Memorandum by the Audit Commission's Housing
Inspectorate (DEC 61)
INTRODUCTION
1. The Audit Commission promotes the best
use of public money by ensuring the proper stewardship of public
finances and by helping those responsible for public services
to achieve economy, efficiency and effectiveness, on behalf of
the communities they serve. We work in the local government, housing,
health, criminal justice and fire and rescue sectors and our remit
covers more than 15,000 bodies which between them spend nearly
£125 billion of public money each year. The Commission operates
independently and our findings and recommendations are communicated
through a wide range of publications and events.
2. The Housing Inspectorate is part of the
Audit Commission. The Inspectorate was formally set up in April
2000. Our inspections of local authority housing services in England
and Wales under the best value framework began in the summer of
that year. Our remit has been extended recently to include the
inspection of housing associations, the inspection of the Supporting
People framework by Administering Local Authorities and the assessment
of the prospectuses of the nine Market Renewal Pathfinders.
3. The Commission has recently published
its draft Strategic Plan for 2004-07[2].
At the core of our plan is the move towards Strategic Regulation.
Our approach to Strategic Regulation embodies four key principles:
— it is a force for continuous improvement;
— it is focused on outcomes for service
users;
— it is proportionate to performance
and risk; and
— it is delivered in partnership.
4. Under the draft Strategic Plan the Commission
has made a commitment to work with Government to help providers
achieve the Decent Homes Standard (DHS). The following parts of
the Plan refer to our work on helping housing providers secure
Decent Homes (and decent neighbourhoods) for their tenants and
residents:
"People need homes that they can afford,
of a decent quality and in a pleasant environment where the needs
of vulnerable residents are met. And social housing tenants are
just as entitled to have choice over the services they receive
as other public service users. At present, this choice is often
not available, so the way in which housing services are provided
needs to change. New models of supply need to be developed to
meet rising expectations and changing needs. More needs to be
done to tackle homelessness and housing quality must urgently
be brought up to the Decent Homes Standard in both the public
and private sectors.
Key Priority—Work with housing providers
to identify where improvement in services is needed and to support
that improvement, with particular attention to the Decent Homes
Standard.
Success Criteria—By 2006, a reduction of
50% in the number of organisations assessed as unlikely to meet
the Decent Homes Standard by 2010.
— We will evaluate the use of housing
resources, focusing on the target to deliver the Decent Homes
Standard by 2010 (Aim 1.3).
— We will make it easier to compare
performance by establishing a standard scoring system applicable
to all social housing providers and by producing regularly updated
assessments for housing which includes both performance data and
inspection information and focuses on the delivery of landlord
services, the achievement of the Decent Homes Standard and (for
local authorities) the management of homelessness and housing
advice services (Aim 2.1).
— We will support and assess the development
of neighbourhood management approaches in deprived neighbourhoods
(Aim 3.4)
— We will support co-ordination and
delivery, by councils, of their planning and housing responsibilities
to achieve and maintain sustainable communities (Aim 5.2)"
THE DELIVERY
OF DECENT
HOMES
5. The Inspectorate has a number of roles
linked to the Government's target that all social housing be brought
up to Decent Homes standards by 2010 and that the proportion of
private housing of a decent standard occupied by vulnerable people
be increased by the same date. Our roles can be classified as
follows:
— inspection of local authority housing
services under the best value and Comprehensive Performance Assessment
(CPA) frameworks (including improvement planning work);
— inspection of arms length management
organisations (ALMOs);
— inspection of housing associations;
— assessment of market renewal pathfinders;
— research and analysis linked to the
provision of publicly funded housing.
INSPECTION OF
LOCAL AUTHORITY
HOUSING SERVICES
6. Between August 2000 and November 2003
the Housing Inspectorate had inspected and published reports on
383 housing services provided by local housing authorities in
England (415 including Wales). The reports are sent to inspected
bodies themselves as well as interested stakeholders. All our
reports are available on the Commission's website. The reports
set out the strengths and weaknesses of inspected services and
give clear recommendations on how those services can be improved.
7. Of the 383 inspections undertaken of
English local authority housing services by the Inspectorate since
2000, 108 (28%) were of repairs and maintenance (and related)
services (covering 104 local authorities). These 104 councils
own and manage over 1.56 million homes, 57% of all local authority
housing in England (2002 figures). Our inspections invariably
cover asset management issues, the scope and nature of stock condition
surveys and capital programming issues as well as the direct delivery
of repairs and maintenance services. Latterly housing inspectors
have paid increasing attention to the ability of authorities to
meet the Government's DHS target. Table I shows how we have judged
current services provided by inspected authorities and what we
have assessed as their prospects for improvement. Overall local
authority performance on repairs and maintenance has been worse
than in other service areas. Only 16% of repairs and maintenance
services have been judged as good or excellent since 2000 while
26% of all housing services reviewed by the Inspectorate in England
over the same period secured similar ratings.
Table I
INSPECTIONS OF LOCAL AUTHORITY REPAIRS AND
MAINTENANCE SERVICES (AUGUST 2000-NOVEMBER 2003)
| What are the prospects for improvement?
| | | |
| |
Excellent | 2 |
7 | 4 | 1 | 65%
|
| Promising | 12 | 34
| 10 | | |
| Uncertain | 8 | 26
| 2 | | 35% |
| Poor | | 2 |
| | |
| Poor | Fair
| Good | Excellent |
|
| 84%
| 16% |
|
| How good is the service?
| | | |
|
| 108 | | |
| | |
| |
| | | |
Note: Four local authorities had their repairs and
maintenance services inspected twice.
8. Over 21% of these inspected services have been judged
as "poor". In these cases the Inspectorate works with
inspected authorities to help improve their services. Usually
this involves devising an action plan to turn round the failing
service. After 12 to 18 months the Inspectorate would carry out
a re-inspection of the service to assess if improvements in service
delivery had been achieved. If a service was still judged as "poor"
following the re-inspection, the Inspectorate would have a number
of options.
9. Recently authorities with failing services have been
made subject to "support and supervision". In these
instances the Inspectorate works particularly closely with the
authority to monitor its improvement plans. Milestones are set
and the authority is expected to hit the periodic targets that
have been agreed. A further re-inspection date is set by which
time the authority would have been expected to have made significant
improvements in service delivery. Ultimately the Commission can
recommend to the Secretary of State that he intervenes to affect
the changes needed to address service failure (under the Local
Government Act 1999).
10. To date, the Inspectorate has judged that 46 inspected
services in English housing authorities have been "poor".
Twenty two of these services (48%) were repairs and maintenance.
Ten of these services have been subject to formal re-inspections.
Most of these services have improved. On re-inspection one authority
was judged as "good" while six were judged as "fair"
while three were assessed as continuing to deliver "poor"
services to their tenants and other service users.
11. We were keen to see improvements in this important
housing service so we worked with our researchers to produce two
publications advising authorities (and other providers) about
how those services could be enhanced. Building on what we had
learnt from our inspections, these publications were produced
in early 2002[3].
COMPREHENSIVE PERFORMANCE
ASSESSMENT (CPA)
12. Following the publication of the Local Government
White Paper Strong Local Leadership Quality Public Services[4]
in late 2001, the Commission introduced CPA for local authorities
in England. In 2002 all county and single tier local authorities
(including every London and Metropolitan Borough) were assessed
under this framework. For single tier authorities, housing was
evaluated and scored along with social services, education and
other service areas. Where single tier housing authorities had
not transferred their stock and a substantive service had not
previously been inspected, we undertook inspections of the repairs
and maintenance services of those authorities as part of CPA.
Thirty six inspections were carried out on this basis during 2002.
13. District Council CPA in England is being undertaken
over a two year period (2003-04). Two housing diagnostics form
part of the CPA framework for districts. These diagnostics are
entitled: Balancing the Housing Market (BHM) and Meeting the Decent
Home Standard (DHS). The basis upon which the diagnostics are
used depends on whether the council owns and manages housing stock.
In general, stock owning authorities are subject to the DHS diagnostic
whilst authorities that have transferred their stock receive the
BHM diagnostic. Stock owning councils are not subject to the DHS
diagnostic where:
— the council has been granted approval to set up
an ALMO;
— the council is transferring its council homes
to a housing association through the large scale voluntary transfer
process.
14. The DHS framework is based around four main questions:
1. What is the council trying to achieve in relation to
the standard?
2. Does the council know the condition of their housing
stock and their compliance with the decent home standard?
3. Is the council delivering its plans to meet the decent
home standard?
4. How well does the council monitor its progress and
how effectively does this feed into future strategies and plans?
15. To date the Commission has published a total of 35
CPA reports for districts. These reports include 15 that feature
the DHS diagnostic assessment. CPA for districts has so far been
completed in the counties of Cheshire, Cumbria, Devon, Norfolk,
Nottinghamshire and West Sussex. There are three district councils
that have yet to have their reports published in these counties
that have received the DHS diagnostic.
16. We are anticipating that there will be a total of
around 130 DHS diagnostics undertaken for English districts under
CPA by autumn 2004. Therefore, although the counties assessed
so far represent a broad cross section of English districts, the
evidence provided through CPA for districts must be seen as indicative
only.
17. From the 15 DHS reports published to date the overall
scores have been:
|
| Score | Number of districts
|
|
| A | 2 |
| B | 8 |
| C | 4 |
| D | 1 |
|
| |
Note: A = very low priority for improvement; D = very
high need for improvement
18. While DHS diagnostic assessments provide a useful
insight into how well district councils are currently performing
in relation to meeting the DHS, they are based on evidence gathered
during an inspection and do not take account of how circumstances
change over time. Many councils are in the process of re-considering
option appraisals as a result of the new financial framework for
housing. Many are also improving the quality of their stock condition
information, which has the effect of changing the evidence base
upon which the DHS diagnostic is scored. This could impact (either
negatively or positively) on the prospects of some district councils
meeting the DHS. This highlights the need for effective monitoring
to measure the progress of councils in working towards the achievement
of the DHS in the absence of any formal desk-top assessments by
Government Offices.
19. The purpose of CPA is not simply to assess and then
score the services provided by English local authorities. One
of the key objectives of CPA is to drive improvements in service
delivery. With this in mind the Commission is working with all
English local authorities on programmes to improve services to
the people that live in, work in and visit those communities.
Under our Improvement Planning programme we are working with a
number of single tier authorities to help them improve their repairs
and maintenance services, asset management strategies and the
like. This programme is designed in part to help these authorities
meet the DHS. Improvement Planning programmes for district councils
are currently being drawn up for those authorities that have already
been subject to CPA.
ARMS LENGTH
MANAGEMENT ORGANISATIONS
(ALMOS)
20. The Government proposed that local authorities should
be given the opportunity to establish ALMOs in its housing policy
statement in December 2000[5].
These new bodies would be offered additional funding to deliver
Decent Homes if they fulfilled a number of criteria. Originally
it was proposed that only ALMOs delivering "excellent"
services (as judged by the Inspectorate) would be able to receive
this additional funding. This criterion was amended so that by
the time the first ALMO inspections took place in autumn 2002
only a "good" judgement was required to enable the funding
to be released. In the first three ALMO bidding rounds, the ODPM
has approved that 33 councils can set up 39 ALMOs to manage 544,000
homes.
21. Our inspections cover all services transferred to
the new arms length body. We also inspect the governance arrangements
that the ALMO has put in place to deliver its housing services.
An ALMO must have been set up for at least six months before we
undertake our inspection of its performance. We will also help
the ODPM to monitor the future performance and progress of individual
ALMOs.
22. The first eight ALMOs "went live" in April
2002, and we inspected them between August and October 2002. We
assessed five as delivering "good" services, three as
"excellent". All these ALMOs are now delivering their
Decent Homes programmes.
23. There are 12 councils involved in round two but 17
ALMOs, because Leeds has set up six. We started inspecting the
round two ALMOs in April 2003, and have completed 10 inspections
so far (where the reports have been published). All round two
inspections will be completed by February 2004. Two of the ten
ALMOs were judged as delivering only "fair" services
and therefore failed to secure the additional funding from the
ODPM at this time. The other eight ALMOs were all judged as delivering
"good" or "excellent" services to their tenants
and residents. Where ALMOs get less than a "good" rating
on first inspection, they can request a re-inspection provided
that is at least six months after the publication of the first
report.
24. The ODPM approved 13 ALMO bids in round three, and
we will start those ALMO inspections in summer 2004. Nineteen
authorities have expressed an interest in becoming ALMOs in round
4. Inspections of successful bidders will be conducted in 2005-06.
25. The Audit Commission has published guidance on the
inspection of ALMOs as well as a report on our learning from the
first ALMO inspections[6].
The guidance sets out the Inspectorate's expectations of organisations
delivering "excellent" housing management services and
the criteria we use to inspect ALMO governance arrangements. In
the guidance we explicitly cover what we would expect housing
providers to do if they are to maintain their homes in good condition
and meet DHS by 2010.
INSPECTION OF
HOUSING ASSOCIATIONS
26. Following a decision of the Deputy Prime Minister
in September 2002, the inspection of housing associations was
transferred from the Housing Corporation to the Audit Commission
in April 2003. The Corporation had formally begun the inspection
of housing associations a year earlier (April 2002). The inspection
of housing associations by the Inspectorate currently uses the
methods devised by the Corporation. However the Commission will
be consulting over December and January on changes to its inspection
methods which will see a largely common approach to the inspection
of housing associations and local authorities[7].
This meets a key objective of the Government when it was decided
that the inspection of the housing services of local authorities
and housing associations should be undertaken by one body.
27. Under the 2002-03 housing association inspection
programme, 84 reports have been published. The 2003-04 programme
consists of 79 inspections and covers 87 housing associations.
So far 18 reports from the current inspection programme have been
published.
28. Under existing inspection methods, housing associations
are assessed by our inspectors on six key service areas. These
are:
— Equalities and diversity.
— Dealing with nuisance and anti social behaviour.
— Resident involvement/tenant participation.
— Maintaining homes in good condition (repairs and
maintenance/asset management).
29. The inspection of an association's repairs service
and its asset management strategy assesses (in part) the ability
of an inspected body to meet the Decent Homes Standard for its
stock.
30. The focus of inspection of housing associations with
respect to DHS falls into a number of areas. First, on planning
issues an association is expected to show:
— its Board has a clear vision of its asset management
strategy and knowledge of the Decent Homes Standard;
— the association has undertaken a recent stock
condition survey that quantifies the gap between the DHS and present
stock condition (if any);
— how stock condition information and the asset
management—with future projections about homes meeting DHS—inform
the maintenance programme;
— the association consults with tenants groups when
setting priorities and service standards to meet DHS.
31. Secondly, on delivery associations are expected to
show that planning leads to better services on the ground that
demonstrates real progress towards meeting the DHS. Finally associations
should monitor and review their performance in meeting the DHS.
32. The Corporation remains the regulator of registered
housing associations. This means that the Commission needs to
work with the Corporation to effect any changes in practices and/or
performance. We maintain close working relations with the Corporation
which enable us to discuss any concerns we may have about the
service delivery record of individual housing associations. On
occasion this may necessitate regulatory action by the Corporation
to ensure failing services are improved. We have agreed a protocol
with the Corporation about our respective roles in cases like
this (and on other issues as well). This protocol was published
in September[8].
33. Positive practice identified in early inspections
of repairs and maintenance services delivered by housing associations
was published by the Housing Corporation in June this year[9].
HOUSING MARKET
RENEWAL
34. In late 2002 the ODPM gave the Commission responsibility
for assessing the prospectuses prepared by the nine Market Renewal
Pathfinders in the Midlands and the North of England where demand
for housing of all kinds is very low. The Pathfinders span local
authority boundaries and are usually governed by a board drawn
from a wide range of interests. Local authority interests are
represented on the Boards of each of the nine Pathfinders. By
contrast, housing associations are represented on very few of
the Boards.
35. The Pathfinders are seeking to access £500 million
of Government funding to help revive their housing markets and
thus contribute to the regeneration of the inner city areas where
their activities are based. Although much of the housing in these
areas is privately owned, a significant amount is owned and managed
by local authorities and housing associations. Funds allocated
to the Pathfinders can complement resources available to social
housing providers to help them achieve their Decent Homes targets
by 2010. Although not a major element of the evaluation process,
when we review Pathfinder prospectuses we do look at the contribution
the Pathfinders can make to help social housing providers in their
areas hit the Decent Homes target.
36. Following our review of the prospectus for Manchester/Salford,
ODPM allocated the Pathfinder £125 million to help revive
its flagging housing market. The other eight prospectuses will
be reviewed by the summer of 2004.
COMMISSION RESEARCH
AND ANALYSIS
37. The Commission is conducting research on issues which
have a bearing on the Government's target to achieve DHS in the
social housing sector by 2010. In particular we are assessing
the impact of recent changes in the housing finance system on
the achievement of the DHS in the council sector. We are examining
a number of issues that arise from our research and other activities.
38. Will more investment be needed to help sustain the
social housing sector than just that allocated to housing associations
and local authorities to achieve DHS?
For some providers environmental works could be just as important
(if not more important) than achieving DHS with individual homes.
In some areas the non decent homes investment may actually be
more important in the wider market context. The Government has
implicitly recognised this with funding for ALMOs, housing market
renewal, neighbourhood renewal and other schemes but more funding
might be needed if "decent neighbourhoods" are to achieved
alongside DHS.
39. What is the role of the Regional Housing Boards in
helping providers deliver on the DHS target?
The housing revenue account system for local authorities
does not provide the resources for large catch up repairs often
needed for decent homes. Therefore, those authorities with major
catch up costs could need additional funding. Increasingly Regional
Housing Boards will be responsible for funding of this kind although
it is not clear at this stage how the Boards will reflect local,
regional and national priorities in the context of DHS. This could
result in some authorities having insufficient resources to hit
DHS by 2010.
40. Are there delays in the system which will make it
difficult for local authorities to hit the DHS by 2010?
Changes to business plans necessitated by changes in housing
finance may delay decisions on stock options and hence the achievement
of decent homes. Complex option appraisals processes and the need
to rerun these in the light of recent changes can introduce delay.
41. Those interviewed as part of our research were broadly
in favour of the business planning process, which had helped some
take a more strategic and longer term approach to stock management.
However, the scale of the changes to individual housing revenue
accounts that will result from the combination of rent restructuring
and changes to management and maintenance allowances mean that
some business plans will need major and unpredictable revisions.
42. This may in certain circumstances mean that an option
appraisal also needs to be reviewed, as the financial viability
of different stock options may have changed. Authorities will
have to explain significant changes to their tenants and other
local stakeholders. This may delay the point at which some plans
are finalised and signed off by regional offices, and hence the
speed with which some homes are made decent.
43. Will there be sufficient revenue resources to ensure
that homes remain decent?
Most debate currently focuses on the availability of capital
to achieve DHS. In some cases the real difficulty faced may be
in identifying the long term resources to sustain homes as decent.
44. Do value for money issues get overlooked to ensure
that DHS is achieved?
Our view is that the new allocation system for long term
maintenance in the local authority sector does not incentivise
authorities to retain housing which is less expensive to maintain
if there is a choice. Also where demand for their housing is weak,
local authorities will need to decide how their investment monies
can be best used. Spending resources to bring marginal stock up
to the DHS could perhaps be better spent on "restructuring"
the council's stock so that it is aligned with market conditions
overall.
45. At the local level, does the building industry have
sufficient capacity to deliver DHS by 2010?
Through our research activity, work with Market Renewal Pathfinders
and inspection of ALMOs we are being advised that the capacity
of the building industry is being tested by the scale and volume
of construction projects in some parts of the country. This could
affect the ability of some providers to meet the DHS by 2010 because
there are insufficient contractors available in the local market
to undertake the necessary work. This could also raise prices
in the construction sector resulting in less building work being
purchased per pound and thus threatening the ability of providers
to hit their DHS targets.
2
Audit Commission, "Strategic Plan 2004-07 Consultation"
(November 2003). Back
3
Audit Commission "Housing Repairs and Maintenance-Learning
from Audit, Inspection and Research" (January 2002); Audit
Commission "Housing Repairs and Maintenance Handbook-Learning
from Audit Inspection and Research" (March 2002). Back
4
DETR, "Strong Local Leadership Quality Public Services"
(December 2001). Back
5
DETR, "Quality and Choice-The Way Forward For Housing"
(December 2000). Back
6
Audit Commission "ALMO Inspections and the delivery of excellent
housing management services" (March 2003); Audit Commission,
"Learning from the first housing ALMOs" ( May 2003). Back
7
Audit Commission "A Framework for the Review of Housing Inspection
and Assessment" (Forthcoming-December 2003). Back
8
Audit Commission "Inspection of Housing Services-The roles
of the Audit Commission and the Housing Corporation" (September
2003). Back
9
Housing Corporation, "Inspection Uncovered-Repairs and Maintenance
Services" (June 2003). Back
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