TWO independent reports are predicted to show that little improvement has been made in two major council services.

And that could cost the council £68m.

Housing and children's services are the subject of a detailed report by the Audit Commission and Social Services Inspectorate (SSI) which will be published in the next two months Lack of real progress will be a huge blow to senior councillors who have always insisted major improvements had been made over the last year.

An inspection of Ascham Homes, formerly known as the ALMO (Arms Length Management Organisation), which runs the council's housing services, was undertaken in November and it has failed to gain the two-star rating it was desperately after.

If true, it would be the only ALMO in the country that has failed to improve after a second assessment.

Ascham Homes would also lose around £68 million it was hoping to secure to improve housing services.

The children's service is expected to have improved on its poor Joint Review rating in 2001 after an assessment in October.

But a draft report by the SSI has said there is still "uncertain capacity to improve", despite a £2 million cash boost last year. The report, expected to be made public next month, will however say that children's services are now serving some people well.

Waltham Forest Council was again rated one of the worst in the country by the Audit Commission last month after a partial comprehensive performance assessment (CPA) up to March 2003. The council is one of only ten authorities out of 150 in England to receive the lowest rating "poor".

A council spokesman insisted this week that the authority had made significant progress.

He said: "The council has made significant progress during the course of the past year, which has been recognised by the Audit Commission.

"We have acted by putting in place the building blocks for recovery and making improvements in many services.

"The Audit Commission has confirmed that the council's overall direction of travel is positive.

"This most recent social services inspection of children's services recognises the significant progress made since 2001. A final report is due to be published at the end of February 2004, when we will be able to discuss the findings in more detail."

He added: "All staff, members and the Ascham Homes Board have worked hard on tenant services since the ALMO went live in May 2003. They would be disappointed if the Audit Commission did not find that performance has improved in all key areas.

"Ascham Homes and the council are currently discussing the draft findings of the inspection with the Audit Commission. A final report is expected to be published in the spring."