House of Commons - Communities and Local Government Committee

Beyond Decent Homes - Communities and Local Government Committee Contents

Memorandum from the Association for the Conservation of Energy (ACE) (BDH 45)

SUMMARY

— It is anticipated that 95% of the social housing stock will be "decent" by 2010. However, the remaining 5% should be tackled as a matter of priority—and Government should ensure sufficient levels of funding to enable this to happen.

— Following the abolition by CLG of the national targets for private sector homes occupied by vulnerable households, we are concerned that there is now no means of enforcing the Decent Homes Standard in the private sector. Government should give urgent consideration to regulating the private rented sector to prevent landlords from renting out F- or G-rated properties. In the short term, we make a number of suggestions below of ways in which local authorities can bring about better energy efficiency standards in the private rented sector through more effective use of the Housing Health & Safety Rating System.

RESPONSES TO INDIVIDUAL QUESTIONS

N.B. We have confined ourselves to responding to questions of relevance to the Association.

What steps should the Government take to ensure that decent housing standards are met and sustained after 2010?

1. While the Decent Homes Programme has delivered significant improvements in social housing, the thermal comfort element of the current standard is woefully inadequate to provide affordable warmth.

2. As long ago as 2004, the predecessor Committee to this one concluded in its report on Decent Homes[74]: "The Committee does believe that the thermal comfort criterion provided for in the Decent Homes standard is far too low."

3. More recently, the EFRA Select Committee reached a similar conclusion: "The low level of requirements set for thermal comfort means that significant scope remains for improvement in energy efficiency levels. It is clear that the social sector leads the way in improving SAP ratings, but, given the likelihood of many social tenants being on low incomes, it is important to maintain progress and for future investment programmes to prioritise the improvement of energy efficiency levels."[75]

4. ACE therefore believes that, post-2010, a "Decent Homes Plus" target should be set using a much more ambitious thermal comfort criterion. We endorse the recommendation of both the EFRA Select Committee and the Fuel Poverty Advisory Group that the Government should assess the cost and feasibility of introducing a SAP 81 standard as the basis of an improved thermal comfort level for all social housing.

5. We are concerned that, as 2010 fast approaches, the Government has still given no indication of what, if any, form of capital investment programme it is considering to follow on from the Decent Homes Programme. This continuing silence is all the more surprising given the Government's stated intention in their recent consultation on the Heat and Energy Saving Strategy (HESS) that "the Government will show leadership by ensuring that social housing will meet or exceed the aims it is setting for all housing on energy efficiency and low carbon energy".[76]

Where targeted housing fails to reach the Decent Homes criteria by 2010, how should this backlog be addressed?

6. It is anticipated that 95% of the social housing stock will be "decent" by 2010. However, the remaining 5% should be tackled as a matter of priority. Moreover, Government should ensure that sufficient funding is available to enable this backlog to be tackled expeditiously. The ongoing CLG consultation on the reform of council housing finance implies (at para. 3.32) that the backlog will be dealt with by capital grant programmes provided by Government. However, further clarification from CLG would be welcome on this point.

Do the management organisations—councils, including via ALMOs, and housing associations—need to change?

7. It goes without saying that delivering the remainder of the 2010 Decent Homes Programme and further energy efficiency improvements thereafter will depend on sufficient funds being available to management organisations. In this context, we have two specific concerns:

8. At the end of June, the Homes and Communities Agency wrote to ALMOs (Arms Length Management Organisations) notifying them of a planned deferral of funding under the ALMO capital programme for those ALMOs that have not yet achieved two star status. This will mean that ALMOs that have not yet achieved two star rating will be denied planned funding for their Decent Homes Programmes. The Local Government Association states that this decision affects 11 councils, and will lead to a funding deficit over the next five years in the region of £970 million. We agree with the LGA that funding for those ALMOs with planned Decent Homes Programme activities should be immediately reinstated.

9. Housing associations have been able to fund the majority of their Decent Homes work on the back of a buoyant housing market, which saw them benefit from healthy bank balances as a result of the receipts from shared ownership sales. This has radically changed as the recession has led to severely reduced mortgage availability coupled with a collapse in property values. In addition, housing associations' balance sheets reflect the value of the property they hold—which in turn has reduced the amount of money that they can raise from potential lenders. All of this means that the flow of money through the system has all but dried up. This clearly has serious implications for housing associations' ability to deliver further energy efficiency improvements post-2010.

What are the implications for decent housing standards of the Government's proposal, currently out for consultation, to move to a devolved system of council housing finance?

10. In principle, we agree with the proposed move to a devolved system of council housing finance. However, we are concerned that councils' ability to deliver energy efficiency improvements post-2010 may be hindered if they are burdened with excessive debt.

11. The current consultation contains the bold assertion that: "Self-financing would require a one-off reallocation of housing debt in order to put all councils in a position where they could support their stock from their rental income in future."[77] However, we seek further clarification from CLG on this point, along with assurances that councils will have sufficient headroom in their business plans to enable them to deliver further energy efficiency improvements in their housing stock.

Should minimum acceptable social housing standards be amended to take account of environmental standards, fuel poverty and the estate?

12. As already indicated, ACE is firmly of the view that minimum social housing standards should contain greatly enhanced thermal comfort standards. Without a new standard that sets demanding targets for energy efficiency for social housing, this sector of the housing stock risks falling behind the private sector in terms of energy efficiency, rather than leading the way, as apparently envisaged in the Government's HESS proposal to "show leadership by ensuring that social housing will meet or exceed the aims it is setting for all housing on energy efficiency and low carbon energy"[78]. In this regard, we are further alarmed that elsewhere in the HESS consultation the Government is only proposing to "consider" identifying "aspirational" standards for energy saving and emission reductions from refurbishments more generally. It is time to stop considering and start taking action.

How should the Decent Homes target for private sector homes occupied by vulnerable people be taken forward?

13. It is important to recognise at the outset that such a target in fact no longer exists.

14. The 2002 Comprehensive Spending Review extended the Decent Homes Standard to include all private sector homes occupied by vulnerable households. CLG defined a "vulnerable household" as one in receipt of at least one disability-related or means-tested benefit.

15. The following targets were set by Government for vulnerable households:

— A year-on-year increase in the proportion of vulnerable private sector households in decent homes.

— The 2006-07 English House Condition Survey should show the proportion of vulnerable households in decent private sector homes to be more than 65%.

— The 2010-11 English House Condition Survey should show the proportion of vulnerable households in decent private sector homes to be more than 70%.

— The 2020-21 English House Condition Survey should show the proportion of vulnerable households in decent private sector homes to be more than 75%.

16. In 2008, however, the Government abolished these national targets (previously set out in Public Service Agreement 7). This might have had something to do with the fact that the 2006-07 English House Condition Survey revealed the proportion of private vulnerable households living in decent homes to be only 58.8% in 2006 and 61% in 2007!

17. Since this time there has been no enforceable Decent Homes target for the private sector. This is clearly a glaring public policy omission that needs to be remedied.

18. The other way in which local authorities can intervene to require improvements in the private rented sector is by means of the Housing Health & Safety Rating System (HHSRS). However, enforcement of the HHSRS relies in the main on tenants complaining to their council about the condition of the property in which they live. Many tenants are unaware of their rights; others are scared that their landlord will simply try to evict them, rather than undertake the necessary remedial works.

19. Local councils have a duty under Part 1 of the Housing Act 2004 to "keep the housing conditions in their area under review" with a view to taking enforcement action where necessary. If a council has reason to believe that a "hazard" exists at particular premises, they must inspect the premises and may then require enforcement action to be taken to remove that "hazard".

20. One of the key hazards identified in the HHSRS is "excess cold". For these purposes, CLG guidance identifies properties with a SAP rating of less than 38 as being likely to fail the HHSRS on the grounds of "excess cold".

21. However, as already identified, enforcement of the HHSRS is piecemeal and haphazard. Recent research by the Chartered Institute of Environmental Health[79] has shown that local authorities are not always using the HHSRS to the best effect. In some cases this is because the energy assessment required by the HHSRS is quite subjective, leaving council officers unsure whether the premises in question are in fact suffering from "excess cold".

22. ACE therefore makes a number of suggestions for improving energy efficiency standards in the private rented sector:

— In the short term, we believe that councils' ability to identify excessively cold premises would be greatly improved if they were to be given access to the data contained in local Energy Performance Certificates. This would enable them to identify F- and G-rated properties, which they could then target for inspection and improvement. In addition to enabling councils to prevent unhealthy homes, this would help them deliver on their HECA targets (set pursuant to the Home Energy Conservation Act 1995) as well as their responsibilities under National Indicators 186 and 187.

— When premises are assessed under the HHSRS, an Energy Performance Certificate should be required at the same time. This would help overcome the problem of subjectivity—and provide useful information for the future.

— When premises are improved as a result of having failed the energy assessment, they should be improved in such a way as to "fuel-poverty proof" them for the future. This will require a substantial package of energy efficiency improvements, rather than just one or two measures to bring the property just above the SAP 38 threshold. It is arguable that the HHSRS requires this anyway, since one of the criteria under the system is that the property should be "affordable". Furthermore, some energy efficiency improvements will be likely to be subject to Building Regulations, which would lead to an even higher SAP rating being achieved.

— In the medium term, we believe that the Government must stop relying on such piecemeal and haphazard interventions for improving private rented sector housing stock. We believe that urgent consideration should be given to regulating the private rented sector to prevent landlords from renting out properties that are F- or G-rated. Only in this way will the necessary improvements in this sector be comprehensively achieved.

What lessons can be learned from the Decent Homes Programme and equivalents in Scotland, Wales and Northern Ireland?

23. The Scottish equivalent of the Decent Homes Standard is the Scottish Housing Quality Standard. This includes an energy efficiency element that requires properties to achieve a minimum NHER rating of 5 "where technically feasible". We believe that this is a step in the right direction, but is not ambitious enough.

24. NHER 5 is not high enough to ensure adequate levels of thermal comfort; and furthermore "technically feasible" is defined in such a way as to exclude the installation of energy efficiency measures that are "disproportionately costly". "Disproportionate cost" is not itself defined, which means that certain energy efficiency measures can be arbitrarily excluded on the grounds of cost. The definition therefore needs to be reworded and tightened so as to make absolutely clear which measures are both technically feasible and cost-effective.

September 2009