Good morning and thank you for the opportunity to give evidence on the Housing (Amendment) (Scotland) Bill. When stakeholders gave evidence on 29 November, they expressed broad support for the bill, which I very much welcome.
The bill is a short but essential measure that will amend a number of the powers that the Scottish Housing Regulator can exercise over registered social landlords. It also provides for ministers to limit local authorities’ powers over RSLs. It is necessary because of the decision by the Office for National Statistics to classify RSLs as public sector bodies. That decision was taken because the ONS judged that some of the powers that the regulator and local authorities may exercise over RSLs amount to public control of RSLs. If that position was left unchanged, all new net borrowing by RSLs—which previously would have counted as private borrowing—would count against the Scottish Government’s borrowing limits.
Therefore, although classification might appear to be just a technical matter, that would have the real and significant consequence of placing a new and permanent burden on the Scottish Government’s finances. One result would be that borrowing by RSLs to support our affordable housing programme would no longer count as private borrowing. It would count as Government borrowing—effectively adding £1.5 billion to our £3 billion investment in the programme. That would put our target of building 50,000 new affordable homes at risk.
The purpose of the bill is to avoid that outcome by ensuring that powers that the regulator and local authorities have over RSLs are consistent with RSLs being classified as private sector bodies. For the most part, the bill achieves that by amending the regulator’s powers that the ONS identified as constituting public control over RSLs. The bill goes as far as is necessary to secure reclassification but no further.
Although those changes are significant, the bill leaves the regulator with most of its powers intact—a point that several stakeholders noted in their evidence to the committee on 29 November. Those powers include powers to monitor, assess and report on how well social landlords are performing, powers to set standards on the financial health and governance of RSLs, powers to undertake investigations and powers to require compliance with enforcement notices. Those, and the other remaining powers, will allow the regulator to continue safeguarding and promoting the interests of tenants—not least by reassuring private lenders that RSLs remain attractive businesses to lend to.
In that respect, it was good to hear George Walker and Michael Cameron say that the regulator’s revised power to appoint a manager to an RSL would have been sufficient to allow the regulator to have made each of the appointments to an RSL that it has made in recent years. It is reassuring that the regulator will continue to have the ability to act in such circumstances. Tenants and lenders will welcome that.
Mr Walker and Mr Cameron recognised that losing the regulator’s powers of consent over matters such as disposals and restructuring by RSLs will place a greater onus on RSLs to govern themselves well. It was encouraging, therefore, to hear Sally Thomas and David Bookbinder say that the sector recognises the extra challenge that it will face and that it is ready and able to step up to it.
This small bill is intended to safeguard the Scottish Government’s finances and to ensure that we remain able to deliver our affordable housing programme. Stakeholders recognise the need for the bill and, as you have heard, support it. I hope that the committee will also support it and I am happy to answer any questions that you might have.