Tonight at the tediously titled Overview and Scrutiny Committee we discussed a call-in of the new Labour administration’s decision to bring housing management of 18,000 council houses in-house. You may have read my previous postings about this highly political manoeuvre, here.
This management is currently done by Ealing Homes, a so-called ALMO, one of those weird, over-complicated, unaccountable products of our previous government. The new Labour administration proposes bringing this function in-house. The Tories wanted to outsource this function to competing external providers so that council house tenants and leaseholders had some power to choose supplier rather than having to accept what they were given which is standard Labour practice.
We didn’t change the decision but we did at least get some background to the woefully thin paper that Labour used to justify its decision, here. Labour leader Julian Bell has been claiming that their move will save £5 million. It emerged tonight that this saving was a four year saving, so only £1.25 million a year then. Bell uses the same double (quadruple) counting trick that got prime minister Gordon Brown the reputation for being a liar. Bell’s modest saving ignores the benefits of outsourcing. It appears that any savings will be driven by the re-tendering of the repairs and maintenance contract – a saving that will apply to any end solution. He reckons that council can save £1.25 million a year by cutting through the ALMO red tape. Great.
We also established that the Ealing Homes management fee of £12.8 million will effectively be in-sourced. Outsourcing this function to a competitive market, I think the council had 12 or 13 responses from not-for-profit housing associations to provide these services, should have resulted in a saving in the order of 25%, or £3.2 million per annum, in the long run. This amount represents a £180 per week saving for Ealing’s council house tenants on top of what Bell’s saving would deliver. Ooops. Labour really would rather be ideologically pure than help council house tenants.