MAJOR changes could soon be introduced into the way councils look after their housing stock.

Councils set up arms length management companies because changes under the Labour Government meant councils could no longer apply for money to do up their properties.

They had to hand control to private firms or set up arms length firms such as St Georges, set up by Basildon Council in 2007, and South Essex Homes, set up by Southend Council in 2005.

Following the election in May, further changes meant councils can now apply for funding and can also generate more money by keeping all the rental income from council homes.

Until now councils have had to pay a varying percentage of rent money into a national pot, which was distributed to other authorities.

St Georges cost about £1million to set up and £380,000 a year of taxpayers’ money to run.

It needed £160million to bring all council homes up to an official Government “decent homes” standard, but despite getting a required two-star rating by inspectors, it was only given £15million, leaving its future in doubt.

Now, following a review which began last year, a recommendation to scrap St Georges has been put forward to Basildon Council’s cabinet.

Councillors will vote on Wednesday over the recommendations for the council to regain control of the management of the borough’s around 12,000 council homes.

Tony Ball, council leader, confirmed this meant St Georges would no longer exist and the council would be back in control of the housing.

However, nothing will be certain until the cabinet has taken the vote.

Mr Ball added: “St Georges was set up purely to access decent homes money. Now that has changed we need to look at all issues of value for money and whether we still need St Georges. Without it would be better in economic terms due to all the duplication of directors and other roles.”

George Kreuder, chairman of St Georges, supports the review, but hopes St Georges is saved and is concerned at the lack of consultation so far. He said: “We understand that in a time of such austere economic times and proposed changes to the funding regimes, it is natural the council would want to evaluate the best options available to deliver its housing services.

“However, both the board and our tenant and leaseholder representatives are disappointed at the lack of involvement and consultation on the review process.”

He said there were concerns the report did not explain how savings will be made by dispensing of St Georges as it has already saved £4million over four years.

He added: “We believe St Georges Community Housing is the best option for Basildon’s Council housing management and are confident we can match all of the proposed savings outlined within the report while continuing to provide a high level of service to our customers.”

Southend Council is not as far down the line with its decision, but Anna Waite, councillor in charge of housing, confirmed a review would be carried out.

She said: “We will be looking at all possibilities.

“It is far too early to be specific about what we will do. That could be working with South Essex Homes, without them or even in a very different way, but whatever we do we will be trying to make the service even better.”

Mike Gattrall, chief executive of South Essex Homes, welcomed the review and hopes it results in the organisation continuing.

He said: “We have secured £24million of funding and so far 2,000 homes have been brought up to decent standard. We will be making a joint application with the council next week for more funding and are confident of a positive application. We have a good working relationship with the council.”

South Essex Homes, which manages 6,000 homes, was originally promised £58million, but it was cut by the coalition spending review.