Why prudential?

The next issue to tackle was trying to define what sort of housing standards we want to see. We saw this as not only the bricks and mortar issues, but also of the psychological affects of poor neighbourhoods or the frustrations with poor management and repairs. We decided to take the Welsh housing quality standard (WHQS), which is superior, more comprehensive and more expensive than the decent homes standard, as our benchmark. We saw it as a good start.

However, we are committed to listening to our current and future tenants and embarked on a consultation exercise with over 1,000 tenants, and future tenants. This was in the shape of both focus groups and a face-to-face survey. From this sprang the Carmarthenshire homes standard – our panacea. It comprises three elements – a building standard, a tenancy and estate management standard and a neighbourhood management standard.

The building standard in many ways is in excess of the national standard. For instance tenants wanted increased levels of security lighting and carbon monoxide detectors.

At this stage we did not consider what we can achieve by 2012 (the date for Welsh authorities to meet the WHQS), or the resources available, but solely on defining the standards tenants and future tenants wish to see their homes bought up to, maintained and managed. As it turned out, there is little difference between ours and the national standard.

Next came the trickier issue of how we are going to achieve the standard. We spent nine months working through the options with consultants and importantly an independent tenants adviser. Although this was only the options part of the process, we were anxious that tenants had access to specialist help and advice. We started to look in depth at the options. The bulk of the work was undertaken by an options team that included tenants and trade unions. It also included colleagues from across the authority such as legal and finance. The options were quickly narrowed down.

While technically we could form an ALMO (for mainly governance reasons) this would not attract any additional funding as is the case across the border. We already have an housing services advisory panel made up of officers, tenants and members so we saw little real advantage of this, compared to the set up costs.

PFI was ruled out as we feel we do not have the capacity to undertake a project with a long lead in-time and the associated costs and risks. In any case, there are no additional PFI credits available in Wales.

The options fairly quickly boiled down to retention or transfer. A telephone poll revealed that 94 per cent of tenants want to stay with the council. Albeit from a less than informed position, all our feedback from tenants was the desire to stay with the authority. It seems, whatever the level of our service, there is a local trust with the council and its members. The question was the size of any funding gap to reach the standard and how we can meet it.

Our bottom line is that our tenants standard is non-negotiable, as are rent increases (guideline increases plus 1 per cent only). In terms of what may give, we did not rule out approaching the assembly on its date of 2012. There is a stark reality in Carmarthenshire that a ballot has a high risk of failure. Should rents and standards be non-negotiable, then the rules around borrowing, or the date, will come into the equation. We have to find a way to make this work. The National Assembly plays a crucial role in this exercise of enabling the 21 authorities to deliver the standard.

We are fortunate that our stock, much of which is sheltered, is in relatively good condition. We have very low numbers of non-traditionally-constructed homes. An 80 per cent stock condition survey undertaken four years ago was used to assess the funding gap as £60 million on 9,000 homes.

We have now spent four months constructing a business plan around prudential borrowing to plug this gap. While we welcome the introduction of the major repairs allowance in Wales last year, we are hampered as we cannot use this to borrow. We have had to look at the housing revenue account and taken some hard decisions on the level of efficiency savings we will need to make.

We are also implementing plans around contractor partnering which will help deliver long term and sustainable efficiency savings in the way we will procure the improvement works. Needless to say we are robustly analysing what further benefits we can secure by better use of ICT. We have also profiled our expenditure out over 50 years as opposed to the assembly model of 30 years. We wait for news as to whether this is acceptable to the assembly.

We will use our rental income stream to finance the borrowing required. This will be over the entire life of the business plan. We have had to ensure the assumptions were clear about rents, and rents would not increase by more than the assembly’s guidelines.

We have also had to look carefully at land disposal, and how this can be re-cycled to provide affordable homes to buy, with long-term restrictive covenants to keep them affordable for future generations.

Going back to the ‘why’, we see our £20 million a year that is going into the stock as a major regeneration driver. We are planning to spend £100 million over the next five years, which makes us one of the largest regeneration spenders in the county. We are anxious to reap long-term benefits from this investment, and not rush to spend this money in a way that misses the opportunity for lasting local economic change. The price of an average house in Carmarthenshire is now £120,000 and average household income is £22,000.

Like much of Wales, recorded homelessness is at the highest it has ever been. While we want to ensure the supply of affordable housing to buy and rent is addressed, we are anxious to ensure our stock business plan is deliverable and receipts from land sales are maintained. In this sense, the business plan is about so much more than just the council’s stock.

Even if we had the financial resources sitting in a reserve account waiting to be spent, it is doubtful we can reach the standard by 2012.

Factors such as the local construction market, skill and capacity base, and the need to secure long term benefits, would influence not only where we spend the money, but how. These opportunities do not come along everyday.

Admittedly it looks like we, and our tenants, have a choice. Many authorities in Wales, with no recourse to PFI, ALMO or borrowing, probably have none. If we didn’t, I would like to think our focus would remain on the why rather than the how.

Robin Staines is head of housing services at Carmarthenshire County Council