Penfold Associates

A recent item on the BBC website reported that 1 in 4 council homes in London currently fail to meet the Decent Homes Standard. This should not be seen as a failure of the programme. The vast majority of social housing tenants in England have benefitted from the programme. By April this year only 10.2% of social stock was “non-decent” and for the RSL sector the figure was 5.3%. The London situation stands out from the national council housing figure of 16.2% and even in London the figures are skewed by the poorer performing boroughs such as Havering (56%) and Tower Hamlets (55%).

In 1997 the council housing stock was generally in a shocking state. Like much of the country’s infrastructure it had suffered from years of neglect stretching back over periods of Labour and Conservative rule. The Decent Homes Standard changed that and was arguably the most successful reform programme of the New Labour years. A very simple objective was set – to bring all the social stock up to a basic standard of decency by the end of 2010. The 2010 target will be missed but sufficient progress has been made that nobody can seriously argue that the programme has failed. One reason for the shortfall is that last year the Labour Government transferred money out of the programme to help boost the house building industry with its Kickstart programme. This was understandable given the problems the industry faced during the recession. Less understandable is the failure of some councils to sort out their housing options and make any significant progress in delivering the Standard. These recalcitrant councils were aided and abetted by people claiming to “defend council housing” but whose only real achievement was to prolong the time ordinary tenants had to live in very substandard conditions.

But why was the programme so successful? The first reason must be the clarity and simplicity of the objective. This contrasts with complex structural reforms in education and the NHS. It also contrasts with the plethora of strategies, action plans and performance targets applied to most of what local government was doing. Detailed plans were expected even for activities that were irrelevant in your area. Performance targets could also have perverse outcomes. For instance, surgical priorities in the NHS were distorted by waiting list targets. In planning, development control targets did not address the quality of decision-making. They also caused inconvenience to applicants who needed to make minor amendments to applications and found that authorities demanded new applications in order to avoid affecting their average performance time.

The other major reason for the programme’s success was that councils and practitioners were presented with practical tools to implement the programme and were generally allowed to get on and do it. LSVT had been started by the Conservatives and was seen by some as an ideological assault on council housing. The incoming Labour Government reviewed this policy and recognised the potential for bringing private sector money into achieving their public sector objective – indeed, taken as a programme in its own right, LSVT is probably the UK’s biggest and most successful example of private public partnership. The ALMO model worked where a lower level of investment was necessary and, sometimes more crucially, was politically easier to swallow for some councillors. PFI is undoubtedly a more complex mechanism but lent itself to situations where more radical remodelling of estates and creation of mixed tenure communities was needed.

The programme has not been without problems and some valid criticisms have been made. A National Audit Office report criticised DCLG and its predecessors for failings in the way they managed housing PFI. It highlighted the overspends that arose because councils’ outline business cases were so out of line with the eventual projects and said the department could have learned from PFI in other sectors. The Public Accounts Committee has also said that the original costing for the entire programme was “not fit for purpose”. Taking a broader view, the Local Government Select Committee said earlier this year that the programme has had a dramatic effect on the living conditions of most social housing tenants. Their report contrasted this with lack of progress in private sector housing standards. The Select Committee said there was a need also for DCLG to improve its information base, to put more emphasis on energy efficiency and to give some incentives to “slow” councils.

So, what can we learn from this:
• Firstly, it does help if central government can restrict itself to setting broad objectives and a framework for action rather than attempting to micro-manage. Both the Coalition parties abhor the previous regime’s plethora of strategies and process targets so we may be off to a good start if they can stick to that position. Where councils fail to perform, a mix of incentives and penalties is needed to encourage progress. DCLG must improve its ability to manage a programme and achieve value for money in using its own resources without interfering in delivery on the ground.

• Secondly, implementation tools need to be practical and understandable. LSVT, for instance, benefitted from the fact that tenants would know about local housing associations and generally have positive views about their work. The not-for-profit charity or I&P society was simple to understand and the simple governance model of one third tenants, one third councillors and one third independents seemed to combine empowerment with safety even if it did not match the latest fashion in the corporate sector.

• Regulation is a vital security blanket. Some of the very early LSVTs were predicated on RTB sales that did not materialise and ran into difficulties but the old Housing Corporation sorted these out and made sure that this risk was not taken again. The presence of the regulator gave comfort to tenants and to funders alike.

• Funding models need to be transparent. PFI is harder to explain than LSVT or an ALMO (although it can be done). Most opponents of PFI – in schools and hospitals as much as housing – do not understand the basic principles and many of the criticisms fired off at contractors are the result of unrealistic initial costing or inadequately researched specification by the clients.

• Models that fund expanded social housing new-build or reinvestment activity through using RSLs’ equity or increased cashflow from intermediate renting or higher social rents are easy enough to understand but like LSVT will rely on support and oversight from the regulator.
• It is important to take full advantage of whatever external funding is available. The most obvious opportunity here is to make sure that social housing tenants benefit from the energy conservation measures that the Government proposes to fund from future savings on energy bills.

• We must remember that Decent Homes was basically a remedial programme. We were playing catch-up to what was always a very basic standard. Work is needed to raise standards to a more aspirational level. There is always a danger that social housing will function only as a residual tenure with its estates being enclaves of deprivation and poverty. The defence against this is to build new – and convert existing projects into – truly mixed communities.

• Finally, the other big thing we need to remember is that – no matter how important it is to build new homes for all sections of the community – the existing stock will always greatly outnumber new provision in any year. This is why it is so important that investment in raising standards is continued. This particularly applies to measures which improve the environmental performance of the existing stock.(KP)

Kim Penfold