Michael Gove has accused social landlords of “complacency” and putting bureaucracy above tenants, as he stepped up his demands for higher standards after the death of two-year-old Awaab Ishak from long-term exposure to mould.

The housing secretary told MPs too many landlords had shown “defensive behaviour” when receiving complaints about squalor, but also admitted the extent of dangerous conditions was so great that more funding may be needed fix the problem – potentially setting up a clash with the chancellor.

In an appearance in front of the House of Commons select committee on levelling up, housing and communities, Gove also accused Awaab’s landlord, Rochdale Boroughwide Housing, of wholly inappropriate “self congratulatory” comments about its performance on equality and diversity after his death. The landlord fired its chief executive over the scandal on Saturday.

In a wide-ranging hearing, Gove also indicated:

  • He and the chancellor, Jeremy Hunt, have commissioned a review of council tax, which he described as the “second-most unpopular tax in the country”. He promised more detail in the new year;

  • The government’s target to end rough sleeping is in doubt, with Gove describing it as “a big worry”;

  • Families hosting refugees from Ukraine will hear within weeks whether they will get continuing payments;

  • Disabled people in high-rise buildings should have personal evacuation plans, as recommended by the Grenfell Tower public inquiry, despite the Home Office rejecting the call.

After a coroner’s verdict that mould had led to the death of Awaab Ishak in Rochdale, Gove told the MPs the social housing regulator should have additional powers to investigate and will have the power to levy unlimited fines under forthcoming legislation.

In the wake of the scandal, Gove has written to six housing providers – Clarion, Southern Housing Group, Onward Homes, Catalyst Housing, PA Housing and Johnnie Johnson Housing – that have had recent findings of severe maladministration made against them by England’s housing ombudsman .

But social landlords say government funding has prioritised affordable home-ownership above the building of houses for cheapest social rent. They say many cannot afford to build new social housing without access to specific funding, which went down significantly since 2010. That year, housing associations and councils built more than 30,000 social rent homes. By 2020, that had fallen to fewer than 5,000.

Clive Betts, the chair of the select committee, asked Gove if he thought “regressive” council tax was a “serious issue for reform” and he replied “yes”. He said the junior minister Lee Rowley was examining the issue “at the chancellor’s and my own requests”. He said he wanted to say more in the new year.

Asked about hitting the government’s target of ending rough sleeping, he said difficulties included families facing homelessness because of the rising cost of living and Ukrainians arriving in the UK and becoming homeless.

“We’re in a world where a number of very important policy aims and ambitions that we have had become more difficult to deliver,” he said. “I don’t want to … try to trumpet that it’s all going fine because it’s not.”

Asked about a decision by the Home Office not to ensure all disabled people in high-rise homes had personal evacuation plans, he said: “We should deliberately set out to provide people living with disabilities, that they have absolute assurance that we’ve done everything possible in order to ensure that plans for their safe evacuation are in place.”

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