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Memorandum from Communities and Local Government and the Homes and Communities Agency (BDH 36)
Decent Homes History and Lessons Learnt
1. In 1997, the Government committed to tackling the £19bn backlog in disrepair in social housing and in the 2000 Green paper set out that it would make all social housing decent by 2010. There were around 1.8 million non-decent social homes in 2000. The standard covered the basic components of a home that made it warm, wind and weather-tight. It was set as a threshold so that any home below the standard would be improved.
2. All items included had to be capable of some objective measurement and of having a threshold level set. . The elements of the standard also had to be in the control of the landlord to ensure deliverability. This is why the standard was confined to elements within the curtilage of the home. Because of this it was not assumed that delivery of the standard took all available resources.
3. The Government set the "Decent Homes" standard and expected all social landlords to deliver. However, there is no statutory basis for the standard which is set out in guidance. The Housing Corporation included the Decent Homes standard in the regulatory code. Most landlords are completing works far in excess of the Decent Homes standard.
4. The social sector Decent Homes programme has delivered much more than the obvious improvements to the housing stock. There are many and varied examples of innovative and best practise by landlords in delivering their programme of works. The Decent Homes programme has:
§ driven up performance; § delivered efficiencies with procurement consortia; § empowered tenants, improved access and social inclusiveness; § and improved the environment and security of estates.
5. The Decent Homes programme has also made a contribution to tackling worklessness in a number of ways:
§ creating
employment opportunities within the building sector (e.g. 300 training
opportunities in § directly providing employment for some residents - as tenant representatives; § and establishing programmes to encourage people into training and work
6. The definition of the standard has also changed since introduction. The Housing Health and Safety Rating System (HHSRS) is a new approach to the evaluation of potential risks to health and safety from any deficiencies identified in dwellings. HHSRS was introduced in the Housing Act 2004, and came into force on 6 April 2006, replacing the "fitness standard" as the statutory minimum standard for housing and as one component of the Decent Homes measurement. Although the tough new statutory assessment of housing standards raised the bar to drive further housing improvements it also led to an increased number of homes that could be considered to contain hazards. The HHSRS includes fire risk as a hazard, and we are now considering whether we cost for any recommendations to emerge from the Camberwell fire as part of the review of work under the new self financing.
7. We have used both the English House Condition Survey (EHCS) and social landlords' own data in the reporting of Decent Homes to measure progress on the delivery of Decent Homes. However, we reported in the 2007 Autumn Performance Report that the two data sources were showing significant differences - both in the number of non-decent homes and in the rate this was reducing. Following work to investigate why this was occurring we moved from using the EHCS to using social landlords' data in the reporting of Decent Homes for the Departmental Strategic Objective (DSO) on Housing.
8. Both measures have their own strengths and weaknesses, but the EHCS, for valid reasons, will not be able to demonstrate delivery of Decent Homes as defined by our guidance to social landlords. There is also a two-year time lag in the reporting of the EHCS data which would not be helpful in demonstrating progress over the current Comprehensive Spending Review period.
9. Although there are statistical issues with monitoring the standard, there are also practical issues with achieving 100% decency. Making homes decent is not always straightforward. The appropriate course of action for any non-decent home is a matter of professional judgment, taking all the facts and circumstances into consideration. Some homes, although technically non-decent, may nevertheless be already performing at a level that is acceptable in terms of what the standard is seeking to achieve. Homes may also become non-decent but it would make sense to make them decent outside a cost-effective programme of planned works.
10. The Northern Ireland Decent Homes Standard was introduced in June 2004 and is the same as the English standard with a target date of 2010. In 2008 the Northern Ireland Housing Executive reported that 75% of their 93,400 homes met the Decent Homes Standard.
11. The Scottish Housing Quality Standard (SHQS)
was set in February 2004 with a target date for social housing of 2015. It goes
further than the Decent Homes Standard in, for example, its energy-efficiency
requirements. There are 599,000 social
rented homes in
12. The Welsh
Housing Quality Standard (WHQS) is to be achieved by 2012. It goes further than
the English or Scottish Standards, requiring that houses be well managed and
located in attractive and safe environments and as far as possible suit the
specific requirements of the household (e.g. specific disabilities). There are 235,000 social homes in
13. There are 3,965,000 social
rented homes in
14. Once the Decent Homes standard
has been achieved there will be a solid base for considering what further improvements
need to be made.
Decent Homes Backlog
15. We have previously said that we expected around 95% of social homes to be decent by 2010. The latest assessment by the Homes and Communities Agency (HCA), on behalf of the Department, has adjusted landlord statistical returns to reflect revised spending plans and takes into account the current economic climate, which has impacted on the anticipated landlord delivery plans due to a fall in capital receipts.
16. It is estimated that the local authority sector will have a backlog of over 255,000 non-decent dwellings at the end of 2010. These homes fall into two main categories those managed by Arms Length Management Organisations (ALMOs) and those where the local authority has retained the management responsibility.
17. 177,000 (69%) of the estimated non-decent properties at 2010 are managed by ALMOs, who will be given the funding to help them make their homes decent. ALMOs rounds 1 and 2 have mostly finished spending. 106,700 of the estimated non-decent properties will be managed by ALMOs, rounds 3 - 5 are currently spending and are expected to achieve the target by 2016. 63,500 of the estimated non-decent properties will be managed by round 6 ALMOs. The intention to put back the funding of Round 6 accounts for 11,250 of the estimated number of dwellings remaining non-decent at 2010.
18. It is estimated that by 2010, 75 of the 114 retention local authorities will have met the target. The remaining 39 retention authorities will achieve it at a later date.
19. Eleven of the retention local authorities with a backlog at 2010 have Local Area Agreement improvement targets (under National Indicator 158) on Decent Homes. This represents 40,620 (51%) of the estimated non-decent dwellings managed by retention authorities in 2010
20. We are advised that the most significant factor in the rising backlog has been a short fall in capital receipts as a result of the current economic downturn.
21. Around 18% of the backlog (14,360 properties) has arisen because the local authority is facing varying levels of financial difficulty because tenants voted in a ballot against the local authorities preferred delivery option, transfer or ALMO. The Department, and latterly the HCA, has been working with the two largest authorities to find innovative funding solutions. The Department, Government Offices for the Regions and the HCA are also actively engaged in discussions with another 10 of these local authorities about how they will deliver the standard in their housing stock.
22. The Government remains fully committed to completing our comprehensive Decent Homes programme and once completed to seeing this standard maintained in the future. The reforms proposed will safeguard the commitment to future decent homes. We will also improve the common areas of estates and will ensure that there is sufficient funding in the new system to do so. Our aim in setting up the self-financing system is to ensure that it delivers in the future the investment needed to sustain and maintain the existing stock of council homes.
Decent Homes Standards Going Forward
23. The Government remains committed to delivering and maintaining the Decent Homes standard. It allows all landlords to determine, in consultation with their tenants, what works need to be completed, and in what order, to ensure the standard is met.
24. Although tenants have generally supported the standard, the focus on features within the home, potentially at the expense of other things outside the home - such as lifts and common parts, energy performance, and work to their estates - has been the subject of some criticism. Tenants can sometimes ascribe higher importance to the improvements outside their home rather than within.
25. The Reform of Housing Finance review concluded that future funding will need to be provided to at least continue to deliver the Decent Homes Standard, but should in addition provide funding for items such as lifts and common areas.
26. The National Strategy for Energy and Climate Change White Paper reaffirms the Government's commitment for the social housing sector to play a leading role in increasing energy performance to reduce carbon emissions.
27. The Decent Homes programme in its planned continuation will deliver some of what is required to improve energy performance and reduce carbon emissions. In considering the future shape of the Decent Homes programme, there are a number of measures that would enhance further the sustainability and energy efficiency of existing housing stock. We have further work to do to consider whether to adopt a measures based approach or an outcome based one in taking forward the decent homes standard and to consider the implementation of a new sustainability standard. The Reform of Council Housing Finance consultation sets out some innovative funding options that would not require any additional public expenditure. These funding options would be aligned to the self-financing system for local authority finance.
Funding the Decent Homes Standard
28. The Reform of Council Housing Finance consultation document proposed dismantling the Housing Revenue Account subsidy system and replacing it with a devolved system of responsibility and funding. Under such an arrangement each local authority would keep the money raised locally from rents and use it to run their stock.
29. Councils would need to have enough money from rental income to pay for ongoing maintenance at the Decent Homes Standard as well as works needed to maintain lifts and common parts. The Review concluded that rents set in line with current social rent policy would generate sufficient income to sustain the stock in all local authorities at the higher funding levels proposed.
30. As there would be a one off settlement for each council, and since they would be able to keep more of the capital receipts, there would be greater certainty of funding to allow councils to plan for works and procure them efficiently. It would also facilitate effective long-term management of their assets, and re-investment in replacement stock.
31. All councils would need to prepare a 30-year plan that would capture their social housing investment requirements based on common standards. They would be accountable for delivering against that plan. They would, however, have the freedom to operate within that plan and to make changes without their income projections having to be dependent on annual funding arrangements and complex calculation of expenditure allowances.
32. The benefits delivered by ALMOs that manage council housing services should not be affected by a change in the system for financing council housing. We see a strong future role for ALMOs which are valued by their tenants. We would expect ALMOs to continue to develop their housing management capacity and to look for opportunities to extend the range of services they offer, including to other landlords, where this would improve efficiency and effectiveness.
33. Transferring to a housing association should also remain an option that council tenants can choose. There are potential benefits from bringing in a not-for-profit body with access to private finance to own and manage the homes. However, there should be equity in the terms of public funding whether they are transferred or retained in the future under self-financing. The value placed on the stock in a self-financing agreement and a transfer deal will be based on delivering the same standards of service at a comparable cost.
Future Regulation of Standards
34. The Tenant Services Authority (TSA) was launched on 1 December 2008 and is already regulating registered social landlords (RSLs). Since December, both the TSA and the Department have taken important steps towards the establishment of the new regulatory system in April 2010. The TSA has launched a national conversation with tenants and landlords to inform the development of its new regulatory standards. The Department is currently consulting stakeholders on draft legislation that is designed to implement 'cross-domain' regulation, so that the TSA can also act as regulator in the interests of council tenants.
35. TSA as an independent regulator will determine what standards to set to enable it to best meet its statutory objectives, following consultation with tenants, landlords and other stakeholders. Although it is primarily TSA's responsibility to set standards, the Secretary of State also has a power in the 2008 Housing and Regeneration Act (section 197) to direct TSA in relation to its standards. The purpose of this power is to ensure TSA has regard to the Government's legitimate interest in the regulatory standards it sets, and in particular those standards which might directly affect central budgets or key policy issues.
36. The Department is also consulting on matters relating to the regulatory standards that the TSA will operate in the new system. The consultation document proposes that Ministers should direct the TSA to set standards on rents, quality of accommodation and tenant involvement. We have prepared a draft direction that confirms the Government's commitment to complete and continue with the Decent Homes programme.
37. The proposed direction aims to ensure progress in reaching the Decent Homes standard. It therefore maintains the current policy on Decent Homes, and will not impose any additional burdens on landlords; the only change is that policy goals will be achieved in part through TSA standards. In practice, meeting and maintaining the standard depends on funding availability from Government or other sources (eg rental income or private finance). The direction cannot make provision for funding, and the capital programme to fund Decent Homes is not in any case within TSA's remit. Therefore, the Government is proposing a direction allowing TSA the flexibility to work with landlords in developing a strategy to meet the standard after 2010 where there is good reason for doing so.
38. The quality of accommodation direction would affect TSA's standards on Decent Homes, which may begin to operate from April 2010. The direction would stand until it was superseded following a consultation.
Private Sector Decent Homes
39. Private Sector Decent Homes funding has been driven by Public Service Agreement targets (PSA7) to increase the proportion of vulnerable households living in Decent Homes in the private sector to 70% by 2010. Progress towards meeting this target has been good and was ahead of trajectory with the target percentage figure nationally increasing from 42.9% in 1996 to 68% in 2006.
40. Against this progress we were able to satisfy ourselves that the 2010 target would be met. Given the drive to reduce the number of national indicators and targets set by Government, PSA7 has now become a legacy target against which we have made a public commitment to continue to monitor progress through DSO 2.8.
41. For this purpose the updated definition of Decent Homes, following the introduction of the HHSRS, will be used with a statistical baseline for 2006. Under the updated definition 59% of vulnerable private sector households lived in decent homes in 2006. This figure is not comparable with the original definition because of the incorporation of the HHSRS in the updated Decent Homes standard but it can still be used to demonstrate progress albeit against a new definition. Estimates for 2007 are 61% showing continued progress. The 2008 estimate of the percentage of vulnerable private sector households living in Decent Homes will be available in January 2010.
42. The Government remains committed to improving house conditions across all tenures. Looking beyond 2010 -11 and with the new climate of the HCA, the introduction of the HHSRS, and changes to regional structures it is an appropriate time to explore the future direction of this policy.
43. Communities and Local Government is undertaking work over the coming months to consider options for private sector Decent Homes, including looking at how works to tackle disrepair are measured in the private sector, how the policy contributes to wider Government agenda on health and climate change together with the future delivery mechanism and drivers.
September 2009
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