Examination of Witnesses (Question Numbers
20-38)
DR STEPHEN
BATTERSBY, MR
ANDREW GRIFFITHS,
MS SARAH
WEBB AND
MR RICHARD
CAPIE
26 OCTOBER 2009
Q20 Mr Turner: The Government has
given you a rent rise of minus 2 per cent; do you think that puts
the rents out of sync with achieving the Decent Homes standard?
Ms Webb: It is our firm belief
that the time has come for a major rethink on rents generally.
We think that there was a strong case for arguing for the rent
convergence policy that we have had over the last ten years, but
as with all ten year policies, we are getting to the point of
having done that, we have reached that point, and we now need
to rethink rents. Rather than just sort of comment specifically
on the minus 2, I mean, we do have a view on the minus 2, but
it is more to do with the fact that actually, we need a fundamentally
new way of looking at rents which allows local authorities, ALMOs
and housing associations to reflect local variations and local
differences and local offers with tenants in a more, I do not
know, what do I say, adult way than is currently the case. We
do believe that you need to protect affordability as part of all
of that, which is unfortunately why we needed rent convergence
in the first place, so there was a bit of a sense that it did
not matter how you put the rents up, housing benefit would always
pay the bill. Clearly, that is unsustainable, but we have rent
levels at the moment in some places with which you struggle to
see how any landlord is supposed to make sensible investment decisions
going forward. As the professional body, we can encourage landlords
to be better at asset management, to fund decent homes going forward,
and we do and they have got better, but in any other business,
your rental income would be a major determinant of how much you
could invest in your housing. It is exactly the same debate as
the water companies make about investing in water, et cetera.
So there is an argument for looking at rents, but we would not
suggest doing it just simply for the benefit of Decent Homes.
Q21 Mr Turner: Really it is coming
back to the point that we were talking about in the previous two
questions, about the housing revenue account and the reforms to
that. Do you think the Government is going about that in the right
way?
Mr Capie: We have been really
pleased with the level of engagement we have had with the CLG
and with Government on the HRA reform. I think we are very, very
clear and we have been calling for reform of HRA for a very, very
long time, as I know other people have, and I know there is a
real appetite out there in local government to see this happen.
There is a huge amount of support for this reform, I think that
is the starting point. I think we have seen arguments out there
suggesting that all the existing debt should be written off. I
do not think that will necessarily be the case, I would say that
is extremely unlikely. But we want to see a settlement which is
based on fair redistribution of the debt, which is, you know,
there is sufficient headroom in that for councils to actually
look at the sustainability of their stock going forward. So it
is not obviously just about where we are at this moment in time,
it is about putting forward a solution which enables genuine self-financing
going forward. I think we want to make sure that we do not see
a situation where additional debt, for example, is done and loaded
in as part of that deal, we want to see a fair settlement where
the existing debt is redistributed in a fair way that actually
provides that certainty and provides that platform for local authorities
to make sensible investment decisions going forward.
Q22 Mr Turner: Is not the problem
at the moment that the Treasury takes a dowry off the rents of
about £300 million, rising up to £1 billion, and they
want to see that that is going to be maintained in the future,
and the way they are going to do that is by making sure that the
transfer of debt is actually higher than what is variously reported
as £15-20 billion that is either actual or on the book at
the moment?
Ms Webb: I think we understand
that discussions are ongoing between the Treasury and CLG officials
about how to make this work. The single most important thing for
us is that a deal is done that enables HRA reform to happen, and
to happen ideally in this Parliament. We think that that is fundamental
to the housing futures of a lot of local authorities, and to the
Decent Homes programme going forward. In an ideal world, it seems
very—I would struggle if I was asked to sell a deal that
involved a higher level of debt than is currently in the system.
If I was asked to sell that to tenants locally, I struggle with
how I would do that.
Q23 Mr Turner: Have you actually
done any work on what you think the amount—I mean, there
are two things here. Obviously there is the principle that you
would not want to take that to tenants, saying that they should
pay more than is actually in, and that is a moral stand, if you
like, but have you done any work on what is the impact of something
more, where that level would come, that would make the whole rent
structure incapable of ensuring that you get the Decent Homes
standards and possible new building in as well?
Mr Capie: There is a lot of different
ways that you can model those going forward, in terms of the numbers.
There is about £17 billion worth of debt already out there,
and then there is the round 1 and 2 ALMO debt on top of that,
so about £20 billion. Depending on the different costs and
assumptions that you put in there around management costs, around
major repairs going forward, you can end up with different numbers.
There has been quite a lot of technical modelling done, both by
ourselves, as putting ideas and thinking into the mix, in terms
of the work we have done with the department, work we have got
ongoing with individual local authorities, there are different
calculations that you could do which would in effect end up with
a different number, plus from that £20 million, depending
on how you did it going forward. I think the key starting point
for us in looking at what is sustainable going forward is to end
up with something which, as you said, enables that level of investment,
enables a settlement where local authorities are not finding themselves
in a position where they have debt that they cannot, in effect,
service going forward, in a way that actually gives them the flexibility
to address many of the issues that we have touched on here today,
around the quality of housing, not just in terms of what is needed
at this moment in time, but in effect some of those fundamental
questions about some of the challenges we know we have got to
tackle in the not too distant future as well.
Ms Webb: There are very few issues
that I can think of where everybody involved agrees that change
is needed, and there is nobody that I know that defends the current
HRA funding system for local authorities, and the way that we
are going to fund housing, whether it is private housing or affordable
housing or social housing going forward, it has to be a mixture
of lots of different mechanisms, because we need large amounts
of money, and there is not one place they can all come from, but
in that mix is HRA reform. If you did nothing else other than
allow local authorities to organise their funding on a 30-year
business plan way, even if you did not put any more money into
the system, just allowing them that flexibility to behave like
other organisations behave, allows them to make better use of
their existing resources.
Chair: We are pushing up against time,
and we need to get on to the discussions about the private sector,
which John is going to deal with, and maybe Dr Battersby and Mr
Griffiths can respond to.
Q24 John Cummings: In your evidence,
and this question is primarily to the Chartered Institute of Environmental
Health, you tell the Committee that targets should not be set
relating to vulnerability of occupants as this can be as much
a reflection of changing economic circumstances as changes in
housing condition. So how likely is significant progress in the
private sector during the current economic climate?
Dr Battersby: If I can sort of
start off on that, I think the point that is being made is in
fact, without any change in housing condition, unlike the social
sector, you could theoretically at least meet the target if people
moved off benefit.
Q25 John Cummings: Can we not talk
about theoretics?
Dr Battersby: Okay. In reality,
local authorities are struggling to meet the targets anyway because
of lack of resources. In the main, they are responding rather
more to complaint or, if possible, grant inquiry but, of course,
local authorities have a mix of assistance, they may be giving
grants, or grants and loans, and of course at this stage loans
are not particularly attractive, so the real difficulty is that
for many local authorities, they are not either being able to
assess effectively how far they are going along to either meet
the target or exceed the target.
Q26 John Cummings: So having identified
the problems, Dr Battersby, what do you think could be improved
in the way in which central government deals with decent homes
in the private sector?
Dr Battersby: I think part of
the problem, we have also said in the evidence, is 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.
We are, to a large extent, working in a vacuum, because that information
is not out there. We have looked at the level of enforcement,
and so that is how we have determined, as has already been referred
to, there are HMO licence issues, but in the main, it is a matter
of responding to complaints. The private rented sector, in many
respects, is being left untouched.
Q27 John Cummings: What do you think
the Government should be doing to rectify this?
Dr Battersby: Well, the CLG could
be using section 3 to give the direction to local authorities
as to the way they should be developing the housing strategies,
in fact more explicit guidance to local authorities on developing
effective private sector housing strategies, and indeed, how they
should be monitoring their progress.
Q28 John Cummings: Have you any idea
as to why the Government is not implementing section 3?
Dr Battersby: Not at this time,
no.
John Cummings: Any ideas at all?
Q29 Chair: Would it put additional
costs on local government if they implemented section 3?
Dr Battersby: In what way?
Q30 Chair: A possible reason why
Government might not wish to do it is because if Government puts
additional duties on to local authorities, it is generally expected
to cough up the money required. If the Government did what you
asked, would it be putting additional duties on local government,
and would Government therefore be expected to come up with additional
money?
Dr Battersby: It would not put
any additional duty, the duty is already there in the 2004 Act,
it is just the way that that duty is being met or not.
Q31 Chair: Thank you. Can you just
clarify, in your first answer to Mr Cummings, I think you said
if people got off benefits, because they would no longer be vulnerable,
is that what you are saying?
Dr Battersby: Yes, then you move
them out of vulnerability.
Q32 Chair: But it would not actually
alter the state of the housing stock.
Dr Battersby: No.
Q33 Mr Betts: On the issue of resources,
I have a suspicion that there is a power to licence private rented
property which has not been taken up very widely by local authorities,
it seems to me that there are a lot more problems out there than
are being recognised, and that surely is a resource issue. A lot
of authorities do not want to go down the route of getting involved
in things like licensing because it is quite expensive for them
to do. Is that a fair point?
Dr Battersby: HMO licensing—if
you are talking about the national mandatory licensing regime—
Q34 Mr Betts: There is mandatory,
but very few authorities have gone for more than that, and very
few have gone for general licensing in areas of all private rented
accommodation.
Dr Battersby: And there are very
few that have gone for selective licensing. Selective licensing
areas are those where all private rented would have to be licensed.
I mean, there clearly are resource issues, and that probably is
a disincentive.
Q35 Chair: But it would have the
effect of putting the cost on to the landlords.
Dr Battersby: To an extent, I
mean, with all licensing, and even the proposed register. Although
a simpler way would be to proceed with the registration of all
landlords, and taking up what was suggested in the report from
Julie Rugg, that would be better in many ways, because it would
not put the resource pressure on the local authorities. All landlords
would have to register and as part of that registration process,
that would be one way forward of addressing the issue. As I have
said in meetings in CLG, local authorities still have to use their
enforcement powers, because the less responsible landlords will
not register. They have to be found, and the powers have to be
used.
Mr Griffiths: Just to make the
point 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, so I think there has been a lot of wasted
resources in HMO licensing, plus the fact that an awful lot of
authorities still have some way to go, and it would be better
actually if attempts were made to improve conditions in the private
rented sector by more strategic use of the Health and Safety Rating
System. If there was clear guidance from CLG to help local authorities
to do that, that would actually remove the temptation to have
a reactive approach, which is not actually addressing the needs,
because all it does is address the needs of those who shout the
loudest—
Q36 Chair: There is nothing to stop
local authorities just taking the initiative to have a more reactive
approach, they do not need guidelines from CLG telling them to
do it.
Mr Griffiths: Indeed, I think
the problem is most local authorities simply choose to ignore
their statutory duty under section 3, but 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.
Ms Webb: 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.
Q37 Chair: We are having evidence
from Sandwell later on, so we are not yet aware of it, but we
know we are going to be made aware of it, if I can put it that
way.
Dr Battersby: There are one or
two PCTs where that is happening, but again, there are good examples,
but they are still a handful.
Q38 Chair: Thank you very much indeed,
I think we need to move on to the next set of witnesses.
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