Funding for genuinely decent homes – the Decent Homes Standard Review

The Decent Homes Standard which applies to social housing and vulnerable tenants in the private sector is undergoing a government review. It was announced in the Social Housing White Paper which said that “If the evidence demonstrates that we need to revise the Standard, we will consider the strategic, economic and management case for new criteria as a second stage of the review”.

The DHS was introduced in 2002 to address a £19 billion backlog of work on council housing. Not only did the Tories stop funding council house building they starved existing council housing of the funds necessary to maintain them. Whilst the DHS in conjunction with a Major Repairs Allowance did improve the standard of stock by providing double glazing, central heating and UPVC doors, as two Parliamentary committees judged, the standard was set too low.

The review has set up a Sounding Board to discuss the four criteria by which homes are judged ‘decent’ or not. These are:

A. Meet the current statutory minimum standard for housing – they must not have one or more Category 1 hazards (a risk to health).

B. Are in a reasonable state of repair.

C. Have reasonably modern facilities and services

D. Provide a reasonable degree of thermal comfort.

The Board “will offer evidence on whether they should be: retained unchanged and why, amended in some way and how, removed altogether and/or if it should be replaced”. Decisions, though will rest with ministers. The Sounding Board is advisory.

At the end of March 2020 4.8% of council homes were judged ‘non-decent’. However, the Standard is subject to wide interpretation by landlords. For instance, it is possible for a home to suffer from mould and damp but still be deemed to be ‘decent’. If you live in a flat the condition of the lift is not considered. So a home can be deemed to be ‘decent’ even if the lift persists in breaking down and aged and/or disabled people are effectively imprisoned in their home.

Key housing components are given an estimated lifetime. So kitchens are expected to be replaced after 30 years, bathrooms 40 years. If these (overly long) timescales were reduced then that would mean increasing expenditure.

In reality you cannot seriously consider improving the standard without assessing the current condition of the stock and the estimated cost of bringing homes up to an improved standard. For council homes this requires looking at Housing Revenue Account finances Sounding Board members have raised the need to revisit the ‘debt settlement’ of 2012 when a new finance system for council housing was introduced. There is a strong case for debt cancellation (see caseforcancellingchdebt.pdf (wordpress.com)). In the settlement 136 councils were loaded up with £13 billion additional ‘debt’. Servicing overall debt (slightly under £25.7 billion) costs councils around £1.25 billion a year. This wasn’t debt in any real sense but the result of financial manipulation by the Treasury. Under the previous system we know that in the 25 years up to 2008, council tenants paid £91 billion in rent but councils only received £60 million in ‘allowances’. The £31 billion difference was more than historic borrowing for previous building programmes.

The amount of debt councils were given was in large part based on an estimate of rental income over the course of the 30 year business plans they had to draw up. Yet changes in government policy since 2012 have meant that estimates of rent income bear no correspondence with what councils are actually collecting. For instance a 4 year rent cut (1% a year) imposed by the government was estimated to produce a 12% cut in income over the course of the business plans. The introduction of the ‘enhanced right to buy’ with increased discounts produced a nearly five fold increase in sales and hence a much greater loss of rental income than was included in the settlement.

The 2011 Localities Act gives government the power to reopen the debt settlement. The loss of income and the cost of debt servicing means that councils have insufficient funding to maintain the existing standard, never mind improving it. Cancellation of this bogus debt would provide councils with at least an extra £1.25 billion a year.

The Sounding Board meetings thus far have recommended changes to the existing standard though there is no commitment from the government to any additional funding. Notes of a Sounding Board meeting read:

“On funding, noted it was too early yet but the Review would need to be mindful of costs and that additional expectations on DHS may not be followed by funding and sector may need to fund.”

But the government cannot have a policy of ensuring everybody has “a good quality home” and then say, sorry, we can’t afford it.

If the standard is to be improved then there is also another major issue on the horizon which cannot be dodged. The White Paper said “We will ensure that the Decent Homes Standard review considers how it can work to support better energy efficiency and the decarbonisation of social homes.” From 2025 all new homes built will have to have a non-carbon heating system. The question of retro-fitting of existing homes was raised on the Sounding Board. There is no way that councils have the funding for retro-fitting existing homes. Even with a low estimate of £20,000 per property the cost of retro-fitting 1.6 million council homes in England would be at least £32 billion. As well as addressing the issue of global warming, retro-fitting of council homes would improve the living conditions of tenants and tackle one of the persistent problems of damp and mould. Failure to provide grant would show that the government was not serious about its ‘net-zero’ commitment.

The Labour Campaign for council Housing has produced a Briefing which addresses in detail some of the issues raised by the DHS review (see dhs-standard-briefing-2.pdf (wordpress.com).

This is a guest post for the Newsletter of the Labour Housing Group

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