Sheffield City Council - Sustainable Communities

Sustainable Communities; building for the future: the implications and opportunities for Sheffield.

1. Introduction

1.1 On 5th February, the Government published its long awaited Communities Plan, "Sustainable Communities : building for the Future". The plan is heralded as a step change in policy which sets out a framework for delivering decent homes in sustainable communities. In a report to Cabinet of 12th February, the implications of the plan for Council Housing provided a context for proposals to establish a process for neighbourhood based option appraisals called Neighbourhood Commissions. That report necessarily focused wholly upon the implications of the Communities Plan for the future of council housing in the City.

The purpose of this report is to:

· Explain the policy context and linkages between the Communities Plan and the Neighbourhood Renewal Strategy and the council's own successful neighbourhoods agenda.

· Present further analysis of the implications of the policy framework for Sheffield.

· Provide a synopsis of the implications for Housing.

· Provide further information about the development of the mechanisms for delivery including the role of the Regional Housing Board.

Appendix A provided an update on National Housing Policy following the Communities Plan and PDS Plus (Decent Homes Review).

Appendix B is summary of the PSA Plus Review into Decent Homes.

2 Balancing national priorities

2.1 The Communities Plan has its roots in a desire to better understand the changing patterns of household growth during the period between 1997 and 2001 and so to more appropriately redirect resources to meet these changing demands. In the opening chapter the report presents a series of graphical and geographical representations of data which amongst other things point to an apparent disparity between household growth and housing supply in the North and South of England manifesting in oversupply, low values and low demand in the North, with high demand, high values and under provision in the South.

2.3 Prominent among the announcements were the finalisation of the ODPM's Housing and Regeneration Expenditure Budgets for the 3 years to March 2006, a series of proposals for the significant reform of housing investment mechanisms for existing council housing stock, new homes and for low demand areas and a raft of initiatives aimed at smoothing implementation of policy beyond the end of the decade.

2.4 Alongside the announcement of spending plans for 2003/4 to 2005/6, the period of the last spending review, there were a significant number of detailed announcements still to follow including the outcome of then Decent Homes (PSA Plus) Review. Additionally there was also an amount of material deferred for "future consultation". On 3rd March the first of these announcements was made when the government published the outcome of the Decent Homes Review and announced the arrangements for the stock transfer and Arms Length Management Organisation (ALMO) programmes for the coming year. Further detail is contained in Appendices to this report.

3 Policy Context and linkages

3.1 The Communities Plan has much in common with the Neighbourhood Renewal agenda nationally and locally with its emphasis on 'joined up' solutions to the multiple problems experienced in deprived neighbourhoods. The Neighbourhood Renewal agenda highlights improved public services as critical to raising 'floor target' attainment in the areas of health, crime, employment, education, housing and the physical environment.

3.2 It sets a framework against which the essential characteristics of neighbourhoods needs to measured and in many neighbourhoods within this city it is evident that systematic interventions are required.

3.3 The opening section of the Communities Plan raises the rhetorical question "what makes a sustainable community" , and it is notable that the following indicators developed within the communities plan share a synergy with the work previously undertaken by this Council to identify the characteristics of a successful neighbourhood. The communities plan identifies a successful neighbourhood as having:

a flourishing local economy
strong leadership to respond to change
effective engagement and participation by local people, groups and businesses especially in the planning, design and long term strategy
stewardship of their community and an active voluntary and community sector
a safe and healthy local environment with well designed public green space
sufficient size scale and density and the right layout to support basic amenities in the neighbourhood and minimise use of resources including land.
Good public transport and other transport infrastructure both within the community and linking it to urban rural and regional centres
Buildings both individually and collectively that can meet different needs over time and that minimise the use of resources
a well integrated mix of decent homes of different types and tenures to support a range of household sizes ages and incomes
good quality local public services including education and training opportunities health care and community facilities especially for leisure.
a diverse vibrant and creative local culture encouraging pride in the community and cohesion within it
a sense of place
the right links with wider regional national and international community

3.4 Through the council's Successful Neighbourhoods corporate project group led by the Executive Director of Housing and Direct Services, we have been undertaking specific household research in a small number of neighbourhoods to test our assumptions about the relevance of our suite of neighbourhood indicators to the community. As part of this work a set of neighbourhood indicators which utilise data from a variety of local and national government sources have been developed and in fact 39 indicators have been grouped under 8 domains: Economic activity, Education and Learning, Housing, Access to services/ connectivity, Community Safety, Social Care, Health and Environment. These are currently being tested

4. Implications for Sheffield City Council

4.1 Sheffield City Council already has a number of elements in place to ensure it can respond positively to the Communities Plan. These include:

· A strong family of Partnerships;

· Area Panels who produce local area plans, identify priorities for Neighbourhood Renewal Investment and actions to improve local neighbourhoods

· Progress through Neighbourhood Commissions to review options for additional housing investment to meet decent homes standards in public and private sectors.

· A Housing Investment Strategy which is very close to Fit For Purpose with a review of the Strategy for Private Sector housing.

· Introduction of Neighbourhood and Environmental wardens in parts of the City.

· The Council's corporate key priority and vision to create successful neighbourhoods.

4.2 Of particular interest is the framework set out by the ODPM for 'Sustainable Communities in Yorkshire and the Humber' a regional "daughter document" to the Communities Plan. The broad approach being taken is reflected in Sheffield's Draft Neighbourhood Renewal Strategy "Attractive Successful neighbourhoods" against which progress is monitored by Sheffield First for Inclusion. The strategy incorporates the Successful, Neighbourhoods Vision for Sheffield which "Sheffield will be a City, where each neighbourhood is a pleasant place to live and visit that functions well and where residents feel proud to live. Irrespective of where people live or to which community they belong, everyone will have the opportunity and choice to benefit from and contribute to the city's growth and restructuring.

4.3 Sheffield's Social Inclusion Strategy with its emphasis on people and places is key to the realisation of this vision. The high level measures of success for all neighbourhoods include:

· Employment in line with national average

· No ward to have unemployment rate more than double the city average

· Reduce life expectancy gap between lowest wards and city average by

10%

· Reduce child mortality gap between manual groups and the population by

10%

4.4 As part of the Social Inclusion Strategy the recently completed local neighbourhood renewal strategy (LNRS) describes how regeneration and neighbourhood renewal fund investment is supporting delivery to achieve these outcomes. The strategy identifies all of those other issues that are referenced as important within the communities plan – i.e. Community safety, environment, educational attainment and housing investment. The investment by Sheffield of Neighbourhood Renewal Fund is also consistent with these objectives and those of the government's Communities Plan.

4.5 The Council's Area Action initiative is an especially relevant element of how the Council is responding to the agenda of local neighbourhoods. Through the role of Area Panels in the allocation of some elements of NRF through Local Action Plans (LAPS) there has been a strong emphasis on supporting local capacity to engage with the service improvement agenda and investing in local priority actions with high priority for activity to improve the safety and quality of the physical environment in neighbourhoods.

4.6 None of the above policy drivers and structures should be seen in isolation and there is a danger that the plethora of policy documents, partnership structures and varied terminology might present a fragmented approach. Some new phrasing does not indicate that the Communities Plan is a new or changed policy direction either nationally or locally. However, there is an obvious need to draw the linkages more clearly. The attachment at appendix A seeks to show how national and local policy frameworks are complimentary, but crucially the relationship between those partnerships with leadership and delivery roles. There is also a need a have a shared understanding that when we talk about 'neighbourhood renewal', 'sustainable communities' and 'successful neighbourhoods' that there is a single agenda about narrowing the gap between the most deprived neighbourhoods in Sheffield and the rest. The interventions used to do this will include investment in raising performance against government floor targets, close working with communities and partner organisations and the closely linking local strategies for tackling problems in housing and the environment, health, safety and educational attainment and employment opportunities.

5. Challenges and Opportunities

5.1 Better places

5.1.1 The communities plan introduces a new addition to the lexicon to describe the condition, cleanliness, appearance of the streetscene and open spaces and activities which take place there, all of which have a major bearing on the quality of life or liveability in communities. A new BVPI 199 will be introduced in 2003/04 which measures the general cleanliness of local authority land including the streetscene. This will be a key indicator of the liveability of communities and a comparator of areas within the City as well as a comparator with other competing cities.

5.1.2 The plan introduces a liveability fund of £201M over the next three years to improve liveability. At the present time we are waiting details of the Government's proposals for the use of additional resources being provided for Liveability. These seem likely to fall into two broad categories of action. Firstly, a targeted programme of Street Scene type improvements within deprived communities, and secondly a new programme of targeted priority investment in Parks and Open Spaces.

5.1.3 The Parks and Open spaces fund suggested nationally is in the order of £89M but details of the way in which this will be distributed are still awaited from the Government. Development, Environment and Leisure in consultation with Street Force are currently preparing plans for Street scene improvements and programmes in a number of deprived communities targeting in particular the Southey/Owlerton/Burngreave areas initially. The Parks, Woodlands and Countryside service are currently preparing area based Asset Management Strategies to identify priority needs for investment in Parks and Open Spaces and these are also being discussed with the relevant regeneration partnerships. It is intended that a further report on these matters will be prepared and reported back to Cabinet once the details of the criteria intended to be used by Government to resource these types of programmes are known.

5.2 Decent, Sustainable Homes

5.2.1 One of the strongest statements within the communities plan and the decent homes review is around the need for delivery mechanisms which not only deliver decent homes (the top priority) but which are capable of delivering improved services and greater levels of tenant and resident participation and influence particularly as part of the option appraisal process.

5.2.2 Every authority must complete an option appraisal process and submit a "fully funded" decent homes plan for "sign off" by the Government Office by 2005. This plan will demonstrate, how decent homes are to achieved by the target date of 2010. Criteria for sign off will be the subject of further consultation in May. However, the PSA Plus Review gives a clear framework for this. The centrality of tenants and residents, the need to involve tenants in the appraisal process as early as possible, the need to explain all options to as many people as possible and for tenants to have a clear role in determining the decision for the future. Although the Neighbourhood Commissions have commenced ahead of the completion of the option appraisal framework, the principles upon which the appraisal process is based are central to the terms of reference set for the commissions. The City Council will continue to engage in the consultation process and will revise and refine the terms of reference for successive neighbourhood commissions in the light of issued guidance.

5.2.3 The commitment to separating strategic and landlord functions is again reaffirmed. There is now a clear expectation supported by a Ministerial announcement that authorities should initially establish Arms Length management arrangements for housing management even where there is a likelihood that the authority will select PFI or Transfer to deliver decent homes. The government's belief that this separation enhances both the quality of landlord function and housing strategy is now fully enshrined in guidance.

5.2.4 The communities plan gives a clear commitment to improving the condition of housing in the private sector occupied by vulnerable people. Nationally, additional resources of £30M annually will be made available to assist councils to achieve decent homes, however no details are yet available about how this funding will be allocated.

5.2.5 From April 2004 there will be a single "Regional Housing Pot" aimed at delivering on Regional Housing Strategies which regions will have developed to replace regional housing statements by July 2003. Allocation of resources within the RHP will be the responsibility of the Regional Housing Board, consisting of the Government's Regional Director, the Government Office, the Housing Corporation, the Regional Development Agency, the Regional Assembly, English Partnerships, the Chairs of the two Regional Low Demand pathfinder Boards and potentially others. The Regional Housing Board will make recommendation to Ministers who will retain final decision making powers in respect of allocations. Both the Corporation's Approved Development programme and Local Government's Housing Investment Programme resources will effectively go into the Regional Pot, with the intention that resource allocations to local authorities will follow 2003/04 patterns in 2004/05 and 2005/06.

5.3 Planning reforms and land use

5.3.1 The communities plan heralds a reform of the planning system to ensure that proper use is made of land enabling well designed housing developments to happen. The planning Bill will mark the departure form predict and provide to a system of plan, monitor and manage by introducing a streamlined planning system which will bring greater focus to regional planning through the introduction of Regional Spatial strategies. A selective review of Regional Planning Policy has already commenced in the region, and this will need to be informed by in the new Government agenda to develop Regional spatial strategies. It is anticipated that the move to a full Regional Spatial Strategy will form part of the more comprehensive review which will come later. However, Members will be aware that at the current time a study of future Spatial Strategy for South Yorkshire is underway and the consultants are due to report in the near future. This will provide an important context for developing a new Spatial Strategy for South Yorkshire which will need to take account of the key objectives for the Sustainable Community Plan and in particular the emerging Housing Market Renewal Strategy for South Yorkshire.

5.3.2 The need for a streamlined Development Plan are already being considered as part of the work on developing a replacement Development Plan for Sheffield which is intended to take the form of a Local Development Framework under the provisions currently, including the Planning and Compensation Bill which is currently subject at committee stage in the House of Commons. The intention of the changes are to produce a more flexible and speedy development plan system for the City through the definition of a new Development Framework/Area Action Plans. It is currently envisaged that the consultation draft will be placed on Deposit in the spring of 2004 and will be well placed to take on board the emerging issues for Neighbourhood Renewal in Sheffield.

5.3.3 As far as Brownfield land development is concerned, Sheffield is already achieving in the order of 80% of all new housing development on Brownfield sites. The Urban Capacity Study which was carried out in 2001 and which is currently being updated, indicates that such a target should continue to be achievable over the life of the new Plan. However, there are other issues in parts of South Yorkshire where a much higher proportion of development is currently taking place on Greenfield land and therefore working with partners in South Yorkshire, as housing markets overlap, will be a key policy objective in the coming year.

5.3.4 A Planning Delivery Improvement grant has been introduced, with the first allocations from the £350M national pot having been announced. Sheffield, along with most of the major northern cities is to receive the floor allocation of £75,000 per annum. An action plan is already in place which seeks to improve performance in the service to achieve the Government's targets for the processing for major and minor and other planning applications within the next 3 years. If successful this Action Plan will be rewarded by increase in planning improvement grant for next year and the subsequent years, and therefore a targeted strategy of improvement and focusing of resources on the Development Control process is currently in hand. Progress on delivering the Best Value Action Plan is monitored by the Chief Executive and Cabinet Advisor for Finance and Performance, and the Cabinet Member for Development.

5.3.5 As a result of changes in procedures and targeting resources, it is currently expected that the outturn for the year to March 2003 will show significant improvement from the previous year's performance and will place the service in a good position to improve performance further over the coming year and therefore maximise the service to customers and enable the Council to claim a higher level of resources from the Planning Delivery Grant.

5.3.6 In recognition of the need to prioritise resources on to support Neighbourhood regeneration, the Council has set up a targeted team to deliver planning and land use strategies and programmes in support of regeneration initiatives in the priority regeneration neighbourhoods in the City. This team is to be resourced from a combination of the re-targeting of existing resources within the Planning, Transport and Highways service, matched with resources from regeneration funds (SRB 5), Neighbourhood Renewal Fund, Housing Market Renewal) together with a contribution from the approved Housing Development Programme. It is anticipated that this dedicated team will provide a clear focus for supporting the regeneration agenda set out in the Community Plan here within the City.

5.3.7 Examples of the type of projects which will be led by this team include; work on the development of the Neighbourhood Strategies in the Southey Owlerton regeneration area, working jointly with the Burngreave New Deal for Community Board to deliver the Spital Hill Redevelopment, development of a Transport Strategy for the north of Sheffield with particular emphasis on Southey/Owlerton/Burngreave, Firvale and Brightside and developing new proposals for improving accessibility to jobs and services for these communities.

6. Conclusions

6.1 The Council is already well placed to deliver much of the expectation within the Government's Communities Plan.

6.2 Creating successful neighbourhoods remains a key corporate task for the Council and will be assisted by recent structural changes. The role of Area Panels and work of Neighbourhood Commissions continue to be important elements of this work. However, there is more work required to align strategies with clear economic and social performance indicators being available at both City and neighbourhood level, bring forward proposals for improvement neighbourhood management, neighbourhood planning and the establishment of a framework by which the performance or clear measurement of the improvements within all neighbourhoods can be gauged.

7. Financial implications

7.1 There are no immediate financial implications arising from the recommendations in this report. In terms of the Sustainable Communities plan itself the key implications can be summarised in terms of:

· specific Housing issues

· wider issues

Specific Housing Issues

7.2 Other sections of this report cover the overall picture in the Plan in terms of resources for capital investment in housing. Sheffield's overall investment requirement has also been the subject of recent reports to Cabinet.

7.3 Sheffield's Better Homes, Better Neighbourhoods strategies are already working to access the funding streams set out in the Plan. Key to this is the Neighbourhood Commission process. In particular a bid has been submitted for ALMO funding of £144.83M for 2004/05 to 2010/11.

7.4 The Plan will continue to inform both the long term strategy and the HRA capital and revenue budget planning for 2004/05.

Wider Issues

7.5 The financial implications of meeting the required standard of cleanliness in the new "cleanliness" BVPI are currently being assessed and will be incorporated in the Council's Financial Strategy process, which is planned to be reported to Cabinet in July. As well as assessing the costs, an assessment needs to be made of any potential grant income from the Government's "liveability fund". Additional costs of improving the performance indicators for the planning service will be contained within the PTH budget. To assist with this the Planning Improvement grant from Government (£75,000 in 2003/4) will be passed on to the planning service in full. The costs of providing prioritised planning resources to support Neighbourhood regeneration will be met from existing resources, grant income and a contribution from Housing.

8. Recommendations

That the implications for Sheffield of the Governments Communities plan are noted.
That the implications of the introduction of a new Best Value Indicator BVP199 (environmental indicator) are noted.
That the implications for the introduction of a revised planning framework be endorsed
That the commitment to achieving a brown field site redevelopment target of 80% be endorsed
Notes the outcome of the PSA Plus Review and further developments in the National Housing Policy since publication of the Plan and reaffirms the commitment of the Council to produce a fully funded decent homes plan by 2005.

APPENDIX A

Sustainable Communities; building for the future: Update of Development in National Housing Policy

1. Introduction

1.1 In the report to Cabinet of 12th February, the implications of the plan for Council Housing provided a context for proposals to establish a process for neighbourhood based option appraisals called Neighbourhood Commissions. That report necessarily focused wholly upon the implications of the Communities Plan for the future of council housing in the City.

1.2 Alongside the announcement of spending plans for 2003/4 to 2005/6, the period of the last spending review, there were a significant number of detailed announcements still to follow including the outcome of the decent homes (PSA Plus) Review. Additionally there was also an amount of material deferred for "future consultation". On 3rd March the first of these announcements was made when the government published the outcome of the Decent Homes Review and announced the arrangements for the stock transfer and Arms Length Management Organisation (ALMO) programmes for the coming year.

1.3 This appendix provides:

· a synopsis of the Government's Decent Homes (PSA Plus) Review, setting out the implications for the City Council,

· further information about the development of the mechanisms for the delivery of decent homes including the role of the Regional Housing Board.

2 Delivering Decent Homes

2.1 Sustainable communities; building for the future reaffirms the governments challenge to councils to bring all council housing up to a decent standard by 2010. Following the comprehensive spending review announcement in July of last year, the government recognised that although good progress was being made towards the interim target of one third of non decent homes being made decent by 2004 , the 2010 target was at risk, without a change in policy..

2.2 The Decent Homes review took place between September and November 2002. The terms of reference for the review was to examine all policies contributing to the delivery of decent homes and to make recommendations. The work undertaken within the scope of the review was grouped under three main headings; getting the basics rights; putting the right framework in place; and ensuring delivery works. The steering group incorporated visits to Sheffield and Whitefriars Housing Group Coventry. The visit to Sheffield is reported to have been particularly influential.

2.3 The findings of the review together with the 32 recommendations are set out fully within the Executive Summary and recommendations attached to this report. Briefly the findings of the Decent Homes Review emphasised the need to

· Base decisions on the investment in and management of the stock on sound information about the stock and the local housing market

· Put tenants at the heart of delivery fully engaging them in the delivery of decent homes

· Ensure that delivery is sustainable, making estates places where people want to live and where there is long term demand for the housing strongly linked to wider regeneration initiatives.

· Choose options that best fit local circumstances using mixed approaches where one solution will not address each locally based neighbourhood problem.

· Base investment decisions on a robust option appraisal which looks not only at investment but at the services being offered to tenants.

2.4 The Communities Plan makes clear that there are three routes open to councils who need additional investment for part or all of their stock to deliver decent homes: Stock Transfer, Arms Length Management and the Private Finance Initiative (PFI). Each option results in the separation of the councils landlord service from its strategic functions providing greater prominence for the strategic function and clear focus to improve the performance of the day to day housing service.

3 Key Housing Policy Issues

3.1 Policy Headlines

Taken together, the Communities Plan and the Decent Homes Review now establish a policy framework which change the way investment options can work for councils. The key housing policy issues emanating from both the Communities plan and the decent homes review are:

· The government's commitment to the 2010 decent homes target is restated

· Local authorities are required to have carried out option appraisal and to have a "fully funded" decent homes delivery plan "signed off" by 2005. Government will intervene where authorities fail to do this.

· Sustainable homes are now seen as a fundamental requirement. An allowance of 5% is now available within ALMO allocations to fund "sustainability work"

· Emphasis on tenant involvement in option appraisal is underlined

· Barriers to stock transfer have been removed

· PFI for the refurbishment and limited replacement of local authority housing is to be simplified, and an additional £685M is available over the next three years.

· £1.9 billion for Arms Length Management is confirmed with £700million being available under bidding rounds 3 and 4 during 2003.

· Decent homes target is extended to vulnerable occupants of private sector housing with an addition a £30M being made available over the 2004/5 and 2005/6.

3.2 Resources

3.2.1 There are increases in resources for all of the main options for the future of Council Housing stock, and although the decent homes standard extends to all social housing, Housing Associations are expected to reach the required standard using existing internal resources only. There is however a clear and unambiguous statement that there will be no extra money for councils who retain their stock under existing arrangements over and above the announcements in the Communities Plan.

3.2.2 A council retaining its stock under existing management arrangements will therefore need to rely exclusively on the Major Repairs Allowance and internally generated resources such as capital receipts and, where possible revenue contributions from the Housing Revenue Account to achieve and keep council housing decent.

3.3 Tenant Involvement

3.3.1 One of the strongest statements within the communities plan and the decent homes review is around the need for delivery mechanisms which not only deliver decent homes (the top priority) but which are capable of delivering improved services and greater levels of tenant and resident participation and influence particularly as part of the option appraisal process.

3.3.2 The criteria for signing off option appraisals will be the subject of further consultation in May. However, the PSA Plus Review gives a clear framework for this already: the centrality of tenants and residents, the need to involve tenants in the appraisal process as early as possible, the need to explain all options to as many people as possible and for tenants to have a clear role in determining the decision for the future". The need to positively reject options is also clear i.e. it will not only be appropriate to adopt one option without explaining clearly why other options have been rejected.

3.3.3 Although the Neighbourhood Commissions have commenced ahead of the completion of the option appraisal framework, the principles upon which the appraisal process is based are central to the terms of reference set for the commissions. The City Council will engage fully in the consultation process and will revise and refine the terms of reference for successive neighbourhood commissions in the light of issued guidance.Council's which bid under the impending round of ALMO, PFI and LSVT applications will have their appraisals scrutinised as part of the bidding process.

4. The Options

4.1 Stock Transfer

4.1.1 Measures within the Communities Plan and the PSA Plus Review can be seen as a reaffirmation of stock transfer as a mainstream process for achieving decent homes. The key developments include:

· Payment of debt redemption premia on (PWLB loans only) as well as overhanging debt on low value transfers.

· Exploration of ways to fund negatively valued transfers, although PSA Plus appears to rule out central grant funding; concentration is therefore expected on using other local resources, the security of existing housing associations financial strength or regional single housing pot resources.

· Partial debt redemption clearance for partial transfer in order to ensure the capital receipt for many subsequent whole stock transfer is as far as possible available for the authority.

· Some criticisms have been acknowledged about the value for money on set up costs and the use of the capital receipt following transfer, and there is a commitment to find ways to measure value for money at the local as well as national level.

· Consultation on alternative funding mechanisms

· Relaxation of the upper limit of 12,000 properties for individual RSLs.

· The transfer guidance issued on 3rd March includes the criteria for getting into the programme and suggests that approaches to the setting of different discount rates can be adopted in the current low interest rate climate. This technical change could fundamentally change the value of low or negative value transfers.

· An affirmation of the commitment to seeking landlord choice in the transfer progress. This is highly significant for Sheffield where there is already evidence that communities are interested in examining what existing Housing Associations are able to offer in the context of service and investment delivery.

4.1.2 The policy changes on stock transfer are primarily aimed at providing transfer as a real financial alternative in large stock, urban and low value areas. These amendments take account of all the policy and technical changes proposed by the City Council. The changes now mean that either whole or partial stock transfer in the city is now a technically feasible option.

4.1.3 The Communities Plan was less encouraging on the subject of the potential for new forms of transfer organisation. Although the Community Gateway model (currently being developed in Preston) is mentioned in both documents and welcomed, the development of such a model is apparently left to evolve outside of any specific policy initiative.

4.1.4 There is also a clear demonstration running through the PSA Plus Review that stock transfers can deliver service improvements and that tenants need to be presented with the exemplifications of service enhancements when they are consulted on the options.

4.2. Arms Length Management Organisations

4.2.1 The increase in the level of resources for the ALMO programme and is a five fold increase on the level of resources made available when the initiative was first launched. Key policy changes and developments now effectively confirm Arms Length Management as a mainstream option within reach of far more councils as the sole or substantial mechanism for delivering decent homes. The key developments are:

· The minimum requirement to gain access to supplementary borrowing approval is confirmed as having reduced from three to two stars. There is no minimum threshold on the prospects for improvement rating. There is now no upper limit on resources, the £5000 per unit average ceiling having been rescinded.

· Although the upper transfer size limit of 12,000 has been rescinded, there remains a continued expectation of a 12,000 upper limit on each ALMO board size (although not necessarily single ALMO size)

· Of the £1.9 Bn of resources announced within the communities plan, £700M for new rounds 3 and 4 is confirmed as being available. The timescale for submissions is April/May for round 3 and September / December 2003 for round 4. No further rounds of the ALMO programme have yet been announced, however the expectation is that subsequent rounds will be run on 9 monthly cycles.

· The resources will be aimed at delivering Decent Homes but with recognition that investment in sustainability is also needed - a proportion of ALMO resources will be set aside for this purpose, nominally 5% of the level of the bid.

· Bidders must now set out in more detail at the bid stage proposals for governance and investment programmes. A stock transfer style Business Cost Model, to test value for money must accompany applications.

· Part of the criteria will also relate to the Council's current position against the resource qualifying standard (2 stars)

· The outcome of the "Blue Skies" debate on the reform of housing capital finance is expressed in the commitment to explore ways for 3 Star ALMOs to be given extra freedoms and flexibilities, including the possibility of coming out of the subsidy system through a process of HRA debt restructuring.

· The prospect of partial ALMO's is also set out, however the guidance remains geared to whole stock rather than partial solutions. This development is highly significant for Sheffield's mixed approach to investment solutions.

4.3 Private Finance Initiativ, e (PFI)

4.3.1 The low pace of the first and second round pathfinders is the subject of in depth consideration in the PSA Review. Whilst two of the nine pathfinders have now signed PFI agreements, work has yet to start. There is a reaffirmation of the government's commitment to this approach as a key delivery mechanism for Decent Homes and wider regeneration and development. The developments in the policy and resource framework for PFI are:

· Increase in resources of £686 million for HRA and other housing PFI credits to 2006

· The amendment of subsidy and other detailed arrangements to remove barriers for PFI schemes

· The inclusion of the ability to develop (some limited) new housing to replace defective or cleared housing in PFI schemes.

· Outline and preliminary guidance was published on 3rd March and a third round of bids invited during the spring of 2003.

· PFI credits will be payable against investment which delivers sustainability as well as decent homes.

· The role of the Community Housing Task Force is extended to include giving advice and support to Council seeking to develop PFI proposals.

· The outcome of the "Blue Skies" debate on the reform of housing capital finance is expressed in the commitment to explore ways for 3 star ALMOs to be given extra freedoms and flexibilities, including the possibility of coming out of the subsidy system through a process of HRA debt restructuring.

5. Market Renewal

5.1 The Communities plan provides confirmation of the long term commitment to the nine low demand pathfinder projects of which the South Yorkshire Partnership is the largest. All nine pathfinders were allocated £2.66M in 2002/3 to meet the costs of establishing the pathfinders and funding "Early Wins" schemes. A further £4M has been allocated to the South Yorkshire partnership to fund further early wins activity. Future levels of funding will be reviewed in 2004 and in subsequent spending reviews.

5.2 Within the Communities plan, the major focus on achieving the 2010 Decent Homes target is emphasised further by the explicit expectation that LSPs and New Deal partnerships will direct Neighbourhood renewal funding and New Deal funding to support regeneration both within and outside the pathfinder areas.

5.3 The Audit Commission has established a unit to monitor the low demand pathfinders, and to disseminate good practice to support market restructuring and regeneration across the north and midlands.

6. The Regional Picture

6.1 For the first time in 2003 the Yorkshire and Humberside Region has produced a Regional Housing Strategy (RHS). The purpose of the strategy is to advise on the priority areas for housing investment in the region and to ensure stronger integration with other strategies at the regional level.

6.2 The strategic objectives have been developed in consultation with stakeholders at the regional subregional and local level. Sheffield has been fully represented throughout this process hosting and chairing the subregional stakeholder event. The objectives are:

· Responding to changing housing markets

· Provision of affordable homes to enable mixed income communities

· Urban regeneration and neighbourhood renewal

· Providing high quality homes to meet peoples aspirations

· Fair access to housing for all groups

· Developing capacity and skills to deliver

6.2 Alongside the development of the RHS, the Communities Plan introduces the Single

Regional Housing Pot (SRHP)from April 2004.

The allocation of resources within the SRHP will be the responsibility of a newly established Regional Housing Board, consisting of the Government's Regional Director, the Government Office, the Housing Corporation, the Regional Development Agency, the regional chamber, English partnerships and potentially others at the discretion of the Board.

6.4 Both the Housing Corporation's Approved Development programme and Local Government's Housing Investment Programme resources will effectively go into the Single Regional Pot, with the intention that resource allocations to local authorities will in part follow 2003/04 patterns in 2004/05 and 2005/06. For 2004/5and 2005/6, 70% of the HIP element will be allocated according to the formulaic measure of need used in the 2003/4 allocations with the remaining 30% being retained in the SRHP. From 2004/5 the ADP will be fully freed up and included in the SRHP however existing commitments and pre-allocations will be met.

6.5 The regional Housing Board will determine the allocation strategy for resources within the SRHP. Consultation with key stakeholders on possible allocation methodologies has been undertaken with Sheffield representing the South Yorkshire subregion.

6.6 Achieving the decent homes standard remains one of the key challenges facing the Region. A total of 162,700 homes in the region currently fail the decent standard, 43,000 of this number are in Sheffield. Regionally some 130,000 private sector homes are in an unliveable condition with 28,000 homes in Sheffield failing to meet the decency standard. Sheffield is unique regionally and nationally to have set both public and private sector decency targets and to be working on cross tenure option appraisals and delivery plans linked to Neighbourhood Renewal strategy objectives.

7 Joining It All Up

7.1 There is a clear intention to achieve sustainable solutions to the way we plan and build new housing, whilst tackling and delivering regeneration using a holistic multi agency, multi service approach. The statement that "in the past we built housing estates, in the future we want to build communities" perhaps encapsulates the desired step change in policy and approach being sought by the government.

7.2 The role of the Regional Development agency in housing is to be welcomed as is the new role of English Partnerships in identifying and assembling sites for new development and working with the Housing Corporation to provide affordable housing.

7.3 Increases in resources for the Neighbourhood Renewal Fund are announced, and an extension to Neighbourhood Management pilots is being supported. More to follow

7.4 There is a restated commitment to end the use of bed and breakfast for the homeless by 2004. £260m will be invested over the next three years to tackle the structural and underlying personal causes of homelessness. Sheffield has been allocated £200,000 for 2003/4 to assist in the delivery of its homelessness strategy and to develop a strategy for the replacement and re-provision of interim accommodation.

APPENDIX B

Review of the delivery of the decent homes target for social housing (PSA Plus Review)

Executive summary and recommendations

Introduction

Decent housing is a vitally important component of sustainable communities and it is important for individual households as poor housing conditions can damage health. It is seen by the Department of Health as having an impact on their target of narrowing the gap in life expectancy by area and reducing the difference in infant mortality across local authorities.

To secure delivery of decent housing to all social housing tenants the Government set a target, as part of the 2000 Spending Review to make all social housing decent by 2010. This would result in a marked improvement in the living conditions of households whose homes were part of the 1.6 million that fell below this standard in 2001. This commitment was reaffirmed in July 2002 as part of the 2002 Spending Review.

Since the target was set progress has been made. On available evidence the milestone of one-third reduction in the number of homes below the decent homes standard by 2004 will be met. But there is sufficient evidence from local authorities' current business plans to suggest achievement of the 2010 target is at risk. The PSA Plus Review was set up to assess this risk by identifying shortcomings in the current decent homes delivery plan and recommend changes to improve it.

The Review

The Review was directed by a steering group, primarily of external stakeholders. Evidence for the Review was provided through a number of different workstreams co-ordinated by a project team.

The findings are grouped under three main headings:

- Getting the basics right

- Putting the right framework in place

- Ensuring delivery works

The Review has made a number of recommendations, the key ones of which were published in "Sustainable Communities: Building for the Future" The full list is at end of the summary. Throughout the report are lists of key actions through which the recommendations will be implemented, each action will be taken forward in ODPM's Delivery Plan and, where appropriate, will be developed with external stakeholders.

Getting the basics right

Putting the tenant at the heart of decent homes

Tenants are the focus of delivery in social housing and meeting their priorities is important to the delivery of decent homes. But landlords also have to consider the needs of future tenants by ensuring that any investment strategy for their stock is developed in the context of the wider housing market.

Tenants need to be fully engaged in decisions about the future of the homes in which they live. Planned revised guidance on options appraisal should clearly state this and set out how best this can be achieved. Tenants also need to be provided with strengthened independent support.

Part of a wider strategy for neighbourhood renewal

Decent Homes must exist within neighbourhoods that are sustainable in the long term. This increasingly depends on efforts to regenerate areas ensuring that areas of social housing are places in which people are happy to live. Where wider regeneration is an issue the delivery of decent homes should form part of a wider strategy for neighbourhood renewal. Housing providers need to work closely with Local Strategic Partnerships and New Deal for Communities Partnerships where appropriate.

Putting the right framework in place

A level playing field

Local authorities need to be able to choose the right approach for additional investment in their own stock from the three existing options of stock transfer, the Private Finance Initiative (PFI) and, for high performing authorities, Arms Length Management Organisations (ALMO). Local authorities need to be able to apply different options in different areas to suit local circumstances and tenants priorities as part of an overarching strategy for all council owned stock. To make this possible the Review recommends the removal of barriers identified as unnecessary. These include meeting the cost of early redemption of debt, extending overhanging debt treatment to partial stock transfer, and exploring options for gap funding of negative value housing stock.

Improving the different ways to deliver

Where local authorities retain their stock, best value reviews have shown that management remains the priority whilst other strategic issues can often be overlooked. For those who no longer have stock the wider housing function is often ignored. Separation of the landlord role from the strategic function should be encouraged as a means of improving performance on both fronts. Linking additional resources for decent homes delivery supports this approach.

There are lessons to be learned from the housing inspections of the first round of ALMOs. The key to a sound proposal is the work undertaken in the options appraisal, the outputs of which should show clearly the steps that need to be taken to achieve 2 star rating and their planned investment strategy. Future bids should be required to make clear their governance arrangements at an early stage. Revised ALMO bidding guidance should make these arrangements clear.

Transfer still has a key role to play in delivery. The Review has made great strides in ensuring that future transfers will be better placed to deliver good services to tenants. More robust option appraisals will be the starting point. But the Review has also started some work on alternative funding models for transfers to ensure transfers deliver the best possible service to tenants.

Lessons cannot yet be learned from PFI in practice as the first contracts still need to be signed. But already considerable experience has been gained as to how to make the setting up of contracts more straightforward and a number of actions are being taken forward to ensure that current and future projects can run more smoothly.

Ensuring delivery works

Strengthening the 'front end'

The Review has shown that a key risk to delivery is right at the start of the process of thinking about investment in decent homes – that is in the option appraisals that local authorities conduct. Many options appraisals are weak, taking a narrow view of the costs and benefits and do not focus on the provision of better service to tenants. The rigour of appraisals is not currently assessed.

More support needs to be provided for the conduct of these appraisals which will ensure the active engagement of tenants. The Community Housing Task Force will expand its role to provide hands-on support and guidance to all authorities as an integral part of their option appraisal work. It is proposed that appraisals will be formally signed off by Government Offices to ensure rigorous approach has been taken Government Offices will need to develop the necessary expertise to achieve this. As part of their business planning process all authorities need to have finalised the appraisal of their options for delivering decent homes and providing a good service to tenants by July 2005 at the latest if all are to have plans in place that deliver decent homes

Support and capacity building

Several organisations other than housing associations and local authorities have roles to play in the delivery of decent homes but roles currently overlap. There is work to be done to clarify the roles of the key players both in central and regional government and other agencies in order that co-ordinated support can be offered to those housing providers that need assistance in delivering decent homes.

Lack of capacity in some local authorities and housing associations has been identified throughout the review as a key risk to delivery. These organisations can be supported to get them on the right track but for the improved performance to be sustained this improvement has to be retained within the organisations.

Capacity can be improved through a range of tools. There is a wealth of good practice guidance, and training courses, seminars and conferences exist to cover the decent homes delivery agenda. But users of guidance feel there is too much. There needs to be better co-ordination of what is produced and more effective means of dissemination.

A staircase of levers and intervention

Central government relies on many agents to deliver the decent homes target. As well as support to those agents, central government needs ways to influence and drive those agents that are not delivering for their tenants. The government is clear that better condition housing is not just for some tenants but for all tenants.

The Review has recommended a number of incentives that will help drive delivery forward. There also needs to be a staircase of support, persuasion, soft levers, hard levers, and intervention that can be used be used to minimise and respond to delivery risks. Within this the developing role of the Comprehensive Performance Assessment and subsequent improvement plans needs to be fully explored.

Implementation

Without good repairs, maintenance and capital investment strategies decent homes will not be delivered and tenants will not receive a good service which provides value for money. The Audit Commission's "Learning from Inspection" report identified both good and poor practice in these areas. A particular issue is poor procurement practices and work will be undertaken with the Housing Forum to learn from their demonstration projects in this area

Lack of capacity in the construction industry is a key risk to the delivery of the decent homes target. The government's agenda requires a significant step change in the outputs, ranging from major infrastructure projects through new housing to refurbishment and repairs and maintenance needed to deliver decent homes. ODPM will engage in more effective dialogue with other government departments that can support the growth in capacity of the construction industry. Regional construction forums need to ensure that capacity issues are tackled in both regional development strategies and regional housing statements. Local authorities and housing associations need to build training opportunities into the contracts which they let for repairs and refurbishment.

Recommendations

Getting the basics right

1. Meeting the priorities of tenants is central to delivery of decent homes as they need an environment that they are proud to live in. This must also include future tenants by taking account of the context of the wider housing market.

2. Local authorities should assess which parts of their area require wider regeneration and where it is an issue the delivery of decent homes should form part of a wider strategy for Neighbourhood Renewal and community cohesion.

3. ODPM should endeavour to develop policy on decent homes within wider Government objectives, working with other government departments to secure shared goals.

4. Ensure delivery of decent homes is also about delivery of better services to tenants and that tenants are involved in decision making.

Putting the right framework in place

5. ODPM to keep value for money (VFM) analysis of policies that deliver decent homes under regular review to take account of any changing circumstances and ensure that local authorities also make appropriate VFM assessments when determining investment options.

6. On the basis that all options represent acceptable VFM:

a. As part of a wider Local Strategic Partnership strategy transfer proposals should identify regeneration elements that can be funded by other partners, outline how delivery can be ensured, and where appropriate make provision within the transfer proposal for those costs that are appropriate to local housing providers to ensure decent homes remain sustainable.

b. ALMOs and PFI should also include works to safeguard the sustainability of decent homes.

c. Treat premia payments for early redemption in the same way as overhanging debt, while maintaining incentives on local authorities to optimise transfer price.

d. Extend overhanging debt treatment to partial transfers subject to a justifiable/ auditable method being devised for calculating the debt attributable to the transferred stock.

e. Further discussion on gap funding to look at ladder of options for dealing with negative value stock, starting from exploring all possible structures of private finance (e.g. aggregated bond issues, structured finance or repayable dowry/grant), through to loans/grants from the single regional pot.

f. Regional bodies should be responsible for any loan or grant to act as gap funding, as they will be responsible for delivery of decent homes, and will act as recipient for any future repayments.

g. Allow Social Housing Grant to be used to fund appropriate re-provision through the existing or transfer housing association where there is a clear requirement and when this cannot be accommodated within the business plan;

h. Make changes to rules for PFI .

i. Revoke blanket rule on the upper limit for housing stock transfers, on the grounds solutions should focus on what is right for local communities. Group structures may still be preferable to large new landlords.

7. Allow greater local flexibility to determine the most appropriate solutions for local circumstances as part of the options appraisal, but locally based solutions should be part of an overarching strategy for the whole of the local authority stock.

8. Greater emphasis must be placed on the development of housing strategies which set the framework for investment in social housing.

9. Where local authorities say they can deliver through existing resources there is still a need to challenge the robustness of their plans and performance against plan needs to be closely monitored. Where these are "excellent" authorities under Comprehensive Performance Assessment (CPA) decisions are needed on how performance might be tracked.

10. Strive to boost both efficiency of capital programmes and delivery of programmes by using existing levers available.

11. The Housing Corporation will provide ODPM with information from statistical returns, and will take a more proactive role in assessing whether a housing association will deliver decent homes.

12. Government, with the Housing Corporation, to offer guidance and support for stock rationalisation and restructuring where it is appropriate and offers a local solution to a local problem.

13. The Housing Corporation should encourage sensible risk taking, backed up by guidance and a balanced approach to failure, to ensure innovation and good incentives to deliver on calculated risks.

14. Government and the Housing Corporation must offer advice on group structures, and in particular must ensure that tenants are offered opportunities to be involved.

15. The ODPM should learn from the inspections of the Housing Inspectorate, feed them into the processes and checks in the ALMO programme before consent is given by the Secretary of State.

16. Revise the management of the ALMO programme to reduce uncertainty and improve incentives to improve service delivery and to encourage partial ALMOs.

17. Develop the proposal for a self-financing approach for 3 star ALMOs ("ALMO PLUS") and work up a detailed proposal as part of the move to a full prudential regime that can be agreed and consulted upon as soon as possible.

18. ODPM should urgently implement the proposals to try to get PFI contracts for refurbishment signed and work underway, focussing on standardisation, boosting capacity in local authorities, to build market confidence.

19. Once the first contracts have been signed, and using the emerging findings of the PFI evaluation, ODPM should explore options for developing PFI for new build as part of a refurbishment scheme.

20. Improve the VFM of stock transfer by pursuing those areas with most potential in the short term (transfer receipt and set-up cost), and by a longer term focus on ensuring the key benefits of transfer proposals for tenants are realised.

21. Develop the three options for alternative funding structures for transfer: considering scope and viability, consulting the financial services industry, and then put out for consultation.

22. Ensure options appraisal process offers tenants a choice of possible successor landlords in determining the model of transfer that would be pursued. Where this isn't the case, offer this choice to tenants as part of the transfer process.

Ensuring Delivery Works

23. Social landlords must have robust information about their stock and on demand and supply on which to base their investment strategies to deliver decent homes.

24. The requirements for options appraisal must be strengthened, better guidance needs to be produced, the roles of the main players needs to be clarified, and tenants must be fully involved from the start.

25. There needs to be better integration of the roles and responsibilities of the key supporters of delivery facilitated by ODPM, including the Community Housing Task Force and Government Offices. Develop a set of protocols which set out respective roles.

26. Work to improve capacity both within and outside the ODPM, expanding the skills base where necessary, exploring the opportunity for innovative approaches to sharing expertise and improving the co-ordination of, and strategy for, existing guidance and guidance production.

27. ODPM need to set out a staircase of support and praise, persuasion, soft levers, hard levers, and with intervention as a last resort, that will be used to minimise and respond to delivery risks.

28. Local authorities should, as part of their Best Value responsibilities, make the delivery of decent homes a priority. Equally, the decent homes target needs to be an important element of Comprehensive Performance Assessment and related housing inspections, and the inspection of housing associations.

29. Better use must be made of the good practice experience that exists to improve performance and innovative ways must be found to get the message across.

30. ODPM to engage in more effective dialogue with other government departments that can support increasing the capacity of the construction industry (DTI, DWP, DfES) and regional construction forums, to ensure that capacity issues are tackled in both regional development strategies and regional housing strategies.

31. Explore options for solving the problems created by leasehold properties on social housing estates, and give a clear message to prospective RTB purchasers.

32. ODPM should undertake regular monitoring of progress made to date and estimate likely future progress. The information underpinning this monitoring should be as robust and accurate as possible. Progress will be reported through a number of formal mechanisms already established by ODPM.

Housing Delivery Unit

Office of the Deputy Prime Minister