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President of Russia Vladimir Putin: Good afternoon, colleagues,

We are continuing the series of meetings on key economic and social policy priorities. The problem we are addressing today is both economic and social in nature. It is a hugely troublesome problem for officials at all the different levels, but it is a matter of great importance for our people and concerns practically every single person in the country. I am talking about the housing and utilities sector.

The situation in the sector is not improving. A year ago, 47 percent of our citizens named this as one of the biggest issues, but now the figure is already 54 percent. Let me assure you that when people say this is one of their biggest issues this is because they are having problems here. Surveys show that more than a third of our people have problems with cold water supply, 40 percent of apartment blocks have problems with hot water supply, and more than a quarter of households say they have problems with electricity supply. At the same time though, they are seeing their housing and utilities bills going up all the time.

Improving work and modernising the housing and utilities sector is a priority task for the regional and municipal authorities. Results achieved in this sector should be one of the main criteria for measuring regional teams’ performance, and let me stress that the executive authorities at the federal level must do their bit too, of course. What this sector needs are not pinpoint decisions of the moment that only serve to patch up the holes, but long-term systemic decisions aimed at providing people with high-quality housing and utilities services at clear and affordable prices.

We keep talking about improving quality but little actually changes. Let me say though, colleagues, that if we do not tackle this problem, things will not get any better but will only get worse. I therefore ask you to take this matter very seriously and not see today’s meeting as something that will soon be over and done with. I will explain too, what criteria we will use to measure the results of our work.

Improving work and modernising the housing and utilities sector is a priority task for the regional and municipal authorities. Results achieved in this sector should be one of the main criteria for measuring regional teams’ performance.

We have to be more active about getting investment into this sector in order to set in motion a regular cycle of repair work, commissioning of new heating and water supply systems, new energy supply networks and boilers, and introduction of modern technology and utilities service provision. We recently decided that the Housing and Utilities Reform Facilitation Fund will co-finance these projects. Let’s discuss the other proposals in the sector too, today. Once again, let me repeat that the housing and utilities sector must become a modern sector and not be a feeding trough for monopolists and various dubious firms.

Let me say too, that the housing and utilities sector works for our people, providing them with the most essential services, and it therefore must be under full and constant public control. We have to make a real effort to make the sector more open to the public. In this context I propose establishing public organisations to help the authorities monitor the housing and utilities system’s performance of its duties, oversee the managing companies’ performance, and also monitor utilities rates in the regions. There have been more and more public calls for such steps. When I met with my election campaign supporters they also raised this issue. Indeed, wherever you go this is one of the issues on everyone’s lips.

Let’s discuss today how to support these kinds of public initiatives, all the more so as a network of just such public organisations is to be established in accordance with Presidential Executive Order No. 600 of May 7, 2012. This network of organisations should be established by summer this year. I am not sure what the situation looks like now with this. I know that people are already carrying out some initiatives of their own. I am not sure how much support these initiatives are getting, but they should receive broad support.

Price-setting and the amount of utilities bills are a separate issue. Last year, regulation in this area began to change and we started introducing a system that divided the bills into an individual bill and an amount for the needs of the building as a whole. What is the result? For a start, we are to look at what our goal was. What we wanted was for bills to reflect not just specific apartments’ personal consumption, but also how much money is spent on resources for the building as a whole, things like washing floors and entranceways, heating and so on. The aim here was above all to help make the price-setting mechanisms more transparent.

But what did we end up with? First of all, prices began rising very fast, and in some particularly flagrant cases even doubled or tripled. This was partly because all costs were being transferred to the final consumer, and in this case it is our citizens who are the final consumers. All expenses, including losses in the grids and losses due to illegal connection to the networks, were being transferred to ordinary households. But what have the public, what have ordinary households got to do with this? It is the managing companies’ and the authorities’ job to make sure these losses don’t happen. Ordinary people are not the ones responsible for this, but they are the ones being made to pay. The managing companies and the suppliers do not even have any incentive to reduce these losses, and the people being forced to pay for poor quality services are simply being driven into a corner. 

The housing and utilities sector works for our people, providing them with the most essential services, and it therefore must be under full and constant public control. I propose establishing public organisations to help the authorities monitor the housing and utilities system’s performance of its duties.

The Government has already been instructed to improve the housing and utilities bills payment system, and we will discuss this work’s current state of progress today.

I also want the Government members and regional governors to make sure that the social support system is working properly. If improvements are required, let the necessary adjustments be made.

Another issue concerns management of apartment buildings. We began reforming this sector around 10 years ago. This work has been progressing extremely slowly and ineffectively. There are still problems and loopholes in the law, and they create fertile soil for all kinds of abuses. There is no real competition between the management companies, fictitious apartment owners’ cooperatives have been set up, and so on. I remember when these changes were introduced, and I remember all the promotion that took place. There was a lot of loud noise, but the results have been rather mediocre to say the least, and in some cases have even been negative.

There has been a growing number of so-called ‘raider takeovers’ of residential buildings, when managing companies battle between themselves for the right to collect people’s money. They don’t compete to provide quality services, but just to collect people’s money.

We have already started stepping up state oversight in this sector. We set up state housing inspection offices to monitor what is happening in this area. I think this was the right decision and we should develop this work further. Of course we have to make the transition to the market, but the market has to be a modern one and the authorities are to monitor what is going on there. We cannot simply abandon people and leave them to their fate. I recalled the case of people who invested in apartment construction and never received the promised apartments, at a recent expanded-format Government meeting. That was also the market at work, but who needs that kind of market? And the kind of market that is developing at the moment, we don’t need that kind of market either.

We should ensure that the inspection offices I mentioned just now work as effectively as possible. I ask you to report today on the work to prepare the required legal and regulatory base. The work in this area has been lagging too. All we are doing is going round in circles from one month to the next, passing the paperwork on from one agency to the next, on to the parliament and back to the Government. The legal base is still in very unsatisfactory condition.

Overall, I think the model for managing apartment buildings needs improvement. The apartment owners often have no real instruments at their disposal for protecting their rights.

In this respect I ask you to draft proposals on how to hold the managing companies responsible if they provide poor quality services, on the situation with drafting standards for management of apartment buildings, and on the next steps we need to take in this area.

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