Public Services Management: After the right to buy, the right to manage - Council tenants say government plans for them to run their estates do not go far enough, reports Paul Gosling

COMPULSORY competitive tendering (CCT) has swept across the manual work functions of local authorities, reducing costs through efficiency savings, defining minimum service levels and cutting wages and jobs. Until December 1989, when leisure management was introduced to CCT, white-collar work was largely unaffected. Now office staff are at the brunt of CCT, with housing management to be included, probably in stages from April 1994.

The process is complicated by other major changes which are being introduced simultaneously. First, a number of the district councils affected will be abolished under the Local Government Review, either by the time of CCT introduction or soon after. Second, the Government is radically extending the rights of tenants to be involved in housing management.

Once again Wandsworth council in London is not only acting faster, but also going farther, than the Government requires. Wandsworth is currently putting out tenders on a single function basis to allow, for example, estate agents to bid to manage individual estates. Authority-wide service contracts have previously been awarded under earlier tender arrangements, covering such matters as repairs and maintenance. Many other councils, supported by the Institute of Housing, argue that it is important that housing management should be as integrated as possible, and that too many contracts will lead to inefficiency. The Department of the Environment has stressed that a single contract for a whole authority would be anti-competitive and therefore not permissible.

Sir George Young, the Housing Minister and a more traditional Conservative than is found in Wandsworth, appears to have put his personal stamp on the CCT proposals in the DoE's consultation document, Competing for Quality in Housing, launched by him in June. Tenants who have chosen to remain with local authorities, resisting first the lure of the 'right to buy', and then 'swap a landlord', are now to be given the 'right to manage' - in other words to take over councils' estate management functions.

Rather inconveniently for Sir George, the signs are that the tenants themselves are distinctly cool towards the proposals. This looks odd at first sight, as housing co-operatives (where tenants are in full control of management) are very popular with their tenants: surveys have indicated that 95 per cent of housing co-op tenants in Liverpool were satisfied or very satisfied with their housing, compared with 75 per cent of council tenants nationwide in similar housing.

The tenants' complaint is that Sir George's proposals are far too restricted. Over recent years the Government has heavily funded the training of council tenants to promote tenant participation, and many have become highly aware of housing management issues. Many tenants' associations now want greater management responsibility than is on offer from the DoE, arising from the likely definition of responsibilities of client and contractor.

The intended split between client and contractor functions is proving one of the most controversial elements of the whole proposal. In particular, local authorities are resisting the loss of the administration of 'right to buy' and 'rent-to-mortgage' schemes. The Government believes that by introducing politically neutral bodies to control the administration of these it will increase the number of applications, and the speed with which they are handled.

The client, or landlord, function would contain very little of what housing authorities currently provide, comprising the setting of criteria for choosing tenants, producing policy on bad neighbours, setting the rents, monitoring the Housing Revenue Account, setting the capital investment programme, producing a repairs policy and reporting on housing management performance on an annual basis to tenants. The administrative effects of all these matters would be delegated to the contract side.

Under the proposed 'right to manage' scheme tenants' groups can opt to take over the client function subject to them proving that they are supported by the majority of tenants. However, they are specifically excluded from taking responsibility for the capital programme, and rent and repairs polices. This leaves them little real power, a point which many groups have already picked up, while their previous right to be consulted over the principle of councils contracting out housing management is removed. Tenants' associations that are already undertaking some of the contract side - which may include security, grounds maintenance or administration - will be allowed to continue doing so without reference to CCT, provided that they can prove their competence.

What tenants would like, according to housing officers, is greater assistance in taking on more of the contract side. Graham England, director of housing for Westminster City Council, said: 'Most of the tenants are not very keen to take the client element, which is often very difficult, sorting out the neighbours, etc, and they are keener to do the flower beds and to employ housing officers to manage the estate.'

Westminster, one of six pilot authorities chosen by the DoE to test procedures, has identified two estates for trial implementation, with full residents' involvement. Mr England explained: 'We've got residents' groups drafting the specifications. We have just sent off our observations on the proposals to the DoE, and we are about to appoint consultants to meet the private sector, and to do the market testing. The obvious things are already out to contract, for example, repairs and maintenance, professional services such as architects, cleaning and gardening.'

Estates have been divided into 17 villages across the borough, and Westminster will be looking for one contract for each village, when the proposals are finalised and introduced in their final form. It will be looking to make each village contract multi-functional so that tenants have a single point of contact. Although in theory Westminster could end up with 17 contractors it expects it will be much fewer than that, and hopes that a number of contracts will be won in-house. It intends to allow local residents' groups to be involved in rent setting, and to give them the opportunity to provide some direct services themselves. 'We are concerned not to lose any tenant self-management that is already in place,' Mr England said.

Chris Laird, director of housing at Derby City Council, one of the other pilot authorities, predicts that housing management is likely to be the most difficult area of tendering so far. She said: 'It's an extremely complex issue, and chief officers must take time out to sort out the contract/client split, otherwise they'll end up losing the quality of service that customers are used to. There are a number of areas where clarification is needed, such as the performance levels required, the effects on borrowing approvals, how the authority is to stay in contact with the customer, how you resolve the relationship of housing management and housing benefits. What do you do to ensure maintaining service provision if the contractor goes bust? When the contract quality worsens and you say 'enough is enough', we need to take it back over in time to ask for new tenders.'

Several councils have previously had great difficulties when companies that won leisure management contracts quoted unrealistic tender prices. The result in some cases has been companies closing down overnight, and leisure facilities not remaining open. Councils having closed down their own management operations were then faced with attempting to maintain services until new contracts could be put in place. Ms Laird has had to devote herself full- time to the CCT introduction, even though Derby did not volunteer to be a pilot. The concerns expressed by her were echoed by other DoE consultees. The Institute of Housing, the Labour-controlled Association of Metropolitan Authorities and the Conservative-led Association of District Councils all expressed strong concerns over defining service standards in a way that can be adequately incorporated into tender specifications. They fear that tenants will face much lower service standards in the future.

Another concern is the potential effect on councils' Housing Investment Programme allocations, which currently relate to their achievement in meeting housing management objectives. Failure to meet management standards could lead to a loss of millions of pounds of spending approvals. Yet, the authorities say, they will not be permitted to incorporate penalty clauses into the contracts as they would be deemed anti-competitive and unreasonable, since realistic penalty clauses would exceed the value of the contracts.

Even the question of whether CCT will actually produce savings has been thrown into doubt. The ADC has argued that the implementation of CCT on housing will cause such disruption that far from saving money it will in fact increase costs. At last month's ADC Housing Convention the DoE's own consultant on the proposals, Roger Baker, said that administering CCT on housing would add 10 per cent to overheads. CCT has so far produced contract savings of 6 per cent, so the net effect would be an increase in costs of around 4 per cent, he concluded.

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