How can we tackle the remaining non-Decent homes?

Progress so far

The 2010 original target date for the completion of the decent homes programme is looming fast into view. Already, more than half of the 2 million plus council and housing association properties classed as non-decent 10 years ago have been brought up to a modern standard.

One participant in the debate involved at the sharp end of delivering decent homes described the huge benefits that have been delivered by the billions of pounds invested over recent years. “Prior to the decent homes programme, many of our estates were dire. Let’s not forget how great decent homes have been for those who count – tenants.”

Another said that the programme has had particular benefits on the health of tenants, many of whom are vulnerable and elderly. “Some of the properties we were working on didn’t have central heating and the windows didn’t close properly.”

The supply chain for procuring the decent E E homes projects was identified as a key issue by all around the table.

Securing a skilled workforce continues to be a headache, particularly in London and the South-east where big projects like the Thames Gateway and the Olympics are sucking in workers. But there are pressures everywhere – for example, in Cambridge, where landlords report problems getting hold of quality staff and experienced operatives. Skills problems are especially significant when it comes to finding project managers, estimators and supervisors to ensure decent homes projects are delivered on time, on budget and to the required standard.

One short-term solution proposed is to build anti-poaching arrangements into contracts where a number of companies are working for the same client. Such an arrangement can deliver better value for the client, who doesn’t see his bills pushed up by contractors competing for the same staff.

A longer-term approach is to widen the pool of available labour through training programmes involving supply chain partners and clients. Such an approach may help not only to ease skills shortages, but to tackle the underlying problems of poverty and unemployment that hold back many of the people living on social housing estates.

Clients can help out by investing in training programmes when embarking on major refurbishment programmes. Many arm’s length management organisations (ALMOs), for example, have used the extra money they have received through decent homes investment to finance local apprenticeships.

Investment in training can also generate improved efficiencies of operations, resulting not only in cost and time savings for contractor and client, but also in enhanced tenant satisfaction. As such, for some contractors and supply chain partners, training is a matter of enlightened self-interest, particularly if it results in having staff with a wide skill set.

One contractor said: “We are talking about getting it right first time. If you can send a skilled operative in a van with the right tools to a repair job, he can complete the work on the first visit. It makes commercial sense for us, it’s great from the customer’s perspective and the tenant is happy.”

But tensions arise when clients have trouble deciding where their priorities lie – to boost training opportunities or seek out the lowest cost bid. “There are contrasting messages coming from the clients in the supply chain,” said one member. Companies have to decide whether to invest in developing a multi-skilled workforce and risk being undercut by smaller and perhaps newer entrants to the market.

And running training programmes is a far from risk-free activity for contractors. One member said: “As a responsible organisation, we see it as a long-term investment, but we know that a percentage of people will walk out of the door before time.”

Meanwhile, the skills gaps are not just on the contractors’ side. “There are not many people in client organisations with project management experience who are able to judge whether they are getting a good or a bad deal,” said one member. “Most councils are historically hung up on the idea that the private sector is ripping them off on decent homes projects.”

Suppliers such as Jewson, which are reaching beyond their traditional sales role and adopting a partnership approach, with an emphasis on transparency, service and solutions, are helping to address this issue.

On one topic, there was agreement on all sides of the table – the inadequacies of the OJEU contracting process. One frustrated forum member said: “We are trying to deliver a more efficient product and we have to deal with this unnecessary administrative burden. The process is a waste of time and resources.”

Clients complain about being snowed under with bids that they then have to sift through, which rarely results in the emergence of a left field candidate. The bidding process becomes what one participant described as a “contractors’ reunion”. “We follow each other round the country,” he said. “The same players turn up every time to do contract presentations. It costs money, time and energy on both sides that can’t be put back into the contract. The client will end up with who they want anyway.”

At this point, participants were reminded about procurement services such as OGCbuying.solutions. Public sector organisations can access OGCbuying.solutions framework agreements with suppliers such as Jewson that have already passed the OJEU process, thereby avoiding the need for competitive tender, saving time and money, but ensuring they get the most competitive price.

But the costs don’t stop at the procurement process. One social housing provider estimated that refurbishing the typical dwelling would work out at £14,000 – based on a cost of £10,000 to upgrade a property and once borrowing had been taken into account. This represents a big hit on social landlords’ balance sheets. One member suggested running a competition in the decent homes market similar to English Partnerships’ £60,000 home contest. “For example, you could get people to come up with a [decent homes] package for £7,000.”

While the idea of a cut-price package didn’t find much favour with contractors round the table, there was an acknowledgement that maintenance issues are insufficiently taken into account at scheme development stage.

There was a suggestion from the supplier side to bring new build and maintenance teams together at the start to improve product specification and rationalisation, helping to ensure the quality, practicality, durability, repair and maintenance of selected materials are considered from all angles at the outset.

The other side of the equation to controlling costs is attracting extra resources to finance decent homes. This means addressing the hot potato of rents, which are tightly regulated in the social housing sector. Why shouldn’t tenants who have benefited from improvements to their properties, which usually result in the side benefit of lower energy bills, pay more rent to help finance such work? “Communities understand that you pay for what you get,” said one. “As a homeowner, I would see it as a good investment if my bills are falling,” said another.

But administrative and political realities stand in the way of such radical change, which would in many cases result in big rent rises for council tenants. Councillors worry about giving up control over rents. “If you start to have a different rent for each property, it becomes very complex to administer.”

The furture

The government has admitted that it won’t hit its 2010 target of bringing all social housing up to scratch. 2012 is looking a more likely date.

The key issue is that while many homes have been brought up to standard, many councils and ALMOs are left with a number of estates that are expensive to refurbish. In many cases, it is debatable whether it is even worthwhile upgrading them. The problem is particularly pressing for ALMOs, many of which are located in large urban areas. Some of the stock has structural problems that are difficult to remedy with the relatively limited sums ALMOs have been awarded. In other areas, particularly low density peripheral estates, demand for properties has slumped following the collapse of traditional sources of employment.

Landlords are therefore carefully examining whether it is worthwhile bringing existing stock up to standard or whether to remodel and redevelop the areas this stock is located in. That doesn’t mean that the programme so far has been a waste of time and money, said one member. “If you had started with the bigger challenge of decent neighbourhoods, we would never have got this far.”

But issues need to be faced up to. “Even when you bring such properties up to decent homes standard, they’re not fit for purpose. We have had to spend money on stock that we didn’t want to keep. It would be more efficient if we could use that money to replace the stock.”

When deciding whether or not to remodel estates, the key issue is deciding on the most sustainable option. One member said: “You can put in new kitchens and bathrooms, but we need to look at whether people actually still want to live there. We can spend as much money as we like, but it is of limited value unless we address that problem.”

“It’s not just about size and quality of houses, it’s about community,” another member agreed. “They want kitchens and bathrooms and windows, but they want to be in a decent place that they can be proud of, so we need to go beyond material improvements.”

However finding a financial mechanism that will enable such radical changes is difficult. Some ALMOs, for example, are still waiting to find out how and when they will receive their funding from the Department for Communities and Local Government – an example of how central government red tape frustrates long-term business planning.

Partly as a result, many councils and ALMOs are seeking to opt out of the national council housing subsidy system, known as the Housing Revenue Account (HRA). “Allowing councils to opt out of the national HRA system will enable them to do longer-term business planning over a 30-year period. We need to have a stable policy and planning regime to work in and we don’t have that now.”

In the meantime, councils and ALMOs have been given access to the Housing Corporation’s grant programme. ALMOs will be working with local communities to identify neglected sites in their areas, such as underused or derelict garages, which have the potential to deliver much needed additional housing. But landlords must not forget about their core purpose, warned one member. “There should be a requirement on local authorities and housing associations to demonstrate that they have resources set aside for the future of existing housing stock before they invest in new housing. We need to look after our existing residents first.”