House of Commons - Beyond Decent Homes - Communities and Local Government Committee

Beyond Decent Homes - Communities and Local Government Committee Contents

4 Our findings: private sector

160. As we described at the beginning of this report, the decent homes programme began as a programme of improvement of social sector housing. In 2002, however, the target changed and as well as bringing all social housing up to the standard by 2010, the Government committed to increase the proportion of "vulnerable households in the private sector, including families with children" living in homes in decent condition.[268] In 2007 CLG re-stated this objective. "Vulnerable" people were those in receipt of one or more of the principal income-related or disability benefits.[269] The PSA note explained that the target would contribute to the objective of tackling disadvantage and, in particular, "narrowing the gap in health, education, crime, worklessness, housing and liveability outcomes between the most deprived areas and the rest of England".

161. This section of our Report is structured differently from that on the social sector programme, reflecting the different nature and volume of the evidence we have received on each issue. Most of our evidence on the private sector target has not come from private sector organisations. We have, however, taken comprehensive evidence from the Residential Landlords' Association, which is one of the two national landlords associations in England with over 13,000 members controlling more than 100,000 units of residential accommodation.

The size of the problem

162. Private sector housing includes the private rented sector and the owner-occupied sector. The most recent English House Condition Survey states that there were 18.3 million homes in the private sector in 2007, making up 82% of all homes. Of these, 15.6 million were owner-occupied homes (70% of all homes) and 2.7 million were private rented homes (12% of all homes). Of all private homes, 64.2% were decent. In 2007, there were 3.1 million vulnerable households in the private sector, of which 61% occupied non-decent accommodation. This comprised 48% of vulnerable private tenants and 65% of vulnerable home owners. Two distinct groups of vulnerable people which we discuss in this Report are low-income tenants of rented housing most of whose rents are covered by housing benefit; and elderly owner-occupiers, who may be asset-rich but cash-poor. Ms Sue Adams, Director of Care and Repair, told us that "older people over retirement age in private sector housing are more likely to be living in non-decent homes", and that the likelihood of non-decency "really starts to escalate when you hit over-75 and then over-85".[270]

163. The status of the target covering decency in the private sector changed in 2007. CLG told us that under Public Service Agreement 7, which covered the period 2005-08, the target was set to increase the proportion of vulnerable households living in decent homes in the private sector to 70% by 2010. At the next Spending Review in 2007, it was judged that progress towards the target was "ahead of trajectory"; CLG told us that "we were able to satisfy ourselves that the 2010 target would be met" without the renewal of the target. CLG told us that PSA7 has "become a legacy target" against which progress continues to be measured but, given the "drive to reduce the number of national indicators and targets set by Government"[271] is no longer a live target. CLG told us that the current Departmental Strategic Objective 2.8 (Percentage of vulnerable households in decent homes in the private sector) "builds on the success of this target".[272] However, whereas PSA7 had defined a goal of 70% of vulnerable households living in decent homes, DSO 2.8 refers only to increasing the number, without a specific goal. Moreover, in moving from PSA 7 to DSO 2.8, the target was removed from the performance framework for local authorities. CLG explained that the goal "no longer forms part of the national indicator set against which local performance is assessed".[273]

164. The achievement of the target was also affected by the change to the definition of decency in 2006, when the HHSRS was introduced into the criteria (discussed above in relation to its effect on the numbers of decent social homes). The judgement that the target was "ahead of trajectory" was based on the number of vulnerable households living in decent homes having increased to 68% in 2006. However, under the new definition of decency, only 59% of vulnerable private sector households lived in decent homes in 2006. In 2007 this had risen to 61%. CLG told us that the change in measurement had had an uneven effect on numbers across the sector, and that "owner occupied vulnerable households [were] affected the most as these properties contained a greater number of category 1 risks" under the HHSRS.[274]

CRITICISM OF THE PROGRAMME

165. Our evidence was critical of the implementation of the policy to increase decency in the private sector, and particularly of the transition from PSA7 to DSO 2.8. The CIEH stated in evidence that "the private sector was something of a somewhat inadequate afterthought" in the decent homes programme and that "the Government has singularly failed to set effective targets for the private sector".[275] Foundations, the national body for home improvement agencies, told us that the new target in DSO 2 is "more obscure and much less accessible to the public and professionals within housing as a clear statement of what has to be achieved" with the result that "the whole issue of decent homes appears to have slipped well down in terms of priorities".[276] Birmingham City Council told us that the "lack of a national target has lessened the importance" of work on private homes.[277] The Association for the Conservation of Energy called the lack of a specific target a "glaring public policy omission".[278] Mr Tomos Jones, Home Improvement Manager at Sandwell Metropolitan Borough Council, told us that "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".[279] Several witnesses told us that local authorities simply were not performing their duties to maintain strategic oversight of standards in the private sector.

166. Our witnesses also told us that, in practice, the policy had not resulted in the desired improvement. Care and Repair stated that improvement had been slower than in the social sector and "is now at a standstill"; National Energy Action told us that the Government was "failing badly" in the private rented sector; Richard Jones of the Residential Landlords Association told us that the target has had "little or no impact".[280] Moreover, if housing stock is seen in the round, it is the private, not the social sector that represents the overwhelming challenge: 82% of housing is in the private sector and vulnerable owner-occupiers and tenants of private landlords are more likely to be living in non-decent housing than social sector tenants.

167. When we put these points to CLG and the HCA, Sir Bob Kerslake, Chief Executive of the Homes and Communities Agency,told us that progress towards the target had been "quite strong",[281] and CLG stated that "the target percentage figure nationally [increased] from 42.9% in 1996 to 68% in 2006".[282] However, the target was not created until 2002 and it is not clear how much of that increase was related to government intervention.

Future of the policy

168. The future of the decent homes target for private sector homes is not clear. CLG told us that "the Government remains committed to improving house conditions across all tenures" and that "it is an appropriate time to explore the future direction of this policy". During the course of our inquiry, the Department was undertaking work "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".[283] CLG told us that "the homeowner (landlord or owner occupier) has primary responsible for upkeep of the home"[284] but recognised not only the value of improving the lives of vulnerable people but also the cost-effectiveness of doing so. It said that the "main aim of the programme is to improve housing conditions for vulnerable people raising their quality of life, and helping them to continue to live independently" and that "this may also prevent the need to enter residential or care homes with all the cost benefits that this brings".[285] In oral evidence, the Minister said that a future iteration of the policy would be "a matter that we will consider for the next spending review period, and we will make those judgments and decisions accordingly".[286]

169. The majority of our witnesses argued strongly in favour of retaining and strengthening a target for decency in the private sector, for a variety of reasons. Witnesses felt that the size of non-decency in the private sector required the Government to act and that national policy on health and social care was undermined by low housing standards. Ms Webb of CIH told us:

we have a health and social care policy and a policy around ageing and older people that says: "Enable independence for longer; enable older people to live in their own homes for longer, have preventative activities in the home that reduce accidents, reduce falls and make people healthier", but we do not seem to have a private sector housing driver that targets resources at the people in the worst housing at that end.[287]

Other witnesses linked poor housing to a range of social and economic impacts; and housing improvement programmes to economic renewal.[288] The CIEH argued quite simply that every household "has the right to a decent home".[289] Some witnesses commented on the perceived incongruity of social housing being significantly better than private housing; Circle Anglia told us: "we have created a paradoxical position where a citizen who works hard and achieves enough to be ineligible for social housing is likely to have to live in a home that is in poorer condition[…] than his neighbour in a social housing unit".[290]

170. Some of the evidence we received also argued that private sector tenure was not a reason for exemption from public policy goals. In respect of private rented housing, several witnesses argued that the receipt of public funding through housing benefit placed a duty on landlords to adhere to standards.[291] London Borough of Newham stated that the private rented sector was "one of 'last resort' for many vulnerable and impoverished households" and that in Newham two thirds of private rented households were "supported by state subsidy but housed 'privately'".[292] Moreover, according to Sandwell MBC, the lack of availability of social housing meant that "access to other forms of tenure is not a realistic option".[293] The merits of setting a target rather than using other approaches to stimulate improvement were also discussed: the Audit Commission told us that without a government target, "councils would now consider it less important".[294]

171. Other witnesses were cautious. The RLA was in favour of improving standards but saw little merit in using government targets as a means of doing so.[295] Ridge and Partners argued that enforcement should be balanced in the owner-occupied sector against "the rights of an individual to continue to enjoy the quiet occupation of their property".[296] In oral evidence, Mr Hand of Ridge and Partners queried the effectiveness of setting private sector targets, saying:

it is very difficult to apply a Decent Homes standard equivalent in the private sector. Who is going to enforce it? Who is going to fund it? We are dealing with commercial market pressures, and that will be quite tricky.[297]

THE HOUSING MARKET

172. The private housing market is complex and the factors affecting quality of homes vary. The market has also seen changes over the last decade that have influenced the logic of quality standards in the sector. The Rugg Review of the private rented sector explained that the market was segmented into distinct sub-markets catering variously to young professionals, students and high-income renters, those on housing benefit, immigrants, asylum seekers and inhabitants of 'slum rentals' at the bottom of the market. Rugg found that "market forces do not adequately 'police' management quality in the PRS, since there is an excess of demand for rental property at the bottom of the sector", and that rental yields can in fact be higher on property that is in poor condition.[298]

173. We took evidence from Professor Tony Crook, Professor of Housing Studies at the University of Sheffield. He told us that there had been "enormous change in the structure of ownership" in the private rented sector over the last ten years. There had been an influx of small-scale landlords, "the vast majority looking for a return composing capital gains and income returns". While "there has been a big increase in standards", this was "largely due to the entry into the sector of the buy-to-let landlords" bringing formerly owner-occupied stock into the sector. He stated that the increase in standards was complicated by the fact that "the best are getting better and the worst are at best standing still". The market was not creating incentives for higher standards as "rents are not related to conditions" but to location, and so "at the bottom end of the sector you have got the market not generating the higher returns that the landlord could earn by investing" in improvements. In addition, he argued that in some sectors of the market, tenants were "actively seeking low standards" because higher standards entailed higher rent.[299]

174. In the owner-occupied sector, we heard that there has been "a total social revolution in 30 years away from social rented housing and into low-income owner-occupation" and that "we have got more low income people in home ownership than we have low-income tenants".[300] Age Concern and Help the Aged stated that "more attention needs to be given to the "Right to Buy generation" that was "encouraged to buy their homes in the 1980s [and] are now struggling to keep them in a decent state of repair".[301] Professor Crook told us that "many of these circumstances continue to prevail because of the shortage of affordable housing" and that many low-income vulnerable people "may be better off in the social sector", were housing available.[302]

Implementation of the policy

175. Having set the target in 2002, the ODPM set out the steps by which the improvements would be achieved in Sustainable Communities: Building for the Future in 2003. From 2004-05 onwards allocations of funding to local authorities for private sector improvements would be made at a regional level through new regional housing boards according to regional housing strategies and using a regional housing pot for funding. Local authorities were empowered to offer a wider range of financial help for the improvement of privately-owned housing, including loans. The single regional housing pot would include funding for repairs and improvements to the homes of low income or vulnerable homeowners and tenants, especially older people. Home improvement agencies (HIAs) would help vulnerable home owners and tenants, especially older people and the disabled, to apply for grants and loans and arrange for work to be carried out. Legislation was introduced to regulate and improve standards of houses in multiple occupation (HMOs).[303] In addition to these measures, CLG told us that regional funds for meeting decent homes standards in the private sector "work alongside the Warm Front grant", providing top-up funding in order to complete works, "as the Warm Front grant ceiling does in some circumstances prevent the grant from funding all of the necessary energy efficiency measures". The same funds are also used to provide the mandatory Disabled Facilities Grant and to "tackle disrepair at the same time as adaptations are installed".[304] The Minister told us in oral evidence that £1 billion had been provided for this work in the 2008-11 Spending Review period.[305]

176. Meeting the decent homes standard is not a statutory requirement. Enforcement and regulation of private sector standards were dealt with through the Housing Act 2004. In the Act, local authorities were given responsibility to oversee housing in their areas and take enforcement action where necessary. Section 3 of the Act requires that a "local housing authority must keep the housing conditions in their area under review with a view to identifying any action that may need to be taken by them" under specified provisions. Section 4 states that if a local authority considers, as a result of the activity carried out under Section 3 or for another reason, that homes should be inspected for hazards under the HHSRS, it must then arrange for an inspection. Where an inspection is carried out and the judgement has been made that Category 1 hazards exist, a report must be made. Under Section 5 and 7 of the Act, if the authority considers that a Category 1 hazard exists, action must be taken. A range of possible actions are specified in the Act, from serving an improvement or hazard awareness notice to making a demolition order or slum clearance declaration. If Category 2 hazards are present, the local authority has discretion to act but is not required to do so.

VULNERABILITY

177. Our witnesses were critical of the focus of the private sector policy on vulnerable people, for several reasons. The Residential Landlords Association stated that the vulnerability criterion made implementing the policy "not workable" as there are "a considerable number of variables in assessing vulnerability and defective premises in that tenants are constantly moving in and out of vulnerability and properties in and out of decency".[306] Stoke-on-Trent City Council told us that "there are significant issues […] in relation to identifying [vulnerable] households".[307] Mr Tomos of Sandwell Borough Council told us that the link to vulnerability made it difficult to implement the policy efficiently:

if we target activity on an 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 […] Linking it to vulnerable occupiers specifically does make it difficult to deliver on the ground.[308]

Moreover, Dr Stephen Battersby, President, Chartered Institute of Environmental Health, advised us that the link to vulnerable people meant that the target could be met by fewer people falling into the category of 'vulnerable' without the stock having improved at all. He said: "you could theoretically at least meet the target if people moved off benefit".[309]

178. These criticisms are very similar to those which our predecessor ODPM Committee heard in 2004. That Committee suggested that "the reasoning for limiting the scope of the Decent Homes target in the private sector appears to be a pragmatic evaluation of the scale of the problem [and] the cost of rectifying it, as well as the view that fundamentally, owners of private property are themselves responsible for its maintenance".[310] It found that:

the large number of non-decent homes in the private sector and the cost associated with bringing all of them up to the Decent Homes standard dictates the need to limit the target so as to concentrate only on vulnerable households. The focus on vulnerable households in turn necessitates a target of less than 100% compliance because the population of vulnerable households constantly changes, and people move in and out of non-decent homes.[311]

Recording their belief that "that every household has a right to a decent home", our predecessors concluded that:

the Government should set a longer term target for bringing all homes up to the Decent Homes standard, say by 2015. The Government should consider carefully how to provide both funding incentives and statutory enforcement vehicles in order to achieve such a target in the private sector.[312]

They continued:

[we see] little sense in limiting the target only to a proportion of dwellings inhabited by vulnerable households. Making such distinctions is likely to waste resources in monitoring, and also to render monitoring and enforcement inaccurate and ineffective. Instead, the Decent Homes target should be applied to all dwellings in the private sector as well as the social sector.[313]

179. Like the majority of our witnesses, and for the various reasons which we set out above, we are in favour of retaining and strengthening a target for decency in the private sector. Like our predecessor ODPM Committee, we believe that every household should have a decent home. We therefore recommend that future policy on the maintenance of standards in the private sector be based on a clear long-term target to bring all homes in the private sector up to the decent homes standard. In the shorter term, we consider that funding should be targeted at areas rather than at vulnerable individuals, in order to harness economies of scale.

The standard

THE CRITERIA

180. The same standard is used to define decency in the private sector as in the social sector. We have received comments from the Residential Landlords' Association on how landlords in the private rented sector view those criteria.

Criterion (a): statutory minimum standard for housing

Dwellings which fail to meet this criterion are those containing one or more hazards assessed as serious ('Category 1') under the HHSRS.

181. The Residential Landlords' Association made several criticisms of the HHSRS, saying that it was "okay as an academic exercise" but complex and difficult for landlords to understand and apply and hence "of no real value to landlords".[314] While landlords did not want the upheaval of changing the HHSRS, they did want more certainty about how to meet the requirements of the System. The RLA advocated the development of "workable practical guidance […] telling landlords what is required of them" and "covering the main hazards under HHSRS". The guidance would be based on "normal levels of risk likely to be encountered in the average property" and would have to address different types of property. This could be "linked in with education and training for private sector landlords".[315] The RLA also told us that the application of the HHSRS was unfair in its different application to social and private sectors. Whereas, under the decent homes standard, social landlords must exclude Category 1 hazards from properties, private sector landlords may also be subject to enforcement action because of Category 2 hazards, under the Housing Act 2004. Moreover, "private landlords face potential criminal sanctions for non-compliance but social sector landlords do not".[316]

182. The Local Government Association suggested in evidence that the HHSRS was sufficient for the regulation of standards in the private sector, in a tight economic climate, and that in the absence of additional funding, other criteria of the decent homes standard might be dispensed with. It said:

HHSRS already enables councils to deal with the health impacts of poor housing and is an enforceable standard. Upgrading old kitchens and bathrooms that are still serviceable, present no risk to the occupiers, and cannot be enforced could be seen as less of a priority. As such, category 1 hazards under the HHSRS could be the standard against which housing standards are monitored.[317]

Criterion (b): a reasonable state of repair

Dwellings which fail to meet this criterion are those where either: one or more of the key building components are old and, because of their condition, need replacing or major repair; or two or more of the other building components are old and, because of their condition, need replacing or major repair.

183. As with the social sector, we have not received evidence about this criterion in respect of the private sector, and have therefore no particular comment to make on it.

Criterion (c): reasonably modern facilities and services

Dwellings which fail to meet this criterion are those which lack three or more of the following: a reasonably modern kitchen (20 years old or less); a kitchen with adequate space and layout; a reasonably modern bathroom (30 years old or less); an appropriately located bathroom and WC; adequate insulation against external noise (where external noise is a problem); and adequate size and layout of common areas for blocks of flats. A home lacking two or fewer of the above is still classed as decent, therefore it is not necessary to modernise kitchens and bathrooms if a home meets the remaining criteria.

184. We have not received evidence about this criterion in respect of the private sector and have no particular comment to make on it.

Criterion (d): a reasonable degree of thermal comfort

This criterion requires dwellings to have both effective insulation and efficient heating. It should be noted that, whilst dwellings meeting criteria b, c and d are likely also to meet criterion a, some Category 1 hazards may remain to be addressed. For example, a dwelling meeting criterion d may still contain a Category 1 damp or cold hazard.

185. The RLA was critical of the thermal comfort criterion, calling its specifications on insulation and heating systems "unduly prescriptive" and "illogical". It was "dubious to say the least" about linking the criterion to fuel poverty, "because of the links to fluctuating fuel prices and incomes". Moreover, links to fuel poverty would lead to "extensive works of insulation (e.g. double glazing and cavity wall)" at "significant capital cost relative to rental returns, particularly with smaller older properties".[318]

186. The recommendations which we make above on the thermal comfort criterion apply equally to its use in the private sector.

Additional criteria: carbon dioxide emissions

187. We discuss above the arguments for reducing carbon dioxide emissions from social sector housing, and whether the decent homes standard might be used as a vehicle to do so. Our witnesses were at pains to advise us that tackling emissions was even more important in the private sector. The reasons were several. First, 82% of UK housing stock is in the private sector (70% of all stock is owner-occupied and 12% private rented) and bringing total emissions down appreciably, in accordance with government policy, would rely upon taking steps to manage this stock. Moreover, energy efficiency performance is lower in the private sector than in the social sector. The 2007 English House Condition Survey stated that private sector homes had an average SAP rating of 48, compared to SAP 58 in the social sector.[319] Both owner-occupied and private rented housing had an average SAP rating of 48, but the private rented sector had both a greater proportion of energy efficient and of very inefficient homes than the owner-occupied sector, reflecting the different markets within the private rented sector.[320] Finally, the energy inefficiency of private sector homes does not only affect inhabitants of those homes but may be regarded as the main contributor to a national problem.

188. As described above, CLG has a "departmental strategic objective", distinct from the Decent Homes target, "to increase the average energy efficiency (SAP) rating for all homes over the spending period, from the 2006 baseline of 48.7 SAP points".[321] The Department's most recent report on progress towards this target records that the average energy efficiency rating increased to 49.8 in 2007.[322]

189. Our evidence described various reasons for low energy efficiency in the private sector. Stock tends to be older and, consequently, more difficult and costlier to adapt.[323] Mr Simon Nicol of the Building Research Establishment told us that many of these homes "are, for example, homes that have solid walls, which are very difficult to insulate".[324] The Energy Saving Trust told us that, in addition, many small landlords are hard to reach to promote energy efficiency policies.[325] Most importantly, perhaps, financial incentives do not encourage the installation of energy efficiency measures and in some circumstances discourage them. In the private rented sector, for example, the capital cost of energy efficiency measures falls upon landlords, but the benefits, in terms of reduced fuel bills, accrue to tenants. The Energy Saving Trust stated that landlords "aren't interested in making energy efficiency improvements when they don't lead to increased capital or rental values and it's their tenants—not them—who benefit in terms of reduced bills".[326] Neither does improved energy efficiency lead to higher returns for landlords through higher rents: as Professor Crook told us, the main influence on rental prices is "location, location, location" not energy efficiency.[327] Besides, Mr Butterworth of the RLA told us that "tenants' organisations do not want to contribute to any [costs of energy efficiency] because they think that the tenant pays the rent and that should cover just about everything within that".[328] Mr Butterworth also told us that in the owner-occupied sector, there was no market incentive for upgrading the energy efficiency of homes as, when purchasing a new home, "people have no interest whatsoever in paying for energy".[329] The lack of interest from buyers and tenants in energy efficiency may alter with increasing familiarity with Energy Performance Certificates and continued energy price rises.

190. We discuss above the merits of using the decent homes standard to bring about change to energy efficiency in the social sector. The difference in the private sector is that, as currently formulated, the decent homes standard only applies to vulnerable households, which represented 3.1 million households in 2007 out of the 18.3 million homes in the private sector. The EHCS 2007, however, estimated that 20.2 million homes (91% of the housing stock) "would benefit from at least one" of several specified energy efficiency upgrades of varying cost.[330] Ms Webb of the Chartered Institute of Housing argued that this disparity meant the decent homes standard was not the ideal vehicle for seeking energy efficiency improvements. She said:

Clearly, if we are going to invent Decent Homes 2, which we would argue we should, then eco standards should be part of that. However, the vast majority of stock in the country are not social houses, they are private houses. The Decent Homes standard does not cover the majority of private sector houses, so whilst thinking that there is a clear place for adding eco standards into any Decent Homes 2, we would not miss the opportunity to say that there needs to be a separate programme for bringing all housing in this country up to a better eco standard.[331]

191. The evidence we received made various suggestions of possible solutions to the energy efficiency problem in private housing. We go on to discuss enforcement of standards in the sector below. The Energy Saving Trust referred in positive terms to the Scottish Energy Assistance Package, which offers free energy advice over the telephone and advice on benefits, tax credits and low energy tariffs to those at risk of fuel poverty; provides housing insulation to older people and those on benefits; and offers enhanced "bespoke energy efficiency measures" to the most vulnerable groups.[332] The Trust also advocated the promotion and extension of the Landlords Energy Saving Allowance, which allows landlords to claim up to £1,500 against tax each year for the installation in properties of certain energy saving measures.[333] The Sustainable Development Commission argued for the introduction of enforceable minimum energy efficiency standards in the private rented sector.[334] Others argued for a leadership role for local authorities. The Audit Commission stated that councils "can have most impact where they lead, oblige and provide some element of subsidy to social and private landlords and private sector homeowners to reduce domestic CO2 emissions".[335] Mr Sharpe, Director of the Sustainable Housing Action Partnership, referred us to projects in Birmingham and Yorkshire where local authorities had led and facilitated energy improvements across sectors in a particular area. He said:

you can take a complete housing area which has mixed ownership in it… and you then use the social landlord to provide the structure, the economies of scale, the specification for the work and then you build into that soft loans and an ability for the private sector.[336]

192. The Government's Strategy for Household Energy Management proposes a range of solutions to improve energy efficiency in the private sector. These include a universal advice service and free or subsidised efficiency upgrades supported by energy companies. In addition, the Strategy proposes improved marketing to private landlords of the assistance available for making energy efficiency improvements, backed up by regulation to make it illegal to rent out a property which lacks loft and cavity wall insulation where installation is feasible.

193. We conclude that, given the scale of energy efficiency improvements required to meet government targets on reducing carbon dioxide emissions from housing, energy efficiency programmes must go wider than those vulnerable private sector households to which the decent homes standard is currently applicable. We draw renewed attention to the conclusions of our report Existing Housing and Climate Change, which considered these issues in more detail and made a number of recommendations for government action to reduce carbon dioxide emissions from housing in both the social and private sectors.

Management of the programme

OVERSIGHT AND ENFORCEMENT BY LOCAL AUTHORITIES

194. As described above, local authorities have responsibility under the Housing Act 2004 to oversee housing in their areas and take action against owners of properties with Category 1 and, in some circumstances, Category 2 risks under the HHSRS. The Act also required the licensing of large, privately rented HMOs and enabled local authorities to establish discretionary licensing schemes for smaller HMOs where necessary. The tool for assessing risks in properties is the HHSRS, which applies to all housing, including that of owner-occupiers. There is no specific obligation to apply the decent homes standard, despite the CLG target. The impact of poor housing on social outcomes across the responsibilities of local authorities, such as health and anti-social behaviour, suggests that it is in the interests of local authorities to exercise the powers available to them to influence standards in the private sector.

195. Our evidence has made the argument that this system is not working to maintain and improve housing standards, and bears little relation to 'decency' as defined elsewhere. Criticisms have been made of landlords and owner-occupiers for not maintaining standards; and of local authorities for not taking action to enforce improvements, despite the links between poor housing and a range of negative social impacts. The Audit Commission told us that it had conducted 72 inspections of strategic housing services over three years, "many of which included in their scope the condition of private sector homes". It said:

We identified a much lower proportion of high performers overall in this sector, and private sector was a weaker area within the overall strategic service. Common weaknesses included lack of a strategy or a strategic approach (including for empty homes) and old stock condition information (including for Houses in Multiple Occupation). In addition, many had no measurable objectives to reduce non-decent housing, and were slow to deal with disabled facilities grants and the resulting adaptations.[337]

Savills told us that "very few Authorities have significantly addressed the poor standards of accommodation within the private sector".[338] The Chartered Institute of Environmental Health told us that "too few local authorities meet fully their statutory obligations under Section 3 of the Housing Act 2004",[339] and Circle Anglia said that "existing legislation on HMO registration is, in practical terms, unenforced by local authorities".[340] Mr Nicol of BRE Housing Group said that private sector homes had been "touched incidentally […] by particular environmental health officers spotting that a vulnerable person is living in a home with a health and safety hazard; but there has not been a targeted approach towards the private sector at all".[341]

196. We explored the reasons behind this apparent failure to act, and were presented with a variety of reasons. The Residential Landlords' Association said the decent homes standard "is, of course, not legally enforceable in the private rented sector, whatever certain local authorities may think".[342] While, on the other hand, the HHSRS is legally enforceable, meeting the requirements of the HHSRS may not necessarily lead to a home qualifying as 'decent'. We were also told that the legislation is not clear about what local authorities should do when faced with a property that fails the HHSRS. Ms Sue Adams, Director of Care and Repair, told us:

The flaw in the system is that what [local authorities] are meant to do is not very clearly defined. They are not legally obliged to remedy the situation. In informing the householder that they have got a category one hazard, in law, you can probably legally argue, they have acted.[343]

197. Witnesses also felt that the requirement on local authorities to "keep the housing conditions in their area under review" was not clearly explained in the Act or in policy guidance to local authorities.[344] According to Mr Griffiths, Principal Policy Officer, Chartered Institute of Environmental Health, this lack of clarity meant that "most local authorities simply choose to ignore their statutory duty", whereas "if it was actually made explicit, what is required of them, and there was guidance given as to the best way to do that, that would actually make them use the resources they have much more effectively".[345]

198. We also heard that the lack of information about housing conditions made it difficult for local authorities to act. The Audit Commission stated that "many councils do not have up-to-date information about the condition of private sector homes in their areas".[346] Dr Battersby said that authorities are "to a large extent, working in a vacuum, because that information is not out there" and that "there is a need for CLG to give a clearer indication, and indeed use section 3 of the 2004 Act to make it absolutely clear the way local authorities should record their information and make the information available".[347]

199. Our witnesses had various suggestions for solutions to these problems. The first step requires local authorities to establish a better information base about the private stock in their areas. Birmingham City Council said that "Authorities should be given greater encouragement to complete regular representative stock condition surveys and publish results with appropriate financial support to undertake and analyse these".[348] CIEH said "CLG should give statutory guidance on what full meeting of [local authorities' statutory duties under the Housing Act] comprises, and give direction on what records should be kept and reported".[349] Secondly, witnesses described solutions to the perceived lack of motivation and capacity to tackle the problem. Sandwell MBC recommended that National Indicator 158 be amended to include a target for the private sector.[350] Several witnesses called for more financial and human resources for local authorities to carry out inspections of homes.[351] Bolton at Home ALMO suggested bringing the private rented sector within the remit of the TSA and recommended local authorities adopt a "tool-box approach that provides for options not just around the physical works but also on finding the most suitable financial package for the individual vulnerable customer (with any support they might need from other agencies)".[352]

200. We recommend that the Government issue clear guidance telling local authorities to maintain up to date information on the condition of private sector housing stock. We further recommend that the Government provide local authorities with a model of how this should be done.

201. We heard that those local authorities that are engaged in work to assemble strategic intelligence on the condition of private sector stock are hampered by inadequate resources and conflicting priorities. Mr Jones of Sandwell MBC said the Council was "following CLG guides in terms of stock condition surveys; […] working with the BRE to develop their stock condition model so we can identify where we have pockets of non-decency and vulnerable people".[353] He said that the Council did enforce the HHSRS, but that "due to lack of resources we are not able to do that in a strategic way, we are very much responding to complaints".[354] Councillor Bob McCann of Sheffield Council told us that, whereas a proactive rolling programme of 1,500 HMOs was operated by the Council, this was not the case for the wider private sector stock. He said:

Our response to problems in other private rented homes is generally reactive, in that we respond on receipt of a complaint from a tenant. We are unable to resource a rolling programme of routinely inspecting all private rented homes to identify category 1 hazards and non-decency.[355]

Mr Nicol of BRE said that this was a widespread problem. He stated:

because of restricted funds environmental health officers have been acting in a reactive way. If it comes to their attention that someone is living in an unhealthy or unsafe home and they are vulnerable, they will deal with it on a one-off basis. However, there is no real proactive movement within urban renewal departments of local authorities to go out there and identify where the problems are and do something about them because they know they have not got the funds to back that up.[356]

The RLA said that there are "simply insufficient local authority resources"[357] and Southwark Borough Council stated "adequate regulation arrangements are already in place but the resources to fully implement it are not".[358] The RLA said that:

there are only approximately 1,600 local authority environmental health enforcement officers. This is to cover 1,000,000 private sector rented homes plus all their other duties relating to housing.[359]

202. As we discuss above, witnesses felt that the fact that private sector improvements are not included in the national indicator set for local authorities has a detrimental effect on the priority this work receives. Ms Adams told us:

Since you have not got a target of equal strength for addressing disrepair in the private sector as you have with building new homes or addressing disrepair in the social rented sector, it is almost inevitable that those will take priority when finances are squeezed.[360]

203. The RLA also told us that the available resources for policing private sector housing standards had been absorbed by meeting the requirements of HMO licensing, which had diverted effort from the rest of the sector. Mr Butterworth told us: "licensing has placed huge burdens on [environmental health officers] and taken them away from checking on the lower end of the sector where they need to engage with the poorer properties that do tenants a disservice".[361] Moreover, the RLA felt that the effort was not well-spent on HMO licensing. Mr Jones told us that mandatory HMO licensing "has brought into regulation, by and large unnecessarily, whole swathes of student and young professional type accommodation" and "has ended up as a self-feeding, self-serving bureaucracy […] that has distracted local authorities from the real task of dealing with homes that are not fit".[362] Mr Butterworth said "it has provided very little benefit" and that "so far licensing is just a fine on landlords who are pretty well compliant anyway"; it is "making no inroads into the non-compliant and the poorer properties".[363] Mr Griffiths of the CIEH agreed, stating that:

a lot of local authority resources have been spent dealing with good landlords who are playing by the rules and are coming forwards for licensing if they have an HMO that is eligible for licensing, and the ones that need more attention inevitably slip through the net.[364]

Mr Jones said that in Leeds, "about £1.25 million" had been spent bringing 2,500 student properties into the licensing scheme, only to discover that these were "by and large compliant", whereas the real problem was the "poorer conversions, which are not licensable HMOs because they are self-contained flats".[365] This process was "a source of great amusement to those [rogue landlords] who pay nothing and cock a snook as per normal".[366]

204. In the owner-occupied sector, we heard that the role of local authorities was even less clear. Mr Nicol of BRE told us: "you do not want to tell people in their own homes what to do, particularly those people who are perceived to be able to afford it". Moreover, there "are not really incentives for people in the private sector who can afford it to improve their own homes".[367] Birmingham City Council said that "at best local authorities can only encourage owner occupiers to bring their property up to standard".[368] We heard that vulnerable owner-occupiers could be offered low cost equity release loans and grants (including mandatory disabled facilities grants) but that funding was very limited. The RLA stated that "although the Housing Health and Safety Rating System is intended to be tenure neutral, even though it addresses issues of health and safety, it has not been enforced even-handedly in the owner occupied sector".[369]

205. Others called for a proactive, targeted approach by local authorities in order to maximise what could be achieved within current funding restrictions. The Audit Commission said that: "some councils have used regulatory powers and accreditation schemes to improve the quality of housing without spending significant sums of public money".[370] Sheffield City Council referred to its work with the private sector as "a mixture of encouragement, education and enforcement".[371] Stockport MBC told us it had "an extremely successful proactive programme of intervention" by focussing on "the single largest reason for non-decency, that is, thermal comfort". The programme was described as follows:

Work in this area has, and does, include work with landlords, particularly through the landlords' forum, the 'handyperson' checks […] In addition, financial assistance is made available to help owner occupiers, in appropriate circumstances, to address category 1 hazards, and the 'Staying Put' agency service works with vulnerable home owners to facilitate undertaking works on their homes on both a private and publicly funded basis. A greater emphasis on marketing these services, and the work of the Housing Standards Team which focuses on standards in the private rented sector, has increased exposure and ensured that help is reaching those in greatest need.[372]

206. Finally, witnesses referred to engaging landlords and owners not only through enforcement, but also through positive efforts to build relationships and win cooperation. Councillor Bob McCann of Sheffield City Council stated:

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.[373]

The new Strategy for Household Energy Management provides for a "new strategic role for local authorities" to "lead, drive and co-ordinate local action" on energy efficiency, including by engaging energy companies.[374]

ENGAGING LANDLORDS

207. We took evidence from the Residential Landlords' Association and others on the perspective of landlords and the reasons for non-decency in the private rented sector that may be attributed to landlords. In summary, witnesses felt that while some landlords simply did not improve standards because the market offered no incentive to do so, others did not understand the HHSRS or could not afford to improve stock and felt no need to do so in the face of low levels of complaints from tenants. Mr Butterworth of the RLA told us that "various things have been done that indicate an over 90 per cent satisfaction ratio from tenants with their property".[375] However, the CIEH stated that complaints "are generally not made by transient or vulnerable tenants (who frequently occupy high risk properties in multiple occupation) and from tenants who, justifiably or not, fear retaliatory eviction".[376]

208. Witnesses acknowledged the existence of "less responsible landlords";[377] landlords "who will not maintain or properly manage their stock without compulsion and regulation;"[378] but differed in their views of how to target them. The RLA felt that action to raise standards with the majority of conscientious landlords would make it easier to identify and tackle the rogue landlords. The RLA stated that for "each of the major risk categories [under the HHSRS …] workable practical guidance should be developed on a national basis, telling landlords what is required of them" in order to secure "mass voluntary compliance […] linked in with education and training". This would be complemented by a code of management for landlords. The RLA told us it "even went to the extent of preparing a draft of such a code but the Government do not wish to take it forward". It advocated linking the code to a national accreditation scheme and stated that it was in the process of developing such a scheme. The purpose of accreditation would be to remove from government regulation all accredited landlords, leaving exposed the "minority of rogues and non-compliant landlords" who "operate under the radar".[379]

GOVERNMENT ACTION

209. On 3 February the Minister for Housing made a Written Ministerial Statement announcing the publication by CLG of a response to the Rugg review of private rented housing. It stated:

The Government want to see a private rented sector which offers high-quality accommodation, and in which tenants can make choices based on clear information about their options, their rights, and their responsibilities. We also want to ensure tenants know where to turn if things go wrong. At the same time, Government want to increase professionalism in the private rented sector—supporting good landlords and agents, while driving out the worst practices of the sector that fail tenants and damage its reputation.[380]

The Government stated that it would set up a national register of landlords "to protect tenants and support local authority enforcement activity"; introduce full regulation of letting and managing agents; require all tenancies to take the form of a written agreement and increase the limit for assured shorthold tenancies from £25,000 a year to £100,000. The Statement referred to "longer-term plans for legislation to improve standards".

210. At the beginning of March the Government published its Strategy for Household Energy Management, which stated:

We will also work with the private rented sector to improve the marketing to private landlords of the help they can already get, and develop Pay As You Save approaches that work for rented property. In addition, given the split incentives of landlord and tenant, we will consult on how to formulate regulation so that the installation of loft and cavity wall insulation where feasible would be a condition of renting out a property from a date in the future, at the earliest 2015. Over the years before any such requirement, there will be a concerted effort by the Government, working with the sector, to ensure that landlords understand the help that is available to them, both as a result of the energy company obligation and the tax regime.[381]

211. We consider it a huge missed opportunity that the considerable political will demonstrated by the Government in raising social sector housing to the decent homes standard has not been matched by similar energies with respect to the private sector; and that the policy in the private sector appears to have failed. The downgrading of the target for decency in the private sector has weakened local authorities' already patchy engagement with their responsibilities towards private sector housing. A sustained and concerted effort on the part of local authorities, led and supported by Government, will be necessary to achieve the target of a decent home for all in the private sector.

212. We welcome the publication of the Government's response to the Rugg review of private rented housing, which goes some way towards addressing some of the problems with quality in the private rented sector which we identified in our 2008 report The Supply of Rented Housing and call on the Government to commit itself to a programme of measures which will raise these problems up the political agenda. We have identified some of the necessary measures in the preceding sections of this Report. We welcome the tackling of energy efficiency standards in the private sector proposed in the Strategy for Household Energy Management and look forward to more detail in due course.

Funding

213. CLG supplied us with figures for expenditure on private and public sector decent homes work from 2000-01 to 2012-13. These showed a total of £11.7 billion allocated by central government to the social sector and £2.1 billion allocated to the regional housing pot for private sector accommodation for vulnerable households. In addition, local authority expenditure on ALMOs and through the HRA came to £28 billion, which included non-government funds.[382] The funds for private and public sector housing were to tackle similar numbers of homes: in 2001 there were 1,647,000 non-decent homes in the public sector and 1,160,000 non-decent homes occupied by vulnerable people in the private sector.[383]

214. Witnesses were almost unanimous in their view that resources for work in the private sector were insufficient. As the Chartered Institute of Housing told us, "There are considerable resource issues around the achievement of the DHS [Decent Homes Standard] in the private sector".[384] Home improvement charity Care and Repair England noted:

Over the past 25 years state expenditure on improvements to private sector stock has fallen from £1,040 million in 1983/84 to £266 million 23 years later in 2006/07. During that time the cost of building has gone up by a factor of more than three and house price inflation by a factor of 8.6.[385]

Stoke-on-Trent Council expressed a common view when it said, "Current resources in relation to private sector decency are limited, and likely to be reduced further in line with national spending cuts".[386] Cllr Bob McCann, Cabinet Member for Housing at Sheffield City Council, illustrated the effects in his area:

In 2010-11, the total capital allocated from Government Office likely to be available for loan funding through the regional Loans Service across Yorkshire and the Humber is expected to be less than £2m. This will provide less than 150 loans across the region. The allocation for Sheffield is expected to be less than £110,000 and will be sufficient to fund only around 10-12 loans. This will make little impact on the 16,000 financially vulnerable owner occupiers who occupy non decent housing in the city.[387]

215. Furthermore, even this funding is not certain to be available for improving decency in the private sector. Sandwell MBC told us:

This authority has seen funding specifically for private sector decent homes within the Regional Housing Pot reduce from £6.7m in 2006/07 to £1.2m [...] in 2009/10. It has also been advised that private sector renewal is likely to be reduced further in future years to fund the Government's commitment to new homes.[388]

Care and Repair noted, "The Government has recently further reduced the budget for private sector renewal by 25% in 2010-11, shifting the funding originally allocated to this sector into the budget for building new homes",[389] a point also referred to by the national body for home improvement agencies Foundations.[390] Cllr John Lines, Cabinet Member for Housing at Birmingham City Council, told us:

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.[391]

216. CLG recognises that government funding will not be enough on its own to address the issue of non-decency in the private sector. The Department told us "it is clear that the total cost of dealing with the problem of sub-standard housing cannot be met entirely from public sector resources", noting that "the Regional Assemblies together with local authorities have been encouraged to develop loans schemes to help assist in the delivery of improvements with less reliance on public funds where this is appropriate to do so". It went on to state that "the long term ambition remains to lever in private sector finance".[392]

PRIVATE FUNDING

217. The question of how to lever in private sector finance is, then, the key one in addressing non-decency in private rented and owner-occupied property. Witnesses to our inquiry expressed considerable scepticism about the scope for doing so. The Residential Landlords Association, arguing that "we [...] need to seriously address the issue of the financing of improvements/major repairs/refurbishment in the private rented sector", pointed out that "even in the good times banks were very reluctant to lend for this kind of activity on the whole [...] the current credit crunch will mean that it will be impossible for many landlords to obtain finance."[393] Foundations told us:

The reduction of house values over the last years and the marked reduction in the availability of private finance, as well as a risk-averse approach taken by lending institutions, has had the effect of inhibiting growth of alternative forms of funding for private sector renewal. We are not aware of any private finance having entered the market, and the only notable increase in activity has been in the development and take-up of property appreciation loans, which offer very good value in times of falling property prices. However, by far the most popular response by local authorities in this area has been the development of interest free loans, which obviously require continued public funding and are, in effect, another form of public subsidy.[394]

Sue Adams of Care and Repair referred to "quite a lot of wishful thinking that you can reduce any investment in private sector housing and equity release and the private market will step in and fill the gap, and I do not think we have seen much evidence that that wishful thinking has actually happened in reality".[395]

218. More work, then, is needed to develop means of levering in private finance. Foundations told us that "research carried out in 2007 for CLG concluded that although a number of low cost loan schemes had been developed, the key objectives of levering in private finance and encouraging the use of property equity were still at the early stages of development".[396] Little appears to have changed since then. Nevertheless, there is evidence of potential for schemes which could meet those objectives. Tomos Jones, Home Improvement Manager at Sandwell MBC, told us in oral evidence:

Councillor Lines [Cabinet member for housing at Birmingham City Council] before spoke about Kick Start which provides equity share loans for owner/occupiers. The scheme is expanding out regionally now and one of its key aims 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 lender. 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". Obviously there the key is to get private financing to the sector to guarantee sustainability in terms of offering assistance to private sector occupiers.[397]

219. The Government's Household Energy Management strategy describes two sources of funding for its proposed energy efficiency works:

I. The new energy company obligation. We expect this to provide approximately two-thirds of the overall financing. The final nature of this obligation will be set out for consultation following the publication of this Strategy;

II. A new form of 'Green Finance' based on a Pay as You Save model. We expect this to provide approximately a third of the financing for major insulation (and support upfront payments for any energy saving eco-upgrade with pay-back through energy savings or micro-generation revenue).[398]

220. We are encouraged by the measures described by the Government in the Household Energy Management Strategy and look forward to more detail of how the financing model will work. We recommend that, as part of the support which it gives local authorities for the concerted effort to address the issue of non-decency which we recommend above, CLG undertake or commission work to develop means of levering in private finance for the improvement of private sector stock. The results of this work should be made widely available to local authorities, who should be encouraged to develop schemes appropriate to their areas to facilitate access to those funds.

PUBLIC FUNDING

221. Meanwhile, some of the evidence submitted to us suggested that there may be ways of levering in additional public, as well as private, finance to private sector housing improvement. Sarah Webb, Chief Executive of the Chartered Institute of Housing, said at our first evidence session for this inquiry:

Could I just throw in, just moving on from private rented sector to private sector more generally, and just point you in the direction of some very good examples where health and housing have come together, talking about where you might secure additional resources to help very vulnerable particularly older people in privately owned, non-decent housing? In Sandwell, for example, the PCT is funding a number of pieces of housing work that are specifically aimed at using PCT resources to improve non-decent homes of vulnerable older people.[399]

We later took evidence from Sandwell MBC, who told us:

we have been [...] working with funding streams like the Housing Market Renewal 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.[400]

222. This kind of approach is very much in line with the "Total Place" initiative, which aims to join up spending by different public sector agencies in a locality and has recently been endorsed by the Prime Minister as an important means of improving efficiency and value for money in public services.[401] However, Total Place is as yet only a pilot. The current mechanism by which "joined up thinking" of this sort can be achieved are the Local Strategic Partnerships (LSPs) which oversee councils' progress towards the targets in their Local Area Agreements (LAAs). This depends on LAAs including a target relating to private sector housing improvement. In Sandwell, "significant lobbying [...] resulted in NI187 (fuel poverty) being accepted as one of the 35 key indicators in our Local Area Agreement and a wide variety of partners provided funding for our services including the Primary Care Trust, Working Neighbourhoods Fund, the Housing Market Renewal Area, Kick Start and the New Deal for Communities".[402] However, NI187 is somewhat tangential to the objective of private sector housing improvement, and it is evident from the phrase "significant lobbying" that it took determination on the part of some individuals in Sandwell Council to ensure that what is obviously an important issue for that area was formally recognised in the LAA. Tomos Jones told us "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",[403] echoing the complaint from an earlier witness, Sue Adams of Care and Repair, that "there is no national indicator that can be even selected from the Local Area Agreements which would drive private sector housing stock improvement".[404]

223. To facilitate the joining up of local public sector funding streams which can be applied to the elimination of non-decency in the private sector, in line with the Total Place agenda, we recommend that a National Indicator be available to local authorities specifically relating to private sector housing improvement.

VAT ON REFURBISHMENT WORKS

224. Meanwhile there is one further step that witnesses suggested the Government could take to increase the resources available for addressing non-decency. The Residential Landlords Association argued that:

we [...] need to look at the Tax Relief Regime and introduce a proper system of capital allowances for improvement/major repairs/refurbishment, with a reduction on VAT to 5% on this kind of work (which although now permitted by European Law has not been implemented by the British Government).[405]

The Rugg Review of the private rented sector concurred, stating:

There is scope for reviewing taxation frameworks around property improvement and consider the removal of any disincentives: for example, immediate tax relief is not available on improvement works.[406]

225. We considered this issue two years ago in our inquiry into Existing Housing and Climate Change. As the report of that inquiry explained;

A central recommendation of the Sustainable Development Commission's 2006 Stock Take report was that VAT rates for work related to refurbishing, renovating and otherwise improving homes should be equalised with lower rates applying to new-build construction or demolition works. At present, the former work often attracts full-rate VAT at 17.5 per cent while the latter is exempt from VAT, arguably providing a significant financial incentive for builders, developers and other parts of the construction industry to focus their efforts either on building new homes or on knocking down old ones rather than on improving them.[407]

226. We recommended that the Government seek to remove the "anomaly" by which differential VAT rates may in some circumstances make the demolition and reconstruction of a home more financially attractive than its refurbishment or renovation.[408] The Government's response to the report cited the European rules which, at that time, meant that the equalisation of VAT rates for these activities could only have been achieved by applying VAT to new construction: clearly not a desirable outcome in the current economic circumstances affecting the house building sector.[409]

227. Current economic circumstances also lend greater weight to the other objection to reducing VAT on refurbishment raised by the then Minister for Housing, Rt Hon Yvette Cooper, during oral evidence on that inquiry. She pointed out that the Exchequer would lose revenue by effectively subsidising works many people currently undertake without a VAT reduction:

The difficulty with [reduction] is the deadweight cost. Obviously there are a lot of refurbishments that already take place and therefore it would be a hugely expensive thing to introduce if this were to be done right across the board.[410]

It is therefore arguable that direct subsidy of refurbishment works in poor quality private sector housing is a more effective use of scarce public funds than an across-the-board reduction in VAT.

228. We continue to believe that, in the medium-term, VAT on property refurbishment should be reduced and equalised with that applying to new build. However, we conclude that the economic circumstances are not currently such as to make that a viable proposition. We recommend that the Government make such equalisation a medium-term policy goal, but in the meantime should target the public funding available for the renovation and refurbishment of housing more directly at the poorest-quality stock.

268 HM Treasury, 2004 Spending Review Stability, Security and Opportunity for All: Investing for Britain's long-term future, Chapter 5, available at www.hm-treasury.gov.uk. Back

269 These benefits are: income support, housing benefit, council tax benefit, disabled persons tax credit, income based job seekers allowance, working families tax credit, attendance allowance, disability living allowance, industrial injuries, disablement benefit, war disablement pension. Back

270 Q 172 Back

271 Ev 165 Back

272 Ev 331 Back

273 Ibid. Back

274 Ibid. Back

275 Ev 97 Back

276 Ev 140 Back

277 Ev 260 Back

278 Ev 277 Back

279 Q 140 Back