Welsh Government is showing welcome ambition on housing but needs funding and flexibility to meet its targets, says Cerys Clark.
Background
Over the summer Welsh Government have held a consultation on the new iteration of Welsh Housing Quality Standards (WHQS). To meet the new standard homes must:
- Be in a good state of repair
- Be safe and secure
- Be affordable to heat and have minimal environmental impact
- Have up-to-date kitchen and utility area
- Have an up-to-date bathroom
- Be comfortable and promote wellbeing
- Have a suitable garden
- Have an attractive outside space.
The new WHQS standard includes an aspect to promote affordable warmth with a target for all existing homes to meet a minimum of EPC A.
The consultation received 282 responses with over half being from tenants. It is important to note that the consultation took place at a time when the cost-of-living crisis was not at its current level. Whilst finances were beginning to tighten the financial context is now significantly worse. The rent settlement at 6.5 per cent did ease some concerns but this is a real terms cut when we consider inflation in November was 10.7 per cent.
Consultation outcomes
No policy decisions have been finalised by Welsh Government, which will be holding further sessions in early 2023 to discuss policy options in light of the consultation responses.
The responses showed broad agreement that the standard will go far enough to improve the quality of social homes in Wales. It will also help improve the health and wellbeing of tenants. The focus on tenants, the comprehensive approach together with linking health and housing were also welcomed by respondents. Yet there was disagreement around the timeframes to meet the standard with just 6 per cent of social landlords agreeing with the proposed timeline. The whole stock assessments were cited as one target that was not reasonable because of ongoing recruitment issues of surveyors. Social landlords are unable to compete with the private sector recruitment drives. Other barriers and concerns shared by respondents were:
- Ongoing supply chain Issues
- Inflation
- Possible disposal of properties that are too difficult to upgrade to EPC A
- Only 9 per cent of social landlords felt the standard struck the right balance between bold and achievable.
- Funding streams – social landlords want assurance of funding
Welsh Government have not yet finalised the WHQS policy and is planning to hold further stakeholder groups early in 2023 to further inform possible policy outcomes. Yet these stakeholder events and policy decisions are being made against the backdrop of severe financial constraint.
The minister for finance in her 2023/24 draft budget stated that the budget was being made in hard times for hard times. Due to inflationary pressures the settlement from UK Government was expected to be worth £1 billion less in 2023/24 with capital investment levels seeing a real terms cut of 8 per cent. Against this backdrop there has been no change to committed levels of capital investment for Social Housing Grant, decarbonisation or building safety. But, with inflation at 10.7 per cent in November, these monies will not go as far.
The Future Generations Commissioner’s report Homes fit for the future: The retrofit challenge stated that £5.3 billion needed to be invested to retrofit all social homes in Wales over the next decade. The commissioner called on Welsh Government to invest £1.7 billion (around £170 million per annum) over the next decade. Yet this is currently twice the level of investment committed to in the Draft Budget 2023/24 which has committed £184 million over the next two years for decarbonisation and an additional £216 million for stock transfer organisations. These monies include investment for optimised retrofit.
There is also another budgetary consideration for social landlords: the rent settlement of 6.5 per cent. This will reduce income levels for social landlords and may affect the surplus levels needed to draw down finance for further investment. The cost of borrowing may have also increased due to external financial market impacts from trying to manage inflation.r Budgets are tight for many social landlords and money is not going as far as it did due to rising inflation.
So we have a significant challenge on our hands. How do we in Wales ensure that we meet the ambition of higher quality social housing against the backdrop of inflationary pressures and the competing demand of developing low-carbon homes? The UK Housing Review outlined that some social landlords are already making the decision to reduce the number of homes they develop in order to bring existing stock up to standard. If social landlords are to meet the bold ambition of WHQS 2023 Welsh Government will need to consider the levels of investment given to achieve the standard. The ambition is bold but at current levels of investment difficult to achieve – something that will need to be considered as the final WHQS policy is drafted.
Cerys Clark is policy and public affairs manager at CIH Cymru