UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 1054-ii

 

HOUSE OF COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

communities and local government committee

 

 

BEYOND DECENT HOMES

 

 

monday 9 NOVEMBER 2009

CLLR NICK STANTON, CLLR KIM HUMPHREYS

CLLR JOHN LINES and MR SUKVINDER KALSI

 

MR PETER MORTON, MR BOB MCCANN

MR TOMOS JONES and MR JOHN CLAYTON

MR DAVID ORR, MR ANDY DOYLEND and MR BRUCE MOORE

Evidence heard in Public Questions 66 - 166

 

USE OF THE TRANSCRIPT

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Oral Evidence

Taken before the Communities and Local Government Committee

on Monday 9November 2009

Members present

Dr Phyllis Starkey, in the Chair

Mr Clive Betts

John Cummings

Andrew George

Anne Main

Alison Seabeck

Mr Andy Slaughter

Mr Neil Turner

________________

Memoranda submitted by Southwark Borough Council and Birmingham City Council

Examination of Witnesses

Witnesses: Cllr Nick Stanton, Leader of the Council, Cllr Him Humphreys, Deputy Leader of the Council and Executive Member for Housing, Southwark Borough Council, Cllr John Lines, Cabinet Member for Housing and Mr Sukvinder Kalsi, Assistant Director of Finance (Housing), Birmingham City Council, gave evidence.

Q66 Chair: Can I welcome the witnesses. We have got four of you, two from each place. I know that you complement each other, but can I ask you to exercise some restraint in answering questions so that we can avoid duplication if at all possible. Can I start off by asking some factual questions of each of Southwark and Birmingham on what proportion of your social sector homes are non-decent in the technical sense, and what you expect it to be in 2010?

Cllr Lines: Of the Decent Homes or our homes in Birmingham 95 per cent reach Decent Homes formula that has been given to us by the government. In 2010 we will expect to see it reach a hundred per cent. However, I have to stress, also within the Decent Homes work we have been doing, we have also been doing other improvements, for example new kitchens and bathrooms and structural work also within the Decent Homes so I think we are doing rather well.

Q67 Chair: So the new kitchen and bathroom is not part of your Decent Homes standard.

Cllr Lines: They are as well as.

Q68 Chair: Southwark?

Cllr Humphreys: We reported an outturn of 47.2 per cent non-decent at the end of 2008/2009.

Q69 Chair: You have done it the other way. So that is 53 per cent decent, is that right?

Cllr Humphreys: Yes. I am afraid we are not going to be hitting the hundred per cent figure by 2010, not surprisingly, with those results. We are currently conducting a new stock condition survey which will be the basis upon which we are working on in terms of future works going forward. I think our general comment, going on from what Councillor Lines said, is that we have been pursuing a policy of actually doing a "Plus" in terms of our works, Decent Homes Plus which is actually, in terms of good management of our stock, the most sensible approach rather than simply pursuing an artificial government target.

Q70 Chair: I want to press you on that slightly. So you are doing it to a higher standard than Decent Homes which obviously means you do fewer homes.

Cllr Humphreys: Correct.

Q71 Chair: Why have you decided to do it that way?

Cllr Humphreys: In 2005 we carried out an options appraisal with tenants. At that point we pursued a basic Decent Homes standard. It became very clear as we implemented that policy that it was very unpopular with residents who found that actually when we were doing the basic Decent Homes work to their properties they felt that there was an awful lot of disruption for not an awful lot of gain to them. We went through and carried out a policy review of that and that came into place in 2008. That agreed a new Decent Homes standard, but in addition to that it also agreed a way forward in terms of funding that, for example we agreed with tenants that we would be selling off some minor voids to help pay for this and also selling off additional spare land on housing estates to provide additional social housing.

Q72 Chair: So your tenants actually preferred fewer homes to be done but to a higher standard, is that right?

Cllr Humphreys: Yes.

Q73 John Cummings: Can I ask both local authorities, what has been the cost to date and how has it been financed to achieve these rather magnificent results?

Cllr Stanton: We are spending at the rate of about £100 million a year on our housing investigation programme in Southwark. Of that we raise about half locally through capital receipts; the other half comes from a variety of government funding sources, mainly the Major Repairs Allowance that is responsible for about 37 million of the hundred.

Q74 John Cummings: Is it the same for Birmingham?

Cllr Lines: So far it has cost us approximately £600 million pounds for the Decent Homes for the city. When we embarked on it following the decision of our tenants to stay with the council on two occasions, we were of course left with the responsibility of bringing our homes up to the Decent Homes standard. We embarked on that, Birmingham's "fourth option", and that was paid for by both borrowing and of course the sale of housing land where council homes once stood and were demolished in years gone by. That worked rather well up until when the recession started to bite when we could not sell the land or we could at a reduced price. We had difficulty in selling the land both to RSLs with a discount and of course developers without a discount. Both were providing homes and we were bringing in the money. Needless to say, we have had to borrow more to pay for our Fourth Option through prudential borrowing. The silly situation is that we are actually borrowing less from the prudential borrowing than we are paying the government in our rent subsidy.

Q75 Chair: We will get onto the rent subsidy later; could we just keep off that for the moment.

Mr Kalsi: I want to clarify a point in terms of the borrowing. We have only undertaken prudential borrowing that we can afford from the tenants' rent accounts by making sure that efficiencies have been generated to do that. I think the point that I would like to highlight is that over the past five to six years or so we have repaid £150 million worth of RTB receipts back to the central government and we have only taken out prudential borrowing of about £138 million. Had we been able to retain all our receipts we would not have needed to do any prudential borrowing whatsoever.

Chair: Just remember we are not the government, we are the Select Committee.

Q76 Mr Betts: I was interested in what Birmingham was saying that you were doing Decent Homes to a standard as laid down and then the kitchens and bathrooms are a sort of add-on, yet in terms of the definition of Decent Homes kitchens and bathrooms are an integral part. So how do you define a decent home if you do not put a modern kitchen and bathroom in?

Cllr Lines: The kitchens and bathrooms which we are doing - which is Decent Homes Plus, of course, are a little bit more than we need to do, but we believe that some of the properties that we have, whilst we are doing the Decent Homes, that extra work should be carried out because it would need doing anyway if it is important but we probably do it earlier on, and that of course comes out of capital funding.

Q77 Mr Betts: What is your standard in terms of kitchens and bathrooms that you define according to the Decent Homes standards? To tick the box for Decent Homes, what is your kitchens and bathroom standard?

Mr Kalsi: Probably members are aware that in terms of the actual true definition and criteria for Decent Homes it is not absolutely essential to have all your kitchens and bathrooms completed. You have to make sure the elemental life span for those properties complies with what is required and the standards only require replacement beyond 30 and 40 years. So what we have done in Birmingham is to make sure that effectively the criteria for heating and insulation is complied with but where we have gone into properties to make sure that there are efficiencies we have done the kitchens and bathrooms there if they needed to be done, but otherwise we will be doing them in the future. We have started a programme, we are doing about £16 million this year and we intend to complete that over the next five years or so.

Mr Betts: I still do not think I have got this completely.

Chair: If you look on page four -----

Q78 Mr Betts: I can see that, it says that for a property to be decent it has to have modern facilities and services. It can fail on two of the grounds but assuming it is flats and assuming it has not got external noise problems in particular it has to hit three out of the other four. It can fail on two but it cannot fail on two or more of those so it has to have the kitchens and bathrooms looked at and dealt with if they above a certain age.

Mr Kalsi: They are being dealt with, yes.

Q79 Mr Betts: If the kitchen is 20 years old or more or the bathroom is 30 years older or more you are doing them because of your Decent Homes standard.

Mr Kalsi: Yes, and if they need doing we have been doing them because it does not make sense from a value for money perspective to do part of the property and then come back at a later stage so we have been doing them.

Chair: We have a Division in the House of Commons which means that we all have to disappear in then come back.

The Committee suspended from 4.49pm to 4.57pm for a division in the House

Q80 Mr Betts: It may helpful if Birmingham could actually give us a copy of what they regard as their Decent Homes standard because I am not sure whether you have got properties which have kitchens older than 20 years and bathrooms older than 30 years that you are saying actually meet the Decent Homes standards.

Cllr Lines: As to the Decent Homes standard, we abide by the government directive which is wind and water tight. We ensure that homes have uPCV double glazing, secure by design doors (front and rear), insulation (both roof and walls) and of course the rest of the structure is of a decent standard. On top of that we have replaced all the uPCV gutterings and fascias and all those sorts of things.

Mr Betts: I understand that but there is still this section on reasonably modern facilities which has got specific standards.

Q81 Chair: This is getting more interesting by the moment since I now find that double glazing which is part of it which is not what Milton Keynes Council tell me. I think what would be really quite useful is if both Birmingham and Southwark could provide the Committee afterwards with just a list of what they regard as those characteristics which should be included within Decent Homes.

Cllr Humphreys: We will be happy to give you our Decent Homes Plus criteria.

Q82 Chair: Yes, and mark which bits are the "Plus" and which bits you think are meeting the national Decent Homes standard, and the same thing for Birmingham. Different councils clearly are interpreting this in different ways. As I say, my own council would claim that the Government Office okayed whatever it was you agreed, but we want to know what is going on basically.

Cllr Humphreys: I think that is absolutely correct. Certainly tenants have an awful lot of confusion as to what Decent Homes is. As I mentioned when we started on the basic Decent Homes programme there was quite a lot of disappointment from residents when they found that we were not doing kitchens and bathrooms on every single occasion. One of the other things we found that has been one of the big problems is that obviously a borough such as Southwark which has a large number of lifts, for example, we have to do those works; it would be absolutely pointless to do internal works to a flat and not replace the lift if the lift needed replacing. Unfortunately there is no credit, in a sense, in terms of the Decent Homes criteria taken into account for that. I think we have more lifts than anyone else in London; we have thousands of lifts.

Cllr Lines: I forgot to mention the heating. All our properties have heating and those that have the oil type of heating which is not particularly good environmentally or financially are being converted.

Chair: Can I just make it clear, we are not, as a Committee, going around the place criticising individual councils. We are seeking to get information from different councils in different circumstances so as to get a feeling for the way the Decent Homes programme has been delivered. It is not our business to give you stars or not stars; that is what the Audit Commission does. So you do not have to justify yourselves to us.

Q83 Mr Slaughter: It does sound rather as though you are both scratching around for money and that is presumably partly the consequence of retaining the stock. Your Decent Homes Plus does not sound like anything that two ALMOs in my local authority would think was anything like adequate. I appreciate that may not be your problem, but Birmingham also mentioned that you are gaining part of the money from the sale of housing land. I notice from our brief that your housing waiting list has doubled over the last five years to 23,000. I know that all housing waiting lists have gone up substantially over the last five years but does this mean that you are selling off existing council homes or land on which future council homes could be built and therefore, in order to fulfil your Decent Homes programme, you are making your overcrowding and waiting list situation worse.

Cllr Lines: I hope not. We have now embarked on building new council houses and we will be building 500 a year within two years. The brownfield sites that have been selling and are not selling now, we will now be building on ourselves. There is very much of it. When I took over as Cabinet Member five years ago I had over 70,000 council homes; I have now got less than 68,000 so you can see the number of homes that I have had to demolish because we could not afford to bring those properties up to Decent Homes standards which we have been directed to by the government. So there are various ways of actually doing that, demolishing the worst cases and investing in our best.

Mr Slaughter: Do you make that connection between rising housing needs - ie need for accommodation or just council accommodation - and the fact that you are selling off stock and land?

Q84 Chair: Can we just clarify this because I feel we are slightly going off track? My understanding, Councillor Lines, was that you sold land which did not have houses on it.

Cllr Lines: Which once had houses on it.

Q85 Chair: Ages ago.

Cllr Lines: And which still have a right to buy police.

Q86 Chair: No, I am not asking about that. My understanding was that you said you were selling land which did have houses on it at some point in the past but currently does not have any houses on it.

Cllr Lines: Correct

Q87 Chair: Leaving aside the right to buy, you are not selling housing in order to fund?

Cllr Lines: No.

Q88 Chair: You are selling land which you could build houses on or somebody else could.

Cllr Lines: Brownfield sites, yes.

Cllr Humphreys: On that point I actually did state that we were selling some flats. In 2008 we came up with a new policy in agreement with tenants. What we decided to do was sell the smaller properties that we have - bedsits and one bedroomed properties - where we actually have a comparative over supply in terms of properties, and what we are looking in terms of the new policies that we put through is to actually increase our supply of larger properties. In inner London areas such as Southwark we have a major problem in terms of overcrowding which of course is one of the government's other agendas that we have to try to meet and actually trying to find larger properties is one of the biggest and most pressing needs that we have.

Q89 Mr Slaughter: Given the problems you are having with the list of Decent Homes standards, I gather you have both expressed views about future Decent Homes standards and that should be slightly more wide ranging than simply the physical structure. I can see that you might want to broaden it on the issue of, say, planning, fuel poverty and new environmental standards, that is really a logical extensions of what is there already. Are you seriously talking about a sort of centrally directed policy in relation to, say, environmental concerns, design and issues of that kind, in other words not just whether you have a decent bathroom, kitchen, et cetera, but what the external space is like, what the estate is like and things like that? Do you see that as part of the Decent Homes in the future?

Cllr Lines: It all comes down to money and when we are paying more money out than we are getting in then we have the difficulty so we cut our cloth accordingly. So that is what we are doing and I think we are doing a very good job actually.

Q90 Chair: What is being asked about is the future Decent Homes standards, whether you believe that additional factors should be included within a future Decent Homes standard, not necessarily whether you are going to do them or how you would fund them, just ideally whether you would like more things included.

Cllr Lines: Yes, we most certainly would. I did mention insulation with regard to sustainability and now of course we are doing that with our Decent Homes which is extra to the demands.

Cllr Humphreys: I think there needs to be much greater flexibility in terms of the definitions. I have mentioned, for example, lifts and environmental improvements. In addition fire safety is important, especially bearing in mind the tragic events that occurred in Camberwell in the summer, something that is very dear to our heart at the moment. These sorts of issues need to be considered. As Councillor Lines says, obviously money is a major consideration in terms of this but what we are trying to say is that there needs to be greater flexibility in terms of how this is assessed rather than just a simple tick box routine which seems to be what is the case now.

Q91 Mr Slaughter: The problem you have at root is that you do not have access to the same funding that other authorities may have. The standards for Decent Homes are predicated on money being made available and is there to cure a specific problem which is the neglect over many decades of council housing which led to the internal space, roofs, doors and possibly cladding and things like being of an inferior standard. That is the quid pro quo. Local authorities are saying that they want government to lay down the standards of design, how individual estates should be laid out et cetera.

Cllr Lines: No, I would hope that the expectation would be much higher, but it all comes down to money. I have had to borrow £130 million to continue and to finish the Decent Homes, that is for the five years. In that time I have handed over £150 million in capital receipts for the sale of housing. We are in a ridiculous situation and we would like a level playing with RSLs, for example, where the monies that we collect in rent we would like to invest in Decent Homes.

Q92 Chair: Can we try to stick to the question?

Cllr Lines: Sorry, it comes down to finance.

Cllr Humphreys: Going back to Decent Homes, looking at the internal fabric of a flat is only one consideration that we have as a landlord. We have a range of other landlord considerations and in terms of the amount of money that we are spending on our stock every year Decent Homes is only one component of that. I think tenants or residents fail to understand that some of those works that we are doing, for example the money we are putting into heating and lifts, does not actually meet that Decent Homes target. We could go down the route and say that we are not going to spend any money on lifts, we are not going to spend any money on doing up heating systems or things like that, but I do not think tenants would thank us for that, if we just and pursued an artificial target.

Q93 Mr Betts: Both councils have mentioned the issue of money yet there was money available by means of either stock transferral or creation of an ALMO but both your authorities decided not to go down that route and take the money that was on offer. Was that your decision as a council? If it was a tenants' decision did you try to persuade them otherwise?

Cllr Stanton: The exercise that we had to undertake was to tell the government that either we could meet Decent Homes under our resources or that we could not and we wanted to for an ALMO or a stock transfer with tenant support. All the history of Southwark is that there is no tenant support at all for ALMOs or stock transfer; tenants want to remain council tenants. Whatever consultation exercise we have undertaken it has always resoundingly shown that. When we undertook that exercise in 2005 about meeting the basic Decent Homes standard on the assumptions that the government gave us to work with about building cost inflation we showed that we could meet Decent Homes out of our own resources and that was backed at the time by out tenants movement and nothing subsequently seems to have changed in Southwark. I think our firm political view is that there is no support for an ALMO or a stock transfer as a solution to the problem in Southwark.

Q94 Mr Betts: You say you could meet it but you have not met it.

Cllr Stanton: We have not met it because we subsequently changed our criteria. If we could spend £400 million a year chasing the Decent Homes target we would have had made more progress towards meeting the Decent Homes target that we have. Instead we have been putting some of that £100 million a year into replacing lifts, into replacing heating systems, into putting in CCTV and secure entrance doors. We have done things that real tenants tell us they actually want. That does not help us to meet the Decent Homes target but it does help us to meet a higher standard of properties.

Q95 Mr Betts: Did you ever offer your tenants an alternative then they could have gone for an ALMO to get the Decent Homes work done then you could have put some of your other resources into these extra programmes and got the best of both worlds?

Cllr Stanton: We had a very large consultation exercise with tenants back in 2007 about a full LSVT and it got absolutely nowhere. On the Aylesbury Estate in 2001, which is a large housing estate of 2700 units, there was a stock transfer ballot with an 80 per cent turnout and 75 per cent said no.

Q96 Mr Betts: What about an ALMO?

Cllr Stanton: A 2005 exercise again showed no support for an ALMO at all.

Cllr Lines: In 2001 Birmingham City Council spent £12 million in trying to convince the tenants that they would be better off with an ALMO or any other way than being under the council. The tenants - 74,000 of them - said "No thank you" even though the homes were neglected and many of them left to decay for so many years. An option appraisal was then carried out in 2004 and they then again said they would like to stay with the council and obviously that meant that we had to find the money, but if we respect democracy that is what we had to do.

Mr Kalsi: Could I just clarify the facts behind what Councillor Lines has said? In that option appraisal in 2005, 70 per cent of our tenants wanted to stay with the council, only 15 per cent were in favour of an ALMO, nine per cent partial stock transfer and five cent PFI. So it was an overwhelming majority and all the options were tested with all our tenants in terms of what their preferred option would be.

Q97 Chair: Was the council steering tenants in a particular direction or wholly neutral?

Cllr Lines: The previous administration of Birmingham City Council spent £12 million in trying to convince the tenants that another option would be better for them.

Q98 Alison Seabeck: You both have very large stock, what would be the implications for you - from your evidence you hold slightly different views on this - of the proposals as currently being brought forward for changing the HRA?

Cllr Stanton: We have a purist localist view which is that the national HRA should be abolished even though it is a beneficiary probably from the current arrangements but that is only going to work if it is coupled with an ability to raise revenue and borrow locally which currently we are inhibited from doing so our rents are basically set by national government, we are heavily restricted about borrowing. We keep circling around the fact that in Southwark our housing debt is something like £775 million; we are servicing that at a level of £50 million a year, so that is dead money just going back to the Treasury which then comes back to us in debt subsidy. If we are going to make a serious dent in the standard of our housing it seems to us that taking this once in a lifetime political opportunity about doing something about HRA and debt nationally, there has to be something about allowing us to re-borrow that debt or re-finance the debt or taking a debt holiday. There is some proposition about that debt, that that £50 million could be more productively spent on Decent Homes, on tackling fuel poverty, creating local construction jobs and apprenticeships even if, when that cycle of investment is over and we have brought the homes up to the desired standard, we then go back to putting that money into repaying debt at a slightly higher annual rate because we have taken a debt holiday. If we do not take that opportunity to look not just at the current debt interest payments but the current underlying issue about how a council might, over the years, spend £775 million building flats, a lot of which we have demolished, are currently in the process of demolishing or very expensively refurbishing or sold at knock down prices under the right to buy.

Q99 Alison Seabeck: I assume you have done costings for the different options and looked at different effects. Have you submitted those to DCLG?

Cllr Humphreys: In terms of our responses to DCLG the big question is how much debt are we going to be saddled with as a result of it. It is going to be less than we have at the moment in a sense but that is supposed to be a once and for all situation. That is the question mark that both ourselves and I assume Birmingham and every other council across the country is looking at. Until you know what the figure you are expected to hold is, it is very difficult to make assumptions. We support breaking down the concept of the national housing subsidy does not make any sense whatsoever. We certainly support getting rid of that and we support that there should be much more local accountability for councils running their stock, running it efficiently, being able to reward their tenants in a sense by being able to do that.

Cllr Lines: I think we recognise that debt has to be repaid and the sad thing about the debt that most of us have got goes back probably to not far after the Second World War and we are still paying for that now. When I took over as Cabinet Member five years ago we paid £10 million per annum back to the government in rent subsidy. I am now paying £57 million per annum in rent subsidy. I believe that we can be trusted with housing and that investment in housing over a few years we would obviously have climbed that mountain and got to the top with regards to a better future for homes for our people, affordable homes that is of course.

Q100 Anne Main: I find it quite interesting that both Councillor Lines and Councillor Humphries welcome the fact that this rent subsidy is actually not fair. My own constituents have had the same problem and they think it is deeply unfair. If that is the case, Councillor Lines, and you would like to see a new system in place, do you believe that by having access to that budget you have just described - £57 million - that you could then enormously increase the amount of building? Do you believe this has stifled the amount of social housing you have been able to deliver by not having that?

Cllr Lines: We would welcome the opportunity to actually prove again that councils can build large numbers of houses. They have not necessarily all got to be in rent; we do not necessarily have to go down the road of the '60s where we were building those great big monolithic estates. We believe we can provide homes for our people provided the government allow us to spend the money that actually get in from rent. As you can see, we are not actually doing that. We would like a level playing with RSLs where they are allowed to keep their rent.

Q101 Chair: We are going off the track again. In this inquiry we are not looking at the affordability and supply of housing which we have done to death before. We are concentrating on Decent Homes. The question, Anne, should have been: would you be able to deliver your Decent Homes standards quicker and sooner and possibly go even further, never mind the house building for the moment? Can you just answer yes or no?

Cllr Lines: We would have done it a couple of years ago.

Q102 Anne Main: Councillor Humphries, would you be able to do it because you are in a different position? Would you be able to do it if the system was altered as you described?

Cllr Humphreys: I think it is hard for me to answer that. I think the answer would be no in the sense we would be getting less money, but there needs to be a level playing field in terms of how you structure it. It is fundamentally unfair that for people in one part of the country their rent is going to subsidise the rent in another part of the country. It makes absolutely no sense whatsoever.

Cllr Stanton: Southwark is one of the largest authorities in London in terms of the amount of new social affordable housing that has been built in the borough over the last four or five years. A lot of that has been provided to us through quotas of private developments which we have given planning consent for and have clawed back 35 per cent affordable. The hard answer to your question is: should local authorities, like Southwark, with large amounts of social housing, have the choice at a local level to say to a developer, "Rather than take part of your development as new affordable housing we will take a cash contribution towards our Decent Homes bill" and at the moment National Planning Guidance prevents us from having a planning framework that will do that but certainly my experience and my constituents, when you get a bit development being built, the developers go along to ask, "What would you like out of this development?" and people say they want double glazing, CCTV, playground for the kids and very little of that can actually come out of section 106 because that is not what section 106 is for. Certainly that would help us in Southwark meet our investment gap at no cost to central government.

Q103 Chair: We have two more sets of witnesses. If it is factual, Mr Kalsi, do you think you let us have it in a note after?

Mr Kalsi: There is one point just worth making. There are a lot of proposals that are helpful in what is being proposed, but there is one issue that I think the council feels quite strongly about and that is are they based on effectively just maintaining the Decent Homes standard as we are. We do not think that is adequate and it would mean a lot of debt being reallocated across the nation. We are opposed to any debt reallocation because I think that will limit our opportunity in the long term to do exactly Decent Homes Plus. The other thing I would just highlight to the inquiry is that actually, when you look at the debt outstanding on our properties - £10,000 on average per property - compared to the value of our council housing stock - which is about £40,000 per property and even that is based on the existing use value for social housing which is much depressed than what an open market value would be - I think there is plenty of headroom if we had a positive financial framework that is in line with the RSLs that would free us up with the ability to perhaps mortgage and borrow a bit more on our stock to do that investment knowing that it is a very, very secure investment on the value of the properties.

Q104 Mr Turner: Debt reallocation is actually fundamental to the proposals. Are you saying that Birmingham would not take part and would try to put a veto on it?

Mr Kalsi: Our initial calculations indicate that we would be taking significantly more debt on.

Q105 Mr Turner: Would Birmingham put a veto on the whole of the national scheme?

Cllr Lines: We would work with anyone to ensure that we had better housing for the people of the country as well the city of Birmingham.

Q106 Chair: That is not an answer. Could we just have a yes/no answer: would you veto?

Cllr Lines: No. We would do anything that would help our people.

Cllr Humphreys: You have sort out the debt as part of the HRA. If you cannot sort out the debt you are not going to sort out the HRA. The reallocation is fundamental.

Q107 Mr Betts: Are Birmingham saying they will refuse to take any extra debt on as part of a reallocation package to get a reform of the HRA?

Cllr Lines: We would be very, very happy to debate that question.

Chair: Councillor Lines, debating things is not the answer. We just need a yes/no answer. Would you like to repeat it, Clive?

Q108 Mr Betts: Are Birmingham saying that they would not, under any circumstances, take on extra debt as a part of a national redistribution of debt in order to secure a reform of the HRA

Cllr Lines: Of course we do not want to take on extra debt. We have probably got more debt than any one. I think that is a reality.

Q109 Mr Betts: Are you saying you would refuse to take on any more debt to secure a reform of the HRA?

Cllr Lines: We do not want any more debt, thank you. We will work with anyone to ensure that we have homes for our people.

Chair: I think we have got our answer. We have just gone one more question which I would like a brief answer to although I know it is quite technical which is in relation to private sector homes.

Q110 Mr Turner: In respect of private sector housing where you have a duty to review the standards within that, can you just tell us how you do that? There have been some criticisms that authorities do not do it properly. Do you accept that as local authorities across the board as well as your own authority?

Cllr Lines: You are talking about private homes.

Q111 Mr Turner: Yes.

Cllr Lines: Obviously we are working very closely with various organisations. They are ensuring that money is available to those people who want to improve their homes up to the Decent Homes standard. We have one organisation called Kick Start which works very well. The difficulty we have for the future is that the minister has reduced the budget for the West Midlands region to invest in private homes. He has decided that it will be moved into building new homes so in effect what we are doing because of that is we are storing up problems for the future. That aside, we will do all we can to ensure that money is available for those people that want to borrow on equity or any other way to ensure their homes do reach those standards but these are difficult times.

Cllr Humphreys: In terms of the private sector we are focussing on vulnerable residents. In 2008/2009 the council made 307 private sector homes occupied by vulnerable households decent. Many of these improvements were funded by sub-regional targeted funding stream resources. These are uncertain going forward in 2010/2011 and this year we have only made 73 decent so far but we work in the South East London Housing Partnership with our colleagues in Lewisham, Bexley, Bromley and Greenwich in terms of pooling the resources and expertise together to try to make as many as possible but there is a significant job to be done there.

Q112 Chair: I do not want an answer now but, Councillor Lines, could you possibly drop us a note afterwards to explain what Birmingham Council is doing under Section 3 of the Housing Act 2004 to review the standards in the private sector?

Cllr Lines: Certainly.

Chair: Thank you all very much.

Memoranda submitted by Sheffield County Council and Sandwell Borough Council

 

Examination of Witnesses

Witnesses: Mr Peter Morton, Chief Executive of Sheffield Homes, Mr Bob McCann, Sheffield City Council, Mr Tomos Jones, Home Improvement Manager, Sandwell Metropolitan Borough Council and Mr John Clayton, Investment Director, Sandwell Homes, gave evidence.

Q113 Chair: Welcome to our witnesses. Can I start off by asking you what is the proportion of social sector non-decent homes in each of your councils and what do you expect it to be by 2010?

Mr Morton: In Sheffield the current non-decent figure is 19.1 per cent; by March 2010 it will be 12 per cent and by December 2010 it will be eight per cent. We are aiming to achieve the target by 2013/14.

Mr Clayton: In Sandwell's case our stock is currently 19.7 per cent non-decent. At the end of 2010 it will be 7.7 per cent non-cent. We aim to reach our target in December 2012.

Chair: I do not want to go down the list here but I think we would find it quite useful if each of your councils drop us a note and say what you think the Decent Homes standard is as you apply it in your area because there is clearly a certain degree of variation, if I may put it that way. If you are - which I think you are - implementing a "Plus" can you indicate what you regard as the "Plus" standards? Thank you.

Q114 Mr Slaughter: You are having some difficulty in reaching Decent Homes targets. Is that fair to say, obviously with ALMO status? Do you have an opinion on this issue of where Decent Homes standards should go for now, whether they should become broader or whether they should encompass other factors be they other structural factors like environmental improvement to property and cladding and things like that, or whether they should include wider environmental factors to do with neighbourhoods and things like that. What is your view of that?

Mr Morton: The Decent Homes standard as presently described is essentially that internal work. The standard that I would advocate would include the environment, the communal areas, cladding, the external environment. What we find is that tenants come out of their homes in Sheffield having had them made decent and they are satisfied, they go outside their front door and they go into an environment which is not decent and that needs fixing. The other big area is around CO2 and there are ambitious targets for the government to achieve a reduction in CO2. Most CO2 comes from houses and we need a big programme to retrofit and fix council housing in that regard. The other point I would make about standards is that we now have the TSA in place, they are consulting about standards and they are setting a standard for the quality of homes. There needs to be a tie in between the TSA standard and the government standard post Decent Homes, but fundamentally authorities need the ability to resource that which at present they do not have.

Mr McCann: One of the things we are very conscious of in Sheffield is making the tenants a driving force behind setting the standards rather than working to government standards or council standards. It is very much about tenants setting the standard that they want and not what the authority wants.

Mr Clayton: I would support everything that has been said by my colleague from Sheffield. The standard needs to be extended to cover common parts, environmental considerations on estates; I think very importantly it needs to be dovetailed into the government's carbon strategy where there is an opportunity to get some synergy between spends and renewables and refurbishments of homes. In addition to that I think the standards should reflect the need to provide disabled facilities which again is an opportunity to get synergy from other areas of spend.

Q115 Mr Slaughter: I take your point on CO2 because since Decent Homes was launched the climate has changed, but do you not feel it is your responsibility to maintain the common parts of estates? I take exactly the point about the environment, but is that not simply your duty as landlords to ensure that there is a pleasant environment for people to go out into? Decent Homes is there for a specific purpose and we heard from previous councils that because they are short of money they wanted to fiddle it so they could spend it on their lifts of something else like that. You are ALMOs, you have got the money for Decent Homes, that is there to cure a real evil that has built over several decades in social housing, but do you not think it is part of your year on year responsibility to maintain the common parts of the environment of your estate?

Mr Morton: Absolutely, but the difficulty we have got is that we do not have the resources to enable us to maintain the external environment to the standard that tenants would expect. When Decent Homes is completed we are back to a position where we were prior to Decent Homes of rationing the resources that we have. We cannot do everything because of the constraints we are under within the funding system. It is absolutely right, there is a high expectation and a rising aspiration for the standards they ought to expect. As a landlord, if we do have the resources to do that, then we are constantly rubbing up against each other.

Q116 Anne Main: You are talking about the synergy between different departments and different aims and government targets, what about the target for reduction in fuel poverty which the government has not exactly been hitting. Do you think there is greater opportunity within Decent Homes to it those targets and do you think the budgeting should be more flexible to enable you to get funding to help hit those targets?

Mr Clayton: Absolutely. The improvement of the thermal efficiency of homes has a very direct impact on fuel poverty. One of the things we need in order to reduce carbon emissions is to make homes more thermally efficient. So yes, you bring the agendas together and it has the benefit in terms of reductions in fuel poverty.

Q117 Anne Main: So is this like one department not speaking to another, or is it the grant structure or what is it that is stopping you trying to do that?

Mr Clayton: In terms of the carbon agenda there is precious little funding available for large scale improvements for thermal efficiency in properties. The thermal standards that can tie with the Decent Homes standards are very low, they come up from a very low base and it is going to be necessary in the future, if we are going to hit our carbon targets - particularly the tough one in 2050 - it is going to be necessary to identify the funding that is required to improve both the insulation and the mechanical performance of the installations in homes.

Q118 Anne Main: Can I just pick you up on what you said about the standard being very low for the installation of thermal properties of a refurbished home? Could you anticipate then that after that low level refurbishment a family could still be in fuel poverty?

Mr Clayton: In the right circumstances but it also relies on the income of that family within the calculations, so yes, that could arise.

Q119 Chair: Do you agree with that or not?

Mr McCann: I would agree to a point. During our Decent Homes programme we are doing a reasonably high degree of thermal insulation.

Q120 Chair: Are you doing a degree of thermal insulation that is higher than the level within the Decent Homes programme nationally?

Mr Morton: We are complying with the Sheffield standard and the government standard and there are some additional insulations going in but it is not to the CO2 standard.

Q121 Anne Main: You are saying you are giving a greater degree of thermal efficiency in your homes because you are going above the low standard.

Mr McCann: The other thing, so far as central heating systems are concerned, particularly old boilers, is that while it complies with the decency standard as is efficient and working, we are not replacing them. In an ideal world we would prefer to replace all out of date boilers but that needs extra funding.

Q122 Alison Seabeck: Can I come back to the common parts issue which has actually raised a number of pieces of evidence here. A number of people feel that Decent Homes Plus ought to extend to common parts and environment. Playing devil's advocate slightly here, given that a lot of estates now are mixed, there is a right to buy in there, is it right that we should be making improvements that will enhance the value of those properties for the home owner without the home owner putting anything back into the system and it all coming from government or local authority?

Mr Morton: The home owners do make contributions to the improvements of the common parts. We take the full costs of the works and divide it by the number of tenants and they pay pro rata.

Q123 Alison Seabeck: As part of your Decent Homes programme you are charging the leaseholders.

Mr Morton: Yes.

Q124 Chair: The leaseholder issue has been brought up in previous inquiries by this Committee. Do you have problems with your leaseholders not being able to afford the contribution that you are asking of them?

Mr Morton: We do but we negotiate long term settlements with them. We try to do our best to ameliorate that problem.

Mr Clayton: We are in the same position.

Q125 Anne Main: If you are going above the Decent Homes standard and therefore by incurring a more expensive scheme - I have had experiences of this in my own constituency - are you then facing a leaseholder who does not wish to go to that level and who only wants the basic level. Do you find any problems there at all?

Mr McCann: The issue there is whether it is a communal area. We have an issue of cladding on blocks, you cannot clad parts of blocks and leave one out; you have to do the whole block. It is a case of getting agreement as to what level of cladding you go to and how much you spend. Like Peter said, we do have several vehicles in place for people to be able to cope with the debt, whether it is long term loans, equity release or something of that nature.

Q126 Anne Main: I can understand that but I will give you the example I had, it was putting solar panels on a communal roof which was to light the communal areas. That was considered a costly option, albeit a more green option, and I am just wondering if you are going to go down that route will you have to seek the guidance and the permission of the residents to actually go that higher level?

Mr Morton: Yes, definitely.

Mr Clayton: We need to go through leaseholder consultation before we execute those sorts of works, yes.

Q127 Chair: Are you saying you consult with the leaseholders as well.

Mr Clayton: Yes.

Q128 John Cummings: Would you tell the Committee how you believe funding should be released and monitored after 2010?

Mr Clayton: We have a commitment from government on the funding stream which we enjoy through the ALMO arrangements and we would be looking to government to deliver on those promises.

Q129 John Cummings: Do you think the procedures could be improved?

Mr Clayton: Absolutely.

Q130 John Cummings: Would you tell the Committee how and where the problems lie?

Mr Clayton: One of the issues that has made the ALMO Decent Homes programme a success has been a degree of stability in terms of the funding stream. There have been interventions and the funding streams have been stretched, but in terms of long term stability they have been far superior to those that we have faced in the past. For the future the preparation on long term business plans for the maintenance of the housing stock over decades, not over a short horizon, and self funding arrangements that can be generated following the review of local authority housing finance. That would give us the ability to plan over a long period and deliver improvements to properties as and when they are needed over a 30 year profile. So if I were to recommend to the Committee improvements in the funding regime they would really be centred on making the funding regime statement predictable and also I would draw the Committee's attention back to the fact that funding arrangements that are available for local authorities and ALMOs in the long term are insufficient.

Q131 John Cummings: Do you think that the present programme has settled down into a system which could be easily extended beyond 2010?

Mr Morton: Following on from the 30 year planning regime, we did some modelling in Sheffield and working on a 30 year business plan we could demonstrate 50 per cent efficiency in delivery. That is a heck of a lot of money at no extra cost to anyone; it is just building into the programme. We have learned through the Decent Homes programmes that by being able to look forward four or five years, it is possible to build in better procurement, better management costs and everything like that. If we could build up 30 year business plans the amount of money in the system would deliver much more than it does at the present time.

Mr Jones: Could I make a point relating to the private sector?

Chair: You can, but we are going to deal with that in a minute.

Q132 Mr Betts: What has been argued for then is some long term stability and long term ability to plan. What changes would have to come in to enable you to do that?

Mr McCann: Housing subsidy.

Q133 Mr Betts: We will come onto the HRA in a few minutes, but in terms of other things, in terms of the ability of ALMOs to plan long term, currently you have short term agreements with councils, you do not own the properties, you have no control over your rents; it is not exactly the greatest basis for long term planning, is it?

Mr Morton: In Sheffield we have recently started an exploration of what an ALMO II might look like which is really about empowering tenants. We have a kind of triangle relationship between the tenants, the council and Sheffield Homes and we try to explore new models of governing council housing which would enable us to bring in additional resources. We are at the start of a journey and we are not clear what the destination is to be, but we need to find a solution that gives us this long term resource. Part of the answer is giving tenants much more control and empowerment over the big decisions that affect their homes. One option I would like to explore is for the tenants to own, wholly or partly, the ALMO. We have looked at the Gateway Model in Preston to see how we can adapt that model to fit an ALMO solution rather than LSVT solution, and look at other ways of changing the model which might take us out of the public sector borrowing requirements and the constraints there but remain a service which is driven by the needs of its tenants.

Q134 Alison Seabeck: You touched on the HRA and Sheffield seem to be reasonably content that the proposals as currently put forward will assist you not only in delivery but in allowing your tenants further involvement. Can I ask specifically, are you currently having discussions with your tenants about what is being proposed under for the HRA and, if so, what are their views? How will the proposals impact on you?

Mr Morton: With Sheffield, Sheffield was one of the six pilot authorities that did the self-financing. We did a lot of work with CLG and the other five authorities and we built a business model which gives us a gap of over £3 billion over the next 35 years. The modelling that we have done indicates that if there was a re-profiling of debt across the whole community, if you like, then we would be well placed to meet that gap.

Q135 Alison Seabeck: When you say well placed, would you need that gap?

Mr Morton: Essentially we are in negotiation with government about re-profiling debt and what the offer looks like. I think every authority would have to work out whether the offer from government gives them a means of bridging that gap. The indications are positive but I think any authority would only embark on coming out of the system and going on its own if it could be absolutely sure that it could fund the stock and the service over this 30 to 35 year period. I think every authority would have to do that piece of work but as things currently stand we are pretty optimistic that we could make the system work.

Q136 Alison Seabeck: You were nodding to say you are already involving your tenants in this.

Mr McCann: Absolutely, yes. In fact tenants were one of the respondents to the recent consultation paper from government about the housing subsidy system.

Mr Clayton: in terms of the long term re-financing proposals, for Sandwell, whether or not it would provide an adequate solution to our problem, is very much a function of the arithmetic and that would depend on the way in which debt was re-distributed and in particular I think we need to factor into it rent policy in the longer term because it is all part and parcel of the same equation. Clearly every authority would need to generate a profile of its cash needs in the long term because in each local authority there will be a different picture simply based on the condition of its stock and where they are in terms of delivering decency. I really could not give you an absolute answer to your question; it would depend on the calculation when it was presented.

Q137 Alison Seabeck: What is your gut feeling, at the moment, that it would be positive or negative?

Mr Clayton: It depends on how debt is redistributed.

Q138 Mr Betts: If there were no reform of the HRA is there any chance that either of you could deliver sustainable works to your properties and maintain a decent standard in the long term?

Mr Clayton: It would be outside of our hands because the income stream would be dictated by government every time it goes for a comprehensive spending review.

Mr Morton: Sheffield would be £3 billion short over 35 years of maintaining stock to a proper standard.

Q139 Chair: Under the current system?

Mr Morton: Yes, under the current system. If there is no change then we are back to where we were where we cannot maintain the stock to the standard that tenants have every right to expect.

Mr Clayton: It is probably worth saying that CLG itself has identified a five per cent shortfall in revenue funding and a 24 per cent shortfall in capital funding and the BRE reckon the capital shortfall is 43 per cent.

Chair: We know those figures.

Q140 Mr Turner: Obviously the private sector is important to housing just as much as the public sector is. Could you just tell us what you do under section 3 of the 2004 Housing Act to ensure that the private sector is brought up to a Decent Homes standard? I wonder, from Sandwell, whether or not you could tell us a little bit more about the funding that you have identified to bridge some of the gaps that have been existing within that.

Mr Jones: Certainly in terms of what we are doing under section 3, we are really starting off by following CLG guides in terms of stock condition surveys; we are particularly working with the BREs to develop their stock condition model so we can identify where we have pockets of non-decency and vulnerable people. We can target our interventions to those particular areas. It is becoming more challenging to achieve the Decent Homes target in the private sector. One of the key things that has been a blow to us is that PSA7 has certainly declined in terms of its profile within the local authority and we are quite disappointed that there is not a section in the national indicator 158 which relates to private sector housing, whether that be specifically to vulnerable people or to private sector housing generally. One of the difficulties we have got in terms of meeting PSA7 is the link to vulnerability. It does make it difficult to target interventions because effectively, if we target activity on area basis we have to either justify not doing works to people who are not vulnerable or do we do works for those vulnerable people which do not contribute to our targets under PSA7. Linking it to vulnerable occupiers specifically does make it difficult to deliver on the ground. Maybe the way forward would be to have a target under NI158 but leave it to local authorities locally in consultation with their regional government office about actually how they are going to deliver targets on the ground. In terms of what we have done, it has been a struggle recently. We have seen capital funding decrease significantly year on year and all the messages back to us are that it is going to decrease further with funding moving towards new building costs. Because of that we have had to work quite creatively with a range of different partners. Councillor Lines before spoke about Kick Start and that is probably our main policy tool and that is about equity share loans for owner/occupiers and that is something that is expanding out regionally now and the key aim of the Kick Start is to attract private finance. We have already tendered once but because of the change in the economic climate that fell through really just as we were at the point of signing contracts with a private sector lendor. We think we have a model that will work but we need to make sure that we keep the momentum up within the local authorities so at a point in time we can go back to the market and say, "This really is a product that is worth investing in" and obviously there the key is to get private financing to the sector and that will guarantee sustainability in terms of how we can keep offering assistance to private sector occupiers. Without that unfortunately we need to rely on continued grant funding, whether that is directly through the Housing Investment programme or by what we have been doing working with people like the Housing Market Rural Area, the Working Neighbourhoods Fund and the PCT to try to make the case that housing interventions work across a whole broad range of policy objectives, health, education, employment. We have been quite successful in doing that but to make it attractive to other partners you always need that capital leverage that you have got through your own grants regime.

Q141 Chair: Is most of your private sector housing owner occupier or private rented?

Mr Jones: It is mostly owner occupier but we have seen a massive increase in the private rented sector over the last five years. It has doubled over five years.

Q142 Chair: You said that the target of going for vulnerable people was difficult, which I can understand. Might you be delivering the same thing better if you went for a target on fuel poverty?

Mr Jones: Potentially yes, because one of the difficulties we have around that is that people can be fuel poor but not vulnerable because the definition of vulnerable is very much about being in receipt of income related benefits whereas obviously fuel poverty is about spending more than 10 per cent of your income on heating your home. That makes the delivery of fuel poverty programmes quite difficult because there are no targets around fuel poverty. In terms of meeting targets that we set out in our local area agreements we are dealing with people who vulnerable, not necessarily meeting any targets.

Mr McCann: As far as the total housing stock in Sheffield, 74 per cent of it is private sector, of that we have 22,000 private rented stock. The conditions we have at the moment, at 2002, were showing that 42 per cent of that was non-decent.

Q143 Chair: Was that 42 per cent of all private housing or the private rented?

Mr McCann: Private rented. We have just carried out a new, up to date house condition survey. We have not got the final details of it yet but it is showing the amount of money needed, an early indication, to remove non-decency, 38 per cent of the 190,000 properties surveyed, it is looking at £311 million.

Q144 Chair: The issue that we are trying to get at, which was raised by one of the witnesses we had in our first session, was whether local authorities are enforcing standards on the private sector as a means of dealing with non-decent homes, in which case you do not have to pay for them, or whether you are persuading.

Mr McCann: We are doing a lot of work with our private sector landlords.

Q145 Chair: Are you enforcing standards, not doing a load of work with them?

Mr McCann: We are enforcing but we are trying to make the private sector landlord a part of the solution rather than to make them the problem. We are trying to build a relationship with them which is starting to work very well. We have a responsible landlording scheme in Sheffield which is just coming up to the 500th member signing up to that. That has worked very well because within that there is an accreditation level which is linked to the universities as well for them recommending landlords. There is a lot of work being done but again the biggest problem is tee funding for it.

Mr Jones: We have an accreditation scheme. The main thrust of our policy is to work with private landlords but we will enforce HHSRS where we are just not able to get compliance through working with landlords. What I would say is that due to lack of resources we are not able to do that in what we market in a strategic way we are very much responding to complaints whereas we do now have information from stock condition surveys about where we have private landlords where there may be category one hazards, you do not have the resources to proactively go out and deal with those. Although you say it does not cost anything, theoretically that is right but ultimately we may need to do work in default and clearly there is a cost to that although ultimately we should be able to get that back not through charges but that could at any point in the future, so there is a cost even in enforcing the private sector.

Mr McCann: The cost is providing the staff in order to deliver.

Chair: I understand that; that is the point that Mr Jones has made. Thank you very much indeed.
Memoranda submitted by National Housing Federation, Circle Anglia and Hanover

Examination of Witnesses

Witnesses: Mr David Orr, Chief Executive National Housing Federation, Mr Andy Doylend, Executive Director (Operations), Circle Anglia and Mr Bruce Moore, gave evidence.

Q146 Chair: Can I just start off, are housing associations going to hit the 2010 deadline for decent homes?

Mr Moore: Hanover already does meet the Decent Homes Standard.

Mr Doylend: With one or two outriders and stragglers, substantively yes.

Q147 Mr Slaughter: You have had an easier job on the whole because with a lot of housing associations the stock is newer and therefore it is not such a challenge as bringing council stock up to scratch. I noticed the old housing associations - Peabody and those whose stock dates from late 19^th century or early 20^th century - in order to meet standards they are either selling off stock or raising money by other means. What are the problems that RSLs are having in meeting Decent Homes?

Mr Orr: I think you are right to say that in some respects it has been easier for housing associations than for others because much of the stock is newer and built to better quality as well and is better maintained during the lifetime of that stock. The second batch, of course, housing associations created as a result of SLVT where the objective was to create a mechanism for investing to meet the Decent Homes Standard and that process has worked; in the main it has delivered the promises that were made. Then there are of course the older organisations, many of whom have had to do a more fundamental restructuring of their stock to be able to meet these standards. There is a kind of complicated relationship between the cost of the works and the rent that they are presently charged where particularly Peabody but others of that kind of association have historically had lower rents which has meant that they had less income to be able to meet the Decent Homes Standard. As you know, there has been no direct government subsidy for housing associations to meet the Decent Homes Standard at all.

Q148 Mr Slaughter: Have most associations had to put their rents up? Presumably that is something which, given the relatively high rent that a lot of associations charge, that presumably is unpopular with tenants.

Mr Orr: In the main housing association rents have been controlled since 2001 as a result of the rent convergence regime so there has been very little real flexibility for housing associations to do that.

Q149 Mr Slaughter: How are they doing it? Are they doing it by a combination of rent rises when they can?

Mr Orr: They are doing it by a combination of rent rises where they can but effective outside management and from time to time that has involved a small proportion of sales to be able to release some of the equity to allow the investment in Decent Homes.

Q150 Mr Slaughter: With Peabody it is up to ten per cent of stock, and good quality stock at that. Is that something that you are concerned about, which you have made representations about or for which you think there should be alternatives?

Mr Orr: In respect of Peabody I think they should have been allowed to put their rents up more because they are below average and I think that would have allowed them to do more without having to sell. I think there is a huge amount of trapped equity in social housing generally, a point that other of your witnesses have made, and I do think it is rational for us to look at what a sensible asset management strategy should look like and I do not think that an occasional sale is bad because sometimes it does allow the release of equity to do good things like meet the Decent Homes Standards or even stimulate additional new build.

Q151 Mr Slaughter: An occasional sale is different from selling ten per cent of your stock.

Mr Orr: I think Peabody would not have wanted to sell ten per cent of their stock and they would have preferred to have been allowed to put their rents up to an average, one that was consistent with the average for the areas they work in.

Q152 Mr Slaughter: Bearing that in mind and that the definition of Decent Homes may change or may expand, do you favour any change? Do you think it has gone as far as it should go and do you wish it left to individual associations to set their own criteria or do you wish to see more government intervention?

Mr Orr: We would like to see the Decent Homes Standard retained as an absolute minimum; we would like to see more flexibility for individual associations to be able to negotiate standards appropriate to those places in conjunction with our tenants. I do think that that is consistent with an agenda which is about engaging tenants far more in the decision making about their homes and communities. So I think we are not in favour of a recast centrally imposed Decent Homes standard partly because so much of what we would have to talk about is about environmental retrofitting and that is such a big issue that I think a kind of recast Decent Homes standard is not the way to go about doing that.

Q153 Chair: If it is not a standard imposed by government across the piece, what would be the point of having specifically enhanced Decent Homes standards negotiated locally?

Mr Orr: My colleagues may want to answer for their own organisations, but in brief there comes a point where I think it is right that tenants should have a choice for themselves about whether they would rather see the available investment in improving the public realm and enhancing public safety or having more kitchens and bathrooms. The difficulty about a centrally imposed standard is that it takes away that local determination.

Mr Moore: Just concurring with what David said, I think having a base standard that everyone should meet but then actually reflecting the differences. You asked previous witnesses to explain what their plus factor is on their Decent Homes and in effect what we are saying is that Decent Homes as strictly construed is a very low standard and each association, each council should be able to then determine how much further they go according to their local circumstances and according to the property type because what might work and be a good cost effective solution on one property type may not be as applicable for elsewhere or the type of tenant that lives in that property as well, so different issues for an older person's association in terms of frailty requirements et cetera may have a different requirement to add onto that base standard. We still strongly think there should be a base standard but then the scrutiny should be: what and why are you applying those plus factors rather than different plus factors?

Q154 Andrew George: To what extent do you and the members of the Federation say that the Decent Homes standard is diverting you from perhaps other objectives within the organisation itself, whether it be overcrowding or dealing with waiting lists and transfers and other issues which you may consider more preferable priorities? Do you believe that the emphasis on Decent Homes standards is not diverting you from those other objectives?

Mr Doylend: Generally no. The Decent Homes standards is such a level that actually most landlords would want to maintain up to that standard as a minimum anyway. Building on what my colleague has said, most of us have local standards that we go well beyond so that local choice is already there. Going forward, however, it is what is built into business plans in perpetuity, and that is maintaining Decent Homes and a bit above, compared to an imposed revised standard and how do we pay for that.

Q155 Alison Seabeck: Hanover, you run a co-payment scheme. I am reading it as you doing the basics and where you want to enhance it you can agree with individual tenants to do that rather than take David's approach that there should be flexibility and everything should be blanket done across a group of properties. How does that work and does it actually produce equities or some tenants feeling that others are doing better than they are?

Mr Moore: We are about to broaden out our initial pilot of a co-payment approach. The co-payment works on the basis that if we are still not satisfied in terms of the replacement cycles for our kitchens and bathrooms it is a priority for our tenants and a large number of our tenants are already putting new kitchens or adaptations to their bathrooms for themselves. Our view is that we should be helping and encouraging others to do that. We are proposing that if somebody's bathroom or kitchen is due to be replaced within five years we would meet 80 per cent of the cost, five to ten years, 60 per cent and ten to 15 years 40 per cent to help meet and incentivise that process of tenants who have resources putting those into play. However, we are not saying that those who cannot afford to put their own resources into play go without; we are still having a base standard and each year we are reducing the wait for that replacement and that will still carry on. For the whole of our tenants we are reducing the wait but for those who have resources we think it is right that we should incentivise those to do that. We have a number of people who are moving into our properties who were previously home owners and they clearly have assets of some form and we think it is an important process to actually unlock some of that equity which otherwise the sector does not see. That is why we are doing it.

Q156 Alison Seabeck: How cost effective is that? There has to be further bureaucracy for your administrative staff in monitoring all this.

Mr Moore: We are thinking that as an era of choice develops that rather than saying that this estate needs everything to be done we look at each property, so actually our asset management is at a per property and per resident base rather than "this estate requires" and everything is done. So that does not change that. We are trying to reduce the bureaucracy involved in this process by saying that because we are not meeting the full amount of cost actually our tenants really do not do things to destroy their properties wilfully, they actually probably put more value into the property than the proportion we are sharing. We do not put too many burdens of bureaucracy in their way. We are paying 80 per cent in a five year time gap and certainly the kitchens and bathrooms I have seen improved have been of a far higher standard than we would normally be putting in.

Q157 Alison Seabeck: David, is this a model that can be rolled out elsewhere to enhance Decent Homes?

Mr Orr: I think it is a very interesting model and I think it could be, but not as a requirement. I think it is one of these things where the best solutions are ones that are worked up locally by individual organisations with their tenants. It may well work very well for Hanover; it may well work for others. However, there is an extremely important point here about the relationship between rent in particular and then the heating and energy costs. We are trapped in a system at present where it would be possible to invest and improve the environmental quality of some of our rented homes but all the costs at present falls on the landlord although all of the benefits rest with the tenant. There is no argument at all about the tenant having a benefit from that, but it means that in practice we cannot access resources that would allow that investment to happen.

Q158 Alison Seabeck: Have you done any work with your tenants or has the NHF done any work on how you might take that forward in terms of sharing some of that burden of the tenants and the net gains?

Mr Orr: We have had some discussions with tenants and some modelling of how that might work. Indeed we commissioned a report which we referred to in our evidence (and which the Committee is welcome to have copies of if it wishes) about how some of that might work. There is evidence that tenants accept the logic of saying that if you have a £5 a week energy saving it is worth paying £3 a week to get that.

Q159 Mr Betts: We talked about doing things locally that meet the circumstances, and equally we have a national challenge on the emissions of CO2 and the whole issue of climate change. Do you think therefore there ought to be a mandatory national standard in terms of thermal efficiency of properties which every organisation has to meet by a given date?

Mr Moore: I think we do, yes. I think there should be a base standard but I think setting that too high could actually perversely result in misapplied public funds. There comes a point at which a certain type of property, so if you take a single brick property that does not have a cavity wall to be filled, et cetera, there is only so much you can do to improve that property and going to hit an ever higher standard on that property you can be paying a disproportionate amount to do that. I think it is actually saying having a base standard but beyond that it is about the scope for improvement and the relative payback, as David was saying, on that investment and is it worthwhile and how that can be shared. Otherwise what will happen is that more and more properties will be simply saying they cannot meet that standard, they cannot co-invest in it and we will lose stock from the sector. I think there is a balance to be struck.

Mr Orr: I think having a mandatory standard is a sensible approach in theory providing there is a proper understanding of how that mandatory standard will be paid for. There is no point in imposing a standard which is unattainable within a given rent envelope. We live in an environment where government now controls the rents that housing associations charge; if you have that rent that is the maximum of the income that you have available, so unless we can find a sensible way of paying for what would be quite significant investment costs then the mandatory standard would be meaningless really. One of the advantages of the Decent Homes standard is that it did create some very interesting thinking about how meeting the standard might be paid for - the LSVT programme, the introduction of ALMOs - and these have contributed but there were costs to government associated with doing that and there is no way that we are going to be able to meet the retrofitting challenge without accepting that there will need to be some investment by government.

Mr Doylend: If you just have a standard for the sector what you will end up with, as my colleague said, is properties just being sold from the sector. They still exist; the problem does not go away. Then you get into the thorny issue of do you have legislation that means it is for everyone, is it the same for private sector or resold and how do you enforce that? Somebody has already raised the point about leaseholders not being able to afford some of these things; they certainly will not be able to afford the retrofit. We have an experiment going at the moment in Norfolk called Greening the Box where we have a pair of semi-detached houses, one we have used a lot of new modern green technology to reduce running costs and we have very much focussed on that and we have reduced the carbon emissions; next door we have done very much more bog standard, more insulation rather than looking for solar panels and such like. We are in the process now of monitoring which of those has lower running costs, which has better carbon emissions. The shocking fact when you look at the price of the two is that the one where you have used modern technology is three or four times the price in terms of retrofit.

Q160 Mr Betts: You have talked about problems with the national standard; there might be a problem if we do not have one that actually we will not get anything at all, but in terms of Decent Homes, the basic standards for Decent Homes for thermal efficiency is pretty low. Presumably your organisations, in looking at your Decent Homes works, have actually adopted higher standards than the Decent Homes. Can you explain what you have done in terms of standard thermal efficiency so far? Obviously in terms of insulation the other thing that Councillor McCann mentioned as being a big problem is that of the efficiency of boilers and people on low incomes. The boilers are over 20 years old, they work but if you put a new one in you would cut people's heating bills by half overnight. Have you done any of that sort of work so far?

Mr Doylend: Definitely. We have a minimum SAFF rating that we have across the stock. We use SAFF as a benchmark for bringing stock up to a minimum SAFF rating of 61. There is a programme of works to bring it up to that level and we are using experiments around ground source heat pumps, looking at different technologies but ultimately you have to look at every property in isolation to see what is the construction, is it an area where it cannot have gas it has to be on electric or oil heating, what is the standard of the property generally? You have to pick up a package of repairs and refurbishment that meets that property's needs. One size just does not fit all.

Q161 Andrew George: In terms of energy efficiency, it is not just about climate change it is also about the affordability. Even if you cannot afford to undertake the kinds of improvements you are talking about, even just getting something like smart meters which actually helps the tenant to try to drive down their own costs, even if you cannot do it for them surely that would help.

Mr Doylend: We also invest in education, that is probably the right way of putting it. Some people who are nominated in, it is their first home, they have no experience of getting running costs down and we invest quite a lot of money through the Sustainable Communities Investments to educate people on how they can best run their homes and minimise the cost.

Q162 Chair: Can we get onto some questions about the Tenants Services Authority which we have not asked the others. How should the TSA regulate the Decent Homes standards after 2010 and how positive do you feel about the steps it has taken already since its establishment?

Mr Orr: The truth of the matter here is that this is one of the three areas where the TSA is subject to the direction of government. It is actually quite difficult at this stage to know how in future a regulator will respond to the direction of government. We are in the middle of a debate with the Tenants Services Authority at the moment about crafting the standards framework. The formal consultation on that does not begin until the end of this week or the beginning of next week so there is as yet no consultation document in the public domain, although privately we have been involved in a number of conversations with the TSA about how that standards framework might develop. I have to say that I am reasonably encouraged by what seems to me to be a fairly rational approach being taken by the TSA which is about saying absolutely have a minimum standard but there needs to be a real and clear determination at a local level for landlords and their tenants to be working together to develop local standards.

Q163 Chair: Are the TSA consulting with individual housing associations or with the overall organisations?

Mr Orr: Their consultations which will be launched at the end of this week or the beginning of next week will be a wide consultation that will involve all social housing providers as well as bodies like the Federation.

Q164 Chair: Up until now?

Mr Orr: It has been a fairly wide pre-consultation conversation.

Mr Moore: Hanover is one of 36 pilots which are about the approach to regulation and our pilot is about devolved decision making and how that works in a regulatory environment. As David said, it is early days at the moment; we are hoping that the TSA will endorse relevant, proportionate, focussed regulation but we are putting our submissions in, showing our residents' views and monitoring the reactions to that so that is us feeding into that process.

Q165 Chair: I understand that one of their proposed national standards is quality of home; what does it mean?

Mr Orr: I suspect it means the Decent Homes standard, at least for the time being.

Mr Moore: I think the potential is for landlords asking their tenants to say what is it they want and what is it you are unhappy about and putting measures in above a basic minimum standard to address those criteria and actually the issue would be then if a landlord had not asked their residents that question, that is when the regulation would come in. Rather than saying what it should be, it should be: have you asked and are you responding to what you have had fed back to you. That is Hanover's approach and others are adopting it.

Q166 Chair: Mr Doylend, is that your understanding?

Mr Doylend: I totally agree, yes.

Chair: I think we will draw this session to an end. Thank you very much indeed.