposed for 2006/07, a real
terms reduction of £2,851 per borough or 6.8% on the 2005/06 subscription.
12. Work to the value of £68,417 (£2,073 per borough), which benefits all 33 boroughs, has been
funded by an increase in the ALG Joint Committee subscription.
13. The majority of LHUC subscriptions from boroughs with council housing is likely to be
sourced from Housing Revenue Accounts (HRAs), which are ring-fenced for housing
purposes. The housing element contained within the ALG subscription could be funded
either through the General Fund or the HRA. There would be a distinction for boroughs
which have transferred their housing stock (Bexley, Bromley and Richmond) as they no
longer have an HRA, and have to fund all subscriptions through the General Fund. Any
subscriptions that are funded from borough HRAs would need to remain ring-fenced for
housing purposes within ALG financial arrangements.
Options for the Future
Option 1 – Keep the Status Quo
14. Continue with the current arrangements where 24 boroughs continue to contribute
subscriptions currently £39,022 per borough, and costs of work undertaken by the ALG
Housing Division are proportionately charged to ALG for the 9 non contributing boroughs.
15. This would be the least disruptive option. However, the separate LHU Committee would
remain and LHU subscribing boroughs may still be concerned that non-subscribing boroughs
are benefiting from the added value that many aspects of the LHU work brings to all of the
boroughs, effectively “free-riding”.
Option 2a - Establish a 33 borough LHUC with equal subscriptions
16. In this option the current subscriptions from the 24 contributing boroughs totalling £936,528
could be distributed amongst the 33 boroughs in equal shares. All boroughs would have to
contribute £28,380 in addition to the current ALG subscription, which would represent a
significant increase for the 9 non-LHU boroughs.
17. If all boroughs subscribed on an equal basis this would have the benefit of

not requiring a formal variation to the ALG agreement

providing an inclusive 33-borough service

reducing the average subscription for the current 24 boroughs by £10,642 and

remove the issue of free riding.
However each of the 9 non contributing boroughs would be required to agree to the additional
subscription of £28,380 which has not been possible in the past.
18. This arrangement would also mean that the LHUC remains a separate Committee.
Option 2b - Establish a 33 borough LHUC with variable subscriptions
19. In this option the current subscriptions from the 24 contributing boroughs totalling £936,528
could be distributed amongst the 33 boroughs on a variable basis to take account of the
varying levels of council housing stock in each borough including those boroughs that have
transferred their stock.
20. All boroughs have a strategic housing role including homelessness, allocations, private sector
housing, enabling and provision of new supply, producing housing strategies etc. The
subscription could be made up of a flat rate from every borough for the strategic role plus for
the stock retaining boroughs (including ALMO boroughs) a variable rate for the level of stock.
21. However this would require changes to the subscription arrangements for the ALG, which are
governed by clause 12.1 and schedule 8 (paragraph 1.2) of the ALG agreement. Each
subscribing borough would need to agree to the changes in subscription arrangements.
22. If all boroughs subscribed on a variable basis this would have the benefit of providing an
inclusive 33 borough housing service and would remove the issue of free riding. However the
9 non contributing boroughs would be required to individually agree to the subscription
arrangements. This has not been possible in the past despite four different proposals having
been presented for consideration.
23. This arrangement would also mean that the LHUC remains a separate Committee.
Option 3 - Dissolve LHUC and mainstream the housing service within the ALG
24. This option implies one 33-borough housing service with the 9 non subscribing boroughs
contributing. The subscription arrangements could either applied on an equal or variable rate.
25. In this option the benefits of providing an inclusive 33 borough housing service would apply
and the issue of free riding would be tackled.
26. However the difficulty of getting all 33 boroughs to individually agree to any new subscription
arrangements would be considerable.
27. This option would raise the issue highlighted in paragraph 11, regarding the funding source
for the subscriptions. Any subscriptions that are funded from the HRA would need to remain
ring-fenced for housing purposes within ALG funding arrangements.
28. There would need to be synchronised LHUC and Leaders’ Committee meetings in order to
agree the dissolution of LHUC and the subsequent mainstreaming of housing into ALG
subscription arrangements.
29. Dissolution of LHUC is governed by clause 1.2 of the ALG agreement which provides that
each member of the LHUC may revoke their delegation to the LHUC (being a minor variation
to the Agreement pursuant to clause 15.4) therefore not requiring a formal written variation to
the Agreement. If each subscribing council withdraws the delegation, LHUC ceases to exist.
Clause 13 provides that the unanimous agreement of all members of the LHUC is required to
terminate those provisions of the Agreement which relate to the LHU. Clause 15.4 provides
that a resolution of the LHUC would be sufficient to provide this authority, without requiring a
formal written variation of the Agreement. The fact that a formal written variation of the ALG
agreement is not required will expedite the process for dissolution of LHUC.
30. Under clause 14.1 the remaining assets or liabilities of the LHUC upon its dissolution shall be
distributed amongst the 33 boroughs. Upon dissolution of the LHUC the Leaders' Committee
could resolve to undertake the work which had been previously undertaken by the LHUC, as
set out in Schedule 3, by relying upon Schedule 2 Part 1, in particular paragraph 7 - provision
of services and dissemination. Funding would then be core funding, but funding provided via
HRA would need to be ring-fenced for housing.
Summary of options
Advantages
Disadvantages
Option 1
 no change - least disruptive option.
 LHUC remains a separate Committee
Keep the status
 the evidence base and data derived
 does not tackle the issue of “free-
quo
from the bespoke projects from
riding”.
boroughs will continue to inform
strategic lobbying work which directly
benefits all of the 33 boroughs
Option 2a
Establish a 33
 provides an inclusive 33-borough
service
borough LHUC
 tackles the issue of free riding
with equal
 reduces the average subscription for
subscriptions
the current 24 boroughs by £10,642
 does not require variation to the ALG
agreement
 9 non members would have to agree
extra subscription of £28,380
 LHUC remains a separate Committee
Advantages
Option 2b
Establish a 33
 provides an inclusive 33-borough
service
borough LHUC
 tackles the issue of free riding
with variable
 may be favoured by boroughs with
subscriptions
lower charges
Disadvantages
 would require formal changes to
subscription arrangements in the ALG
agreement.
 each subscribing borough has to
agree the changes in subscription
arrangements
 this includes 9 non contributing
boroughs and those which may have
to pay more
 LHUC remains a separate Committee
Option 3
Dissolve LHUC
and mainstream
the LHUC
functions
within the ALG
housing service
 provides an inclusive 33 borough
housing service
 separate LHU Committee no longer
required
 retains the scope and level of LHUC
research expertise and policy analysis
 provides an opportunity to potentially
review the current work programme
 need to get all 33 boroughs to
individually agree to new subscription
arrangements
 subscriptions funded from the HRA
would need to remain ring-fenced for
housing purposes
 does not require a formal variation to
the ALG agreement
 tackles the issue of free riding
Financial Implications for ALG
30.
The Housing Division budget for 2006/07 funded through the 33 borough ALG
subscription is £264, 084, or £8,003 per borough. The London Housing Unit budget
funded by the 24 subscribing boroughs is £936,528, or £39,022. If changes to the
funding arrangements for the ALG Housing Division are introduced such as those outlined
in Options 2a, 2b, or 3, this will have financial implications that boroughs will wish to
consider as part of their discussion of the options.
For instance, a 33 borough LHUC with equal subscriptions (option 2a) or an integrated
mainstream housing service (option 3) would have an annual subscription of £36,382 per
borough, at the current level of resourcing. This would result in an annual saving of
£10,642 for each of the existing 24 LHUC member boroughs, but result in an additional
annual cost of £28,379 for each of the current non-LHUC member boroughs.
Legal Implications for ALG
30.
There are no direct legal implications.
Equalities Implications for ALG
31.
There are no direct equalities implications
Appendices

Appendix A – summary of LHU activities from the explanatory foreword to the 2005/06
consolidated accounts

Appendix B - Boroughs which subscribe to the LHU
Appendix A
SUMMARY OF LHU ACTIVITIES FROM THE EXPLANATORY FOREWORD TO THE ALG
CONSOLIDATED ACCOUNTS2005/06
Particular achievements to note during 2005/06 include:







Obtained £61m additional housing revenue funding for London for 2006/07 compared to
previous year, and persuaded DCLG (formerly ODPM) to increase the amount by £26m
over original proposals.
Secured offer of 50% funding and interest free loan from Thames Water to assist
boroughs making adaptations for reduced water pressure.
Led the successful bid to DCLG for funding to work up model for pan-London Choice for
social housing and low cost home ownership and received £75,000 from DCLG.
Successful bid for £160,000 from Department of Work and Pensions (DWP) for the ALG
Housing Benefit Project. This project has worked with boroughs to improve Housing
Benefit service delivery across London
Successfully secured a national focus on the unique challenges faced by London
boroughs in tackling overcrowding, now recognised as a key investment priority in the
London Housing Strategy 2005. Raised political profile of overcrowding, and secured
£500,000 for boroughs to tackle this issue.
Following ALG lobbying, the London Housing Board created a £20m funding pot for
initiatives to transform temporary accommodation to permanent.
Successfully lobbied the Audit Commission regarding housing elements of Corporate
Performance Assessment – securing changes to Performance Indicators.
THE LHU SERVICE
The service includes research, analysis, information, advocacy and publicity to LHUC member
boroughs, helping boroughs to promote best practice and avoid duplication. It has a pro-active
projects programme prioritised by Member Boroughs and a responsive service. Service elements
include;
Evaluating changes: Updating boroughs with relevant social and housing policy changes and
provide accessible analysis of the London perspective. We assess the likely significance to London
as a region as well as boroughs in general, e.g. on housing finance changes - giving added value
through explanation and analysis in the London context; not just a copy of DCLG material.
Effects on individual boroughs of policy/financial/housing market changes: Analysing the
comparative position of each borough, e.g. quantifying the impact of finance announcements on
each borough.
Advocacy: Ranging from publicising member boroughs’ needs (and achievements) at an early
stage in policy reviews, to full-scale lobbying involving a combination of research, analysis and
promoting best practice. Also publicity and other public affairs work to highlight issues e.g.
overcrowding, investment needs, homelessness, affordability and new supply needs.
Readily accessible information with back up: Regular and ad–hoc briefings, summarising key
outputs from our policy and research work, plus member borough information on the web www.londonhousing.gov.uk
Forums with follow though: Organising 19 regular LHUC borough forums (some including nonLHUC members), providing key speakers on particular topics and preparing papers on specific
issues of interest. Combining strategic and local policy issues with practical operational support
in areas such as repairs and Housing Benefit. Points and queries raised are followed through
with officials or can form the basis of wider research.
Responding to queries: Responding quickly by phone or e-mail to one-off queries, providing direct
information and/or advice. This can include acting on the borough’s behalf e.g. putting a query
anonymously to DCLG or taking media enquiries the borough would rather not handle directly.
Borough specific service: Providing up to five person days support each year for each Member
Borough on a Member Borough’s issue of choice. Recent topics included Housing Revenue
Account finance, preparing for inspection (Audit Commission Key Lines of Enquiry), and developing
Housing Strategy. Other options include:

Urgent responsive support: Assisting a member borough: e.g. publicising service
achievements or quick context information to respond to local debates, providing support
requiring wide housing knowledge.

Group borough resource: providing resources e.g. a specialist consultant for projects on
behalf of a number of LHUC member boroughs, on a scale linked to the number
interested.

Locally oriented project: this can include detailed local research for a Service Plan project
and/or to provide local information wanted by a Member Borough e.g. shared ownership
options, rent arrears analyses.
The ongoing work includes servicing forums, periodic bulletins such as housing finance analyses;
production of the London Housing bi-monthly housing magazine; responding to Government
consultation papers and announcements.
Appendix B
The following boroughs subscribe to the LHU
Barking & Dagenham
Barnet
Brent
Camden
Croydon
Ealing
Enfield
Greenwich
Hackney
Hammersmith & Fulham
Haringey
Harrow
Havering
Hillingdon
Hounslow
Islington
Lambeth
Lewisham
Merton
Newham
Redbridge
Southwark
Tower Hamlets
Waltham Forest