In the fourth part of our series on contract management pitfalls, we look at the risks arising out of varying the terms of construction contracts.
18 months after the Housing White Paper, 14 months after the Grenfell tragedy, 11 months since Sajid Javid announced a Green Paper, one new Secretary of State and three housing ministers later, we finally have the Social Housing Green Paper ‘A new deal for social housing’. It’s been a long time coming, so was it worth the wait?
We discuss below some of the key points arising out of the Green Paper and its 48 consultation questions.
With quite a change of tone and burying several past policy proposals, the Green Paper sets out the Government’s five principles for a new deal for Social Housing:
- Decent and safe homes – the last review of the ‘Decent Homes Standard’ was in 2006, and the Green Paper signals a consultation on what a ‘Decent Home’ looks like in 2018;
- Effective resolution of disputes – there was evidence of Grenfell residents’ complaints falling on deaf ears for years before the tragedy last year. The Green Paper emphasises the need to improve and speed up how complaints are resolved;
- Empowering tenants and strengthening the Regulator – Registered Providers (RPs) should be accountable to their customers. If the conversations we’ve already been having with lots of our clients about tenant engagement are anything to go by, many RPs are already leading the way here and actively addressing this. If not, it’s now time to act;
- Addressing stigma – the word stigma (or variations of it) appears 31 times in the Green Paper. The extensive feedback highlighted an uncomfortable truth that prejudice lives on. Tackling ‘institutional indifference’ (a phrase coined by Doreen Lawrence and repeated within the Green Paper) forms the basis of the fourth principle;
- Boosting the supply of social housing and supporting home ownership – the need for more good quality social homes is something everyone agrees on. The Green Paper promises more housing development and improved routes to affordable home-ownership by introducing flexibility for shared ownership tenants to staircase in increments of equity (as little as 1%).
The new premier league?
The Green Paper discusses the introduction of league tables where RPs’ performance will be scored against key performance indicators (KPIs) with the possibility of penalising low-performing landlords through limiting their ability to apply for grant funding.
The Green Paper indicates the KPIs could focus on:
- Keeping properties in good repair;
- Maintaining the safety of buildings;
- Effective handling of complaints;
- Respectful and helpful engagement with residents; and
- Responsible neighbourhood management, including tacking anti-social behaviour.
The success of KPIs and league tables cited in the health and education sectors is debatable when Ofsted has recently criticised schools for creating “exam factories” that teach to tests when results are used for rankings. Is the Government going to learn from Ofsted’s experience?
The importance of creating ‘strong’, ‘diverse’ and ‘thriving’ communities repeats throughout the Green Paper – how will league tables assess true tenant engagement and empowerment and the need for locally set investment priorities?
We consider there’s a real risk that any introduction of league tables will focus RPs on meeting KPIs, creating a false impression of competition whilst confusing the need for accountability to residents and local stakeholders.
All change, again? Regulatory reform:
- Review of social housing regulation – the Green Paper highlights that there have been significant changes in the social housing sector since the last review of social housing regulation was carried out eight years ago. Accompanying the Green Paper is a consultation by the Regulator on the future shape of housing regulation. The consultation signals a potential move away from the ‘co-regulatory’ approach currently adopted by the Regulator and a strengthening of the Regulator’s powers, specifically in relation to how it enforces the consumer standards;
- Consumer standards focus – as anticipated following Grenfell and the recent media scrutiny alleging some RPs fail to provide an adequate service to tenants, the consultation specifically focusses on the Consumer Standards. It considers whether any of them should change and asks if introducing a Code of Practice to sit alongside the Consumer Standards would be helpful. Currently, the Regulator’s role regarding the Consumer Standards is reactive, and it can only use its regulatory powers where there has been a breach that has caused or could cause, ‘serious detriment’. Is serious detriment still the right test?
Stock transfers, back again?
Interestingly, the Government is openly questioning a stock transfer programme shifting local authority housing to community-based RPs. The Green Paper devotes a section to community-led housing and considers the benefits offered by such housing models including Community Land Trusts, Tenant Management Organisations and Housing Co-ops.
This follows the launch of ‘The Community Housing Fund’, announced on 2 July, which ring-fences £163 million to support the development of community-led housing (read our briefing on ‘The Community Housing Fund’). We are asked if there is an appetite for such a programme?
The Green Paper fails to address how new social homes will be funded. It re-iterates the Government’s commitment to a revised rent settlement of CPI +1% to 2025 and just hints at potential longer-term certainty stating it will ‘actively investigate the benefits of…providing funding certainty to some [RPs] over an even longer period’.
Local housing companies
The valuable role that these can play in increasing the overall supply of housing is recognised. It is proposed that, where Secretary of State consent is required, councils must make proposals to offer home ownership: the ambit will only be clear once the various relevant general consents are amended to cater for this.
Use of Right-to-Buy (RTB) receipts
For further reading, there is also a consultation on the use of receipts from right-to-buy sales. This is such an important and complex topic especially in relation to the future of RTB for housing association tenants; we will return to this in future briefings.
“Make a U-turn where possible”
The Green Paper contains more government U-turns on recent housing policy proposals, abolishing the following:
- High-Value Asset Levy for local authorities;
- Mandatory fixed-term tenancies for local authority tenants;
- The Local Housing Allowance cap on social housing benefit;
- Exemptions for housing benefit for under 21s;
- Starter Homes funding;
- Pay to Stay; and
- The withdrawal of grant for below market rent properties.
Whilst the Green Paper briefly mentions the Government’s commitment to the Voluntary Right to Buy (VRTB), it will be interesting to watch developments given the identified funding mechanism for the VRTB, the High-Value Asset Levy, will now be scrapped.
Better late than never? We were promised “the most substantial report of its kind for a generation”. Whilst the long-awaited publication is welcome for its change of tone and abandonment of some recent policy proposals, there is no recognition of the connection between the residualisation of social housing through the RTB and lack of capital funding being key causes of the stigmatisation of social housing tenants. Without additional public funding, the affordable housing crisis will continue. The prospect of a return to more prescriptive and centralised regulation means we could confuse where accountability lies at the heart of social housing and see the blame for not delivering a greater supply of housing falling to RPs.
The Housing Crisis lives on, and there’s little meat on the bones of the Green Paper to address this yet. With a consultation period of nearly three months, it will be a while before the sector has anything concrete to work with.
Join the conversation and have your say, the consultation is open until Tuesday 6 November 2018.
For more information
If you have any questions or would like to contribute to our consultation submission, please contact Rose Klemperer or your usual ACS contact.
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