Agenda item

Report of the Director of Urban Environment to inform the Committee of the outcomes of a Grant Thornton review of leaseholder service charges administered on the Council’s behalf by Homes for Haringey.

Phil Harris, Assistant Director of Strategic and Community Housing, introduced the report on leasehold service charges from Grant Thornton, and the Council’s responses. The overall conclusions of the Grant Thornton report were that the home ownership team were efficient in calculating service charges, and the report also set out examples of best practice and specific areas where Haringey could make improvements. It was reported that there were a number of areas where the recommendations of Grant Thornton had not been agreed and reasons had been provided for this, however Grant Thornton had confirmed that none of these areas were of fundamental importance, and would be kept under further review.

David Longbottom, Grant Thornton, reported that the review was of  a high-level, strategic nature rather than a detailed examination. It was reported that a number of examples of good practice had been found, and the overall conclusion was that the home ownership team managed charges in an efficient and effective manner, with statements being provided to leaseholders in a timely and well-managed way and based on good quality information. Mr Longbottom outlined the recommendations that had been made and reported that, where the recommendations had not been agreed by the Council, these were areas of low to medium risk and the responses were adequate for the time being but would require further review.

In response to questions from the Committee, Mr Longbottom confirmed that no leaseholders had been interviewed during the course of the review and that a single sample service charge statement had been reviewed. Mr Longbottom advised that they had requested to interview leaseholders, however this had not proved possible in the timescale available. It was reported that as it was a high level review, the focus was on the way in which systems were used to manage information, and not on the detailed analysis of individual accounts.

Committee Members confirmed that, as ward councillors, they often encountered residents with concerns regarding statements, and expressed concern that the methodology of this review would not be able to provide assurance on whether Homes for Haringey was obtaining the best value for money. Mr Longbottom stated that the review had been a short, high level diagnostic review, the scope of which was to focus on whether the systems were in place to deliver value for money. Based on experience of more extensive leasehold reviews carried out for other authorities, Grant Thornton recognised the issues raised by Members, but emphasised that this review was to look at the systems in place. Paul Dossett, Grant Thornton, reported that a decision had been taken to look at Haringey in respect of the high level controls in place. The findings of the review did not guarantee that every statement produced would be accurate, but gave an indication in respect of the overall systems and controls. The Committee noted that all Members were aware of case-studies where things had gone wrong, and Rowann Limond, Homes for Haringey, asked all Members to notify Homes for Haringey regarding any concerns they had.

In response to a request from the Committee regarding how the work undertaken provided assurance, Mr Longbottom reported that tests were applied such as whether contracts were competitively tendered and whether processes were in place for managing contracts and quality of work. The scope of the work gave the opportunity for Grant Thornton to highlight areas where there was a potential to review systems to increase their efficiency, for example in this review the area of pre- and post-work inspections had been raised as a potential area for the possible introduction of automated systems. In response to concerns from the Committee had this recommendation had not been agreed, Rowann Limond, Homes for Haringey, reported that this area would be reviewed in two years time when the existing systems in place would no longer be supported. It was confirmed that systems were currently in place to support this area, but that the issue identified by Grant Thornton was within these systems where manual checking was currently needed. The Committee noted that any manual system increased the likelihood of human error occurring, and that this was a concern, although it was acknowledged that a computerised system did not eliminate the risk of error. The Committee suggested that, as the potential for error had been recognised in this particular area, manual checks could be increased in this area until such time as the systems were fully reviewed and it was agreed that this would be taken into account.

In response to concerns from the Committee regarding the level of pre- and post-inspections reported, Rowann Limond confirmed that the amount was higher than indicated in the report as the contractor carried out 10% and the client team also carried out 10%. It was also confirmed that estate services staff were able to check on repairs carried out to any communal blocks in their care. The Committee raised the issue of areas where there was a high number of individual properties, where it was not possible for estates staff to carry out checks, and it was suggested that such properties could be targeted more specifically when arranging post-inspection.

The Committee asked why it had not been agreed that a written guide to  leaseholder consultation procedures be produced, in response to which Homes for Haringey advised that a written guide would increase the risk associated with staff outside the Home Ownership Team taking decisions in relation to Qualifying Long Term Agreements without seeking guidance from the Home Ownership Team. Mr Longbottom confirmed that statutory duties were being met in this regard, but that it was good practice for a written procedure to be produced, for use in conjunction with advice from the Home Ownership Team. In response to the advice from Homes for Haringey that the guidance for other staff was to consult with the Home Ownership Team, it was suggested that this be confirmed in writing, as a way to resolve this issue.

Julie Parker, Chief Financial Officer, and Kevin Bartle, Head of Corporate Finance, confirmed that it was of concern that there were recommendations that had not been agreed, and suggested that these issues be reviewed in 6 months’ time and a report produced on what changes had been made and how Homes for Haringey were managing the risks. In response to a question from the Committee, it was confirmed that if the progress outlined in the follow up report was not felt to be satisfactory, then the Chief Financial Officer would be required to direct that issues were addressed appropriately. Mr Bartle advised that, although there were concerns that certain recommendations had not been agreed, these issues were not felt to be serious internal control weaknesses and that it was on this basis that a six month review had been suggested.

The Committee noted that there had been a number of issues around housing in the past and that things had improved significantly, however progress in certain areas was still needed and it was essential for progress to be reported back to the Committee. The Committee agreed that a report should come back to the Committee in 6 months’ time. Rowann Limond reported that the service was undergoing an Audit Commission inspection and that the draft recommendations from this inspection would be available for this follow up report.

The Committee agreed that a full report should come back in 6 months’ time, but also requested an interim report in 3 months, the focus of which should be the work Haringey officers were undertaking to challenge and address the issues raised.

On a motion by the Chair it was:

RESOLVED

i)                    That the Council’s response to the report on leasehold service charges from Grant Thornton in the form of an agreed action plan be noted;

ii)                  That a follow up report be presented to the Committee in 6 months’ time and that an interim progress report be presented to the Committee at the meeting on 14 September 2010.