UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC60-ii

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

COMMUNITIES AND LOCAL GOVERNMENT COMMITTEE

 

 

BEYOND DECENT HOMES

 

MR SIMON NICOL, MR RICHARD HAND AND MR JAMES SPARROW

JOHN HEALEY MP, MR PETER MARSH AND SIR BOB KERSLAKE

Evidence heard in Public Questions 323-409

 

 

USE OF THE TRANSCRIPT

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Oral Evidence

Taken before the Communities and Local Government Committee

on Monday 7 December 2009

Members present

Dr Phyllis Starkey, in the Chair

Sir Paul Beresford

Mr Clive Betts

Mr Greg Hands

Mr Andy Slaughter

________________

Memoranda submitted by BRE Housing Group, Ridge & Partners LLP and Savills Ltd

Examination of Witnesses

Witnesses: Mr Simon Nicol, Director, BRE Housing Group, Mr Richard Hand, Partner, Ridge & Partners LLP, and Mr James Sparrow, Director, Savills Ltd., gave evidence.

Q323 Chair: Can I start questioning and remind you that as there are three of you, please do not feel obliged for each of you to answer every question, only if there is something additional to add. Can I start by asking you of your assessment of the size of the backlog of Decent Homes work in the social sector after 2010?

Mr Hand: In terms of the assessment of size, I think it is variable. In our experience and opinion, we would have thought that something like 20 to 30 per cent of the Decent Homes standard will not be fulfilled.

Q324 Chair: Is that based on inclusion of homes which may have been decent five years ago and have fallen out of it as they get older?

Mr Sparrow: I would concur with that. Our view, based on all of our information, is that it would be of the order of 20 or 25 per cent, and that is a combination of where tenants have refused work that has been offered to them, a combination of authorities and organisations that have a plan to meet decency and have the funding in place to meet decency, but it is purely a timing issue for them to deliver the programme; and the final part of it is organisations that simply have not had the funding or plan in place and therefore have not met decency up until now.

Mr Nicol: Can I confirm what James said there. We are talking about between 20 and 25 per cent of the social housing stock still being non-decent in 2010, and that is extrapolating information from the English Housing Survey, which is the Government's standard for monitoring Decent Homes. The problem has been that it started out making rapid progress but that progress has slowed up for a few reasons. One is because the easy, quick wins were done first, leaving us with the hard-to-make-decent stock, but also, as the Decent Homes work has progressed, other homes have fallen into non-decency, and these have largely not been quantified by a lot of local authorities and social landlords; they have assumed that the work they are doing is fixing the stock whereas in fact there is stuff coming in at the other end, if you like. It is why we have slowed down and why we could be somewhere between 20 and 25 per cent of the stock. Again, that will be the expensive work still left.

Q325 Chair: The next series of questions will explore whether beyond 2010 we should be bringing other things into the Decent Homes Programme, notwithstanding the fact that there are 20 to 25 per cent that do not even meet the current standard. Do you think a future standard should include a standard for the estates or the environment of the neighbourhood, as well as the homes themselves?

Mr Hand: I believe that it should. However, I think that will be quite difficult to quantify. As expressed in my written evidence, there is a vast difference between a London borough, for example, and a shire district, so the estate requirements in both are vastly different. Whilst laudable, there may be better methods of introducing progress in estates and environmental areas such as the initiative of carrot as opposed to stick in terms of delivering enhanced budget for those that wish to apply for it for appropriate schemes. Introducing it into the standard could be quite difficult because of the disparity of the type of stock that exists across the country.

Mr Sparrow: I agree certainly with everything Richard has just said but there are just a couple of things. I think we need to differentiate. There is a lot of talk about the environment and environmental improvements and the fact that it is not covered. I think there are two different parts to this: there is the maintenance of the existing environment, which is not covered in the Decent Homes standard but is something that is measurable and could be incorporated into any standard and could be delivered; and then there is the general view that there is a great need for environmental improvements, which of course are much more subject to interpretation and more difficult to measure. We would say that that is critical, but you need to differentiate the two. The general point I would make on that is that we have done a lot of surveys in England, Scotland, Wales and Northern Ireland, and certainly Northern Ireland is a very good exemplar of very extensive work that has been undertaken to the environment as a consequence of very clear social issues historically, and therefore there was no choice but to do that work. That work has been done to a very high standard. The net result is that it has been very successful. It has been very costly but it has been successful, and that is an example of why that work should be incorporated into any standard.

Mr Nicol: Coming from our position at the Building Research Establishment, where we monitor progress against the standard, it would be very difficult to have measures that can be monitored in relation to neighbourhoods; for example, what is a neighbourhood; does the Decent Homes standard apply to the private sector as well as to the public sector stock? We would probably spend the first few years defining what a neighbourhood was before we started setting out to measure something. Again, agreeing with James, there is a lot of work going on on individual social housing estates with tenants' groups and so forth, and we think we should be working with tenants in individual situations to determine their priorities and pump money into management, maintenance and those issues that concern tenants, rather than imposing a standard from on high that may not be applicable or particularly useful to tenants on particular estates.

Q326 Mr Hands: Specifically about energy efficiency, moving beyond pure environmental efficiency, both Savills and BRE have submitted to us that you would like to see energy efficiency included in any new Decent Homes standard. Can you tell us what in your view is the most important reason for including energy efficiency and do you think it could be achieved by incorporating an SAP rating into the standard?

Mr Nicol: The answer to your last question is "yes". I think the SAP rating is appropriate to be incorporated within a standard. What that SAP rating should be and how it might apply to different dwelling types would need to be worked up; but, yes, a SAP of, say, something like 65 being a target to aim for would be a good thing. The other way of measuring it might be through the energy performance certificate bands, and saying when you are doing renovation works you would hope to achieve at least a C in certain dwelling types, or perhaps B in others or D in others, depending upon their construction, their age and so forth. I think that something based on SAP, the energy performance certificate, is relevant. Why is energy important? For a number of reasons: energy efficiency is the best indicator of fuel poverty. We are not proposing that we should measure fuel poverty as an indicator in Decent Homes because it incorporates fuel prices and people's incomes, which are outside the control of a local authority, of someone delivering the Decent Homes. Energy efficiency itself is a good proxy of whether someone would be able to afford to heat their home, so that is one reason. Meeting our Kyoto - and perhaps Copenhagen - energy-efficiency targets is very important, and obviously to do our bit for global warming, to save the planet, making better use of existing resources.

Q327 Mr Hands: Is there any way of estimating what cost might be involved in meeting an SAP of 65?

Mr Nicol: Yes, we can calculate that from our existing statistics - obviously not off the top of my head now, but we could go ahead. There are various -----

Chair: How quickly would you be able to calculate it, and could you let us have an estimate? Not now.

Q328 Mr Hands: Is it possible to tell us what percentage of existing stock does not meet an SAP of 65 for example, a rough guess?

Mr Nicol: Again, I would have to refer to documentation but I can get that back to you, yes.

Q329 Mr Hands: There must be a reason why you chose a level of 65, for example. Presumably that is challenging but not overwhelming.

Mr Nicol: I think 65 has been quoted as an aspirational level for the existing housing stock, but it would depend on the type of property. One of the problems with the Decent Homes standard is that it is applied to all property types. With some property types it has been easy to meet the Decent Homes standard; with some property types it has been nigh on impossible. It would have to be an appropriate rating for different types of homes in the social housing stock. The 65 has been mentioned as an aspirational average, if you like.

Q330 Mr Hands: By whom?

Mr Nicol: Good point! It may have been by BRE or it may have been by others as well.

Mr Sparrow: I have three comments on that, but I think we have covered it largely. Firstly, I think continuing with the SAP rating is the right thing purely because considerable information exists already about the SAP rating across the country by authorities and housing associations, and therefore you are off to a good start rather than changing it. The second thing is that in terms of the ability to assess, whatever the figure is, whether it is 65 or 75, local authorities and housing associations do submit returns containing that information, and therefore it should be quite readily available to assess what that is. In terms of the cost, that is a difficult thing to assess but could be done. All I would say is that one of the things, in looking at a slightly more holistic approach, is potentially looking at the ability to adjust rents as a consequence of doing energy work. At the moment there is no ability to do that but if, for example, it could be proved that by doing energy work the cost of energy bills at the property go down by, say £5 a week; then you could say "we can possibly increase the rent by £4 per week" and make some sort of adjustment along those lines. At the moment there is no ability to do that, but if one is looking at this, one needs to look at it in terms of finances. If you do not do something like that, it is a pure cost to do the work.

Mr Hand: I wholeheartedly support the view that SAP should apply because that is exactly the recommendation I gave in written evidence back in 2004. SAP is not a perfect vehicle; there are flaws within the system, and I think making sure that it fully takes account of new technology, which is starting to catch out some of the calculation, is something that should be reviewed very carefully. Also, I would say that the key reason for including it within Decent Homes is that at the moment, apart from the goodwill of the landlord, there is no financial benefit to the landlord in making that investment; so additional support through grant funding and the like is important too. In terms of the approach to be adopted for SAP, I think it should be somewhere in the range of 60-70; but importantly, across archetype bands is the way to go.

Q331 Mr Hands: Across what bands?

Mr Hand: Across the different types of property, because it will be virtually impossible to improve some stock to those levels, so I think you must look at the average of the stock as a whole and therefore consider the SAP rating for a landlord's portfolio rather than set a very specific standard. SAP was introduced of course in 2006 through the housing health and safety rating system, whereby you would have a category 1 failure for a SAP rating of 35 or less, so that was a positive step. However, at the same time, criterion D was reduced in terms of its value, in our opinion, because of course partial heating was then allowed, which I think was a retrograde step.

Q332 Mr Hands: Some witnesses have raised with us questions about the quality of the data collected for Decent Homes and for measuring progress, and the considerable variance in the data. What do you think should be done if there were to be a future set of criteria for improving the consistency and reliability of data?

Mr Hand: I think there are two issues. One perhaps is the quality of data. However, I think there has been very clear guidance from Government in respect of landlords continuing to push and maintain the quality of their asset intelligence recommendations, for example from the Audit Commission, about the validity and the age of stock condition data through the key lines of enquiry process. There is no doubt that the quality of data that has been collected can be variable and the only way of appraising that is for that to be scrutinised more closely during Audit Commission inspection, for example, or that type of opportunity. I think also an area that I flagged within the written submission was that it is not just the data that may be at fault, but it is perhaps over-reliance on off-the-shelf computer systems or other processing systems to calculate the output for Decent Homes. Certainly our work has demonstrated a number of variations in interpretation of the standard and the way in which it can be calculated. The only way to avoid that in the future is clear guidance about the modelling process for the data that exists, getting rid of a lot of the inconsistency that was allowed to occur back in 2000 and 2001.

Q333 Chair: Do the other two concur with that?

Mr Sparrow: I totally concur with that, but would just pick up on the interpretation issue. Interpretation is a massive issue in terms of inconsistent information coming back, and one key way of avoiding that or helping to avoid that is to cut out as far as possible the interpretation issues within the standard itself and streamline it and make it simple, so instead of the examples where a property has to fail on two components to fail overall or three components to fail overall - anything like that that can be taken out, where it is a straight failure, yes or no, would help the whole interpretation and consistency.

Q334 Mr Slaughter: How well do you think that authorities, ALMOs, or whoever has undertaken the work, have managed the process of financial asset management, and how do you think that could be improved?

Mr Hand: From our perspective, the quality of asset management has been variable. However, I think the introduction of Decent Homes as a standard can be praised because it has put a spotlight, a focus, on the need for effective asset management. Because we are human, some are better than others of course, so the quality does vary between client organisation. Some, I believe, are doing very well, and others need to catch up in terms of their approach to viable asset realisation and the way in which they manage their stock. That can only be done by continuing to apply the best practice requirements of the key lines of enquiry regime, code 3 in particular, which focuses upon effective asset management - so knowing that it is monitored, I think, is the best way.

Q335 Mr Slaughter: We have a quote in our pack from Savills that says that although most authorities have become efficient at delivering with limited resources, moving to a more planned investment programme over a longer time period requires a culture change and wide skill range. Is that coded language for -----

Mr Sparrow: It is!

Q336 Chair: Would you like to uncode it?

Mr Sparrow: I will try and uncode it. I think the point we were saying is that it is getting to the source of the problem rather than simply saying that there is a lack of asset management skills and financial skills in some of these organisations. It is a question of why; and the reason why, particularly in the local authority context, is that there has been no incentive for them to do so. There has been no incentive for local authorities to take a long-term view on retaining their assets. In some cases in true asset management it is a question of disposing of properties or getting rid of properties that are no longer viable; but for some local authorities there is not only not an incentivisation to do that, but there is actually incentivisation to keep properties because by taking those properties out there is a reduction in their MRA allowance and so on. Our view is that only by building in the long-term incentives for organisations to make true asset management decisions, and building in some flexibility where they can perhaps dispose of properties more easily, will the asset management skill base and the financial skills follow through.

Mr Hand: And of course being allowed to retain the capital receipts for those disposals.

Mr Nicol: I do not have any comment.

Q337 Mr Slaughter: Do you have any comment on how they have managed the contract process so far? That itself has been a big leap for authorities that have been used to managing, as you say, on quite small make-do-and-mend budgets, to suddenly be faced with quite large sums of capital and longer programmes.

Mr Sparrow: Richard, I am sure, will want to comment, but I would say that there has been a quantum leap in terms of the ability to deliver large-scale programmes or longer-term programmes, and the benefits associated with that from the procurement perspective. What is now needed is the next step, which is looking at the long-term viability of some of the assets, particularly in some of the larger inner-city authorities where there are question marks about the viability and whereby possibly re-provisioning might be a more sensible option.

Mr Hand: I believe we have got to the root of the subject, which is: is there sufficient finance available to maintain the assets appropriately? I think the reason that there have been some small programmes around in the past is because that finance has not been available, so having liberated that we have now had to catch up. It would be a great shame to see that dip and drop to past levels; it needs to be maintained at a point whereby we need not think about Decent Homes standards, because if you are maintaining the stock well, you deliver that standard automatically.

Q338 Mr Slaughter: Your organisations have a vested interest, do they not, in advising and working for local authorities in this area?

Mr Hand: I think we are there to help and bring consistency to the sector, helping to plug some of those gaps.

Q339 Mr Betts: It is the future and what happens beyond Decent Homes. There is a major reform of the HRA now, which has been flagged up as releasing local authorities and ALMOs in particular to be able to shape and determine their own future. But then other people flag up that it all really depends on what that reform means, and particularly going forward like the major repairs allowance; and is Government going to continue to control that and therefore at what level is it updated on a regular basis. Have you any concerns in that area and suggestions about what we need to do?

Mr Sparrow: What was the specific question you were asking?

Q340 Mr Betts: The question is that, clearly, the availability of finance for the future and the clear ability of ALMOs and councils to be able to access finance and have sufficient finance are important. The Housing Revenue Account is seen as part of the reform of the current arrangements, which is necessary, but then we are still going to be stuck with central government controlling major repairs allowance and the suggestion is that what they think is appropriate will not be sufficient.

Mr Sparrow: I totally agree with you. The key point to make here is that you need to build in more flexibility into the process. Coming back to the ability to perhaps look at rents, the ability to not retain assets that are no longer viable - the ability to do these things, as well as having the major repairs allowance, is the only way in terms of creating a viable future; but simply constraining things and saying, "you cannot dispose of assets and you cannot change your rents and, by the way, we are only giving you a limited amount of funds" is going to make life extremely difficult.

Mr Hand: The absence of appropriate funding levels is a significant demotivater for the sector. Whatever the organisation, be it an RSL, a local authority or an arm's length management organisation, they need sufficient funds to be able to manage the assets appropriately - and that is the big struggle. The HRA Subsidy Review is welcomed, certainly from a Ridge & Partners perspective, but of course that is still work in progress so we look forward to the outcome of that with interest.

Q341 Sir Paul Beresford: You will have noticed the newspapers tell us that there is a bit of a financial difficulty in this country, so where will the money come from?

Mr Hand: It is a very good question! It is a case of the mix, the blend, of both public and private-sector finance. One of the traditional paths of that was allowing estate-based transfer or whole-stock transfer, thus liberating a range of social stock from the public purse. That is one avenue that is still open, however increasingly difficult without confirmation about the issues surrounding overhanging debt. So in terms of borrowing and finance, I believe there is a future. However, it is about striking the balance between availability of resources and the requirements of the existing assets. It is all good and well investing in new-build property; however, if we cannot maintain the existing assets we will simply create a large catch-up or backlog programme that will have to be dealt with through programmes such as Decent Homes again in the future.

Q342 Sir Paul Beresford: What happens in local authorities where the tenants are emphatic they want to stay in their local authority?

Mr Hand: Then an option must be found where those assets can be maintained at an appropriate standard.

Q343 Sir Paul Beresford: In other words, you are just launching the question back in the air!

Mr Hand: Not being a financier, but being a surveyor, I am not sure I can give you a detailed answer to that. The man who can is sat behind you!

Sir Paul Beresford: I will ask him later.

Q344 Mr Betts: In terms of the major repairs of assets being a factor, have you any ideas about what the calculation should be, what the figure should be, to give an uplift that would enable ALMOs and local authorities to maintain their homes at a decent standard for the foreseeable future?

Mr Sparrow: Savills as an organisation has done over a million surveys in the social housing sector across the country in the last five years, so we have a reasonable feel about the long-term costs of maintaining properties. All I would say is that this is very much an average, but our average comes out at about £1,000 per unit per annum for major works over the long term.

Q345 Chair: How long is "the long term"?

Mr Sparrow: Over a 30-year period. I know this is a simplistic assessment, but broadly speaking that is the feedback that comes back. That is to cover decency, to cover statutory obligations, and it is also to cover maintenance of the existing environment, because when we take a long-term view we also take into account existing environment because we cannot ignore it. In answer to the question, that is the sort of level that we believe is required.

Q346 Mr Betts: How far away from that are we in terms of the current arrangements, and what the Government may be suggesting for the future?

Mr Sparrow: Well, that is being looked at at the moment, is it not? I do not know what the current figure is that is being discussed.

Q347 Mr Betts: The TSA has been consulting recently about how it will be the new regulator for social housing. It seems to be adopting what often is called a light touch to regulation, trying to get an approach to the management of houses where tenants and tenant associations are very much part of that process in terms of flagging up where they see problems, and the TSA responding. Do you think we need a more stringent enforcement role than the TSA is currently suggesting?

Mr Hand: I think to a large extent that exists, again through the Audit Commission and the review of the asset management and resident involvement in particular, which gives you a grading as an organisation that is toothless apart from that. In the context of the TSA's recommendation I think we would fully endorse and support that this should be a resident and a tenant-led process. Of course, the 2004 stock options appraisal process was entirely resident and tenant-led. From that perspective I think it is about making sure that we maintain that engagement. Do we need more hands-on and more stringent regulation? I am not sure we do. With limited dealings with the TSA, one of the things that I was quite astounded at, at the conference last year, was the aggressive tone that was taken to landlords, suggesting that they were not good enough and needed to pull their socks up. That was a very general observation, which concerned me, as an interested party, but a party outside of those particular organisations. Yes, I think regulation is important but is it going to succeed if it is overly restrictive? I am not sure it will.

Mr Nicol: I am not an expert in the TSA, but I agree with the points you make, Richard.

Mr Sparrow: I will make two points on that. I think for the TSA, to regulate the sector consistently, it really needs consistent powers in its ability to do that across all the organisations which it is regulating. That is the first thing to say. The other point to make beyond this is that it is a combination of both. We are talking about either a more stringent monitoring or a lighter touch. Our view is that the organisations that are performing well need a lighter touch, and the ones that are not performing well need a much stronger intervention and have the ability to do that at an early stage: in other words, let the good organisations carry on doing what they are doing and focus your resources in the right areas. I know that is easier said than done, but I am saying that I do not think there is a straightforward answer to the question of whether to do a lighter touch or take a more stringent approach.

Q348 Chair: Most of what we have talked about is in the social sector, where most people feel generally the Decent Homes standard has worked. Can I just ask you about the private sector? Do you think there should be a future Decent Homes standard for the private rented or owner-occupied sector, and if you do, what would be the point of it?

Mr Nicol: The Decent Homes Programme has almost by default covered the private sector as well, but in fact by 2010 something like 85 per cent of all non-decent homes will be in the private sector because they have barely been touched so far. They have almost been touched incidentally through energy-efficiency programmes or 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. We are left with this huge backlog of works required within the private sector. Why do we need them? Again, it is no use having a brilliant energy-efficient social sector in good condition if people, particularly vulnerable people, are living in poor conditions in the private sector. I do think the standards need to apply to the private sector and be backed up by policies and funding to do something about improving conditions in the private sector.

Q349 Chair: Before the other two come in, what sort of additional measures are needed in the private sector to deliver an improvement in the number of decent homes? Is it a combination of carrots and sticks or all sticks or what?

Mr Nicol: It is carrots and sticks. 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. A lot can be done in terms of, for example, energy efficiency. The great majority of hard-to-treat non-decent homes are in the private sector. These are, for example, homes that have solid walls, which are very difficult to insulate. People do not really want to touch them. They are worried about the products on the marketplace, the expense of the products, whether there are appropriate builders and so forth who can install those measures. There are not really incentives for people in the private sector who can afford it to improve their own homes, and we do need to improve the energy efficiency in the stock. Also, in terms of vulnerable people, at the moment 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. It is really about funds to inform proactive work on the private sector and also education and research to get those products that are currently in the social housing sector, currently being tested, to be adopted by people in their own homes.

Mr Hand: The difficulty with the private sector is about overview and indeed enforcement. The minimum standard at the moment is the housing health and safety rating system. Beyond that 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. Do I think that there should be a higher standard other than the housing health and safety rating system? Yes.

Q350 Chair: That is the way you drive it up. Mr Sparrow?

Mr Sparrow: I have no other comments.

Q351 Chair: But you do not disagree?

Mr Sparrow: No, I agree with everything that has been said.

Chair: Thank you very much indeed.

Memoranda submitted by Homes and Communities Agency

and Tenant Services Authority

 

Examination of Witnesses

 

Witnesses: John Healey MP, Minister of State for Housing, Department for Communities and Local Government, Mr Peter Marsh, Chief Executive, Tenant Services Authority, and Sir Bob Kerslake, Chief Executive, Homes and Communities Agency, gave evidence.

Q352 Chair: Minister, welcome to you and to Mr Marsh and Sir Bob to this final session of Decent Homes. We have a long list of questions we want to try and get through, so we will try to keep our questions fairly brief, and we would be grateful if people could keep their answers fairly pithy, if possible.

John Healey: Thank you. I assume, but just to check, that the Committee knows well Bob Kerslake, who runs the Communities Agency, and Pete Marsh who runs the Tenant Services Authority.

Q353 Mr Betts: We know them better than you, I should imagine!

John Healey: You could say they have been in post longer than I have. That is part of the reason for me bringing them along today. Can I say that we are very pleased to be here - and I speak on behalf of Peter and Bob when I say that. We welcome this inquiry, and I will explain why in my answers.

Q354 Chair: If I could start with the first one. We are anxious to discover what the Government's intentions are beyond 2010. Is it the Government's intention to establish a new target to maintain or indeed even extend the Decent Homes Policy after 2010?

John Healey: The short answer on the extension of the programme first: this is a national refurb programme without parallel or precedent. It stems from the £19 billion backlog in repairs that we had in these homes in 1997. It is a programme that I am very proud of, as a Labour Housing Minister. It is a programme to which we are totally committed, a programme that we will finish and we will fund - and we will do so beyond 2010, as necessary.

Q355 Chair: So the current target will be met beyond 2010, but is there an intention at the moment to then set a successor programme either in principle or in detail?

John Healey: I think that to describe anything as a "successor programme" is probably misleading. If you look at the enormous progress and undertaking that has taken place in the last eight years, we are in a position where at the beginning of this financial year, in April 2009, we had seen the total investment over the previous eight years of about £33 billion. We had seen the proportion of housing association and council homes that were non-decent reduced to 14 per cent. We will continue the programme until the end of 2010, which we have undertaken to do. We estimate that by then around 92 per cent will be decent; in other words, fewer than one in 12 will remain non-decent when taken across the local authority and housing association sector. That will require us to continue the programme in order to complete it; so I prefer to think of it as a completion of the current massive national refurb programme rather than talk of a successor programme post 2010.

Q356 Chair: The witnesses that we had just before you, Minister, estimated that from the England Housing Survey - they reckoned that beyond 2010 about 20 to 25 per cent of social stock would be non-decent. That would include that which is currently non-decent and will not be done by 2010, plus homes which might currently be decent but which will become non-decent because of the passage of time and therefore come into the programme. They reckon it is 20 to 25 per cent that will need to be done after 2010. Are you saying the Government is committed, whatever the percentage, to make sure that 100 per cent is done?

John Healey: We are committed to completing the programme, correct. I do not recognise those figures, but it is certainly true - and we can trace this largely from the landlord reporting rather than the English Home Condition Survey, which of course we moved away from - although we published both - to make our main way of measuring the programme in 2002 the landlord figures. We can trace that in the local authority sector but not so easily in the housing association sector. What I mean by that is we have data that allows us to say that since 2002 we reckon almost 1.4 million local authority homes have been done up under the Decent Homes Programme. There has been a reduction of the non-decent homes by just over a million. We reckon there are probably around 800,000 local authority homes during that period that have become non-decent, although that is probably an under-estimate because some local authorities do not provide us with the returns. That is a figure that also reflects and takes account of an estimate for demolitions and transfers into the housing association sector. The Committee will grasp immediately that the scale of the programme is bigger than the simple headline numbers. A comparable measure of that is in the housing association sector where we are not in a position to estimate the proportions of homes that have become non-decent. But over that same period we have seen in the housing association sector a net reduction of the non-decent homes of about 80,000, but of course during that period quite a lot of local authority homes were transferred into the housing association sector and dealt with and done up as a result.

Q357 Chair: There does seem to be a disagreement, and the issue about the standards we will come back to a bit later. That is another area where we have had mixed views.

John Healey: I am sorry, what is the area of disagreement? Your principal question was: will we complete this programme and will we bring up to a decent standard the local authority and housing association homes? The answer is "yes"; but it goes beyond that because the task then is to make sure that they are maintained at that Decent Homes standard, and that is exactly what we are looking to do in the dismantling of the Housing Revenue Account subsidy system, which this Committee and I have discussed previously.

Q358 Chair: Indeed, and which we will discuss a bit more. I think the area of disagreement is in the Department's estimate of the number of non-decent homes after 2010 and the estimates that we had from the three witnesses before, who were more or less agreed that it was in the range of 20 to 25 per cent. That will obviously affect the amount of money that will be needed to get them up to spec.

John Healey: If I may say so, you have got the advantage of having heard their evidence - and I have not. Perhaps Pete Marsh has a view on it.

Mr Marsh: I can certainly comment on the housing associations, which are bodies that we currently regulate prior to 31 March next year. Our current information is that we are currently at 92 per cent compliance as of April this year; 95 per cent compliance by traditional housing associations and 88 per cent compliance with those associations that have recently taken on stock as part of the stock transfer programme. It is only those associations that have recently taken on non-decent homes that have given promises to tenants to convert those homes to decency beyond 2010 but we have a number of homes that will become decent post 2010. The important thing about that is that the standards that will come into force from April next year have passported in, from a direction that the DCLG issued to us on 10 November, the requirement for all landlords to maintain homes at the decency standard or at a higher standard if that was a condition of grant funding from the HCA previously.

Sir Bob Kerslake: The thrust of this discussion is not about - as I hear what you are saying - the delivery of the programme that exists at the moment, but the extent to which homes come into non-decency. That will happen in part because of the passage of time, so if it would be calculated as falling within the time period, say for your kitchen to be repaired, some will fall out of that period. I have not seen the number you have referred to, so it is difficult to comment on that scale without seeing the number. The challenge is different for a housing authority that has already made the big step towards decency and maintaining that as stock comes in than it is about getting to that place in the first place. You would expect that they would not leave that issue alone and would invest time and resources into the delivery of that themselves. Beyond that immediate period in terms of non-decency, as the Minister has said, the debate comes into a wider area of debate about the review of the Housing Revenue Account.

Q359 Mr Betts: Moving on to the issue of ALMOs, we have had some evidence in from the National Federation of ALMOs, amongst others, who I think are a little concerned and looking for reassurances that the backlog, which does exist even in the terms you describe - there are still a number of properties that need to be brought up to a decent standard at 2010 - they are looking for certainty that that money will be available so that they can plan with certainty and deliver the programme.

John Healey: Mr Betts, they can plan with certainty if they have a Labour Government after the next election.

Q360 Mr Betts: Right; so in terms of your forecast going forward of the money that will be available to ALMOs, that money will be available as far as you are concerned for them to deliver the programme.

John Healey: I have said before this Committee, I have said in the House and I have said publicly: we will finish and we will fully fund the completion of the Decent Homes Programme.

Q361 Mr Hands: What is your estimate of the cost of that?

John Healey: That depends in part on calculations for the number of homes that will need to be done up; that depends in part on the period over which the Decent Homes Programme will be completed, because that is linked. Bob, have you got some figures? We have some forward projections that we can give the Committee some indication on.

Sir Bob Kerslake: If you were to look at the current spend - dealing with ALMOs specifically - the 2009/2010 figure, we estimate on commitment, was just under £915 million. For next year, 2010/2011 it will be about just over £600 million; and then you move forward into the next two years beyond that with another two sums of £600 million, and then £400 million for the year beyond that, 2013/2014. So if you took the period of the next CSR, you would be talking about something like £1.6 billion, of that order.

John Healey: Clearly that is a forward projection, and clearly any confirmation of any amounts would depend upon any spending review settlement and detailed discussions. I want the principle to be very clear, and the commitment of this Government, Dr Starkey, to be very clear, that we will complete this programme. That is an important undertaking and guarantee to those tenants that are still waiting to have their homes brought up to scratch.

Q362 Mr Hands: That is a £1.6 billion spending commitment, which you said earlier was fully funded.

John Healey: We will fully fund and we will complete the Decent Homes Programme beyond 2010.

Q363 Mr Hands: Of £1.6 billion, which is what you have just said - yes?

John Healey: We have given you a projection of the sort of spend that may be the case over a spending review period. But, Mr Hands, we are spending over £900 million this year on the Decent Homes Programme; this is the scale of the investment that has been required. This is the scale of the backlog that we were left when we first came into government.

Q364 Mr Hands: But if it is fully funded, then you must surely have a definitive view on what the amount of spending is that is fully funded; otherwise it cannot be fully funded.

John Healey: No, you are mishearing me. Let me try again. We will fully fund it. We will complete it, and we are totally committed to it. I said also that the detail of the commitment and the period will be for the next spending review. Bob Kerslake has given you an indication of the sort of scale that may be required over a future funding spending period. Okay?

Q365 Mr Betts: Do you accept, Minister, that one of the facts that has given rise to concern by the National Federation of ALMOs and others about beyond 2010 - and I am not in any way demurring from the commitment you have given today - but one of the concerns raised with tenants and others is what has been described as the "stop-start nature" of the Decent Homes funding for ALMOs in the last 12 months. There have been various elements of funding brought forward, then they have been slowed down, and around six ALMOs in particular have not been sure, once they qualified with their 2* rating that funding was going to be available. In some cases it has been postponed albeit with a guarantee that it will eventually happen. It is those sorts of things that have not given that certainty and led to a feeling that perhaps the Government is not as committed as you have obviously indicated today that it is.

John Healey: I think that would not be fair. I recognise - and this Committee has looked very hard at it two or three years ago - the profile of the Decent Homes Programme investment around the edges has been a bit lumpy and certainly in the face of the downturn we looked to bring forward some of the 2010/2011 spending as part of a response to the recession. However, when one looks at those sorts of figures in the context of the overall investment, I think the Committee would have to accept that this is a big commitment. It has been consistently made, and therefore the concern of some of the ALMOs - which I do understand, particularly for those that have not yet got 2* status - and there were one or two others that had not got 2* status back in June when I made announcements on the housing pledge - then the problem has not been stop-start for them - the problem for those 11 ALMOs is that they had not started because they had not reached the required standard of performance and management from the Audit Commission inspections.

Q366 Mr Betts: The fact is that they were anticipating getting the funding once they got their two stars, and there has now been a gap between getting the two stars and the eventual possibility of funding arriving.

John Healey: To be clear on two points, when I took the decisions none of them had yet got two stars. Some of them will take more than one inspection in order to get those two stars. The money has not been taken out of the Decent Homes Programme. What I have said to those ALMOs is that if they get the two stars, it is more likely that they will get their full first-year funding in 2011/12 rather than 2010/11, whatever they might have been anticipating. It remains the case that not all of them may get their 2* status at the next inspection. It also is the case that this £150 million, as a contribution to a £1.5 billion housing pledge, means more money for affordable house-building, and the opportunity for each and every one of these areas to gain a great deal more than they feel they may lose in the short term through the potential investment that is there in the housing pledge.

Q367 Mr Slaughter: Minister, can I ask you two further questions about funding of the Decent Homes project. The first is specifically in relation to authorities that have retained their stock, which clearly have not - the phrase we had from CLG was that they would attain the Decent Homes target at a later date. The question is how they will attain it? The suggestion of Savills is that this can be achieved by stock transfer in part or whole. Do you see these in a different category? How do you see this happening? We are talking about the authorities which, due to the decision of their tenants on the whole have retained their stock and have not had access to the same degree of funding - but I understand the commitment still goes that they will achieve in due course Decent Homes targets. How are they going to do that?

John Healey: At present those local authorities that retain their own stock can fund their Decent Homes work through a combination of major repairs allowance, in some cases supported borrowing, in some local authorities capital receipts. There is no reason to think that we could not continue with any one of those mechanisms or more. It will be something that we can consider and incorporate potentially in the reform of the Housing Revenue Account subsidy system. I am confident that over the period ahead we can make sure that those local authorities that still have a big task on their hands with Decent Homes can also complete that programme for their tenants as well.

Q368 Mr Slaughter: You would not rule out stock transfer?

John Healey: Stock transfer is clearly an option and will remain an option for local authorities, but if you look at my written Ministerial Statement on 30 June, I made clear that any future stock transfers will be on terms that are equitable to the basis for local authorities, and their financing under a dismantled and reformed HRA subsidy system.

Q369 Mr Slaughter: There would be an irony, would there not, particularly if those authorities where tenants have expressed the wish to stay with the local authority rather go to an arm's length management organisation, and the local authority was then compelled to go an RSL or other landlord because that was the only way of reaching their Decent Homes target?

John Healey: It would be an irony, but I do not see where the element of compulsion will be in the system. I think if you consult my statement that will be very clear. Certainly for any tenants that decide they wish to have an arm's length management organisation, to be clear that means they remain as council tenants with full security, and that stock ultimately remains in the ownership of the local authority.

Q370 Mr Slaughter: Interestingly, in your introductory comments, if I heard you correctly, you were guaranteeing not only that all properties would be brought up to the Decent Homes standard but that they would be maintained at that standard should a Labour Government be re-elected. It is all very comforting. Is that right because the evidence we heard about - you were not here to hear that - from Savills and Ridge & Partners was that the situation would be so dire in the coming years that only an aggressive asset management strategy and re-provision of housing would be an alternative. The word "re-provision" fills my constituents with some horror; it is the squeak of the bulldozer coming up the drive. How would you clarify those comments?

John Healey: I do not accept or agree with those comments. I also hope - and I will explain the reason - that that is not dependent simply on a Labour Government. The reform and dismantling of the HRA subsidy system will build into it more money for council housing, more money for maintenance and management, more money for major repairs, and will allow each of the 202 local authorities in the system at present to have the resources over the long term to be able to maintain their homes at a Decent Homes level; not just that, but it will also be not just maintaining that standard into the future, but it would also extend that standard into common areas that currently are not automatically covered by the Decent Homes. I hope that when in February I am able to put the terms of a dismantling of the current system on the table, the terms of a deal for local government, if you like, that that will be something we can see local government across the board, irrespective of political leadership, accept the advantage of to allow us to move to put that change in place. I hope therefore that this initiative, which is radical and far-reaching, will have the support from the Conservative and Liberal Parties; and therefore it will not be contingent on the nature of the national government after the next election, although I am clear that the long-term commitment to completing the Decent Homes Programme is one that we as a Government and I as a Labour Housing Minister are ready to make. I have not heard that commitment from other political parties.

Q371 Mr Betts: We did have words about this recently, Minister, in another session you were involved in when you told us about your intentions for the HRA and how they were progressing. Is there anything you can update us with in terms of the timetable and the responses coming back? We were a little concerned at an earlier session of this inquiry that the cabinet member for housing in Birmingham indicated that they did not want to take part in the reallocation of debt under any circumstances, which slightly threw us and they did not seem to be able to spell out why. It was of some concern and I did not know whether that feedback has been coming back to the Department.

John Healey: Yes, we have had a good consultation and a lot of responses, as you would expect to that. We are working through those at the moment. We are also doing detailed work with local government and independent experts to work out the terms on which this reform could be based. In the New Year, I expect to be in a position, given good co-operation from the local government side, to be able to put that sort of deal on the table.

Q372 Mr Betts: When talking to local government, I think there is a general feeling that reform is needed and there is some general commitment to it, but a feeling that they want to contribute to getting the deal, but so has the Treasury - and we do not want the Treasury looking to start anticipating those surpluses it would have made in future years if the current system existed, and trying to roll those up into a higher level of debt that would be allocated than would otherwise be the case.

John Healey: Having spent two years as Local Government Minister, I quite understand those arguments. We are working through the detail at the moment, and perhaps the time to return to those sorts of questions as well as what will be a challenge for local government will be the point in the New Year when I am able to set out the detailed proposals and the parameters for a dismantling of a system that has, frankly, held councils back from doing what they need to run good housing services and build and develop their homes for the future.

Q373 Mr Betts: In terms of building for the future and investing, councils' ability to borrow has been one of those big issues of restriction in the past that has probably been tightened over the years rather than relaxed. Is this another area where you are still intent on some reform, Minister, in terms of allowing councils or councils with ALMOs a greater ability to borrow against their assets or rental streams to fund investment in future?

John Healey: If, as I know you will have done, you read or if you re-read the consultation document in detail, we clearly recognise that borrowing is an element that needs to be nailed down as part of the future arrangements, and that is one of the things we are looking at at present, as part of the detailed work that we are doing.

Q374 Mr Betts: In terms of a further assurance which I have raised in another place but is important, if we are reforming finance and financial arrangements for council housing in this country, is it not important that we try and ensure that the rents that are collected as part of this system from council tenants are actually spent on services to council tenants and their homes and do not leak out into the wider local authority funding arrangements, and do not end up only funding services which are of benefit and very good schemes but are services that are available to the whole community who do not pay rents and therefore effectively get the services for free?

John Healey: I understand that argument. It is another area that was raised at the consultation and also in the consultation document, and we are doing detailed work on at the moment. I have to say that the problem with the present system is to do less with leakage and more with the fact that the full rental stream is not available to local authorities because of the nature of the national formula system, and a small part of any capital receipts from the sale of their stock is not available in full to local authorities to be able to build afresh. That is why, if I refer back to my written Ministerial Statement of 30 June and again in July, I said that with the new local authority council home building programme that is underway, which this year is the largest council house building programme in this country for nearly two decades - when those homes are built the rents will be kept in full, outside the HRA subsidy system, as will receipts in full for those local authorities from the homes that they build.

Q375 Sir Paul Beresford: One or two of the witnesses have suggested that with the improvements in standards to homes, the costs of that should be reflected in the rent, at least in part by a rent increase to partially reflect the increase in quality in the homes. What is your consideration on that?

John Healey: Generally, we have a system for both housing associations and council tenants, which makes sure that the rents continue to be affordable, that the rental stream is capable of supporting the development and improvement in the housing services they required; but essentially it is equal and equivalent for the tenants. I do not see the immediate case for moving away from that presumption of equality within the system, or indeed the imperative to make sure that they remain affordable, and that there is that important gap between the public housing rents and the private sector rents. I do not know whether Peter Marsh has more to say on this because clearly the TSA will have a big role in this.

Sir Paul Beresford: Does that mean "no"?

Q376 Chair: Just to amplify on what the witnesses before were saying, it was that if they invested in improving the energy efficiency of property and therefore reduced people's utility bills - if that could be part recovered - not wholly - through an increase in rent, that would give an incentive for social landlords to do those major energy improvements.

John Healey: There is a potential for introducing incentives into the system, as we are looking to do with the renewable heat incentive, the feed-in tariffs to re-sell renewable energy into the Grid. I am reluctant to see a move away from a presumption of equal treatment and affordable rents in public housing in the way that I think Sir Paul is suggesting.

Mr Marsh: If the basic premise is that for a set level of rent it is possible to provide a service that includes decency of homes, then the argument for increasing those rents where that cannot be done is questionable, if that is about -----

Q377 Chair: It is the opposite really.

Mr Marsh: There are a number of housing associations and ALMOs and local authorities that have managed to achieve decency within the current rental convergence criteria. There are a number of associations and authorities where rents will be going up, and over the last four years have gone up RPI plus and in some cases RPI plus, plus £2. That rental stream has been sufficient to fund Decent Homes. There are almost two different questions. One is about current standards and one is about future standards. When we are talking about future standards, we also have to bear in mind the cost on the public purse of an increase in rents, bearing in mind HMT foots the bill for a good proportion, something like two-thirds of the cost of rents; so that has to be paid for out of the fiscal envelope.

John Healey: But Sir Paul was asking about the Decent Homes standard and just to make it clear to the Committee, the work we are doing on the HRA subsidy system will be based on a continuation of the formula approach that we take and will not be building in an extra levy on tenants and on their rents if they get Decent Homes, as they should, under the programme.

Q378 Mr Betts: One of the big elements in determining the maintenance of houses after they have reached a decent standard and when we have reformed the Housing Revenue Account is presumably the Government will be contributing towards the upkeep of properties through the major repairs allowance or some other arrangement. It has been suggested to us that one of the problems is that looking to the future it does not appear that levels of the allowance have been sufficient in the past to maintain homes and there is some concern that assurances are not being given that they will be sufficient in future. Previous witnesses gave indications to us that over a 30-year period they would expect about £1,000 per year per unit to be necessary to maintain properties through this sort of allowance. Is that the sort of figure you have in mind or are you not at that stage yet?

John Healey: Again, Mr Betts, you have an advantage over me, having heard those witnesses and I have not. If those witnesses, whoever they are, have submitted that as part of their response to the consultation, then we will take that into account. In the proposals set out at the end of July we are building in an increase of 24 per cent for major repairs into the way we are looking to base the new system and new settlement. That seems to me an adequate provision, one that recognises the ambition to see more money in the system in future; but if these witnesses have made the case that that is insufficient, we will clearly look at that as part of assessing the responses we have had to the consultation.

Q379 Mr Betts: Would it be possible for you to look at that evidence and give us a response on it?

John Healey: Let me try and give you a different undertaking. As soon as we have done the assessment of responses to the consultation on the HRA subsidy system, I will ensure that the Committee gets a copy of that. I am reluctant to pick out bits of what is quite a complex picture and package that we are working on and provide the Committee with that information; but what I can say is that I am absolutely determined we are not going to hang around with this work, so I suspect that that will not hold the Committee up too long in order to supply that information.

Q380 Mr Betts: In terms of that response when you come to that aspect of the details of it, is it likely to set a context in which the Department and yourself calculate the necessary amount of money that will be needed to properly maintain properties to a decent standard over the next 20 or 30 years?

John Healey: Yes.

Q381 Mr Betts: That is the sort of calculation that will be brought forward.

John Healey: Yes, that is precisely one of the principles on which we wish to base the end of the current system and the proposition for a new one.

Chair: Can we return to explore the idea of whether beyond 2010 Decent Homes standards or some other standards will be higher than they are at present?

Q382 Mr Hands: In terms of looking at a couple of the problems that have been mentioned to us by witnesses in some of our written evidence, first of all in terms of the data collection and the methods of measuring progress, what steps do you think could be used to improve the process of measuring progress against the Decent Homes standard, and how would you improve the comparability of data, which is one of the other things we heard about, that unfortunately there just does not seem to have been that much of a level playing-field in terms of the data provided? What lessons do you think have been learned from that, and what would you seek to change either in the extension of the existing programme or in a new programme?

Mr Marsh: There are probably two different issues at play here. One is different providers, different landlords, have different interpretations of what the standard might be for their local communities. That is not to say the baseline is not clear, I think it absolutely is clear, but a number of providers have gone beyond the baseline and said that they will do more than is required by the standard itself and other aspects - for instance, replacing kitchens en masse even if technically they were still modern and acceptable. From a tenant's perspective - and every time we talk to tenants about this particular issue they raise this - it is about some of the other things that the programme has helped deliver, which is involvement and choice. Our standards that will come into force next April will require each provider to set out clearly how it intends to meet each standard. So whether it is a degree of interpretation, we will be asking the councils and the housing associations to say what their interpretation of decency is and what meeting the Decent Homes standard by 2010 or beyond that means for them and their tenants. By requiring that to be reported publicly, we think that will improve the transparency of the difference in quality that is offered over and above the minimum standard set out in the direction that was issued.

Q383 Mr Hands: Just having them all report publicly and transparently what standards they are using, you think will drive comparability of that data. I see what you are saying. That is quite right.

Mr Marsh: We have to be clear; we are being asked by the Minister to enforce the Decent Homes standard as in the direction, and that is either a pass or a fail, but from a tenant's perspective the quality of the pass can differ. Being clear about how the quality of the pass differs between providers I think will help put pressure on those landlords who have taken a de minimis interpretation of the standard and help to shine a light on those who are taking it one step further, given the resource constraints in which they are operating do vary across the three sub-sectors of social housing.

Q384 Mr Hands: Moving on to the question of neighbourhoods, how would the neighbourhood standard proposed by the TSA be assessed? How can you go about doing that? Do you think it is fair to expect landlords to maintain standards beyond the dwelling itself, which would be an unusual move but might be justified?

Mr Marsh: Let me answer the second question first because that is an easier question to answer. The answer there is absolutely "yes". Whether or not the landlord is owning the space or not, many tenants have told us loud and clear during the national conversation, "Having a warm, secure and modern facility behind my front door counts, but I care about the quality of the space outside." That might be simple things like the regularity of cleaning of the communal areas, lift maintenance, and issues that are without doubt the direct responsibility of the landlord; and it can be more complex issues - the gap between the curtilage of the home and the public highway can often involve three or four different agencies, and landlords and local authorities have a requirement to co-operate with each other in deciding who is meant to do what, where. As well as things like communal areas and lifts, the other big issue that tenants are telling us is safety. The neighbourhood standard can be a powerful way of describing what the public realm facility will feel like. I recently visited three estates in Westminster. The work they have been doing in lighting and knocking down some walls and removing the spaces where people can hide has been transformational, as transformational as the work indoors. I do not pretend it is easy. It is very difficult to say there is a national metric on the quality of neighbourhood; it is far more subtle and complex than that. However, requiring landlords to work with their tenants and be clear on an estate by estate basis what a quality neighbourhood means for them as part of a deal, as part of the rent money is a good and positive move forward.

Q385 Mr Hands: Do you see it as being restricted just to physical fabric? You mentioned things like lift maintenance; could it be extended to areas like anti-social behaviour on an estate or in a neighbourhood? How far should a landlord's responsibilities go in that area?

Mr Marsh: It absolutely does extend to anti-social behaviour. That is why within our neighbourhood standard we talk about anti-social behaviour and neighbourhood management as two parts of the same jigsaw. These things can be linked. I refer back to the Westminster scheme. I learnt for the first time the power of pink lighting, which is an anti-social behaviour tool which can be used to deter - I use the phrase carefully - spotty teenagers from lingering. It is a particular light that shines up acne that prevents people from wanting to linger. This is an actual scheme and is not dissimilar from the use of high-pitched frequency sonar devices in underpass areas. I think anti-social behaviour is part of the same pitch, but let us be absolutely clear that anti-social behaviour is a more complex issue than simply the physical environment, and that is why we have been working with Government on extending the family intervention projects across estates.

Q386 Mr Hands: Is there a difference between the social landlord and the private landlord in terms of where the definition of their responsibility for the decent neighbourhood might begin or end? Do you think it would be the same for both kinds of landlord vis-à-vis where they should be and where, say, the police should be?

Mr Marsh: This is a complex issue that involves the local authority that often is an enforcement body in relation to noise pollution, the police and landlords. Often we find, particularly on estates with a significant amount of right-to-buy, there is a presumption in the public press that it is always the social rented tenants who have antisocial behaviour issues; and actually this is where all landlords have to play their part. We only regulate housing associations and next April we will regulate local authority landlords too. Many times, an RSL or a local authority landlord, understanding what they can do to help identify and deal with anti-social behaviour that emanates from residents in the private sector, can be key too. Tenure issues do not stop the responsibility of those partners to work together to resolve the issues because the kid next door can be as much of an issue or more of an issue than the child that happens to live in the property you are renting out.

Q387 Mr Hands: There is also a question on thermal comfort. Do you think the thermal comfort criterion is adequate to prevent excess cold and subsequent ill-health and excess winter deaths? I am not sure who that is best directed at.

John Healey: To be perfectly frank, I have no idea about the detail of the thermal comfort measure, but if that is a question the Committee is interested in, I will certainly undertake to let you have chapter and verse.

Mr Hands: It was suggested to us for example by the Chartered Institute of Environmental Health that there be a thermal comfort criterion in the Decent Homes standard.

Q388 Chair: Particularly with earlier witnesses there was a suggestion that the SAP rating in Decent Homes, which is only 35, should be 65 as a target for the future.

John Healey: I am not sure I recognise those SAP figures. What is clear is that one of the impacts and results of the Decent Homes Programme is that on average people's fuel bills have been £170 a year or thereabouts less, and that the SAP ratings have risen higher and faster in the social sector than in the private sector.

Q389 Chair: I suspect, Minister, that is because many housing associations and ALMOs have delivered Decent Homes plus, which is admirable, but the actual Decent Homes standard is very low and only about 35.

Sir Bob Kerslake: Just to reiterate what the Minister said, in the social sector the average SAP rating is 58 compared to 48 in the private sector. In terms of the social sector the number of dwellings with a SAP rating of 30 or less has been reduced from in 1996 over 14 per cent of the stock to less than four per cent, so it is difficult to see how those numbers reconcile, I think.

Q390 Chair: I think it is the difference between the standard that is set within the Decent Homes Standards, which is 35, and what the authorities have actually delivered, which is indeed for many of them well above the Decent Homes standard.

Sir Bob Kerslake: I think that is right. The practical reality is that whatever standard is set the bulk of local authorities now, and housing associations, have gone higher.

Q391 Chair: Can I push on the issue of fuel efficiency? Outside the Decent Homes Programme the Government itself has targets for reducing greenhouse gas emissions and housing stock is an important part of that, and social housing stock is certainly an important part of improving energy efficiency of existing housing. Has there been any consideration as to how beyond 2010, whatever happens after Decent Homes, it is co-ordinated with the Government's general programme to try and reduce greenhouse gas emissions from existing housing, and in particular has there been any consideration about where the money is going to come from for what is a huge step in getting social housing to the sort of energy efficiency levels that will be required if we are going to meet our greenhouse gas targets?

John Healey: It is indeed a huge undertaking and would be a huge programme. The answer to the first part of your question, Dr Starkey, is that that work is going on at the moment, in particular between our department and Ed Miliband's department. It is part of the work that is going on to report on and plan for the future the heat and energy savings strategy, which is essentially to deal with the fact that two-thirds of the homes we will be living in in 2050 have already been built and therefore if we are going to seriously tackle the fact that more than a quarter of our carbon dioxide emissions as a country come from our homes, then clearly our homes have to be of a better and greener and more energy-efficient standard in the future. We can tackle that on the new homes front, as we will do, with the 2016 zero carbon homes requirement in regulation, but the work that we are now doing to put in place plans for the future for homes that are already built, and we will need still in 2050 is going on but it is complex. It will be costly. In terms of social housing, we have said that we will look to public housing, housing associations and council housing, to play something of a lead role in that sort of programme in future.

Q392 Chair: Are you expecting the funding to come from the Government or from the utilities, say?

John Healey: I think you will have to examine the plans in the New Year when we publish them in order to probe and come to a view about those sorts of questions.

Q393 Chair: I am not sure I am completely clear. Is the current Government policy that there will not be a Decent Homes plus standard that will be introduced after 2010? Is that the case?

John Healey: It depends what you mean by Decent Homes plus.

Q394 Chair: All right, can I explain what I mean by it? You have given a commitment, Minister, that the money will be there one way or another for all social homes to be brought to the Decent Homes standard, including those homes which are currently decent but with the passage of time will become non-decent. What we are trying to find out is whether the Government is considering, once all the housing has been brought to a decent standard, actually driving standards up further by having some sort of successor programme with higher standards, which might include things like much higher energy efficiency standards, for example.

John Healey: My concern is to complete the Decent Homes Programme that we are a long way through, but for the benefits of the tenants who still have not had their homes improved, whether that is new glazing, doors, central heating, insulation, new kitchens or new bathrooms, that we complete that job. What we are committed to doing in the overhaul of council house financing in the HRA subsidy system review is to make sure that we go in the way that Peter Marsh has said, beyond the walls of the home, to deal with concerns that there are sometimes about common areas, levels of fire protection, and those elements. We will base the plans for dismantling the HRA system on those standards. Alongside that, as I indicated earlier in my answer, in the work on the heat and energy savings strategy, which is joint work particularly with the Department for Energy and Climate Change, we are looking for the longer term at the sort of energy-efficient, carbon-reducing standards and the refurbishment that will be required in the long run for all of the homes in our country, private and public housing. We have said, as a first principle, that where we can we will look to social housing, or public housing - however you like to describe it - to play a part in leading the way and setting any new standards of that for the future.

Q395 Chair: We want to move on to the private sector but can I confirm with Mr Marsh that TSA will not only be requiring social landlords to maintain the Decent Homes standard but will require them to agree additional standards locally, which can only be higher not lower?

Mr Marsh: Under the direction we are required to ensure that providers maintain Decent Homes and we require providers to be clear about their interpretation of that standard. Where they can, and where resources allow, we will encourage the development of a local standard beyond the Decent Homes minimum.

John Healey: I will supply the Committee with detail of this tomorrow. I am announcing today a programme assessment of the Decent Homes. I am concerned that some local authorities, the poorest performing local authorities, are going backwards. I want to make sure that they are not letting their tenants down, and that they are also getting the benefit of the lessons learned in other areas. I am concerned, for instance, that 27 local authorities have seen their levels of Decent Homes drop backwards in the last year. I am concerned that ten authorities had more than a third of their stock at the end of 2008/2009, in other words April this year, non-decent. I am particularly concerned that 14 authorities had an increase in their non-decent stock over the last couple of years of 10 per cent or more of the total homes for which they are responsible, and this is a programme assessment that will be completed by the end of February and to which I am looking to your Committee's report to make a substantial contribution - and I welcome your report for when you produce it.

Q396 Mr Hands: How much funding has been made available through the Decent Homes Programme for improvements in the private sector and what work have you carried out to assess the value for money of the work carried out with that funding?

John Healey: Roughly £1 billion over this spending review period. Bob, can you give an indication of how we track the spending?

Sir Bob Kerslake: It is tracked predominantly through the local authorities; the funding goes directly through to them from the private rented sector, not through the HCA in this instance. The tracking is done through the local authorities and through regional arrangements for funding.

Q397 Mr Hands: Are you satisfied that value for money has been achieved? It is all very well saying it has been tracked through the local authorities, but who is seeing whether value for money is achieved? Is that only the local authorities or are you also assessing their returns centrally?

John Healey: That would be a matter for our department and the Audit Commission in their routine programmes of ensuring that local government is spending and delivering effectively.

Q398 Mr Hands: So there are no additional checks on them, no specific checks on the private sector funding?

John Healey: We are able, through the returns we get from local authorities and from the regions, to trace the impact of the Government investment that we make in this programme. Disentangling what is central government contribution from what is normally supplemented to and added to by local authorities is clearly more difficult.

Q399 Mr Hands: It sounds as though it would be very difficult on that basis to assess the value for money of that £1 billion of investment.

John Healey: I think what we can point to, though, is the figures for the number of homes or number of vulnerable households in particular that may have been helped over any reference period by the sort of investment we have been prepared to make into the private sector in the Decent Homes Programme.

Q400 Mr Hands: On a pound-for-pound basis have you got more homes moved up to the Decent Homes standard in the private sector than in the public sector? That would seem to be a simple value-for-money assessment you could do. Is that true?

John Healey: I have not made those calculations because I am not sure you can draw a pound-for-pound comparability between the range of circumstances you find in the private sector with what is essentially a public housing programme, which is the Decent Homes Programme. I am going to let the Committee have the data that we have from the regions on this - Mr Hands, if you want to do those sums, then you can do them.

Q401 Mr Hands: But you have already said, judging by the fact that you have data in front of you that show which local authorities are lagging in getting the number of their homes up to the Decent Homes standard - its sounds like you will be naming and shaming particular local authorities - on that basis you must be able to see how many homes you have brought up to Decent Homes standard in both private and public sector in each authority, and you should be able to make an assessment on whether you are getting a better bang for the buck in giving money to the private sector than to the public sector.

John Healey: That is not correct. I am able, as you would expect, to track the progress of local authorities and housing associations, particularly local authorities, through the Decent Homes Programme which we put in place for public housing. The condition of private sector home housing, local area by local area, is a matter for which there is a general responsibility for local authorities to make an assessment of. Therefore it is not possible to make a direct comparison between an assessment of a programme designed and delivered for social housing and that designed to help some of the most vulnerable households in a very wide range of circumstances in the private sector.

Sir Bob Kerslake: I wanted to emphasise the point that the Minister is making. The goal in relation to the private rented sector is different. The focus there is on the number of vulnerable people in non-decent housing, and therefore focused more on the person than the handling of the whole of the stock. If you look at the performance in increasing the number of people deemed vulnerable in decent housing in the private rented sector - overall that progress has been quite strong towards the target. But a like-for-like comparison is not relevant because you are trying to achieve different things. In the case of the social housing sector the aim is to do all stock; in the case of the private rented sector the focus has been on those people deemed vulnerable living in private rented stock rather than the whole of the stock. It is doing a different job. What we can say is that as far as that is measured, progress towards that target is good.

Q402 Mr Hands: I still think you should be able to look at the amount of money being put in and the number of homes, regardless of the type of household within them and to see on a pound-for-pound basis. There may not be a direct comparison but you should be able to look at the data - which worries me about whether you are getting value for money or whether you really have any figures to test the value for money.

Mr Hand: Mr Hands, we can certainly do that and I will ensure the Committee has that data. What both Bob Kerslake and I are saying to you is that because the programmes are different and the policy purposes behind them are different, then making a direct comparability between the private sector programme and the public sector programme cannot be done.

Q403 Mr Hands: Here I am looking at non-decent homes by tenure, 2006/2007, published in the English House Condition Survey, so clearly you are able to assess the number of non-decent homes. I appreciate you are saying it is targeted in a much more specific way in the private sector but I would still have thought you should be able to look at how much you have achieved on a pound-for-pound basis. I would like to know what your intention is for the future of the Decent Homes Programme in the private rented or even owner-occupied sectors. What are you doing going forward in the private sector?

John Healey: On the Decent Homes Programme?

Q404 Mr Hands: Yes.

John Healey: That would be a matter that we will consider for the next spending review period, and we will make those judgments and decisions accordingly.

Q405 Mr Hands: Are you expecting any change in the approach that you currently have to the private sector?

John Healey: I think it is too early to tell. We are barely half-way through the current three-year spending review. These are matters that will be properly considered, and decisions will be taken, for 2011/2012 onwards.

Q406 Chair: Quite a lot of witnesses in earlier sessions, not actually the ones today, have made the point about imposing the Decent Homes standard in the private rented sector for example, that the local authorities do not have enough environmental health officers, they do not inspect the properties; they are reactive not prospective; and that the focus on vulnerable tenants is slightly problematic in that vulnerable tenants, as everybody else, move, so you have non-decent homes that would then cease to be non-decent because the vulnerable tenant has moved out of it, or vice versa. There has been a huge range of criticisms of the approach of Decent Homes in relation to the private rented sector in particular and slightly less so to owner-occupiers.

John Healey: Clearly, where those criticisms are well based and where there is good evidence, and particularly where there are any conclusions that this Committee might draw as a result of this inquiry, we would take those into account in coming to the sort of decisions that will be necessary during the course of next year.

Q407 Mr Betts: Is it because the private rented sector was an afterthought (because it was not part of the original programme) in terms of tackling the private rented sector and the problems that exist there, there might be a different strategy from the Decent Homes Programme which is completely separate and actually encourages local authorities to go out there and look at the problems that exist, as many of them seem currently not to have a policy for dealing with, and putting a private rented sector strategy together in each area?

John Healey: There is a different strategy for the private rented sector Decent Homes from the public sector rented homes, and we have made that point already. There is a variation in the degree to which local authorities currently have sought an assessment of the private sector Decent Homes problems in their area, and the question for the future of some of the things that we are concerned about in the Decent Homes for the private sector is clearly linked to any decisions that Government may take on a broader front, including, as we discussed earlier, the heat and energy savings strategy.

Q408 Mr Betts: There is a feeling, and certainly witnesses have said to us that local authorities very often do not appear to have a strategy; that there are powers around HMOs but they probably do not go far enough. There are powers possibly around selective licensing where there are real difficulties in the private sector, and very few local authorities have come forward to request government support for going down these routes. Is that not concerning, that really there ought to be a wider look into and that we are not getting it back from local authorities at present?

John Healey: Both the area of selective licensing and the question of a case for an extension on houses for multiple occupation powers are areas that I am looking at very carefully at the moment. They are not necessarily simply about Decent Homes, as you appreciate, Mr Betts. Were we to look at some obvious steps in each of those areas, they may not necessarily have a direct impact on the Decent Homes concerns that this Committee is looking at at the moment.

Q409 Chair: Can I ask one very specific question. Private sector housing was in PSA7 and now it is being monitored as a legacy target. What does that mean?

John Healey: If I may, I will set that out in writing for you.

Chair: Okay. If it does not mean anything just tell us it does not mean anything and then we can get rid of it. Thank you very much indeed.