Housing (Amendment) (Scotland) Bill

The Convener (Bob Doris)

Good morning. I welcome everyone to the 29th meeting in 2017 of the Local Government and Communities Committee. I remind everyone present to turn off their mobile phones. As meeting papers are provided in a digital format, tablets may be used by members during the meeting. We have received no apologies; we have a full house this morning.

We move to agenda item 1. The committee will take evidence on the Housing (Amendment) (Scotland) Bill at stage 1. I will introduce all our witnesses together. I welcome George Walker, chair, and Michael Cameron, chief executive, from the Scottish Housing Regulator; Sally Thomas, chief executive of the Scottish Federation of Housing Associations; David Bookbinder, director of the Glasgow and West of Scotland Forum of Housing Associations; Daren Fitzhenry, the Scottish Information Commissioner; and John Marr, senior policy adviser from UK Finance. Thank you all for coming.

We move straight to questions. We will ask questions in a structured way, because the bill is quite technical. That said, we always start with a very general question. Do the witnesses agree with the Scottish Government’s policy intention to ensure that the Office for National Statistics can reclassify registered social landlords as private bodies? In particular, what would the implications be if RSLs were not reclassified as private bodies? Everything else works around the premise that the policy intent is correct, so we should get something on the record about that.

David Bookbinder (Glasgow and West of Scotland Forum of Housing Associations)

There is widespread recognition—certainly within the housing association sector but I think well beyond it too—that the bill is necessary. Thankfully, the reclassification has not had an impact on the way in which housing associations run their business day to day.

As the committee will be aware, ultimately the bill is about how housing association debt is treated. It will be treated as Scottish Government debt if the decision to reclassify RSLs is not reversed. Treating that debt as such would be bad at any time, but it is really bad at a time when there is a welcome, hugely ramped-up development programme. A number of us have whimsically wondered how and why all the bodies represented today and the Scottish Government have spent so much time dealing with the matter, when, in the past few weeks, the decision to reclassify has been reversed south of the border. You wonder about all that time and effort, but we know that the bill is absolutely necessary, purely in terms of the debt. There are issues that a number of us will want to discuss—in particular, with the regulator—about looking at a slightly different kind of regulatory regime, but there is not much doubt within the sector that the bill is necessary.

The Convener

What would the implications be if the bodies were not reclassified?

David Bookbinder

The obvious one is the impact on the development programme. We could not build 50,000 homes because so much money would have to be set aside against our associations’ borrowing.

As a representative of community-based housing associations, I think that there is a real feeling among associations—certainly in our sector, but I suspect that it is shared in the sector across Scotland—that housing associations are not truly public bodies. Yes, they benefit from public money and perform a number of public functions, but they are managed by voluntary committees and boards. Although it is only a statistical reclassification, it still means something in a symbolic sense. It will feel better to be reclassified as a private body, even though being a private body does not necessarily do us justice.

Sally Thomas (Scottish Federation of Housing Associations)

I reiterate the point that David Bookbinder has made. The SFHA is absolutely of the view that the reversal of the reclassification is necessary.

I want to make two points about that. First, it will protect the Scottish Government’s interests and ambitions in the housing programme, which has, as far as I understand, cross-party support. The housing that the people of Scotland need and deserve will be protected if we reverse the reclassification.

Secondly, it will provide assurance to lenders. The lending industry is critical to the housing programme and the ability of housing associations and co-operatives to build at scale and within a timeframe that is appropriate to the needs of the population.

We also think that reversal of the reclassification will achieve a level playing field across the United Kingdom, which is important for the lending industry and the financial profile. That will give the sector the headroom that we need alongside the lending industry to be able to fund the programme that we require to provide in the coming period.

George Walker (Scottish Housing Regulator)

We absolutely agree that the response is appropriate, right and proper. The SHR will, of course, operate within any legislation that Parliament passes, but it seems to us that the bill is proportionate and will deal with the issues at hand.

I make it clear that the bill will not impede or change our statutory objectives and functions as a regulator. Certain elements mean that we will have to operate in different ways, but we are broadly comfortable that we can do that. Indeed, the coincidence of our doing a regulatory framework review, which we flagged up the last time that we visited the committee, is fortunate, as it means that we can take into account in that review the issues that the legislation raises. We are very comfortable with the approach that is being taken.

John Marr (UK Finance)

I will pick up on points that Sally Thomas and George Walker have made.

As the trade body that represents commercial funders and investors in the RSL sector in Scotland, we certainly agree that it is appropriate to take the bill through the Parliament. Having looked at the proposals in detail, we see that they are broadly consistent with measures that have been taken elsewhere, and they are proportionate to the challenges that the ONS decision has set. We recognise the strength of regulation in protecting and safeguarding existing and future investment in the sector. Although the bill will make changes to regulation and how it works in Scotland, we are confident that those changes will still enable the regulator to deliver an effective regulatory function.

Daren Fitzhenry (Scottish Information Commissioner)

I note the policy intention behind the bill, but our concern is that the committee should be mindful of potential unintended second-order effects from it, particularly in relation to freedom of information and the possibility that bodies that are currently subject to the environmental information regulations would potentially cease to be subject to them. The issue is how that is managed and how the bill addresses it. The bill would potentially create uncertainty where there is a current certain arrangement in which RSLs are subject to the environmental information regulations. Our concern is that, if that is not recognised and addressed, current rights to information would potentially be lost and, at the very least, uncertainty would be caused about whether organisations were subject to the environmental information regulations.

The Convener

That is helpful. A colleague wants to pursue that issue a little further, but I have a question before we move on.

The witnesses seem to accept the general policy intent of the bill. There is an obvious question to ask before we go into a bit more detail. Is there any other way in which the policy intention could have been secured? Could anything have been done other than by using the mechanism of legislative change to ensure that we conform appropriately to ONS requirements? There might not be anything, but we want to ensure that the bill is the only mechanism in town.

Sally Thomas

Absolutely—you have just said it. The bill is the only way to do what we need to do to get the protection, reassurance and benefits that the sector, the Government and the country need.

The Convener

Rather than everyone saying the same thing, are there any divergent views? I see that there are none. That is very helpful scene setting for the committee. We will move to more detailed questions.

Andy Wightman (Lothian) (Green)

I have a question specifically for Mr Fitzhenry. You laid out in your evidence what you see as the risks to the applicability to RSLs of the Environmental Information (Scotland) Regulations 2004. It was your predecessor who made the specific ruling on the Dunbritton Housing Association, but your office made the ruling in the context of the legislation. Helpfully, you append to your submission the environmental information regulations.

It is now clear that the ONS intends to reclassify RSLs unless the bill goes through. Assuming that the bill goes through and the extent to which the regulator regulates the sector is relaxed, so that the ONS is satisfied that RSLs are no longer public bodies, are you free to interpret the environmental information regulations relating to public bodies in a different way to how the ONS interprets things, or do you feel that you cannot really deviate for two different statutory purposes?

Daren Fitzhenry

We certainly would not be bound by the ONS view in relation to that. However, we would be bound by the terms of our legislation and we would have to take a reasonable and rational interpretation of the regulations.

One of the key definitions that we look at is whether the body is under the control of a public body. The bill specifically addresses reducing that level of control. At the very least, the argument that there would be control will be reduced. I cannot bind myself to a decision at this stage because that decision will depend on the facts and the legislation presented to me at the time, including any subordinate legislation dealing with local authorities. We can safely say that the current clear position will be left, at the very least, less clear, and potentially the right could be lost.

There may be other issues. There may be an argument, under a different subparagraph of the regulations, that the body would be treated as another Scottish authority, but again there is no precedent. We are creating a lack of clarity for at least a period of time. I mentioned in my written evidence that the situation could be resolved through the potential extension of a section 5 order under the Freedom of Information (Scotland) Act 2002. That would fill the gap and make RSLs subject to freedom of information legislation, including the EIRs. However, the potential issue is one of timing. Even if the extension were made, there could still be a lacuna—the time between the implementation of the bill, if enacted, and the commencement of a section 5 order.

Andy Wightman

That is helpful. The environmental information regulations refer to a public body under the control of a person or body, so clearly the regulations still exercise a degree of control. Presumably in practical terms, if the bill passes, you would await an application or an appeal to you relating to a failure to provide information under the EIRs, and you would take a fresh view on whether RSLs are bound by the regulations.

Daren Fitzhenry

That is exactly right.

Andy Wightman

That decision would be appealable as a matter of law, in terms of your interpretation of the EIRs, to the Court of Session. Ultimately, the Court of Session would rule on your powers to determine that question.

Daren Fitzhenry

Should my decision be appealed, yes. My understanding is that the Dunbritton case was never appealed further.

Andy Wightman

I apologise if this is in your evidence, but do you have any sense of how many freedom of information requests are made to RSLs under the EIRs, but not appealed to you?

Daren Fitzhenry

Unfortunately, we do not currently gather that information. It is a matter that I have looked at and discussed with my team, with a view to seeing how we can start gathering that as a particular data source.

If there is uncertainty, people may not be able to access information—for example, relating to the types and specifications of materials used in buildings, the repairs that are commissioned or health and safety and fire safety assessments. There could be an impact—and where there is uncertainty there almost certainly will be at least some impact—with some housing associations taking a different view from others.

10:00  

There certainly will be some impact: the number of EIR requests across the board was in the region of 7,500 in the past year. There is also an important perceptional impact. If it was seen that the provision of information could be discarded or put at risk to provide a quick fix when things get a bit difficult and we are looking to make changes, the legislation and the message being put forward would have a very clear perceptional impact.

David Bookbinder

I offer the committee some reassurance on the concerns that Daren Fitzhenry has raised. I can only speculate while we await the decision on what will in effect be the extension of FOI to housing associations, but if the decision was to extend FOI on some as yet unknown date, and there was a gap between the bill coming into force and the FOI extension coming into force, we would have great faith in our members carrying on responding to requests as if RSLs were still subject to the EIRs, even if they were not under the letter of the law. Given that they are subject to the EIRs at the moment, the extension of FOI will cement and extend that thinking. If there is a small time gap, I do not think that our members will suddenly think, “Oh wow, we don’t have to answer any questions on our repair service any more.”

Sally Thomas

I absolutely go along with that; the SFHA takes exactly the same position. It is interesting to reflect on the fact that in the transitional or standstill period between the ONS reclassification and its reversal, which has been a year or two, there has been an agreement among all interested parties that, for our purposes, we carry on as we did before. In other words, we do not suddenly depart from our normal relationships, processes, strategies, agreements, expectations and requirements. We carry on, as previously, in a constructive and positive way until there is clarification.

The Convener

That is helpful.

Daren Fitzhenry

I very much appreciate the intent from David Bookbinder and Sally Thomas on that point. However, although they may wish to comply with the spirit of the law, ultimately if an appeal comes to me and I feel that I am bound not to hold RSLs subject to the EIRs, under the law I would be unable to grant any redress relating to a decision that the applicant had disagreed with. There is still a practical risk.

I do not know whether a possible remedy to that issue would be welcomed by the committee. An additional provision could be considered, whereby the legislation makes it clear that the EIRs apply to RSLs. That could be a new provision in the bill, stating that RSLs are to be treated as Scottish public authorities for the purposes of the EIRs, or a consequential amendment to the EIRs, specifically adding RSLs either to the definition of Scottish public authorities or by reference to a schedule. I simply mention that as a potential solution, subject of course to advice from parliamentary counsel.

The Convener

The Cabinet Secretary for Communities, Social Security and Equalities will be in front of the committee in a few weeks’ time. Those are the kinds of things that we can discuss in that evidence session, so that is very helpful. Do you want to progress with your questioning, Mr Wightman?

Andy Wightman

That response was very helpful. I am sure that we will reflect further on that important point.

You have all submitted evidence on sections 1 and 2, particularly with regard to the appointment of managers. The regulator thinks that it will still be able to do what it has done in the very few cases where it has used such powers, so the bill will, in practice, make no difference. Are you content with the proposed changes to the regulator’s powers to appoint a manager and to remove, suspend and appoint officers of an RSL, as a matter of principle?

The Convener

The SHR has a variety of powers at the moment, but, looking at the issue in its broadest sense, they are going to be narrowed under the bill. Are you content with that narrowing?

David Bookbinder

In some ways, it has been interesting to remind ourselves of the original powers. The forum was certainly surprised at their breadth, but it is confident that, where statutory managers have been appointed in recent years under the current framework, those appointments have been made for much narrower purposes and to deal with very serious issues that have arisen in a small minority of associations. We think that, instead of making the regulator turn to those original and rather broad criteria, the bill, by narrowing those criteria, reflects actual practice.

John Marr

When the provisions were first drafted and we engaged with the Government on their development, we were initially concerned about the threshold of intervention being that an organisation “has failed” rather than is failing, because we felt that that might be too late, with the problem transitioning to actual failure before intervention could occur. However, as a result of our engagement and with the relatively wide definition of failure that is now in the bill, those concerns have largely been addressed.

That said, we suggest in our evidence that consideration be given to specifying in the definition in the bill that failure would include a failure to meet some of the requirements under the regulatory framework. Although lenders and investors who are familiar with the sector and with how regulation works would be able to see the link in the bill to the definition encompassing a failure to meet a regulatory requirement, investors who might be contemplating coming into the market in Scotland and who would be more distant from and less familiar with the system might not be able to make that link so easily, and that might lead to their being reticent in deciding whether to step into the market.

Sally Thomas

For us, this is about minimising risk—I think that we all agree on that. We certainly want to work closely with the regulator—as we already do—and other colleagues to ensure that the change, if it happens, does not increase risk but rather minimises it and provides the assurance and confidence that we need to give not only our individual constituencies but as a whole. We must ensure that all the changes have a positive effect and do not lead to any great increase in concerns, problems or exposure to risk.

George Walker

As the regulator’s new chair, I think that what has been very visible is the seriousness with which the word “proportionate” has been taken in the SHR’s approach to regulation. It really intervenes only where it has judged an issue to be so serious that such intervention is warranted.

Thus far, from my perspective as chair, there is no evidence that the changes would have hampered us in stepping in to intervene in any previous cases in an appropriate manner and in the proportionate way that we have done. Michael Cameron may have a comment on past interventions and how he feels about that, but I feel that, thus far, the word “proportionate” is key, because SHR has acted and will continue to act in a proportionate way, and the changes will not stop us doing that.

Michael Cameron (Scottish Housing Regulator)

We certainly set a high bar for the use of the powers, recognising their significance. The word “proportionate” is absolutely to the fore when we are considering whether we need to use such powers.

It is probably worth picking up on the point about regulatory standards and whether it would be worth having them in the legislation. Although that would certainly aid clarity, we are pretty confident, having read the bill, that regulatory standards are referenced and that the way in which the bill is constructed means that it points to statutory provisions, and regulatory standards are set through statutory provisions. Therefore, although including them would be clearer, we are still pretty relaxed about regulatory standards being the touch point for us in interpreting whether we need to intervene in an organisation.

Andy Wightman

The representatives of the regulator are saying that, in practical terms, they do not consider that the change would have made any difference to the way in which the powers have been exercised hitherto. Is that correct, in essence?

George Walker

Yes.

Andy Wightman

Forgive me for asking this, but are regulatory standards a thing in law? If you were to put them in the bill, would that demand more articulation about what was really meant?

Michael Cameron

The Housing (Scotland) Act 2010, as it stands, includes a requirement for us to put in place standards for governance and financial management for registered social landlords, so they are empowered under statute.

Andy Wightman

So if we were minded to recommend that, would it be relatively straightforward?

Michael Cameron

You could certainly refer back to those statutory provisions.

The Convener

Mr Marr, you have already answered questions about the need for clear definitions around the failure of RSLs, including the failure to meet regulatory standards—you have put some comments on the record in that regard. I was going to ask for more detail on how, in your view, that might impact on investor confidence. You have put a lot on the record already. Is there anything that you would like to add before we move on?

John Marr

I accept what the SHR said about being quite comfortable with regulatory standards as the touch point. In considering how, or whether, to address the point, it may be that the explanatory notes to the bill could be elaborated to include that reference more specifically, if it is felt that the bill is not the place for it. We can add that into the mix as well.

The Convener

That has been a useful exchange. Thank you.

Alexander Stewart (Mid Scotland and Fife) (Con)

Following on from some of the questions for the regulator, I want to look at the removal of consent powers and how that will result in a loss of regulatory intelligence. Some clarity on that would be useful.

Michael Cameron

At the moment, all registered social landlords are required to come to us for our consent in relation to certain disposals and constitutional changes. When they do that, they present a business case that includes a series of documents, depending on what the consent request relates to. That enables us to engage with the organisation. As well as ensuring that we are able to proceed with consent, it gives us a better understanding of how the organisation conducts its business and governs itself. It gives us a level of assurance that means that we do not need to engage with the organisation in any other way to be content that it is well governed and appropriately managed.

10:15  

Alexander Stewart

You have touched on the level of risk that exists in the process. How would you address the increased level of risk for the sector as a result of the changes that the bill would implement?

Michael Cameron

George Walker touched on the fact that we have initiated a review of the regulatory framework. We will give consideration to exactly how we will be able to use our remaining powers to obtain the same level of assurance from landlords and to act where we need to act to ensure that the interests of tenants and other service users are protected.

An important point is that although certain powers are being removed or changed, we are picking up that there is no expectation that there should be a reduction in the protections that are offered to tenants and other service users. We will look at the full range of powers that the Parliament gives us to ensure that we are able to use them to maintain the level of protection.

Alexander Stewart

So you perceive that the safeguards will still be in place.

Michael Cameron

Those safeguards that are provided through the consents process will be removed, and the removal of any safeguards from a system inevitably means that there might be more risk in that system. We will look to see what we can do through our other powers and our approach to regulation to ensure that we can mitigate, where possible, any increased level of risk.

Alexander Stewart

The financial memorandum talks about your potential need for perhaps an additional three members of staff to fill the gap. That would have a cost implication for the organisation, which you have estimated as being up to £176,000. Will you explain a bit more about how that will be managed?

Michael Cameron

We identified the need for three members of staff, together with that figure, in an attempt to quantify what the impact on our resources might be. That might not necessarily translate into the employment of three members of staff, but we felt that that quantified the additional resource requirement on us if we are to obtain the type of assurance that is currently provided through the consents framework. We might need to do more than we currently do through the consents framework, because it not only provides us with regulatory assurance, but enables us to stop things that would not be in the interests of tenants and other service users. The framework also ensures that any disposal or change that happens without our consent is void. Following the proposed changes, that will no longer be the case, so there might be a bigger requirement on us to engage with organisations in which something happens that should not have happened.

The Convener

Before we move on, I want to check something. Alexander Stewart talked about the intelligence that the housing regulator gets through the system of consents, which means that you know what is going on across the sector regarding the relocation of offices, the disposal of land and so on. You get a lot of information about things that, in theory, housing associations and RSLs do not have to tell you about. Do you anticipate that, because of good practice, you would still be informed about all those things and that you would still take a view about them, even if consent was not required in statute?

Michael Cameron

Certainly, one of the discussions that we need to have through the framework review is about how we might be able to ensure that any loss of the safeguards that are in place through the consents process is addressed in other ways by using our other powers. We are very clear that we are not looking to put in place a consents process by proxy.

If Parliament decides to remove the consents framework, that is how we will operate—without our consent being required. We will look at the need for us to run more closely to more organisations if we cannot rely on receiving the type of assurance that we would have previously received through the consents framework.

David Bookbinder

We and the SFHA stress in our submissions a point about consent for something significant, such as the disposal of more than one property or a pattern of disposal. In theory, an association could seek consent—although, as the case may be, it might no longer have to do so—to convert social rented housing into mid-market rented housing or private rented housing or simply to sell it off. Housing associations do a range of due diligence. No housing association in Scotland gets rid of social housing lightly. It happens sporadically, in particular tenements and closes. It might make good asset management sense for an association that has only one remaining flat in a close to divest itself of that property. Equally, it might be sensible to acquire property.

Although it is not at all likely that there will be scale disposals to worry about, theoretically, if a housing association appeared to be making disposals that threatened the balance of its own social housing and had implications for the area—or, indeed, national implications—that would become an issue not just for the regulator but for the Scottish Government. However, I do not envisage that happening because of the care with which associations consider those important decisions.

Sally Thomas

I will add a couple of points to what Michael Cameron and David Bookbinder have said. There will still be a requirement to notify the regulator on completion of any disposal of properties or restructuring, and there will still be a requirement to hold a tenant ballot. That is a very helpful protection with which we all agree. There will still be notification, but the timeline will move, so that it will be provided during or after the disposal, not in advance.

The Convener

That is helpful and takes us seamlessly to our next line of questioning.

Jenny Gilruth (Mid Fife and Glenrothes) (SNP)

My question is for David Bookbinder. In your submission to the committee, you say:

“Again our main interest has been in seeing tenant consultation and ballots protected where a change of landlord or a group structure move to a parent body is being proposed.”

Does the proposed tenant consultation do enough to protect tenants?

David Bookbinder

Yes. We recognised that the current provisions had to go because they were so inextricably linked to the regulator’s consents regime, so we have been particularly keen to deal with the issue. The forum had a key role in extending the ballot provisions in the Housing (Scotland) Act 2014 to apply equally to group structure changes, where one association joins another’s group structure. We are happy with the provisions as they stand. The bill does not include the word “ballot”, but, as the forum sees it, the only way of complying with the bill’s requirements is to hold a ballot and to abide by it, so we are happy that those important provisions are indeed protected, as Sally Thomas has just said.

Jenny Gilruth

We have discussed the bill’s proposals to remove the need for the regulator to have consent powers. Does the panel think that RSLs have robust enough governance arrangements in place to compensate for that?

Sally Thomas

That is a pertinent question. Governance of housing associations is absolutely fundamental to their success and to providing assurance to tenants that they are being run in the most efficient and effective way and that the best use is being made of taxpayers’ money. We work very closely with the regulator and other colleagues to make sure that the governance arrangements that are in place are the best that they can be. We appreciate and understand, as I think others do, that we will have to work even harder at that.

That is not to say that we expect to see governance failures or weaker governance, but as a result of the change we know that we will have to ensure that we are on the ball in terms of governance being the absolute best that it can be, in the interests of tenants, taxpayers and the development programme.

George Walker

I think that Jenny Gilruth gets to the heart of the matter—it is a very important question. We have touched on our framework review, and it is interesting that one of the key issues emerging from the review—it is an issue on which we will consult in the new year—is the idea of boards assuring themselves.

I agree with Sally Thomas, in that I do not think that anyone expects an overnight failure of governance because of the change. However, we will encourage boards to ensure that they are self-assuring in the areas where consent has been required. In the past, an association might have found comfort by asking the regulator whether something was appropriate and reasonable. As that will no longer be available, self-assurance and encouraging self-assurance will be important parts of the consultation that we will bring forward in the new year.

John Marr

I will pick up on points made by Sally Thomas and George Walker. Due diligence was mentioned in the context of disposal by an RSL. It is quite right that an RSL board should ensure that it has gone through the required due diligence before it disposes of any assets. Equally, lenders go through due diligence. Clearly, that can help offset any concerns about the loss of regulatory and business intelligence.

Self-assessment has been mentioned, I think. That will certainly have a role in ensuring a degree of comfort across the piece that where disposals are made, they are made appropriately.

We look forward to engaging with the regulator further as part of the framework review when there is more concrete detail about some of the proposals.

Elaine Smith (Central Scotland) (Lab)

I want to follow up on some of what John Marr just said, but first I would like to ask David Bookbinder specifically to comment on something that was in his submission, which says:

“The provisions may ... make it more straightforward for sensible changes to be made, where these, for example, will help associations prevent potentially disruptive individuals or groups having undue influence or control over an association’s affairs.”

Could you comment further on that statement?

David Bookbinder

Yes. I hope that that is not something that many housing associations would ever encounter. There are two points to make. Most housing associations want as many people as possible in their share membership and they want as many of those people as possible to be willing, from time to time, to stand for board or committee membership. The background to this issue is that a lot of associations are perhaps not crying out for, but are certainly very welcoming of people’s willingness to stand. We are very keen to make standing attractive to potential committee and board members.

Every now and again an association might want to make a sensible change to its rules, its constitution or its code of conduct for board members, when it encounters one or more individuals about whom the association has absolutely sound evidence that they are not there to act in the association’s best interests. At the moment, the code of conduct would enable an association to take action against a board member who, it is felt, is not acting in the association’s best interests, but not against somebody who is applying to be a board member. We know that some of our members have been looking at changing their rules to address such potential situations.

10:30  

I am not suggesting—far from it—that the regulator would not engage if there was such an instance today of one of our members going to the regulator to ask whether it would be okay to take such action. That is an example of the kind of sensible rule change that an association might want to make. That would probably be quite a traumatic time for the association, so cutting out one stage in the process—its having to go through the consent mechanism—would certainly help, where that would evidently act in the interests of the association.

I do not want to suggest that there is a big issue about our movement being under threat from lots of people trying to inveigle themselves on to boards. That is just an example of where a little less red tape would be welcome.

Elaine Smith

I am concerned about who judges what is disruptive behaviour. Who makes that decision? What constitutes that kind of behaviour? Could it just be someone taking a different position from the board and making legitimate points that the board might not be listening to? I see that Sally Thomas is nodding: perhaps there is something that she wishes to say.

How do you ensure that when a board is made up, gender and diversity are recognised?

David Bookbinder

Make-up of boards is a big issue for the movement. The biggest imbalance at the moment, I would hazard, is in respect of age. Many associations throughout our area and, I am sure, throughout Scotland are attempting to balance their boards and to get younger people on to them.

On how we know whether a board is making the right decision about something, I would say—and, I think, the regulator would say—that it is up to the association to get that right: the regulator will not decide for it. An association has to get such decisions right through the experience of its board, which must have a real sense of what is right for the association.

Sally Thomas

That is another absolutely pertinent question, but there is no clear and exact answer to it. Board membership—how to attract people to boards, get a balance and get diversity—is an on-going and major issue for the sector, as it is for many others.

The point about whether behaviour constitutes disruption or challenge is well made. A case will always have to be taken on its merits at the time, and there will always be a judgment of sorts.

That said, the issues of self-assurance and of doing more work to ensure that organisations’ governance is the best it can be are front and centre of what we need to do. If we do that in the right way, get all our ducks in a row and have our priorities right, we can address the issues that Elaine Smith raised. It is an on-going process, however: it is not one that we can safely say is done and dusted. We cannot say that we have done it, that we are successful and that it is all great.

To the SFHA, the Glasgow and West of Scotland Forum of Housing Associations and others, tenant representation on boards is absolutely critical. I have come from England, where tenant representation on boards has been run down for a variety of reasons, so it is an absolute pleasure to be in a place where tenant representation is treated as important, and increasingly so. We want to do everything that we can to ensure that representation is retained. Given David Bookbinder’s concerns, which are credible and realistic, and given Elaine Smith’s question, which is absolutely pertinent, we need to do the best that we can to ensure that there is tenant representation in the best way possible, and that tenants are supported to contribute in the best way possible to governance arrangements. We also need to do the best that we can to take on board and to continually review and reassess, as Elaine Smith asked, whether we are achieving good governance and diversity, and whether behaviour is a challenge rather than a disruption.

Elaine Smith

Unless anybody else wants to follow up, I have a question for John Marr—

The Convener

If you will indulge me, there is something that I want to follow up. There is a general theme that housing associations need a little bit of disruption because the same handful of tenants will have been on the board for a long time, so well-paid officials put through rent increases, rent restructuring and investment programmes that get rubber-stamped. At what point does the board become part of the co-production and corporate governance of the organisation? At what point do they just put things through on the nod? That is a challenge in the housing association movement.

Incidentally, some housing associations are superbly run—there can also be a challenge there. Challenge does not necessarily mean that the housing association is poorly run. I did not pick out that point about challenge from Mr Bookbinder’s evidence, but it grated with me a little when I heard about it because we need well-qualified disruptive individuals to challenge the housing association movement’s senior officers to make sure that an association really is a tenant-led organisation. Any observations on that would be welcome. We will then, of course, move on to Mr Marr.

David Bookbinder

That is an absolutely fair comment. The forum takes seriously the notion of committee and board members having the ability to challenge. For example, with our colleagues at Scottish Housing Associations Resources for Education—SHARE—the forum is about to produce in the next week or so a small booklet, aimed at committee members, on knowing the basics of sound financial management and knowing when to challenge. They need to do that when it is important—when they do not understand something or when they are uncertain about something. The booklet is about giving them the confidence to do that. We could never claim that a housing association is well run if there is a lack of challenge.

We have also done work this year on succession planning, which is about making sure that committees and boards are fit for the future, and having people with the right experience. That includes the critical local input that can come only from local people. We take succession planning and good governance very seriously and have produced a lot of work on them.

The Convener

Thank you for indulging me, deputy convener. You can move on with your line of questioning now.

Elaine Smith

Thank you. Mr Marr, with specific regard to sections 3 to 7, can you expand a bit more on the kind of risks that removal of the regulator’s powers of consent could pose for funders? We touched on that previously.

John Marr

We are talking about a transfer from a system of consents to a system of notifications, not only in relation to disposals but to organisational changes—which could, for instance, be proposals for RSLs to merge or form different business structures.

We mentioned in the earlier discussion that notification might mean that there could be a degree of loss of regulatory and business intelligence. However, we are comforted by and take reassurance from the fact that associations, through their own due diligence, and lenders, through their due diligence, and the possibility of an increased role for self-assessment, could help to fill some of the gaps that might arise through the change. Clearly, there will be provisions within existing loan agreements requiring the borrower to seek lender consent for specific events, which would definitely include constitutional changes. Lenders will still go through that process of engagement with their borrowers to provide consent or otherwise to those changes upon merger.

Even though we are moving to a new approach under the proposed legislation, lenders can still take comfort that existing practices—in terms of their own processes, through their loan agreements—as well as changes down the line from changes to the regulatory framework, will provide sufficient reassurance.

Elaine Smith

In your written evidence you say that you expected that funders would have to

“ramp-up their own due diligence”,

but you also suggest that funders would expect boards to strengthen their self-assessment regimes. Would that result in increased costs for RSLs?

John Marr

There may be costs associated with some changes, but it is difficult to forecast what they might be from this distance. In our submission I touch on the point that lenders might “ramp-up their ... due diligence” and the possibility of there being costs associated with that. I emphasise that that would not be changes in costs to funds per se, but rather to transactional and process costs associated with striking a deal. I would not expect those costs to be significant in the grand scheme of things—they would continue to be proportionate to the deals.

Elaine Smith

Do the representatives of the RSL sector have any comments on that?

Sally Thomas

The question is about a possible cost to boards of increased self-assessment. With David Bookbinder and John Marr, as part of the regulatory review, the SFHA would hope to find ways to minimise that as much as possible. The SFHA would do that by trying to provide as much information and support to advise and, where necessary, to strengthen board activity—particularly self-assessment—at minimal cost to the organisation.

There is a huge diversity of organisations in the sector—they range from very small to very big. The bigger ones can probably do what they need to do using their own means and without taking a big hit to their resources. Other organisations will find it much more difficult, time consuming and resource intensive in proportion to their size and activity. We will focus our resources as a support organisation to ensure that they are targeted in the right way in order to minimise the costs and effort that would be involved for individual organisations.

The Convener

Does anyone want to add to that?

David Bookbinder

Our lenders are our key partners and I welcome John Marr’s assurance that any further due diligence would be proportionate.

The Convener

That is now on the record—although it is not binding.

Graham Simpson (Central Scotland) (Con)

Mr Marr’s written submission suggests that there should be a sunset clause in section 8 of the bill. Can you expand on that?

John Marr

Yes. We understand the rationale for inclusion of section 8. When the bill was drafted there was still a fair degree of uncertainty about how the ONS might view the provisions and whether they would be sufficient to achieve the outcome of restoring the “private sector body” classification. Now that we have seen the ONS move relatively swiftly south of the border in restoring the classification to English housing associations, after the Westminster Government implemented the final pieces of the puzzle in the deregulatory measures of the Housing and Planning Act 2016, and given that those measures are broadly consistent with the measures that have been proposed for Scotland, we can perhaps take comfort that implementation of the legislation in Scotland will enable the ONS to move as quickly as it did down south and reverse its decision. That being the case, one could ask whether the open-ended provision of section 8 is really necessary.

Our concern is that inclusion of the provision—as I said, we understand why it is there—but leaving it entirely open ended would prolong the uncertainty for investors considering coming into the market. It would be helpful if the period within which the power could be exercised were to be limited in some way. We have suggested that the period could last until the end of the current session of Parliament, although, given how quickly the ONS has acted down south, it may be that the power is not even necessary. However, that is clearly an issue for consideration.

10:45  

David Bookbinder

Section 8 really feels like a just-in-case section. I agree with John Marr: we have good reason to be confident that the ONS will be satisfied with the bill’s measures. We are certainly relaxed about that provision being there. The Scottish Government has acted in a very consultative manner on the provision. I think that it would carry on doing that in the unlikely event that it had to use a sunset clause, as you refer to it. However, we do not see it as a threat.

Graham Simpson

The Delegated Powers and Law Reform Committee made some recommendations in its stage 1 report, one of which relates to section 8. It says:

“The scope of those powers extends to permitting any modification of the functions of the Regulator which relate to social landlords. The power is therefore drawn more broadly than is required to achieve the policy objective. The Committee considers that, in principle, the power could be framed more narrowly in accordance with the policy objective. It recommends that the Scottish Government consider this further”.

Do you have any thoughts on that?

The Convener

This might be the first opportunity that the witnesses have had to hear that recommendation in the report. We could be catching you cold a little bit, Mr Marr.

John Marr

That is a welcome progression towards narrowing the scope within which the power could be used. It still leaves the timeframe element open, which was one of our more significant concerns.

The Convener

Are there any other reflections on that? The report came out yesterday, so it is hot off the press. The witnesses seem to be generally content with the power if it is required but think that it would be good to narrow its scope a bit. Mr Marr has spoken about a possible sunset clause.

David Bookbinder

It is a theoretical argument; on the face of it, the power looks very broad. I do not think that anyone in the housing association sector believes that such a power would be misused. If it is prudent to look at narrowing it, so be it, but it is important that the power is retained as a just-in-case clause, as I referred to it earlier.

Graham Simpson

Section 9 would restrict the local authority power of nomination to an RSL board to a maximum of 24 per cent of board members. Inverclyde Council is concerned that the plans are “unduly prescriptive” and will

“not allow for the exercise of local discretion for local circumstances.”

In other words, the council is saying that 24 per cent is too restrictive. Does anyone agree or disagree with that?

David Bookbinder

As the committee knows, that generally applies to stock transfer and, probably, to the largest stock transfer associations, where having a proportion of local authority elected members was part of the transfer arrangements. It may be for others to comment. It is not as if a reduction from 51 per cent is required. We are talking about nuances of between a third and a quarter. I would have thought that, under the proposed arrangement, local authority board members would still have an influence, as they do under the current 33 per cent arrangement. It is clutching at straws to say that the proposal will make a big difference, especially if, as we believe, the ONS needs that change to happen.

Sally Thomas

While in some senses it might appear to be a loss, I would hope—certainly, we would hope as an organisation—that the relationship between local authorities and housing associations is sufficiently good that they will be able to work that out between them in discussion. If it is felt helpful by both parties to have local authority representation on boards, so be it. It is up to the individual housing association and local authority to work that out. That is just as it should be.

Graham Simpson

Does any of the witnesses think that it is appropriate that ministers should have the power to set the limit in the first place?

The Convener

No one is grabbing at that one. Maybe you could provide a bit of clarity. Do you mean that it should be open ended?

Graham Simpson

Should ministers be able to set a limit, whether it is 24 per cent or whatever? I am sorry for all these tough questions.

The Convener

May I clarify that, so that we get an answer that fits with the policy intent of the bill? My understanding—as the committee’s convener it is always dangerous to try to understand something—is that the reason for the restriction was to better conform with the ONS requirement that RSLs be seen as private bodies and to reduce the influence of other public bodies on RSLs. Does that mean that there has to be a cap somewhere down the line? Mr Simpson asked why such a cap should be specified by the Government. There might still be no takers for your question, Mr Simpson.

David Bookbinder

Ideally, we would not want ministers to dictate how our boards are structured. In this case, we think that, as the convener said, it is probably a proportionate response to the requirement for ONS to see a perceived reduction in public influence or control.

Graham Simpson

I should have sent my questions in advance, convener.

Elaine Smith

Having served in the Parliament since 1999, I was in the Parliament when the stock transfer legislation went through. At the time, my former colleague John McAllion and I raised concerns about the fact that stock transfer could just be seen as privatising an asset, council housing, that had previously been owned, in the public sector, by all of us. We are now taking that a step further. At the time, discussion about local authorities’ influence on boards was to try to bat off the accusation of privatisation of a public asset.

My concern now would be the implications, in areas of wholesale stock transfer, of a reduction in local authority influence on local authorities’ duty towards homeless persons. The question is specifically for David Bookbinder and Sally Thomas, but if the regulator wishes to comment I would be happy to hear from him.

David Bookbinder

The sector regarded it as really important, especially in the light of stock transfer, and of the six local authorities in Scotland that do not have any stock, that there were robust statutory measures for housing associations to support local authorities in housing homeless households.

Section 5 of the Housing (Scotland) Act 2001 has been really important. In practice, a lot of local authorities do not resort to using that provision because the more informal nominations and referral arrangements in most parts of Scotland appear to work very well. However, the duty remains critical in ensuring that all associations, particularly those in areas with no council housing, can make a proper contribution to housing homeless households.

Elaine Smith

Will it continue to work well if the local authority nominations to boards are reduced?

David Bookbinder

The forum does not associate the success of housing homeless people locally with the constitution of the board—I do not see a correlation there at all.

Sally Thomas

This is an important issue. The extent to which housing associations have influence, which represents democratic processes, the taxpayer and the public good, is important.

There is a difference between local authority influence possibly being reduced in statute in policy terms, as we have here, and reality. Who can second-guess this? I hope and anticipate that, while there might be a provision that looks ostensibly as though the impact could be to reduce local authority control and influence, the reality of it might not be that at all. The situation might well stay as it is, or their control and influence might even increase.

The joint intentions and collaborative aspects of how local authorities and housing associations work together, and the relationships that they have built up since stock transfer, are mostly good—I would not want to say that they are wholly good; that would be too much to profess—which means that that level of influence would be retained, and increased where necessary, for the provisions that you have been talking about with regard to achieving reductions in homelessness and housing people who need it.

The Convener

Given that percentages are being specified, and there is a direction of travel, does anyone really think that there will be any difference in the good governance of RSL boards, or in the partnership relationship that such boards do or do not have with the local authority, based on whether a local authority can appoint 33 or 24 per cent of board members? Is that completely missing the concept of engagement and partnership?

Sally Thomas

Yes. To follow on from my previous point, I would not want to discount that completely—it would be naive and ridiculous to do so. However, knowing what I know about how the sector behaves and what the sector, collectively, intends to do, I think that the relationships that are in place now and the historical development of those relationships over time since stock transfer will mean that we are in a much better place than we ever were then. The partnerships will reflect that; so, too, will the impact of those partnerships and relationships on the housing needs and demands that we know are out there.

Andy Wightman

I want to pick up on Graham Simpson’s points about the Delegated Powers and Law Reform Committee, of which he is the convener. That committee’s report, which came out yesterday, reveals a disagreement between the committee and the Government on the section 8 and section 9 order-making powers. The committee considers that the powers are too broadly cast; the Government says that it is content. We may need to mop up on anticipated feedback from the ONS. I am not looking for a response now, but we would find it most useful should anyone want to come back and comment on the nature of that disagreement and where the balance might be most appropriately set.

The Convener

The Scottish Government has still to respond to the report that was published yesterday—it has yet to look at the evidence in it. That is the context in which we should view that disagreement. Does anyone want to take up the cudgels on that one? There appears to be no great thirst to do so.

Sally Thomas

The member mentioned taking time to reflect and come back on the issue. That is probably the most sensible way forward for the SFHA.

Graham Simpson

The Delegated Powers and Law Reform Committee report is quite technical, but I suggest that you read it first and then come back to us.

The Convener

That is very helpful. Our committee will have to take a view on the matter, so we want to be informed not just by the Delegated Powers and Law Reform Committee’s report but by your views and those of the minister when he comes before us.

As there are no more questions, I thank everyone for coming along this morning. It was a very useful and structured evidence session, which will inform our stage 1 deliberations. Please contact the committee with any additional information that you want to give us, not just on the specific matter that Andy Wightman raised but on anything at all. I thank all the witnesses for their time.

11:00 Meeting suspended.  

11:05 On resuming—  

The Deputy Presiding Officer (Christine Grahame)

The next item of business is a stage 1 debate on motion S5M-11350, in the name of Kevin Stewart, on the Housing (Amendment) (Scotland) Bill. I invite members who want to speak in the debate to press their request-to-speak button now.

16:04  

The Minister for Local Government and Housing (Kevin Stewart)

I am pleased to open this stage 1 debate on the general principles of the Housing (Amendment) (Scotland) Bill.

I begin by thanking the convener and members of the Local Government and Communities Committee for their careful scrutiny of the bill so far. I welcome the committee’s stage 1 report, with its recommendation to the Parliament that the general principles of the bill be agreed to. I hope that the Scottish Government’s response to the report provides the committee with the assurance it was seeking from us.

I also thank the clerks for their work in support of the committee, and all the stakeholders who gave evidence to the committee. I particularly thank the Scottish Federation of Housing Associations and the Glasgow and West of Scotland Forum of Housing Associations, which, with other stakeholders, have worked closely with us throughout. I am pleased that stakeholders recognised the need for the bill, and support its principles. I look forward to that approach continuing as the bill process moves towards its end.

The bill is a relatively short but essential measure that amends a number of the Scottish Housing Regulator’s powers over registered social landlords. It also makes provision for ministers to be able to limit local authorities’ powers over housing associations.

The bill is necessary because of the decision by the Office for National Statistics to classify RSLs as public sector bodies in the national accounts. That decision was taken because the ONS, in light of the criteria that it must apply in classification decisions, judged that some of the powers that the regulator and local authorities may exercise over RSLs amount to public control of RSLs for the purposes of the national accounts.

If left unchanged, the classification would mean that all new net borrowing by RSLs, which would have been counted as private borrowing previously, would instead count against the Scottish Government’s borrowing limits. Therefore, although the classification decision might appear to be just a technical matter, it 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, but would instead count as Government borrowing, effectively adding £1.5 billion to our £3 billion investment in the programme and putting at risk our target of building 50,000 new affordable homes during this session of Parliament. As RSLs are independent of the Scottish Government, they are free to determine with their private lenders how much they borrow. Therefore, reclassification would have the consequence of the Scottish Government having to accommodate RSLs’ borrowing within its budget, without being able to control or limit the level or extent of that borrowing.

The purpose of the bill is to avoid that outcome by ensuring that the 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 those of the regulator’s powers that ONS identified as constituting public control over RSLs. The bill narrows the circumstances in which the regulator can appoint a manager to an RSL or remove, suspend or appoint an officer to an RSL; and it removes the regulator’s powers to give or withhold consent to actions by RSLs, such as disposing of their assets, or restructuring themselves.

The changes are necessary because, put at their simplest, the powers that they amend currently enable the regulator to act as though it were the actual owner of RSLs. That crosses the line between what the regulator, as a public body, is able to do in respect of bodies that are classified as private, and what is incompatible with that classification.

While the changes are significant, they go just as far as is necessary to secure reclassification, but no further than that. They do not alter the regulator’s single statutory objective, which remains safeguarding and promoting the interests of homeless people, tenants of social landlords and others who use the services of social landlords. They leave intact the majority of the regulator’s powers. That includes powers to monitor, assess and report on how well all social landlords are performing; set standards for RSLs’ financial health and governance; undertake investigations; and, where necessary, require landlords to take remedial action.

Those and other remaining powers will allow the regulator to continue safeguarding and promoting the interests of tenants and homeless people, not least by reassuring private lenders that RSLs remain attractive businesses to lend to.

Through my engagement with the SFHA and the Glasgow and West of Scotland Forum of Housing Associations, I have been encouraged to hear that they recognise that the bill represents a new challenge for their members and that they are ready to step up to it. In particular, they recognise that removing the regulator’s powers of consent over matters such as disposals and restructurings will place a greater onus on all their members to demonstrate to their lenders that they have robust and rigorous governance procedures in place. The committee highlighted that issue in the stage 1 report, and I know that the SFHA and the forum are keen to work with the regulator to ensure that the current review of its regulatory framework helps to strengthen further the governance arrangements that are already in place.

In our response to the report, we confirmed that we will use our regular discussions with the SFHA and the Glasgow and West of Scotland Forum of Housing Associations to confirm that the sector gives proper weight to that important matter—for example, through the provision of continuous training and development for members of governing bodies. We have also worked with UK Finance to address its concerns. In response to the committee’s recommendations, we will lodge amendments that will provide for the regulation-making powers at sections 8 and 9 of the bill to expire three years after the bill receives royal assent.

The bill is necessary to safeguard the Scottish Government’s finances and our ambitious affordable housing programme, and I am pleased that it commands cross-party support.

I move,

That the Parliament agrees to the general principles of the Housing (Amendment) (Scotland) Bill.

The Deputy Presiding Officer

I call Bob Doris to speak on behalf of the Local Government and Communities Committee. Mr Doris, you have five minutes.

16:11  

Bob Doris (Glasgow Maryhill and Springburn) (SNP)

I welcome the opportunity to open for the Local Government and Communities Committee in this debate on the Housing (Amendment) (Scotland) Bill. I thank all those who contributed to our scrutiny of what is mainly a technical bill.

It is worth highlighting at the outset that there was general agreement among those we heard from that the measures in the bill are a proportionate and necessary response to the decision by the Office for National Statistics to categorise registered social landlords as public bodies. The bill’s proposals are intended to ensure that the ONS reclassifies RSLs as private bodies by removing or limiting some of the Scottish Housing Regulator’s powers of intervention. The bill also provides ministers with powers to alter the regulator’s powers in the future, in order to ensure that reclassification of RSLs as private bodies. Those we heard from agreed that the only way to achieve those aims was through the bill.

If RSLs remained public bodies, their borrowing to build new affordable homes would no longer be considered private borrowing but would be brought on to the Scottish Government’s books, potentially adding £1.5 million of debt. That could have severe implications for RSLs’ contribution to the realisation of the Government’s 50,000 affordable homes commitment. We therefore agreed that the measures proposed in the bill were necessary. However, we noted that a few issues raised during our scrutiny needed to be addressed.

The Scottish Information Commissioner was concerned that the removal of some of the regulator’s powers could exempt RSLs from the need to provide information under the Environmental Information (Scotland) Regulations 2004. Although the Scottish Government proposes to bring RSLs within the scope of freedom of information legislation, the Information Commissioner was concerned that there could be a short gap between the enactment of the bill and the implementation of the FOI changes. That would mean that the EIRs would not apply to RSLs, thus making people unable to request such information during the gap period. The Information Commissioner was not able to say with certainty that that risk would arise, but he will have to reach a decision when the issue arises.

Both the Scottish Federation of Housing Associations and the Glasgow and West of Scotland Forum of Housing Associations assured the committee that they would encourage and direct RSLs, where possible, to continue to provide information under the EIRs during any gap period. On that basis and with those assurances and the relatively low level of risk involved, we agreed that having less formal arrangements to ensure that RSLs continue to provide that information is a more proportionate response than amending the bill.

Sections 1 and 2 of the bill narrow the circumstances in which the regulator can intervene where an RSL has failed, and those in which the regulator can remove managers or officials from an RSL or appoint managers or officials to an RSL. Most people agreed that the measures were appropriate, with some saying that they reflect how the regulator has actually used its powers, which the regulator has confirmed.

UK Finance raised one issue in relation to the powers, commenting that the definition of “failure” could be broadened to make it clear that the regulator can intervene where the RSL is failing, rather than when it has failed or becomes insolvent. It felt that that would ensure lender confidence in the market. The Scottish Government and the regulator, however, allayed those concerns by pointing to the statutory provisions in the Housing (Scotland) Act 2010, which set out regulatory interventions that the regulator will still be able to make following amendments made through the bill. The committee welcomes the fact that the minister has now also expanded the explanatory notes to provide that clarity.

Sections 3 to 7 of the bill remove the requirement for the regulator to provide its consent to RSLs where they wish to dispose of land or make certain organisational changes, such as a change in their constitution or restructuring, or to wind up or dissolve an RSL. The requirement to provide consent is replaced with the requirement to notify the regulator within 28 days of the changes being made. Any existing tenant consultation requirements are protected. The committee was broadly content that those proposals were balanced and we welcomed the reassurances that were given.

The importance of strong governance processes and their direct impact on the confidence of lenders and of RSLs themselves was highlighted to us. Although the bill removes some of the regulator’s powers in relation to RSL governance, it was encouraging to hear that UK Finance was comforted by the measures that stakeholders and RSLs will take to ensure that self-assurance processes are strong.

There are some additional powers in sections 8 and 9 that will ensure that the Government has the power to intervene and make additional provisions if we do not have the approach just right. The committee and the Government acknowledged that those powers do not have to last for ever; the bill will be amended at stage 2 to include a sunset clause, which we think is the proportionate, responsible and right thing to do.

The Local Government and Communities Committee is happy to agree to the general principles of the bill.

16:16  

Graham Simpson (Central Scotland) (Con)

This is one of those debates on a bill that does not exactly set the heather on fire, but which is important nonetheless. The Housing (Amendment) (Scotland) Bill looks, on the face of it, to be quite narrow and technical: a bit dull, you might think, Presiding Officer.

However, although the bill deals with specific accounting issues that are of interest to accountants, its implications will be far reaching. If the bill is not passed—although I am sure that it will be—that would make it extremely difficult for housing associations to play their part in meeting the Government’s affordable homes target. Although that might give Opposition spokesmen like me an opportunity to kick Kevin Stewart, which can be quite enjoyable, it would not be very responsible. So, we will support the bill at this stage and beyond.

It is useful to put what this is all about into plain English—at least, I will have a go. Registered social landlords and housing associations were classed as private bodies for accounting purposes until the Office for National Statistics decided to change their status to public bodies. The effect is that any borrowing that they do counts against the Scottish Government’s borrowing limits, which in turn means that the Government might have to limit what RSLs can borrow, which would not be good. We can see the problem. In order to remove those shackles, we have to reclassify RSLs as private sector bodies. However, we would not expect a private sector body to be as tightly regulated as our housing associations are by their housing regulator. That level of public sector control was one of the reasons behind the ONS switch in the first place, so we can see where it was coming from.

If we are to take RSLs back into the private sector, we also have to rein back the regulator’s powers. The bill tackles that, with the end result being that housing associations will enjoy more freedoms and will be able to deliver more. The bill is technical, but it is important.

It is fair to say that there has not been a great deal of interest in the bill outside the sector. The Local Government and Communities Committee received only 16 responses to its call for evidence, compared to more than 1,000 on the Planning (Scotland) Bill, which is a lot more controversial. People are generally supportive of the proposals, which will narrow the powers of the regulator to appoint a manager to an RSL, and to remove, suspend and appoint officers of an RSL.

The bill will also remove the need for the regulator’s consent to be given for disposal of land and housing assets by an RSL, for changes to the constitution of an RSL and for voluntary winding up, dissolution and restructuring of an RSL. The proposals provide the Scottish ministers with regulation-making powers to limit the influence that a local authority has over an RSL.

The Local Government and Communities Committee made a number of recommendations. I am pleased that it took on board the concerns of the Delegated Powers and Law Reform Committee about sections 8 and 9 of the bill, which have already been mentioned and which cover ministers’ regulation-making powers. The DPLR Committee considered that, in principle, the powers could be framed more narrowly. The minister agreed to add a sunset clause to both those sections, and he hoped that that—and his assertion that the powers would be used only for limited means—would address the concerns that were raised by that committee, which, indeed, they do.

Overall the bill is a sensible one that should proceed through its stages without fuss, and I commend it to Parliament.

The Deputy Presiding Officer

Mr Simpson, I understood your explanation, so thank you for putting it in simple English.

I call Monica Lennon. You have four minutes, please.

16:20  

Monica Lennon (Central Scotland) (Lab)

Well, the bar has been raised. [Laughter.]

I am pleased to open for Scottish Labour in this afternoon’s debate on stage 1 of the Housing (Amendment) (Scotland) Bill, and to state our support for it. I was worried that there would be a lot of repetition in the debate, but let us just call it consensus—we will be saying lots of similar things.

I am a member of the Local Government and Communities Committee, which has produced a stage 1 report on the bill. I joined the committee late, at the beginning of this year, as work on the bill was drawing to a close, so I must pay tribute to the convener, my fellow committee members and Elaine Smith, who was my predecessor as deputy convener of the committee, and who will speak later in the debate.

Scottish Labour supports the bill because, like everyone in the chamber, we agree that it is necessary and we understand that it is a proportionate response to ensure that RSLs’ debt does not affect the Government’s ability to borrow money and to build the affordable housing that is so desperately needed across Scotland.

Following the decision of the ONS back in 2016 to reclassify RSLs as public sector bodies in the UK national accounts, the bill has become necessary in order to ensure that RSLs can be reclassified as private sector bodies, as they were previously. As we have heard, and as the minister explained in his opening speech, if that were to be left unchanged, it would mean that any borrowing that was undertaken by social landlords would be counted as borrowing by the Scottish Government. As Government borrowing is limited to £450 million per year, and to £3 billion in total, that would potentially lead to a situation in which restrictions would have to be placed on how much RSLs could borrow.

As we have heard, the bill also seeks to make changes to the powers that the Scottish Housing Regulator has over RSLs in relation to their management and governance and how they buy and sell land. Reducing the powers of the regulator over RSLs will allow the ONS to reclassify them as public sector bodies, as they were before.

As we have also heard from the Local Government and Communities Committee’s convener, the majority of the evidence that was received by it has been supportive of those proposals, including that from the Glasgow and West of Scotland Forum of Housing Associations and the Scottish Federation of Housing Associations. Unlike with other bills, there was no need to consult widely, so the Government took the sensible approach of engaging directly with the regulator and with the groups and bodies that represent those who are likely to be affected by the bill’s proposals, including tenant groups. There appears to be broad agreement between stakeholders and the regulator that changes to the regulator’s powers will reflect actual practice, and that the narrowing of powers will not hamper necessary interventions.

Some concerns had been raised that the bill would potentially weaken safeguards, or have an unintended impact in respect of landlords falling out of the scope of the Environmental Information (Scotland) Regulations 2004, which was highlighted by Bob Doris. We welcome the fact that the Scottish Government has confirmed that it will look into making RSLs subject to the Freedom of Information (Scotland) Act 2002, should it be deemed that they will fall out of the EIR obligations. The fact that there would still be a gap between implementation of the bill and that of the FOI extension remains a concern, but we are all keen for the Government to work with others to resolve that, as the work progresses.

In conclusion, Scottish Labour will be happy to support the principles of the bill at decision time this evening.

The Deputy Presiding Officer

I call Andy Wightman to open for the Green Party.

16:24  

Andy Wightman (Lothian) (Green)

Thank you, Presiding Officer. How long do I have?

The Deputy Presiding Officer

Four minutes, please.

Andy Wightman

Four minutes? Goodness me!

The Deputy Presiding Officer

Is that too much?

Andy Wightman

We will see how I get on. I will try to stay within scope.

Like other speakers and my colleagues on the committee, I acknowledge the purpose of the bill and agree with it. I think that I agree with everything that the minister said in his opening remarks—there is a first time for everything—and with what my convener said. We will vote for the bill at decision time, so I want to use my four minutes to discuss some wider aspects of housing associations that our deliberations on the bill raised in my mind.

In the 1970s, community-based housing associations and co-operatives began to flourish, mainly in Glasgow. They worked to improve life in the city’s tenements and to manage better and to improve tenement housing. That was a very welcome model of co-operation that, 40 years later, we would do well to reflect on, in terms of promoting more co-operative approaches to housing provision.

Housing associations have played an important role in the housing story since the recognition of registered housing associations in the Housing (Scotland) Act 1974. In a debate such as this, it is important to acknowledge the good work of housing associations—in particular, rural social landlords such as Lochaber Housing Association and Waverley Housing, which is in the Scottish Borders, as well as the urban organisations that house large numbers of tenants in our towns and cities. They are where we find our largest housing associations—for example, the Wheatley Group, which encompasses 12 business interests including Dunedin Canmore Housing and Glasgow Housing Association, and which last year reported a turnover of £275 million. In the course of its work, Wheatley housed 250,000 “customers”, as it calls them, across Scotland.

Although today we affirm the value and validity of housing associations as private organisations, it is appropriate to raise a question about where those organisations and the model are headed. For example, I think that we should differentiate between smaller organisations, which tend to use terms such as “tenants”, and larger operators such as Wheatley, which talk about “customers”. When the chair of the Scottish Housing Regulator was before the Local Government and Communities Committee in November last year, I put it to him that in his annual report he had highlighted the diminishing tenant participation in the larger housing associations compared with the small ones. That brings me back to my opening point that it is perhaps time to consider moving towards a more genuinely co-operative model for housing in the social sector.

When the minister appeared before the committee in December, he warned that if the bill did not proceed, the 50,000 affordable homes target would be at risk. That is true, and the bill will overcome that issue. I do not dispute that, but we need to remember that half of the Government’s affordable housing programme, at £1.5 billion, is funded by social tenants, and many of those households are among the financially poorest citizens in this country. It is incumbent on us to acknowledge that.

As I have argued, we should not ignore the role of individual tenants as full participants in housing associations. They are vital to the success of those organisations, which is why I regret the fact that, in many cases, tenants do not participate to the extent that they could. There is room for improvement on that. Those shortcomings are particularly important in the light of the fact that the bill will weaken public oversight of housing associations.

I agree with the general principles of the Housing (Amendment) (Scotland) Bill. Greens will support it at decision time. I look forward to stage 2.

The Deputy Presiding Officer

There is a little time in hand. I was being a bit naughty—yes, I have my naughty moments.

I call Richard Lyle.

16:28  

Richard Lyle (Uddingston and Bellshill) (SNP)

I will get all that time, so thank you, Presiding Officer.

I welcome the opportunity to speak on an issue that is important to all our constituents, including mine in Uddingston and Bellshill. The bill concerns the responsible allocation of funds in relation to the Scottish Government’s debt limit, and it is on that point that I will begin my remarks. I have no doubt that no one in the chamber fails to recognise what an emotional subject housing is. I am also confident that most of us would agree that Scotland needs more public housing. The bill is simply a reasonable administrative necessity.

Andy Wightman

The member says that we need more public housing, but of course the bill classifies housing associations as private organisations. Does he agree that, as well as more housing association stock, we need more public housing that is run by councils?

Richard Lyle

Every house that is built is a house that houses a family. The member knows that as well as I do.

The ONS acknowledges that if we do not agree to proceed with the bill, RSLs will continue to be classified as public sector bodies in the national accounts, with the result that all new net borrowing by RSLs will count against the Government’s borrowing requirements. That would impose a significant, permanent and—most of all—needless burden on the Scottish Government’s finances.

I am sure that all members care about the Scottish Government’s ability to pay for the services on which Scottish people rely and that they do not need more convincing of the simple argument that a Government needs all available funds if it is to fulfil its obligations. Therefore, the Parliament should take steps to solve the problem of the classification of RSLs as public bodies by agreeing to the bill.

Our not agreeing to the bill would have immediate implications for the Scottish Government’s commitment to build homes for families, because our commitment depends on the Government’s planned financial support of more than £3 billion for our programme being augmented by private borrowing by the RSL sector of some £300 million a year. If RSLs’ borrowing can no longer be counted as private borrowing, the cost to the Scottish Government of delivering on the commitment will include RSL borrowing and rise to £4.5 billion, which is £1.5 billion over budget, as members have said.

The policy is similar to policies that are being pursued—for the same reasons—by the UK Government, the Northern Ireland Executive and the Welsh Assembly Government in their respective jurisdictions.

The bill provides that RSLs will no longer be classified as public sector bodies. Any funds that they borrow will therefore not come out of the Government’s limited budget and we will remain able to fulfil our obligations to all our constituents, including making good on our promise to build 50,000 new and affordable homes. I commend the bill to the Parliament.

16:32  

Jeremy Balfour (Lothian) (Con)

When I was trying to put my two girls to bed last night there was great excitement, because today is the last day of term. In the end, I said, “Do you want me to tell you what I’m talking about in the Parliament tomorrow? I’m talking about the Housing (Amendment) (Scotland) Bill.” Suddenly there was silence in the room and I was able to leave—the girls seemed not to want to engage with this vital subject.

Graham Simpson

To get your girls to bed, did you read them my speech? [Laughter.]

Jeremy Balfour

Even more exciting, I referred them to the minister’s biography, which got them overly excited.

Joking apart, although the bill is technical and will not, I suspect, be remembered by most of Scotland in the years to come, it is important, as members have said.

With your permission, Presiding Officer, I will stray away slightly from the bill, although I will stick with the subject of housing. Before I entered the Parliament nearly two years ago, I worked for a small charity that tries to get more affordable housing in Scotland by redeveloping empty church buildings. We worked closely with many housing associations across Scotland. My general view is that housing associations are doing a great job and are working with the Scottish Government to try to get the 50,000 affordable houses built within the next few years. I am sure that all members welcome that.

I hope that the powers that the bill will give housing associations to borrow and follow different accounting procedures will encourage some housing associations to build. I think that some housing associations have become slightly conservative in their approach to building more houses; I came across a number that were scared to go ahead, for different reasons. Housing associations have a responsibility to work with their communities, local authorities and the Scottish Government in that regard.

Kevin Stewart

It is in everybody’s interests to get housing associations to develop if they have the confidence to do so. If Mr Balfour wants to outline some of the reasons that he came across and send them to me, I will look at them. My officials will help as much as they can with giving housing associations the knowledge and helping to set them on the development track if that is what they want to do. I will be quite happy to hear from Mr Balfour about the reasons for lack of development in certain places.

Jeremy Balfour

I will certainly take the minister up on his kind offer after recess.

The bill will give housing associations greater confidence to go forward. It is in all our interests for more affordable houses to be built in the Lothian region and across Scotland. For that reason, I welcome the bill and the fact that there is cross-party consensus on it. I hope that the bill will get through its final two stages quickly so that we can move on and see housing associations flourish as they seek to serve everybody across Scotland.

16:35  

Alex Rowley (Mid Scotland and Fife) (Lab)

I agree with what Kevin Stewart said when he moved his motion.

As the minister said, the planned 50,000 affordable houses, 35,000 of which are for social rent, could be put in jeopardy if the bill does not go ahead. We cannot allow that to happen. We should remember that, even if we achieve those figures, we will still face a housing crisis that must be tackled.

Last year, more than 34,000 homeless applications were made in Scotland. Even 35,000 social rented houses—if they are achieved, which I hope that they will be—will not solve the housing crisis. There are 130,000 households on local authority housing waiting lists, and almost 11,000 households are in temporary accommodation—27 per cent of them are living in bed-and-breakfast accommodation.

Can members just imagine young children sitting in their class of 30 pupils and, while some children are just getting on with their work, some are wondering where they will be sleeping that night? It is incredible that we have these housing problems in 2018 in Scotland. We need to tackle them.

The housing minister is fond of reminding us that, during the period before his party came into government, eight council houses were built.

Kevin Stewart

Six.

Alex Rowley

It was six. However, it is interesting that between 1997 and 2007, 37,200 houses were built in the housing association sector. A lot of progress was made and I was surprised to discover that there are almost 280,000 units of housing stock in housing associations. We can therefore see that housing associations make a massive contribution in Scotland.

The minister was a councillor, as I was a councillor. One of the most difficult things for me—it has continued since I became an MSP—is people coming to my surgery or contacting me for help when they are either in inadequate housing or have no housing at all. That is why it is good that we have unity here today.

Kevin Stewart

I, too, am glad that we have that unity today, because there is a lot of shared ambition across the Parliament to deliver affordable homes and homes for social rent across Scotland.

I recognise that, in Mr Rowley’s part of the world, Fife has done extremely well in adding to our programme during the previous parliamentary session and in the current session. I hope that that cross-party co-operation in Fife and elsewhere in Scotland will continue, so that we can resolve people’s problems with getting housing.

Alex Rowley

We need to work together because of the issues that I have outlined. It is not acceptable for us to have this housing crisis in Scotland. All parties should work together. People’s most basic right—to have a roof over their head—should be available to every individual person, every child and every family. I will therefore be pleased to work with the Government on this.

16:40  

Stewart Stevenson (Banffshire and Buchan Coast) (SNP)

Through the chair, I will say a couple of words to Andy Wightman, who gave us a 40-year horizon since housing associations came into play. “The Digest of Justinian” covered the co-operative housing associations in ancient Rome, and Babylon had co-operative models 2,500 years ago, so Scotland has come to the party quite late.

Members might reasonably ask why I am speaking in the debate. I forced my way to the front of a long queue that the whips had drawn up to fill the last speaking place from the Government benches. The temptation for my part arose, of course, when I read in the committee report at paragraph 10 that

“The Bill is short and technical”.

That word “technical” inevitably drew me in.

It is fair to say that this is not the most contentious thing that we have debated since I came to Parliament in 2001, but it is quite interesting. It illustrates some of the unintended side effects of revising the way in which we do accounting—in particular, the accounting of bodies that have to report their assets, liabilities, income and expenditure. In 2001, I found that, under the old financial reporting standard 17, the accounts for the private finance initiative contractor Kilmarnock Prison Ltd—I was interested in prisons at that time—treated Kilmarnock prison as a disposal in the second year of trading because it had a commitment in the 30-year contract to pass the prison to the Government. It vanished off the contractor’s balance sheet as an asset but, as far as the Government was concerned, it did not appear as an asset on its balance sheet until 30 years hence. That asset appeared on no balance sheet for almost 30 years, under the old system.

We are now under the international financial reporting standards and have a new thing called “contingent assets”. That means that the prison now appears on the balance sheets of both Kilmarnock Prison Ltd and the Government. The bottom line of all that, in relation to the issue that is before us today, is that we need to have the right balance as to where things appear in our public accounting.

The problem that has been presented to us by the Office for National Statistics is perfectly proper. The question is whether the associations were in a place in which they had sufficient freedom of action that they could control, manage, dispose of and buy assets without the Government telling them what to do. The next question is whether they were creating assets for the Government, and the final question is whether they, by their actions, created involuntary liabilities—contingent or otherwise—for the Government. It was uncertainties in those accounting areas that properly caused the Office for National Statistics to say that those bodies are connected to the public sector—although they are private bodies, as Mr Wightman reminded us—and are really part of the public sector. If that was the case it would, of course, inhibit the Government in its spending plans and, more fundamentally for the policy that we are interested in here, inhibit the ability of those societies to borrow money and build housing. Alex Rowley is perfectly correct to say that we have to build more houses, by whatever means.

Elaine Smith (Central Scotland) (Lab)

When he read about the bill, did Stewart Stevenson come across comments by UK Finance that lenders might have to “ramp-up their ... due diligence”? What does he think about that point?

The Deputy Presiding Officer

Answer and conclude, please, Mr Stevenson.

Stewart Stevenson

I was very pleased that UK Finance came to a position of supporting what is proposed—I gather that there was some doubt about that initially.

Elaine Smith makes a valid point: whenever we change a system, we risk creating greater complexity. That would not be good news if it got in the way of our building more houses and made life more difficult for housing associations. However, the bill strikes the right balance and I shall be very happy to support it, come decision time.

16:45  

Elaine Smith (Central Scotland) (Lab)

Although I am closing for Scottish Labour, when the bill first came before the Local Government and Communities Committee, I was deputy convener of the committee. I was involved in taking evidence on the bill and I raised some concerns about some potential unintended consequences of narrowing the powers of the housing regulator. I will return to those concerns later.

As we have heard from the minister, the committee convener and most other speakers, the main thrust of the bill is to ensure that the borrowing ability of housing associations and other social landlords will not be counted as Government borrowing. That will be done by reducing the powers of the regulator over registered social landlords and allowing the ONS to reclassify them as private sector bodies. It will also ensure that the debt accrued by registered social landlords does not become subject to further restrictions or limits as an unintended consequence of the earlier decision taken by the ONS to reclassify registered social landlords as public sector bodies.

Those who know me will be aware that I am not naturally drawn to reclassifying a body from the public sector to the private sector. I note Andy Wightman’s comments on that, too. However, as we know, the consequences of not acting, which were clearly set out in evidence to the committee, would be that the Scottish Government’s target of building more affordable homes could be impacted almost immediately if unnecessary restrictions were placed on the borrowing ability of RSLs. As Andy Wightman said earlier, that would also impact on council house building. My colleague, Alex Rowley, made that point in his speech, too. That is why there is broad consensus that the bill is necessary and why Scottish Labour agrees with the Local Government and Communities Committee and will support the bill’s general principles.

Jeremy Balfour raised an interesting point about housing associations. It brought to mind the right to buy. I was involved in the issue of the extension of right to buy to housing associations back at the start of the Scottish Parliament. It is no longer an issue, but it would have been something that would have put off housing associations from building more houses.

On the issues of concern that have been raised about the bill, I agree that further work must be done to ensure that there is no reduction in the information that RSLs are required to provide to the public. That issue was raised at the committee. I appreciate the view expressed by the SFHA and others that they would continue to expect their members to provide the information that they are currently required to provide under the Environmental Information (Scotland) Regulations 2004. Nonetheless, it is still a matter of concern that, should an unintended consequence of the bill be that registered social landlords fall out of the scope of EIR, there might still be a gap in implementation between the passage of the bill and the extension of the Freedom of Information (Scotland) Act 2002 to RSLs.

Bob Doris

Will the member take an intervention?

Elaine Smith

I am happy to take an intervention from the committee convener, but first I was going to say that I am pleased that the Scottish Government has committed to resolving the issue with the committee, as Monica Lennon mentioned.

Bob Doris

It would not be ideal, but in theory, if the gap were very small, once the FOI legislation kicked in requests could be submitted under FOI and the information would still be given out. I hope that that situation will not arise and that housing associations will act in the spirit of the bill that we are discussing.

Elaine Smith

I am sure that the committee will take that on board at stage 2 and keep an eye on the matter.

At committee, I also realised that increased self-assessment for registered social landlords runs the risk of increased costs for RSLs. There is also an implication that local authorities will have reduced influence on housing association boards, with an associated impact on council duties with regard to housing targets and reducing homelessness. I am glad that the minister has agreed to monitor that, and, in particular, to ensure the right approach to tackling homelessness with the partnership and co-operation of RSLs. Andy Wightman’s comments on that were also interesting. I look forward to seeing how he takes that forward.

In conclusion, the Scottish Government has said that, without the legislation, there would be a significant permanent burden on Scottish Government finances and controls on how much RSLs can borrow. Although the debate has been fairly technical and has maybe not set the heather on fire, as Graham Simpson said, the consequences could be real for Government spend, housing waiting lists and homeless people. Therefore, the bill is important and, as a former homelessness officer, I feel very strongly about it.

As I have said, Scottish Labour will be happy to support the bill at decision time.

16:50  

Alexander Stewart (Mid Scotland and Fife) (Con)

I am very pleased to participate in this stage 1 debate and to close on behalf of the Conservatives.

It has been good to hear the contributions from members across the chamber, who support the principles of the bill. The consensus in the chamber is most encouraging. As a member of the Local Government and Communities Committee, I thank all those who have worked on the bill and look forward to its proceeding.

The Scottish Conservatives support the bill. We understand and acknowledge the reasons behind it. Graham Simpson talked about its importance—why it has to be passed—and he said that the Government and RSLs are taking a sensible approach to what is happening. That is important.

Monica Lennon talked about the powers, management and governance that are required, and Jeremy Balfour touched on housing associations’ lack of building and developments, and their fear. We need to take that on board, so I look forward to dialogue on that with the Minister for Local Government and Housing.

As other members have said, the change is necessary, because the Office for National Statistics reclassified our housing associations as public bodies. That means that any borrowing that is undertaken by them counts towards the Scottish Government’s borrowing limits. At present, Scottish housing associations privately borrow about £300 million each year, which is about two thirds of the Scottish Government’s capital borrowing limit. Without any changes to the current situation, it would be highly likely that the Scottish Government would be forced into imposing controls on borrowing by housing associations, and none of us wants that to happen. It could put in danger the Scottish Government’s target of building at least 50,000 affordable homes during this parliamentary session. The Conservative Party supports that goal. Meeting that target is a challenge, and we must ensure that failure to meet it is not an option. We need those houses now. It is therefore essential that the Office for National Statistics is able to reclassify housing associations as private bodies. The bill will enable exactly that by reducing and removing certain powers of the regulator, and we are happy to support that.

In keeping with the aim of moving away from the designation of housing associations as public sector bodies, it is welcome to see the proposals in section 9 to limit local authorities’ control over them. Giving ministers regulation-making powers for limiting or removing the influence that councils can have over housing associations is another necessary step to tackle the issue. It is very important that we ensure that that happens.

That is not to say that registered social landlords do not need to be regulated at all; they very much require to be regulated. It is vital that tenants can be confident in the knowledge that their homes are well maintained and that their tenancy is secure. A strong framework also gives funders of social housing the confidence to invest. That has been touched on already. There may be a lack of confidence to invest. We must ensure that that is not the case and that we manage to challenge that and ensure that investment happens.

The Scottish Conservatives are committed to strengthening building regulations to ensure the safety of the Scottish public and to increasing the number of affordable homes that are available across the country. We believe that the recommendations in the committee’s report and the bill seek to address the problems. Our aim is to strengthen and support any measures that will improve the housing sector. In turn, those measures will benefit communities throughout Scotland.

I support the bill.

The Deputy Presiding Officer (Christine Grahame)

I call Kevin Stewart to close for the Government. I was going to say that I call Alexander Stewart to do so. That would have been interesting.

16:54  

Kevin Stewart

As long as you did not call David Stewart, who is not present at the moment. Maybe there are too many Stewarts; actually, there are never too many Stewarts.

I would like to thank those members who participated in this afternoon’s debate. I certainly appreciate the consensus that there has been across the chamber and I am glad that members have supported the general principles of the bill today, and that they have recognised that it is necessary in order to protect the finances of the Scottish Government.

As members will know, this Government has a clear and defining reason for making housing a priority. Providing good-quality, warm and affordable housing is vital in order to create a fairer Scotland, to secure economic growth and to support and create jobs. At the heart of that sits our commitment to deliver at least 50,000 affordable homes over the course of this session of Parliament, with 35,000 of those being for social rent, which presents a huge opportunity to meet the various housing needs of communities right across the country.

I am pleased to say that we are making good progress on that commitment thanks to partners in councils, housing associations, and the construction industry. Recent statistics show that approvals for new housing association homes are up 33 per cent on the previous year, helping to lay the foundations for a pipeline of proposals that are capable of delivering against the remainder of the 50,000 target by 2020-21.

The Deputy Presiding Officer

Excuse me—there is too much chat in the chamber. What Mr Stewart is saying is riveting and members should be listening. [Laughter.]

Kevin Stewart

I hope that I can continue to be riveting. Maybe the heather will, after all, be set alight this afternoon.

Let me be quite clear. The role of housing associations is not just about providing good-quality housing and services for their tenants, or building new energy-efficient homes; it is also about creating jobs, supporting vulnerable people—as Elaine Smith pointed out—and acting as an anchor for some of the most deprived communities in our country.

Given the crucial role that housing associations play, I am delighted that the need for the bill and its general principles have, from the outset, had the support of the sector. Both the SFHA and the GWSF have acknowledged the need for the bill—not least to underline the status of housing associations as independent, private bodies that are partners with the public sector, but not controlled by it.

Housing associations are key partners for all of us, developing and managing high-quality, energy-efficient housing across the country, and delivering the range of services to their tenants that I mentioned. Beyond that, they do so much to build and sustain the communities in which they operate, and long may that continue.

We—and they—agree on the need for them to have a strong and effective independent regulator, working on behalf of homeless people, tenants and others who use their services. One of the key benefits of such regulation is the confidence that it gives to lenders. That confidence enables housing associations to borrow at favourable rates, helping them in turn to play their part in delivering affordable housing.

Maintaining lenders’ confidence has been an important objective for the Government during the development of the bill. That is why we have been in regular contact with their representative body—UK Finance—throughout the process, and why we have used our response to the stage 1 report to address concerns that they raised with us.

Another priority has been to ensure that housing associations continue to provide information requested by anyone under the environmental information regulations, as has been mentioned by many members this afternoon. I am pleased that the SFHA and GWSF share that priority, and I am grateful to them for confirming that they will be advising their members to continue responding positively to requests for environmental information even if, once the bill has been enacted and brought into force, the Scottish Information Commissioner decides that the regulations no longer apply to housing associations.

I hope that those examples illustrate the positive and constructive approach that we and stakeholders have taken to the issues that are raised by the bill. I welcome the input of the Local Government and Communities Committee, and I hope that that will continue during its stage 2 deliberations.

I thank the officials who have had to deal with what some members have said is rather a dry piece of legislation. Personally, I find it all quite exciting, as I do all housing matters. I hope that, at stage 2, we will continue to have the co-operation that we have enjoyed so far, and I thank you, Presiding Officer, for the opportunity to hold the stage 1 debate today.

The Presiding Officer (Ken Macintosh)

The first question is, that amendment S5M-11347.1, in the name of Rachael Hamilton, which seeks to amend motion S5M-11347, in the name of Fiona Hyslop, on Scotland’s support for the United Nations Educational, Scientific and Cultural Organization Convention for the Safeguarding of the Intangible Cultural Heritage, be agreed to. Are we agreed?

Members: No.

The Presiding Officer

There will be a division.

For

Balfour, Jeremy (Lothian) (Con)
Ballantyne, Michelle (South Scotland) (Con)
Bowman, Bill (North East Scotland) (Con)
Briggs, Miles (Lothian) (Con)
Burnett, Alexander (Aberdeenshire West) (Con)
Cameron, Donald (Highlands and Islands) (Con)
Carlaw, Jackson (Eastwood) (Con)
Carson, Finlay (Galloway and West Dumfries) (Con)
Chapman, Peter (North East Scotland) (Con)
Corry, Maurice (West Scotland) (Con)
Davidson, Ruth (Edinburgh Central) (Con)
Fraser, Murdo (Mid Scotland and Fife) (Con)
Greene, Jamie (West Scotland) (Con)
Halcro Johnston, Jamie (Highlands and Islands) (Con)
Hamilton, Rachael (Ettrick, Roxburgh and Berwickshire) (Con)
Kerr, Liam (North East Scotland) (Con)
Lindhurst, Gordon (Lothian) (Con)
Lockhart, Dean (Mid Scotland and Fife) (Con)
Mason, Tom (North East Scotland) (Con)
Mitchell, Margaret (Central Scotland) (Con)
Mountain, Edward (Highlands and Islands) (Con)
Scott, John (Ayr) (Con)
Simpson, Graham (Central Scotland) (Con)
Smith, Liz (Mid Scotland and Fife) (Con)
Stewart, Alexander (Mid Scotland and Fife) (Con)
Wells, Annie (Glasgow) (Con)
Whittle, Brian (South Scotland) (Con)

Against

Adam, George (Paisley) (SNP)
Adamson, Clare (Motherwell and Wishaw) (SNP)
Allan, Alasdair (Na h-Eileanan an Iar) (SNP)
Arthur, Tom (Renfrewshire South) (SNP)
Baillie, Jackie (Dumbarton) (Lab)
Baker, Claire (Mid Scotland and Fife) (Lab)
Beamish, Claudia (South Scotland) (Lab)
Beattie, Colin (Midlothian North and Musselburgh) (SNP)
Brown, Keith (Clackmannanshire and Dunblane) (SNP)
Coffey, Willie (Kilmarnock and Irvine Valley) (SNP)
Constance, Angela (Almond Valley) (SNP)
Crawford, Bruce (Stirling) (SNP)
Cunningham, Roseanna (Perthshire South and Kinross-shire) (SNP)
Denham, Ash (Edinburgh Eastern) (SNP)
Dey, Graeme (Angus South) (SNP)
Doris, Bob (Glasgow Maryhill and Springburn) (SNP)
Dugdale, Kezia (Lothian) (Lab)
Ewing, Annabelle (Cowdenbeath) (SNP)
Fabiani, Linda (East Kilbride) (SNP)
Findlay, Neil (Lothian) (Lab)
Finnie, John (Highlands and Islands) (Green)
FitzPatrick, Joe (Dundee City West) (SNP)
Forbes, Kate (Skye, Lochaber and Badenoch) (SNP)
Freeman, Jeane (Carrick, Cumnock and Doon Valley) (SNP)
Gibson, Kenneth (Cunninghame North) (SNP)
Gilruth, Jenny (Mid Fife and Glenrothes) (SNP)
Gougeon, Mairi (Angus North and Mearns) (SNP)
Grahame, Christine (Midlothian South, Tweeddale and Lauderdale) (SNP)
Gray, Iain (East Lothian) (Lab)
Griffin, Mark (Central Scotland) (Lab)
Harper, Emma (South Scotland) (SNP)
Harvie, Patrick (Glasgow) (Green)
Haughey, Clare (Rutherglen) (SNP)
Hepburn, Jamie (Cumbernauld and Kilsyth) (SNP)
Hyslop, Fiona (Linlithgow) (SNP)
Johnson, Daniel (Edinburgh Southern) (Lab)
Johnstone, Alison (Lothian) (Green)
Kelly, James (Glasgow) (Lab)
Kidd, Bill (Glasgow Anniesland) (SNP)
Lamont, Johann (Glasgow) (Lab)
Lennon, Monica (Central Scotland) (Lab)
Leonard, Richard (Central Scotland) (Lab)
Lyle, Richard (Uddingston and Bellshill) (SNP)
MacDonald, Angus (Falkirk East) (SNP)
MacDonald, Gordon (Edinburgh Pentlands) (SNP)
Macdonald, Lewis (North East Scotland) (Lab)
MacGregor, Fulton (Coatbridge and Chryston) (SNP)
Mackay, Derek (Renfrewshire North and West) (SNP)
Mackay, Rona (Strathkelvin and Bearsden) (SNP)
Macpherson, Ben (Edinburgh Northern and Leith) (SNP)
Maguire, Ruth (Cunninghame South) (SNP)
Mason, John (Glasgow Shettleston) (SNP)
Matheson, Michael (Falkirk West) (SNP)
McAlpine, Joan (South Scotland) (SNP)
McKee, Ivan (Glasgow Provan) (SNP)
McKelvie, Christina (Hamilton, Larkhall and Stonehouse) (SNP)
McMillan, Stuart (Greenock and Inverclyde) (SNP)
Rennie, Willie (North East Fife) (LD)
Robison, Shona (Dundee City East) (SNP)
Ross, Gail (Caithness, Sutherland and Ross) (SNP)
Rowley, Alex (Mid Scotland and Fife) (Lab)
Rumbles, Mike (North East Scotland) (LD)
Ruskell, Mark (Mid Scotland and Fife) (Green)
Russell, Michael (Argyll and Bute) (SNP)
Sarwar, Anas (Glasgow) (Lab)
Smith, Elaine (Central Scotland) (Lab)
Smyth, Colin (South Scotland) (Lab)
Somerville, Shirley-Anne (Dunfermline) (SNP)
Stevenson, Stewart (Banffshire and Buchan Coast) (SNP)
Stewart, Kevin (Aberdeen Central) (SNP)
Swinney, John (Perthshire North) (SNP)
Todd, Maree (Highlands and Islands) (SNP)
Torrance, David (Kirkcaldy) (SNP)
Watt, Maureen (Aberdeen South and North Kincardine) (SNP)
Wheelhouse, Paul (South Scotland) (SNP)
White, Sandra (Glasgow Kelvin) (SNP)
Wightman, Andy (Lothian) (Green)
Yousaf, Humza (Glasgow Pollok) (SNP)

The Presiding Officer

The result of the division is: For 27, Against 78, Abstentions 0.

Amendment disagreed to.

The Presiding Officer

The next question is, that motion S5M-11347, in the name of Fiona Hyslop, be agreed to.

Motion agreed to,

That the Parliament notes the terms and purposes of the Convention for the Safeguarding of Intangible Cultural Heritage, which was adopted by UNESCO in 2003, and calls on the UK Government to ratify it.

The Presiding Officer

The next question is, that motion S5M-11350, in the name of Kevin Stewart, on the Housing (Amendment) (Scotland) Bill at stage 1, be agreed to.

Motion agreed to,

That the Parliament agrees to the general principles of the Housing (Amendment) (Scotland) Bill.

The Presiding Officer

The next question is, that motion S5M-11345, in the name of Humza Yousaf, on the Laser Misuse (Vehicles) Bill, be agreed to.

Motion agreed to,

That the Parliament agrees that the relevant provisions of the Laser Misuse (Vehicles) Bill, which completed House of Lords report stage on 27 February 2018, relating to the creation of a new offence regarding the misuse of lasers in relation to vehicles, so far as these matters fall within the legislative competence of the Scottish Parliament, should be considered by the UK Parliament.

The Presiding Officer

The final question is, that motion S5M-11397, in the name of Joe FitzPatrick, on behalf of the Parliamentary Bureau, on substitution on committees, be agreed to.

Motion agreed to,

That the Parliament agrees that Neil Bibby be appointed to replace Alex Rowley as the Scottish Labour Party substitute on the Delegated Powers and Law Reform Committee.

Meeting closed at 17:02.  

The Convener (Bob Doris)

Good morning and welcome to the 15th meeting in 2018 of the Local Government and Communities Committee. I remind everyone to turn off their mobile phones. Meeting papers are provided in a digital format, so members may use tablets during the meeting. We have a full house this morning; no apologies have been received from members of the committee.

We move to item 1. I welcome the Minister for Local Government and Housing, Kevin Stewart MSP, and his accompanying officials. Our task is to consider one amendment to the bill, which the minister has lodged. In addition, we are required formally to agree to each section of the bill at the appropriate point.

Only members of the committee are permitted to vote in the proceedings. Members should have a copy of the bill and the marshalled list. As only one amendment has been lodged, there are no groupings.

I will call the minister to speak to and move amendment 1, then invite other members of the committee to contribute if they wish to do so, before asking the minister to wind up, if that is required, and say whether he intends to press or seek to withdraw the amendment. If the amendment is not withdrawn, I will put the question on it, and if any members do not agree to it I will call a division, which will be conducted by a show of hands. If the result is a tie, I, as convener, will exercise the casting vote.

Those are the rules and housekeeping arrangements. Let us get started.

Sections 1 to 9 agreed to.

After section 9

The Convener

I call amendment 1, in the name of the minister.

The Minister for Local Government and Housing (Kevin Stewart)

Thank you, convener.

Amendment 1 will introduce a sunset clause: that is, a time limit of three years on the Scottish ministers’ powers to make regulations under sections 8 and 9 of the bill. Those powers will expire three years after the bill receives royal assent.

In the stage 1 debate, I confirmed that we would introduce the sunset clause to address the concerns that this committee, the Delegated Powers and Law Reform Committee and stakeholders—in particular, UK Finance—had raised about the open-ended nature of the powers that sections 8 and 9 would confer on ministers, as the bill stands.

Let me explain the background to the issue. Section 8 gives ministers the power to make further modifications to the functions of the Scottish Housing Regulator, beyond those that the bill makes. Ministers would exercise the power in section 8 only if, when the bill is enacted, the Office for National Statistics were formally to conclude that the changes to the regulator’s functions in the bill as passed were not enough to enable it to reclassify registered social landlords back to the private sector. In that event, the power would enable ministers to respond quickly to the ONS’s finding and make whatever adjustments were required in order to secure reclassification.

Ministers would use the power only in the circumstances that I have described. In the light of discussions that we have had with ONS officials about the bill’s provisions, it appears to be unlikely that we will need to use the power. It remains, however, a sensible precaution to have the ability to act if we need to do so. The regulation-making power is subject to affirmative procedure, so in the event that its use was necessary, Parliament would be able to scrutinise any provision that was being made.

The power that will be conferred by section 9 is different, in that we know that we will need to use it before the ONS can review the classification of RSLs. That power enables ministers to make regulations that limit or remove the influence that local authorities may exert over RSLs through any ability that they have to appoint officers to the RSL or to exercise certain voting rights.

As I said at stage 1, we will use the power to make regulations that specify that local authorities may nominate only up to 24 per cent of the board members of an RSL, and that they may not exercise control over RSLs, for example through powers of veto over an RSL. Subject to Parliament passing the bill at stage 3, we expect to lay those regulations in September.

In the case of both sections, there will be no need for a continuing power to make regulations. Therefore, the Government is happy to introduce a sunset clause in order to reassure the committee and stakeholders that the power will not be open ended. I trust that that is acceptable to the committee, and I urge members to support amendment 1.

I move amendment 1.

Graham Simpson (Central Scotland) (Con)

I welcome amendment 1 and the fact that the Scottish Government has taken on board the comments from the DPLR Committee, this committee and other stakeholders. I fully support amendment 1.

The Convener

No other member wants to comment. Do you want to wind up, minister?

Kevin Stewart

I think that I have said everything that I need to say, thank you.

Amendment 1 agreed to.

Sections 10 and 11 agreed to.

Long title agreed to.

The Convener

That ends stage 2 consideration of the bill. I thank the minister.

The Presiding Officer (Ken Macintosh)

Before the stage 3 debate on the Housing (Amendment) (Scotland) Bill begins, I am required under standing orders to decide whether any provision of the bill relates to a protected subject matter—that is, whether it will modify the electoral system and franchise for Scottish Parliament elections. I have decided that no provision of the bill relates to a protected subject matter, and that therefore it does not require a supermajority for it to be passed at stage 3.

The Deputy Presiding Officer will take the chair.

The Deputy Presiding Officer (Christine Grahame)

We have no time in hand, so I must be extremely strict about speaking times. [Interruption.] I cannot find my glasses, so the clerk is telling me who the first speaker will be.

The next item of business is a debate on motion S5M-12483, in the name of Kevin Stewart, on the Housing (Amendment) (Scotland) Bill, at stage 3.

I call Kevin Stewart to speak to and move the motion, and I will try to find my glasses.

15:54  

The Minister for Local Government and Housing (Kevin Stewart)

Presiding Officer, I am happy to lend you my glasses, if that will help. Oh—I see that you have found yours. That is fine.

I am delighted to have the opportunity to open the stage 3 debate on the Housing (Amendment) (Scotland) Bill. I thank the convener and the members of the Local Government and Communities Committee for their careful scrutiny of the bill. The cross-party support that the bill continues to receive is very welcome.

I have made it clear all along that the bill is a short but essential measure, and that it is necessary because of the decision by the Office for National Statistics to classify registered social landlords as public sector bodies in the national accounts. The bill will amend a number of the powers that the Scottish Housing Regulator can exercise over RSLs, while also providing for ministers to limit local authorities’ powers over housing associations.

If the classification decision by the ONS was left unchanged, the Scottish Government would face significant financial consequences, with all new net borrowing by RSLs—which would previously have counted as private borrowing—being counted against the Scottish Government’s borrowing limits, which would in effect add £1.5 billion to our £3 billion housing investment programme.

There was clear agreement in the chamber during the stage 1 debate that should we take no action to ensure that RSLs were reclassified back to the private sector, we would be putting at risk the Government’s commitment to deliver 50,000 new affordable homes. That is a risk that we simply cannot take.

As well as its having support in the chamber, I am delighted that stakeholders have also recognised the need for the bill and that they support its general principles. We continue to work in partnership with key organisations including the Scottish Federation of Housing Associations, the Glasgow and West of Scotland Forum of Housing Associations and UK Finance, which have greatly assisted us in developing a focused bill that addresses the matter at hand.

The Deputy Presiding Officer may recall that during the stage 1 debate I confirmed that the Scottish Government would lodge an amendment that would provide for the regulation-making powers in sections 8 and 9 of the bill to expire three years after the bill receives royal assent. By way of background, section 8 of the bill gives ministers the power to make further modifications to the functions of the SHR, beyond those that the bill makes. I have been clear that we would exercise the power in section 8 only if, after the bill has been enacted, the ONS were to conclude formally that the changes to the Scottish Housing Regulator’s functions are not enough to enable it to reclassify RSLs back to the private sector.

Section 9 is different in that we know that we will need to use the power that it confers before the ONS can review the classification of RSLs. That power will enable ministers to make regulations that limit or remove the influence that local authorities might exert over RSLs through any ability that they might have to appoint officers or to exercise certain voting rights. We expect, subject to Parliament passing the bill for royal assent, that section 9 regulations will be laid before Parliament in early September.

Although such regulation-making powers are a sensible precaution, we took on board the concerns of stakeholders, the Delegated Powers and Law Reform Committee and the Local Government and Communities Committee, which expressed concerns about the open-ended nature of the provisions. I am therefore delighted that the Local Government and Communities Committee agreed unanimously on 9 May to a sunset clause amendment.

That brings us to today’s important debate. I thank Parliament once again for the opportunity to speak about the Housing (Amendment) (Scotland) Bill and the crucial role that it will play in ensuring that we can deliver our ambitious affordable housing programme. I look forward to hearing the views of other members on this important issue.

It gives me great pleasure to move,

That the Parliament agrees that the Housing (Amendment) (Scotland) Bill be passed.

The Deputy Presiding Officer

I call Graham Simpson to open for the Conservatives. You have five minutes, please.

15:59  

Graham Simpson (Central Scotland) (Con)

I certainly do not intend to speak for five minutes. It is important, if not—dare I say it—vital to the social housing sector that this technical and uncontroversial bill be passed. If the bill were not to be passed, that would make it extremely difficult for housing associations to play their part in meeting the Government’s affordable homes target.

Housing associations were classed as private bodies for accounting purposes until the Office for National Statistics decided to change their status to public bodies. The effect of the change was that any borrowing that they made would count against the Scottish Government’s borrowing limits, which would, in turn, mean that the Government might have had to limit what RSLs could borrow, which would not be good. In order to get over that hurdle, we need to reclassify RSLs as private sector bodies. Consequently, it is necessary to loosen the SHR’s powers over them. Therefore, the effect of the bill will be to allow housing associations to enjoy more freedoms, and to enable them to deliver more.

The bill narrows the powers of the regulator to appoint a manager to a housing association, and to remove, suspend and appoint officers. It also removes the need for the regulator’s consent for disposal of land and housing assets by an RSL, and the need for the regulator’s consent for changes to the constitution of an RSL and for the voluntary winding-up, dissolution and restructuring of an RSL, while protecting tenants’ rights to be consulted about certain changes. It also provides Scottish ministers with regulation-making powers to limit the influence that a local authority has over an RSL.

As the minister has said, there was, at stage 2, only one amendment, which added a three-year sunset clause to ministers’ regulation-making powers under sections 8 and 9. The change was a response to concerns that the Local Government and Communities Committee, the Delegated Powers and Law Reform Committee and bodies including UK Finance had raised about the open-ended nature of the powers.

My short speech shows how uncontroversial the proceedings have been. The sector wants and needs the legislation; Parliament wants it, too. We should proceed without any fuss.

I am well under my allotted five minutes, and I intend to sit down.

The Deputy Presiding Officer

Nobody is pressing you to stand for any longer than is necessary, Mr Simpson.

16:02  

Mark Griffin (Central Scotland) (Lab)

We have moved to stage 3 without any amendments being lodged at this stage. The fact that this will be a short and agreeable debate shows just how uncontroversial and sensible the bill is. Labour will vote for the bill at decision time in order to protect the provision of affordable and social housing.

I take the opportunity to thank the parliamentary clerks, the professionals across the registered social landlords sector and the SFHA, in particular, for helping to ensure that the bill has progressed so smoothly. Thanks are also due to the Minister for Local Government and Housing, the Local Government and Communities Committee, and my colleagues Elaine Smith, Monica Lennon and Alex Rowley, who have worked on the bill these past few months.

On paper, we are changing how housing associations are regarded for the purposes of national accounts. Although at first glance the effect of the bill is fairly minor, it is clear to me that the issue under debate—ownership of housing and how the system is structured to protect social and public housing—needs thoughtful consideration.

By legislating to protect the future of social and co-operative housing, we are again working to support Scotland’s efforts to tackle poverty by building 50,000 more affordable homes.

In the stage 1 debate, my colleague Elaine Smith remarked that she is

“not naturally drawn to reclassifying a body from the public ... to the private sector.—[Official Report, 29 March 2018; c 102.]

I think that most of us would take that position, although we accept that we must legislate in order to protect the Scottish budget and the ability of RSLs to build desperately needed new homes.

It is because of Brexit and universal credit that RSLs face new challenges to secure debt and to building the 50,000 affordable homes, so adding the risk of not acting would simply be the wrong thing to do.

The bill will change not only the status of the RSLs, but the powers of the regulator. In particular, it will allow it to intervene in struggling RSLs and to access information.

In March, Andy Wightman rightly spoke about the need to involve tenants better in RSLs. If an RSL is being run well—with tenants and not for them—we should have nothing to fear. However, there is more work to do to ensure that tenants, the regulator and local representatives can speak up and get the information that they need to challenge management or intervene.

Given that we have begun a thoughtful debate about ownership, perhaps we need to think more fully about how tenant participation can be improved and how housing associations will report. Although lenders will require clear accountability from RSLs, it is welcome that the SFHA has committed to maintaining current standards, and that the Government has committed to moving towards freedom of information.

The bill has allowed some space for more debate about the housing sector: long may that continue. For today, I encourage members to support the bill so that RSLs can get on with playing their part in building the 50,000 homes, which is vital if we are to tackle poverty and solve Scotland’s housing crisis.

16:05  

Andy Wightman (Lothian) (Green)

I thank the minister and my colleagues on the Local Government and Communities Committee who have been scrutinising the bill. It is fair to say that it has not been the most challenging bill to scrutinise but, nevertheless, we have done our job well. It is the first piece of legislation that the committee has dealt with. The second one—the Planning (Scotland) Bill—will present somewhat different challenges.

The bill is technical. At stage 1, I said that I agreed entirely with the minister’s remarks in his opening speech and, today, for the second time, I can say that I agree entirely with his opening remarks. I also agree with Graham Simpson’s remarks. We will vote for the bill at decision time, but I will not rehearse the reasons why; instead, I will use the next couple of minutes to reflect further on what we need to do to secure the human right to an affordable warm home, to which everyone is entitled.

As I observed at stage 1, the collective provision of housing has a long history. Here in Edinburgh, for example, the Edinburgh Co-operative Building Company was established in 1861 and was made up of workers from many different trades, including stonemasons, joiners, plasterers and plumbers. The poor state of housing in the old town and soaring prices in the new town meant that Edinburgh artisans were in desperate need of good-quality affordable housing. The company set about building its first colonies at Glenogle park in Stockbridge, and the 11 terraces were completed between 1861 and 1872. Indeed, I think that some members of the Parliament and certainly some House of Commons members live there. The colonies offered an alternative to traditional tenement accommodation and were intended to be flats that felt like houses, with each family having its own front door and garden.

Kevin Stewart

Does Mr Wightman agree that it is good to see the likes of the Port of Leith Housing Association develop new colony housing in the Leith Fort area?

Andy Wightman

Yes. I have visited that development and it is very impressive. That underscores the need to have much more public-led development of affordable housing to a high standard and with good design.

The co-operative nature of the Edinburgh Co-operative Building Company was reflected in its motif of a beehive and in the fact that workers could buy shares in the company, the dividends of which could be put towards purchasing a house. Over the past 150 years, there have been many other examples of co-operation. Housing associations have played an important role in the housing story since the recognition of registered housing associations in the Housing (Scotland) Act 1974. In a debate such as this, it is important to acknowledge the good work of housing associations and particularly rural social landlords such as Lochaber Housing Association and Waverley Housing, which is in the Scottish Borders, as well as the many urban organisations.

Although today we affirm the value and validity of housing associations as private organisations, we should be mindful of the need to broaden out the debate on how to provide affordable homes, reflecting in part on the history of the co-operative movement in housing. We need to resurrect the co-operative principles of the past, refreshed for the modern era by making legislative, policy and fiscal changes to promote them as well as other models such as co-housing. As Mark Griffin pointed out, we need full democratic involvement of tenants in housing associations and council housing. Importantly, we need radical reform in the private sector. For example, in Sweden, the Swedish Union of Tenants collectively bargains with landlords across the whole of Sweden over the rents of 1.4 million tenants. That is the gold standard for tenant participation and rent regulation to which we should aspire in this country.

Those are the kind of next steps that we need. I look forward to engaging with members in the debate on that over the next couple of years. In the meantime, I agree with the general principles of the Housing (Amendment) (Scotland) Bill, and Greens will vote for it at decision time.

16:10  

Bob Doris (Glasgow Maryhill and Springburn) (SNP)

It was a privilege to be the convener of the Local Government and Communities Committee as the bill was making its way through the committee stages. I thank my fellow committee members and everyone who gave evidence to the committee, including Mr Stewart, for their constructive and collegiate approach to this rather technical bill.

The bill must be passed. If it is not passed, as we heard, the Office for National Statistics will reclassify RSLs, which could take the Scottish Government’s borrowing past the maximum permitted limit of £3 billion to £4.5 billion, which would be illegal, given the constraints of the devolution settlement. Cuts would be required elsewhere and there would be an impact on our target of building 50,000 affordable homes, among other things. That is just a fact.

It is also a fact that the bill must limit the Scottish Housing Regulator’s powers to intervene and limit local authorities’ influence over registered social landlords.

I am glad that there is now a sunset clause in the bill. We will not know whether the bill will do what it says on the tin until it has been passed and the ONS makes its decision, so the Scottish Government will need the power to act after the bill has been passed, to ensure that we have got the approach right. I am delighted that the presence of the sunset clause ensures that the new powers are not open ended.

Just as important, I am delighted that UK Finance supports the bill. Despite the Scottish Government’s significant investment in social housing across the country, housing associations and registered social landlords still have to borrow money in the commercial sector to make up the shortfall so that they can invest in housing development. It is therefore vital that UK Finance should have confidence in the system.

We should have confidence in our registered social landlords. The bill will give them additional freedoms—it will give them the freedom to flourish. I will talk about ways in which they are flourishing already, but first let me say that, as a constituency member of the Scottish Parliament, I know that when I hear a tenant’s opinion of their social landlord it is often because the tenant has an issue as a result of their interaction with the landlord. Members therefore sometimes get a slightly jaundiced view of social landlords.

In my constituency, however, the wider role of registered social landlords is a significant success story, and when the bill is enacted RSLs will be able to take an even wider role. When I use the phrase “freedom to flourish”, I am thinking about NG Homes, in the north of my constituency, which invests in the pitstops project, in partnership with School of Hard Knocks. The project brings together people who are very far from the employment market and gives them teamwork activities—rugby is the common thread—to get them closer to employment, and it has had huge success. I am thinking about the sports co-ordinators that RSLs appoint.

The Scottish Government does not have to intervene in the activities of registered social landlords, because they are doing pretty well already. That is the experience in my constituency. RSLs know their communities best, and the bill will give them the power to do more.

Queens Cross Housing Association, in my constituency, has a community chest fund, which it uses to alleviate poverty, not just for tenants but for residents more widely in the local community.

I could go on at length about the variety of benefits that registered social landlords provide to communities, but I will not do so, Presiding Officer—oh, I see that you are indicating that there is some time in hand. Let me tell members some more, then.

Registered social landlords should be empowered to do more to regenerate our communities. In Royston, for example, Copperworks Housing Association, Spire View Housing Association, Blochairn Housing Association and Glasgow Housing Association are producing a local place plan—although such plans will not be on a statutory footing until the Planning (Scotland) Bill has been passed—about regeneration in their communities, because they know their communities best. Cadder Housing Association is doing something similar, through its emerging Cadder vision.

I have talked about the good work that housing associations are doing, and I will leave it at that. We have nothing to fear from the bill, because registered social landlords are already doing a fantastic job, throughout my constituency and throughout Scotland. The bill is a technical bill, which will enable RSLs to get on with the job and ensure that we can continue to invest in our communities and social housing stock the length and breadth of Scotland.

16:15  

Alex Rowley (Mid Scotland and Fife) (Lab)

It is difficult to know what else can be said about the bill, given the consensus in the chamber. I thank the minister and the Local Government and Communities Committee for the work that they have done on the bill.

As Kevin Stewart said, although the bill is technical, it is absolutely necessary. If we were to lose £1.5 billion of the £3 billion of much-needed investment in Scotland, that would create a major difficulty. We all agree that, as Shelter has set out many times, there is a housing crisis in Scotland that we need to tackle, and I know that the minister is absolutely committed to working with local government to make that happen. This morning, I read Shelter’s “Review of Strategic Investment Plans for Affordable Housing”, which it published in February, and it suggests that we are on track with building the much-needed houses.

As housing associations have built new houses over the past decade, they have included houses for people with specific needs. That is certainly the case in Fife, where my experience is from. They have been good at building specific housing for older people and people with disabilities. As we know, the housing crisis is not just about the lack of housing, although that is the key factor. It is also the case that demographics are changing in our country.

Kevin Stewart

I totally agree that we have to get the housing right for people’s needs in various areas. When I was in Cupar in Fife recently, I was pleased to see that Kingdom Housing Association is building a new development with larger housing that has more bedrooms for larger families, and wheelchair-accessible housing. I want to see such schemes across Scotland. I have made it quite clear that, in terms of subsidy, there will be flexibility in that regard for specialist housing and the larger homes that are required.

Alex Rowley

Absolutely.

As Mark Griffin said, although the bill is technical, it has allowed housing to be debated again. There was a time in politics when housing was up there among the key issues on the agenda. Indeed, at one point, the issue was so influential that it could bring down the Government of the day, but sadly it has slipped back. We need to get it back up there.

The specific-needs housing that is built also has a knock-on effect, and in that regard we need to look at the types of housing that are being built within the 35,000 houses for social rent. I do not know whether other members have experienced this, but while doing street surgeries I have talked to people who live in large houses that they have brought their families up in and who want to move to smaller houses, but who find that the only thing that the council has to offer is flats. If people have had a house with a back and a front door and they have brought up their family there, why would they move in their later years to a flat somewhere and a different way of living?

The more that we build housing specifically for older people and people with disabilities, the more we create a chain reaction that frees up houses for families, and in that way we will get more out of the housing stock.

I welcome the bill, because it would have been devastating to lose the investment. We have got it, and we should move forward and continue to build on the consensus in this Parliament that we should, and we will, tackle Scotland’s housing crisis.

The Deputy Presiding Officer

That is the end of the open debate. I call Mark Griffin to close for Labour.

16:19  

Mark Griffin

I am pleased that today’s debate has given confirmation—if any were needed—that the Housing (Amendment) (Scotland) Bill will be passed and that social and co-operative housing will be protected. We have spoken again about the importance of, and ownership of, housing, and I am pleased that we have had that discussion.

Earlier, I spoke about our ambition to hit Scotland’s affordable housing target of delivering 50,000 homes by the next election. Although Scottish Labour would want to go further than that, the important thing is that we create the conditions in which to deliver that number.

The technicalities of the bill might be boring, but the legislation secures the Scottish budget and the investment that we can make in affordable housing while ensuring that RSLs can borrow effectively. The protection of the Scottish budget also ensures that local authorities can secure grants and deliver social housing. In the Central Scotland region, North Lanarkshire Council has set out its plans not only to deliver, by 2027, 5,000 new homes that will provide warm, safe roofs over the heads of Scotland’s poorest families, but to do so affordably. That is why we must set the right conditions for delivering them. As with housing associations and co-operatives, the proceeds can go back into the system—not to landlords or buy-to-let lenders—and workers in North Lanarkshire and across the country will benefit from the boost to jobs.

It has been a busy week for housing. The Parliament has begun its debate on the Planning (Scotland) Bill and the Government has been lobbied to put ambitious finishing touches to the proposed warm homes bill. I dare say that the minister has more vigorous legislative challenges ahead that are key to delivering those housing targets. Nevertheless, as much as any other piece of legislation, this bill is vital to securing much-needed homes, and I am glad that we have set out our agreement to protect part of our housing sector today.

The Deputy Presiding Officer

I call Kevin Stewart to wind up the debate. If you could keep going until 4.30, minister, I would be most obliged.

16:21  

Kevin Stewart

Graham Simpson has obviously not taken his opportunity to wind up today. I did not expect to have eight minutes, Presiding Officer, but I am sure that I can keep going. I am not sure that I will wax lyrical, but I will keep going until 4.30.

I am grateful to members right across the chamber for their helpful and constructive contributions to the debate, and I thank everyone who has been involved with the bill. Although, in some regards, it has been easy for us, as parliamentarians, to scrutinise the bill, I ask members to spare a thought for my officials who have had to deal with this piece of legislation, which is more complex than many people might think. Although it is highly technical, it has required a lot of work, and I thank my officials for their efforts in that regard. I also really appreciate members’ cross-party support. It might be easier for me to get a piece of legislation passed at stage 3 on this occasion than it will be in the future, but—hey—maybe we will have consensus on things to come, too.

As all members will know, the Government has a clear and defining reason for making housing a priority: the provision of good-quality, warm and affordable homes is vital to creating a fairer Scotland, securing economic growth and supporting and creating jobs right across our country. At the heart of that vision sits our commitment to deliver at least 50,000 affordable homes over the course of this session of Parliament, with 35,000 of those being for social rent.

Andy Wightman

A couple of weeks ago, the First Minister confirmed that the Scottish Government’s target is to build—I stress the word “build”—50,000 affordable homes. Is that the minister’s understanding, and will the report against that target cover how many homes have actually been built?

Kevin Stewart

I want to deliver more than 50,000 affordable homes, but I can do so only with the co-operation of local authorities and housing associations. One of the things for which I have been known is flexibility on local authorities meeting needs in their areas. Some of them will buy housing off the shelf or will buy back in order to allow people to move, and I am not going to remove that flexibility.

Our £3 billion investment will deliver many more than 50,000 affordable homes, and more homes will be built right across the country, including the housing for people with varying needs that Mr Rowley mentioned, such as for disabled people and for those needing larger homes. I rely on local authorities and housing associations to make good use of their knowledge of housing need and demand assessments and of local housing strategies to deliver for all the people of Scotland. I am pleased that we had the opportunity to debate that issue last night, during Joan McAlpine’s members’ business debate, and that these debates are becoming more consensual.

During the previous parliamentary session, we delivered more than 33,000 affordable homes, which was 10 per cent above the target of 30,000. The Government intends to build on that great achievement with the co-operation of stakeholders, and we are making good progress towards our target, as Mr Rowley pointed out. The Shelter report shows that we are on track, so it is not only me and the Government who are saying that; stakeholders are also saying it. However, we cannot be—and I will never be—complacent in that regard.

Recent statistics show that the number of approvals for new housing association homes is up by 33 per cent on the previous year, laying the foundations for a pipeline of proposals that are capable of delivering the remainder of the 50,000 homes by 2020-21.

At a local level, there are good examples of progress on increasing the pace of delivery. Those include the use of public sector land to deliver more than 200 affordable homes at the Craiginches site in Aberdeen, charitable bond donations delivering homes for social rent and the expansion of housing association activity into new geographic areas, such as in Cunninghame Housing Association moving from its traditional Ayrshire area to Dumfries and Galloway. Some housing associations have joined with others to provide agency support for partners that have limited or no development experience, which has allowed more partners that can provide affordable housing to enter the programme and which provides efficient ways of working together to increase the availability of affordable housing. Housing associations and councils have also partnered with developers, and the housing infrastructure fund has been used to unlock housing development in many parts of the country.

All of that is, of course, a testament to the hard work and determination that has been shown by the sector—in particular, by housing associations, whose role is pivotal to the achievement of our challenging target. Their role is not just about providing good-quality housing and services for tenants or building energy-efficient homes; it is about creating jobs, supporting vulnerable people and acting as anchors for some of the most deprived communities in Scotland.

Clare Adamson (Motherwell and Wishaw) (SNP)

The minister will remember attending with me an event with the Building Research Establishment at Ravenscraig, at which we were shown innovative specialist buildings for people with disabilities and dementia. Will he expand on those initiatives?

Kevin Stewart

That was a very good visit, which showed what can be done to make a house dementia friendly. We must use what we learn from the BRE and other places, so that those technologies and knowledge go into homes. In that way, we can keep people at home and independent for longer—I am sure that all members across the chamber want to see that.

Although the bill is technical, it makes important changes that will enable us to continue to work towards our ambitious housing targets. After hearing today’s speeches, I am hopeful that the Parliament will pass the bill unanimously come decision time, and I hope that our next debate on housing is as consensual as this one has been.

The Presiding Officer (Ken Macintosh)

There is one question to be put as a result of today’s business. The question is, that motion S5M-12483, in the name of Kevin Stewart, on the Housing (Amendment) (Scotland) Bill at stage 3, be agreed to. Because it is a question on a bill at stage 3, we will have a division. Members should cast their votes now.

For

Adam, George (Paisley) (SNP)
Adamson, Clare (Motherwell and Wishaw) (SNP)
Allan, Alasdair (Na h-Eileanan an Iar) (SNP)
Arthur, Tom (Renfrewshire South) (SNP)
Baillie, Jackie (Dumbarton) (Lab)
Baker, Claire (Mid Scotland and Fife) (Lab)
Balfour, Jeremy (Lothian) (Con)
Ballantyne, Michelle (South Scotland) (Con)
Beamish, Claudia (South Scotland) (Lab)
Beattie, Colin (Midlothian North and Musselburgh) (SNP)
Bibby, Neil (West Scotland) (Lab)
Bowman, Bill (North East Scotland) (Con)
Briggs, Miles (Lothian) (Con)
Burnett, Alexander (Aberdeenshire West) (Con)
Campbell, Aileen (Clydesdale) (SNP)
Carlaw, Jackson (Eastwood) (Con)
Carson, Finlay (Galloway and West Dumfries) (Con)
Chapman, Peter (North East Scotland) (Con)
Coffey, Willie (Kilmarnock and Irvine Valley) (SNP)
Constance, Angela (Almond Valley) (SNP)
Corry, Maurice (West Scotland) (Con)
Crawford, Bruce (Stirling) (SNP)
Cunningham, Roseanna (Perthshire South and Kinross-shire) (SNP)
Davidson, Ruth (Edinburgh Central) (Con)
Denham, Ash (Edinburgh Eastern) (SNP)
Dey, Graeme (Angus South) (SNP)
Doris, Bob (Glasgow Maryhill and Springburn) (SNP)
Dornan, James (Glasgow Cathcart) (SNP)
Dugdale, Kezia (Lothian) (Lab)
Ewing, Annabelle (Cowdenbeath) (SNP)
Fabiani, Linda (East Kilbride) (SNP)
Fee, Mary (West Scotland) (Lab)
Findlay, Neil (Lothian) (Lab)
Finnie, John (Highlands and Islands) (Green)
FitzPatrick, Joe (Dundee City West) (SNP)
Forbes, Kate (Skye, Lochaber and Badenoch) (SNP)
Fraser, Murdo (Mid Scotland and Fife) (Con)
Freeman, Jeane (Carrick, Cumnock and Doon Valley) (SNP)
Gibson, Kenneth (Cunninghame North) (SNP)
Gilruth, Jenny (Mid Fife and Glenrothes) (SNP)
Grahame, Christine (Midlothian South, Tweeddale and Lauderdale) (SNP)
Grant, Rhoda (Highlands and Islands) (Lab)
Greene, Jamie (West Scotland) (Con)
Greer, Ross (West Scotland) (Green)
Griffin, Mark (Central Scotland) (Lab)
Halcro Johnston, Jamie (Highlands and Islands) (Con)
Hamilton, Rachael (Ettrick, Roxburgh and Berwickshire) (Con)
Harper, Emma (South Scotland) (SNP)
Harris, Alison (Central Scotland) (Con)
Harvie, Patrick (Glasgow) (Green)
Haughey, Clare (Rutherglen) (SNP)
Hepburn, Jamie (Cumbernauld and Kilsyth) (SNP)
Hyslop, Fiona (Linlithgow) (SNP)
Johnson, Daniel (Edinburgh Southern) (Lab)
Johnstone, Alison (Lothian) (Green)
Kelly, James (Glasgow) (Lab)
Kerr, Liam (North East Scotland) (Con)
Kidd, Bill (Glasgow Anniesland) (SNP)
Lamont, Johann (Glasgow) (Lab)
Leonard, Richard (Central Scotland) (Lab)
Lindhurst, Gordon (Lothian) (Con)
Lochhead, Richard (Moray) (SNP)
Lockhart, Dean (Mid Scotland and Fife) (Con)
Lyle, Richard (Uddingston and Bellshill) (SNP)
MacDonald, Angus (Falkirk East) (SNP)
MacDonald, Gordon (Edinburgh Pentlands) (SNP)
Macdonald, Lewis (North East Scotland) (Lab)
MacGregor, Fulton (Coatbridge and Chryston) (SNP)
Mackay, Derek (Renfrewshire North and West) (SNP)
Mackay, Rona (Strathkelvin and Bearsden) (SNP)
Macpherson, Ben (Edinburgh Northern and Leith) (SNP)
Maguire, Ruth (Cunninghame South) (SNP)
Marra, Jenny (North East Scotland) (Lab)
Martin, Gillian (Aberdeenshire East) (SNP)
Mason, John (Glasgow Shettleston) (SNP)
Mason, Tom (North East Scotland) (Con)
Matheson, Michael (Falkirk West) (SNP)
McAlpine, Joan (South Scotland) (SNP)
McArthur, Liam (Orkney Islands) (LD)
McKee, Ivan (Glasgow Provan) (SNP)
McKelvie, Christina (Hamilton, Larkhall and Stonehouse) (SNP)
McMillan, Stuart (Greenock and Inverclyde) (SNP)
Mountain, Edward (Highlands and Islands) (Con)
Mundell, Oliver (Dumfriesshire) (Con)
Neil, Alex (Airdrie and Shotts) (SNP)
Paterson, Gil (Clydebank and Milngavie) (SNP)
Rennie, Willie (North East Fife) (LD)
Robison, Shona (Dundee City East) (SNP)
Ross, Gail (Caithness, Sutherland and Ross) (SNP)
Rowley, Alex (Mid Scotland and Fife) (Lab)
Rumbles, Mike (North East Scotland) (LD)
Ruskell, Mark (Mid Scotland and Fife) (Green)
Russell, Michael (Argyll and Bute) (SNP)
Sarwar, Anas (Glasgow) (Lab)
Scott, John (Ayr) (Con)
Scott, Tavish (Shetland Islands) (LD)
Simpson, Graham (Central Scotland) (Con)
Smith, Elaine (Central Scotland) (Lab)
Smith, Liz (Mid Scotland and Fife) (Con)
Somerville, Shirley-Anne (Dunfermline) (SNP)
Stevenson, Stewart (Banffshire and Buchan Coast) (SNP)
Stewart, Alexander (Mid Scotland and Fife) (Con)
Stewart, David (Highlands and Islands) (Lab)
Stewart, Kevin (Aberdeen Central) (SNP)
Swinney, John (Perthshire North) (SNP)
Todd, Maree (Highlands and Islands) (SNP)
Tomkins, Adam (Glasgow) (Con)
Torrance, David (Kirkcaldy) (SNP)
Watt, Maureen (Aberdeen South and North Kincardine) (SNP)
Wheelhouse, Paul (South Scotland) (SNP)
White, Sandra (Glasgow Kelvin) (SNP)
Whittle, Brian (South Scotland) (Con)
Wightman, Andy (Lothian) (Green)
Yousaf, Humza (Glasgow Pollok) (SNP)

The Presiding Officer

The result of the division is: For 114, Against 0, Abstentions 0.

Motion agreed to,

That the Parliament agrees that the Housing (Amendment) (Scotland) Bill be passed.

Meeting closed at 16:31.