Official Report 369KB pdf
Item 3 on the agenda is evidence for stage 1 of the budget process 2009-10. I welcome Peter McColl, policy officer for the Scottish Council for Voluntary Organisations; Stephen Maxwell, associate director of SCVO; Andrew Field, chief executive of the Scottish Federation of Housing Associations; and Dennis Robertson Sullivan, operations consultant for SFHA.
Thank you for inviting us to give evidence. The Scottish Federation of Housing Associations recognises that we face a challenging time in housing over the coming period. I will outline three or four key aspects of the fundamental challenge that the housing sector in Scotland faces.
We welcome that statement, which gives us an indication of some areas that we may wish to pursue.
Thank you, convener. I am grateful for that.
Ms Grant makes an excellent point. Several months ago, we proposed that the Government bring forward the programme of investment in affordable housing specifically to take advantage of the circumstances that you describe. We are carrying out research on that among our members at the moment. It is clear that some developers want to get rid of land, and that land is substantially cheaper than it was at this time last year. Private developers have been offering sites to housing associations throughout Scotland at rates between 40 and 50 per cent cheaper than their price last year. In one case, land was offered at 70 per cent less than its value last year. We are grateful that the Government has brought forward £100 million of the affordable housing investment programme money to help with that situation. We are very keen on housing associations and housing providers land banking at the moment for the reasons that Rhoda Grant has outlined.
I have a slightly wider question for the witnesses from SCVO. Voluntary sector organisations have expressed concern to me about the knock-on disbenefits to them of changes in local government spending. The removal of ring fencing means that they must negotiate locally to get the best deal out of councils that are tightening their belts. How do we protect services from that? How do voluntary sector organisations get full cost recovery, so that they can comply with all the regulations relating to financial stability and service delivery? Everyone is laughing—that is the $1 million question.
My colleague Peter McColl will respond to your initial question. I will then address the other issues that you raise.
Everyone is concerned about funding for the voluntary sector. It is not a good time for public sector funding in general. How we ensure the uplift of funding after the end of ring fencing is a good question. We need to find ways of doing that, as ring fencing has ended and will not return in the near future. It is difficult to know what those ways are, but it is the voluntary sector's responsibility to communicate its successes and capacity to local authorities in order to secure funding. It is local authorities' responsibility to recognise the ability of voluntary sector organisations to deliver good value—often, much better value than other forms of expenditure—per public pound spent. The issue has repercussions for the Parliament and MSPs, who should recognise the abilities of the voluntary sector and support it in the budget process. There is no magic bullet that will guarantee that organisations retain their funding. Organisations must argue clearly for their ability to deliver services, and politicians must recognise that. Have I answered your question?
Yes.
Full cost recovery is just one of a number of factors that determine how realistic public funding for the voluntary sector is. Others include the way in which councils carry out procurement and the nature of the contracts that local authorities get in, for example, social care. Full cost recovery is a key issue.
Thank you for those answers.
No, it is not new money. It is an acceleration.
Rather than being additional money, is it a replacement of money? I think that it was called the AHIP in the past.
I thought that I had heard plenty of acronyms when I was listening to people talking about parking earlier in the meeting.
We understand that.
No—HAG is housing association grant, which is the public subsidy that housing associations get to build homes. The affordable housing investment programme—AHIP—is the Government tranche of money that has been put aside for the building of new homes.
Thank you. That is helpful. Was the money that was put aside previously—that is, before the £100 million was levered in—a higher or lower figure than what you expected to start the process?
It was roughly what I had expected. It was an 11 per cent increase on the previous three years' programme—but that percentage figure does not take inflation into account. It works out at around 1.1 per cent of the total Scottish budget, which is pretty much comparable with previous affordable housing budgets in Scotland and with provision in England. The Scottish Federation of Housing Associations, together with COSLA, Shelter Scotland and the Chartered Institute of Housing in Scotland, argued—as you would expect us to do—for a significantly higher housing budget. We argued that 10,000 new homes per year needed to be built in the affordable rented sector over the next three years. The current budget falls short of that, but it is what I expected.
It is as expected, but it is adequate? It is either adequate or not adequate for the challenge that we face.
In my view, the budget is inadequate for the challenge. Present circumstances mean that more people who should be able to access rented accommodation will not be able to. Over the past few years, many people have moved into ownership; in the coming years, the same type of people, on the same type of income, will need affordable rented housing. We therefore need a larger affordable rented housing programme. The present programme will result in around 6,000 or 6,500 units becoming available for rent across Scotland each year.
In this first year, how much of the £100 million do you expect to be released? Some have suggested that it will be £20 million.
I understand that the Government has brought forward £30 million to put into this year's programme and £70 million to put into next year's programme.
From information that we have received, there will be an increase in the overall money available next year, but then the figure will dip again.
Yes.
How will that inconsistency in the level of funding, over a short period of time, help to meet the challenge? We have a 15-year programme—or is it to 2015?
Are you referring to the 2012 homeless target?
The longer term.
The longer-term governmental aim is to build around 25,000 homes overall across all tenures in Scotland.
There is a slightly accelerated programme this year, an uplift next year, and then we go back down in the third year. Is that the way to proceed in a longer programme to meet the challenges in the provision of housing?
In my experience, the affordable housing investment programme tends to pan out: if there is an underspend in one year, there will be a carry-through into the next year. I understand the rationale behind the Government's thinking in constructing the programme in that way. At the same time as having a programme for affordable housing, the Government is considering the way in which the money that is given to housing associations to develop new housing can be distributed more efficiently. I understand why there is a peak next year.
The peaks and troughs would not affect the sustainability of the programme.
No.
You have spoken about three-year housing budgets and the element of what might be called front loading in this year's budget and next year's budget. What about capacity issues? Will the industry be able to build houses over the next year or two, when there will be a high level of expenditure?
I have concerns about the capacity of the industry, because fewer builders might be in business in future. As I suggested earlier, that might—perversely—mean inflation in the construction industry. The availability of Government money to build homes next year is substantial enough to keep a number of companies in business for a period of time. I therefore hope that construction companies will not go out of business in the coming year and will still be around next year to control that inflation.
You mention the sale of land. Is there a tension that we must all try to overcome between the duties of local authorities under best value to maximise their assets and the will of local authorities to release land for affordable housing? How can that circle be squared?
It is an extremely complex situation. I used to work in local government, so I can give you a direct example. The housing department of the local authority in which I worked developed an affordable housing policy that allowed for 20-odd per cent of any homes that were built to be for affordable rent. That department negotiated along those lines with our education department for the sale of land, in line with our affordable housing policy. However, because of its own budgetary needs, the education department was unable to release its land at the price at which the housing department needed it to be released. It is a difficult circle to square.
The convener and deputy convener have touched on parts of the question that I wanted to ask. You mentioned two key factors—land availability and the availability of skilled labour—in your ability to meet the peak demand for affordable housing that has come with the extra £100 million that the Government is bringing forward. Do you believe that, to meet that demand, there will be more purchasing of privately built houses that the builders have not managed to sell? The concern was raised with the committee recently that the quality of such buildings may not be as high as the quality of buildings that are constructed in the housing association sector. For example, they may not fully meet the Scottish housing quality standard, as designated for 2015. Can you comment on the availability of land and labour and the quality of the build in relation to meeting the peak that the Government has created by bringing forward £100 million in the budget?
Certainly. The Scottish housing quality standard—the legal minimum standard to which a house for affordable rent should be built and maintained—is actually a very low standard. There is nothing magical about it; it is okay but nothing special. Housing associations have tended to build to a standard that is higher than present building regulations demand. We build to a standard that is known as housing for variable needs. For example, the spaces in a housing association property tend to be larger than those in properties that are built in the private sector.
You suggested that the acceleration in the affordable housing investment programme gives housing associations an opportunity to build up a land bank, given the depressed price of land. Does the profile of the budget make it more difficult to turn land into homes? You might have much more land to build on, but unless the budget is reprofiled you will not secure the capital in later years to enable you to put up houses. Is that correct?
It is partly correct. It is right to suggest that housing associations might find themselves holding land that might—I repeat "might"—not be turned into homes in the current three-year programme.
How long does it take to turn land into homes in a housing association development? If you buy land as a result of the acceleration of the AHIP and want to build 70 or 80 units, how long does it take to secure the overall funding package and planning permission, so that bulldozers can enter the site and houses can be built?
It takes about three years—about the span of the AHIP.
Do you mean that it is three years from the acquisition of the land to when the bulldozers move in and foundations are laid?
No, it is three years until we can hand over keys. There is a three-year process from land acquisition to build end.
So it takes about two years before construction starts and about a year to construct—or that kind of timescale.
Yes.
Is there a view on how much of the accelerated funding of £100 million might be used to build up a land bank and how much might be used to buy houses that have already been built—the unsold inventory of off-the-shelf houses that you talked about?
Government has not yet intimated to us what split it would like there to be. I am sure that number crunchers at Victoria Quay are working on the proportions. The key word is flexibility, which we urge the Government to allow us. Our sector should not buy poor-quality housing that is not necessarily in accessible places just for the sake of buying houses. We are urging associations to negotiate hard with companies who want to sell units and to ensure that what they buy is of a satisfactory standard. I do not want to hazard a guess at the proportion of the money that will be spent on buying houses off the shelf; I would rather that we were far more flexible about how we use the finance.
On certain estates or developments, that kind of acquisition would give you an opportunity to create a mix of housing tenures—owner-occupiers, private buy-to-lets and tenants in housing association affordable housing units—that people often regard as desirable. People often complain about the segregation of housing tenures. Are you saying that you want to use the opportunity to create such mixed-tenure developments, which are generally regarded as socially desirable?
Absolutely, yes.
Good afternoon. My question follows on from David McLetchie's line of questioning on the £100 million that is being brought forward.
Let me answer the question by first trying to explain my comments, which may have been perceived as contradictory. The situation itself is contradictory. There is evidence that some private developers are making land available at much cheaper prices than we have seen thus far. There is also an increasing amount of evidence that big land holders such as local authorities and the church are stepping back and saying, "Should we hold on to this land? Do we have the financial ability to do that? Can we just shore things up, put walls around it and wait out the next 10 years?" The picture is indeed contradictory.
That leads nicely on to my follow-up question, which is about the differences that exist. I understand that SFHA members throughout the country have stated that the circumstances are different in the large inner-city areas. For instance, Glasgow City Council has disposed of a lot of its stock and made land available to build on, which is good for the housing associations if they get that land at the right price. However, those circumstances do not apply in the rural areas, where there are greater pressures on affordable rented housing and local authorities have little spare land to sell. There might be an opportunity, if we grab it, to address some of the affordable housing issues in rural areas if land can be purchased at the correct price. Do you agree with that?
I agree entirely. I point out that £40 million of the £100 million is to come from local authorities. A couple of weeks ago, I met members of the local authority representative body—COSLA—which has made it clear that the £40 million comes with negotiations in which it hopes to be involved. The local authorities are being asked for £40 million, so it is understandable that they want to have their say about how it should be spent.
You referred to the distinction between the affordable rented sector and the social rented sector. I am aware that the SFHA is trying to get round that distinction and that some people in the private sector are happy with the term "affordable rented housing" because they claim to be moving into that market and competing with housing associations in it. Does the SFHA have any comment on the increase in the Government's budget provision for private homeowner grants for improvements? Are there opportunities for housing associations to intervene or participate in the distribution of those grants or the provision of services that are available through them?
We certainly hope so. The housing system in Scotland is evolving, and we encourage housing associations to look beyond merely providing bricks and mortar because running a good housing system is about managing the local area—it is about how clean the area is and how well it is policed, for example.
We have talked about the £100 million, which is not new but front-loaded money. We have also discussed how COSLA's share of the money will be negotiated and how the Scottish Government will provide it—what share will be available in 2008-09 and what will be available in 2009-10. Is it a good thing that the Scottish Government has front loaded that money? Does it help your sector?
Unequivocally, yes.
So everything else is about managing and implementing a good decision that has already been made.
Yes.
My understanding is that the £100 million was provided to pump some liquidity into the sector and provide some cash when, as you said, there was an opportunity to get land at a knock-down rate or procure off-the-shelf units from private developers. However, another benefit was mentioned. The construction industry is currently contracting and you said that, although that might allow you to negotiate better deals with the industry in the short term, if it contracts too much there will be far fewer construction firms and the industry could get inflationary. To compound that, you might have difficulty in the medium term in approaching private investors and banks for cash, because the credit crunch means that they are far less likely to lend to you or to lend at a preferential or decent rate. Is that a fair summary?
Yes.
I promise that I am building up to a reason for saying that.
Thank goodness.
Trust me—we are getting there. The Scottish Parliament has a fixed income, whereas the UK Government has been able to pump billions upon billions of pounds into the international and UK banking systems. Does the UK Government have the perfect opportunity to consider seriously pumping liquidity—hard cash—into the Scottish affordable housing sector? If so, how might it wish to do that? I told members that I was going somewhere.
You appreciate that we are a trade body and that we are not party political, so I will try to make my response as sensitive as possible. We and our counterparts in England—the National Housing Federation—have called for an injection of finance into the housing system in England and Scotland. The time for that is not just right but sensible. People who could obtain a mortgage two years ago, or even one year ago, can no longer do so. Some people would struggle to obtain a mortgage under a shared-equity scheme. More people need affordable housing for rent than was calculated two or three years ago, so we need more homes in that sector.
That was a diplomatic way of saying that you would like more money. Of course, everyone would say that.
Before Bob Doris becomes too excited, I remind him that we are discussing the Scottish budget, which sets out the Scottish Government's priorities.
I had not finished. An aspect of the Scottish budget links directly to what has been said.
If you wish to ask another question, I will allow you to do so.
That is kind of you.
Shared equity under the home owners support fund reworks shared-equity schemes that existed in the Scottish housing system under previous Administrations. That does not necessarily offer ways for housing associations to become involved in shared-equity schemes, because everything must be repaid. Associations make nothing out of that—they are not given a grant, because the money must be repaid.
One of your members could be involved in assisting an owner-occupier to staircase down and would take, for example, 50 per cent of the ownership of the house. If the association provided a good service, the owner-occupier might decide that they did not want to staircase back up because they were happy with the good-quality service and relaxed with the situation. Surely that is the future of mixed-equity provision.
Yes.
You have said today that you will not receive adequate funding and that you will receive a lower public subsidy per house that is built, which will put a question mark over standards and quality. You will be forced to borrow more money on the open market, and you will face the same situation as any other mortgage pursuer. The private sector is in meltdown, builders are going out of business, and the Scottish Government has a stated ambition to see a rise from 25,000 to 35,000 houses built each year by 2015. Is that achievable under the current budget and without further action from the Scottish Government?
The Government has not specified how many of the 35,000 homes should be in the affordable rented sector. It is talking about the total number of houses to be built.
Do you agree that Barratt Homes and others have stopped building houses?
Of course.
What point are you making, in that case? What is your general view? Is the target achievable, given the circumstances in which you and the private sector have to work, and the current budget restraints as outlined today?
I was trying to tease out two things: the overall ambition and the output in the affordable rented sector. I am confident that the output in the affordable rented sector can be maintained at the current inadequate level, which is about 6,500 units per year. If the question is whether we as a society can produce 35,000 homes a year while the Barratts of this world are not building, my answer would be no.
Can you maintain your current quality standards and affordable rents on the budget that has been identified?
Let us be clear. I was talking about the output that the sector currently produces. That is about 6,500 units per year, which is an inadequate output of affordable homes. We have consistently argued as a sector—including COSLA, the Chartered Institute of Housing in Scotland and Shelter—that we need a higher output. For higher output, we have historically needed greater public investment, so I argue, and have argued, for greater public investment in housing.
What action does the Scottish Government need to take, either by addressing specific issues or increasing the budget?
The Scottish Government needs to accelerate the amount of money that is put into house building in Scotland, for all the reasons that we have talked about.
How much is needed?
The amount depends on several factors, such as how many homes the Government wants per year.
The Government has a stated ambition to increase the number of new homes that are built each year from 25,000 to 30,000 by 2015. You have told us that the figure of 25,000 will not be met at the current rate. Just to maintain the rate of 25,000 new houses a year, how much will the Scottish Government have to invest?
I absolutely do not know the answer to that because—
The figure is certainly more than the Government is investing now.
Yes—but the majority of houses that are built in Scotland are not built by public subsidy, so I cannot answer your question because I do not know what Barratt Homes—
What about from your perspective, for the 6,000 houses that you are building?
No—I just wanted to say something to my colleague.
We have argued consistently that we need to build about 10,000 homes a year for rent in Scotland. We argued that before the recent election, along with the trade bodies. I keep coming back to the point about the number of forming households who in normal financial circumstances would have gone into mortgage but who will find it increasingly difficult to do that. Those households would not normally consider or be eligible for what we euphemistically call social housing. We need to provide good-quality homes for those households, for rent or flexible mortgages. We need 10,000 new homes a year in our sector in Scotland in the coming years, but we are currently producing 6,500. If the 10,000 figure was accepted, we would need a big injection of finance into the affordable housing investment programme to deliver that.
I want to put the issue in perspective. We are talking about the Government's budget for the next three years, but I seek confirmation from Mr Field that the SFHA and its members have argued consistently—for almost 20 years, as I understand it—for more money from successive Governments to build more houses for affordable rent. Part of the argument is that the national and international financial situation means that Barratt Homes and other house builders have decided not to proceed with building any more houses at present. Therefore, given the Scottish Government's budget and the constraints on it, we need more pump-priming by the United Kingdom Government, which has the levers and financial powers. We have seen that with the effective nationalisation of Bradford & Bingley and other actions that the UK Government has taken in the financial markets.
Can we get to the question? I do not think that that was a question.
It was a statement, convener. You politicised the issue slightly in your argument, so I am responding to your comments about the target of 30,000 new homes.
I hope that we do not return to the rush-and-build policies of the 1960s that saw millions of pounds of public money being invested in housing stock that had to be demolished 30 years later because it was unfit—it was of a terrible standard and of a type that people did not want to live in. I freely admit that that is a difficult circle to square. We have not come under pressure from the Government to return to such circumstances, but we would resist.
I want to go back to the budget and follow on from the key points that Mr Field was trying to make.
It would be approximately a 50 per cent increase on the current programme. However, I am not naive, and ours is not a luddite trade body; that figure is based on research that was done by Professor Bramley at Heriot-Watt University. We believe that this country needs to build that number of houses, even more so in the current financial climate. We are not fantasists. That would be a phenomenal increase in a programme that, as I said at the beginning, has remained relatively constant—to within 1 per- centile point—since the Scottish Administration came into being. Approximately 1 per cent of the total Scottish national budget is spent on housing. The equation is similar in England. If it is any comfort to anyone in this room, including the SFHA, when I spoke at the European Parliament last November and mentioned that 1 per cent of the national budget is spent on housing, an MEP from Spain came up to me and said, "You get that much?"
Any Government would have to take account of that point in their budget.
Thanks for that. I do not accept that any of my questions were party political. I hope that the witnesses accept that my questions were based on scrutiny of the budget, including whether the budget is adequate to deal with current circumstances and whether the £100 million that is being accelerated—it is not additional money—is a solution to the problems that we face.
If you do not mind, convener, I will answer that with a real example from my local authority work. There is an argument that says that public money should not be used to subsidise a private individual's repairs or improvements to their home because those are that individual's obligation and responsibility. Something akin to a private sector grant used to be available, and whether it was used as such was at the discretion of local authorities.
It goes part of the way to answering my question. We all face these issues. In Greenock and Inverclyde, 75 per cent of the stock of the biggest housing association is in shared ownership. There is a significant problem. Although people will benefit from the increase, there are barriers. Should we be considering all the available schemes, such as schemes of assistance, step up, step down schemes and part ownership in some of these areas? Bids could be made for the £100 million to bridge some of the gaps, allow the modernisation of a building, street or area, keep builders in business and give us a greater pool of housing stock as a consequence. I do not know whether anyone is considering the issues as broadly as that. Do you know of any discussions that are taking place with the housing task force, for example? Are people prepared to take a more flexible approach?
There is no on-going, active discussion between the Government and us about exactly what you have described, but we are encouraging such discussion with the civil service, because we need a strategic overview. We could come up with a better system if we got rid of some of the cost lines and reassessed what we are trying to achieve and how best to achieve it. A crude response to your question is that the grant is inadequate, given the number of improvement programmes by housing associations and local authorities. We have to get real: that level of grant will never cover Scotland and ensure that every home that is in a planned improvement area will benefit.
I want to ask a question about improvement grants being given out for free. I accept what you are saying on behalf of your membership. However, the SFHA has to accept that there are individuals, such as pensioners or the unemployed who, for some reason, decided to buy. Some members of the SFHA have argued long and hard for increases in improvement grants to allow whole-scheme improvements to be carried out. I understand that in tenement blocks in Glasgow, Inverclyde and elsewhere in Scotland, an improvement programme can be held up for years because an individual owner-occupier does not have the resources to pay. I accept that if they have the resources, they should pay, but if people cannot pay, because they are pensioners or unemployed, surely the SFHA agrees that they should receive grants for the greater good of the community, so that the community is not penalised because the SFHA says that they should not get grants.
I was hoping that my answer conveyed the fact that I appreciate how complex the issue is. I have gained experience of exactly how complex it is in the course of my work. We need to look at the issue nationally. I hear what you are saying. I have had experience of programmes not being delivered because of the situation that you describe—I have the greatest sympathy for individuals in that situation. However, were that need to be met throughout Scotland, the programme would have to be much larger, which is why we need to look at it more constructively. The programme has been applied quite inconsistently from local authority area to local authority area.
Thank you for your evidence.
We could give you a number of specific examples. However, I am reluctant to do so because it will distract attention from the broader picture. The fact is that public finance has become tight not just because of the removal of ring fencing; it has become tight, too, for organisations funded by NHS boards, where ring fencing has been retained.
I accept that you have reservations. You know of many examples, but you are not prepared to discuss them with the committee.
I would be reluctant to do so without the say-so of the organisations.
You mentioned community planning partnerships, which involve health boards and other agencies. In private session, we have shared our experiences and have been concerned about the democratic accountability of those bodies; indeed, I have been unsure myself about which body I should make representations to on a valued project or work in the area. How has the situation impacted on the voluntary groups that you represent?
The community planning process has always been problematic for the voluntary sector and local communities. One problem for the sector is its decentralised nature, and it is always difficult to ensure that the voluntary sector representative in a community planning partnership is truly accountable to what is a very dispersed constituency. In fact, those difficulties have been around since the community planning process was introduced. Some of the major voluntary sector priorities in a community planning area might not even be tied into the local council for voluntary services, which is the voluntary sector's umbrella body. That complicates the task of representing the voluntary sector in community planning partnerships.
But you are hopeful that, in the second round, you will have an influence on the process. The expectation is that you will have an influence on it, but do you have the capacity to do so in 32 local authority areas? Will your attempting to have an influence result in a diversion of scarce resources?
You asked whether we are hopeful. Hope springs eternal in the voluntary sector, so in that sense we are hopeful. Do we expect to have an influence? I guess that most voluntary organisations are politely sceptical about how much influence they will have on future single outcome agreements, just as many of them are sceptical about their influence on the community planning process.
I am sure that, as a committee, we would be interested in your ideas about how you could have an influence. We have discussed the issue with colleagues in COSLA, and we would be happy to receive further information and ideas that we could feed into the process, as well as questions that we could ask ministers or COSLA people when they come along.
Good afternoon, gentlemen. I want to return to the budget issues. I appreciate your reluctance to give any specific details about the organisations that you represent, and I will not ask you to do that. However, it is important that we examine the effects of the Scottish Government's budget in general terms and local authorities' ability to deliver for voluntary organisations. I am interested to find out about the effects of ring fencing, which I know has been taken away from some areas and retained in others. It would be interesting and helpful for the committee to understand the effects across the sector as a whole.
If ring fencing is to be replaced by single outcome agreements that dictate how local authorities interact with other community planning partners in delivering services for communities, the first question that arises is what single outcome agreements are meant to be. I have read a number of them—and retained my sanity—and I note that some are operational plans, while others are quite high-level strategic documents. They need to be either one or the other; they cannot be a mixture of both. To be frank, I think that most of them are a bit of a mixture. In fact, some of them look as if they have been produced by councils turning upside down every document that they have, shaking out the figures and slapping them together in one document. That is an unsatisfactory approach to guaranteeing voluntary sector funding.
A little bit, yes. It is also important to consider that, in such cases, not only the Government but the voluntary sector should play a part. As an umbrella organisation, the SCVO is in a strong position to influence that. I know many segments of the voluntary sector find it difficult at the moment, as they are having to cut staff or cut the service that they provide because of the squeeze on their budgets. However, I also have a lot of evidence that some organisations that have several branches in an area are not willing to work together on their administration and finance functions, far less on their service delivery. Will you comment on the possible need for some organisations within your remit to compromise on that?
I will amplify the point on ring fencing a little bit. At the moment, we do not have any hard, reliable information about the net impact that the new regime for central Government funding of local government is having on the sector, although we have plenty of anecdotal information from organisations that have lost funding or had it reduced. The SCVO is aware of widespread concern about loss of funding in the sector. There is always some churning of funding—as some organisations lose funding, others may get it—but we do not know what the net impact is and will not really have reliable information on it for another year, perhaps. That slightly handicaps our ability to give confident answers on that aspect.
It was about organisations working together more closely to reduce their overheads.
In many parts of the voluntary sector, organisations are thinking about rationalising or, in some cases, merging. Voluntary organisations have always considered merging and rationalising functions as far as they can. In a number of cities and towns, such as Inverness, Edinburgh and Glasgow, voluntary organisations have come together to create voluntary sector centres and to share some common services. That process is likely to continue.
There are examples not only of rationalisation in cost savings but of excellent practice. I am sure that you are aware of the Fife referral service. Different welfare providers in Fife have come together to refer appropriate cases on to one another. For instance, somebody who needs debt advice may have gambling problems and that individual can be referred on to other services. That reduces the cost not only for the service provider but for society as a whole and provides a level of service across the public and voluntary sectors that we have not had before. The voluntary sector and the people in the public sector who have been useful in facilitating the service must be commended for that.
As a slight aside, I mention that one of my first meetings as an MSP was with a voluntary sector organisation in north Glasgow. I walked into the room expecting one or two members of the organisation, but about 50 of them had turned up. The meeting was all about funding and was a bit of a baptism of fire. One of the questions that I asked them was whether the uncertainty about funding—they were waiting to find out what was coming online—was new and, to a man and woman, they said, "No, it's aye been this way."
I am waiting for a question, Mr Doris.
Sometimes it is vital to give the context. I looked at briefing papers that showed a 37 per cent increase in direct funding from the Government to the voluntary sector, yet you are right that funding to different voluntary sector organisations is being cut locally. I see that as coming directly from community planning partnerships. Do you think that community planning partnerships have acted appropriately in how they have phased in decisions to cut out the voluntary sector?
We are not saying that community planning partnerships cut out the voluntary sector, and certainly not that they did so deliberately. That is not the case. Community planning partnerships are complex, multisectoral, highly bureaucratic, public sector-led processes. We have already referred to the difficulty in ensuring that the voluntary sector and, in many places, communities are adequately represented in those structures.
We have grave concern about the transparency of some community planning decisions—for example, the decision of a community planning partnership to exclude community engagement from the criteria for spending fairer Scotland fund moneys. That decision was its to make, but the problem is that nobody is clear why it made that decision and there has been no explanation. The decision has resulted in, for example, most of the funding being removed from a community newspaper that goes to an area that is so poor that it does not receive freesheets from any of the mainstream publishers. One of the main tools for communicating with the community was removed for no apparent reason, or none that seems to have been explained, other than that there were other priorities.
I have a very brief question on consultation, negotiation and being involved at grass-roots policy-making level. The voluntary sector feels that there is not enough of that, but the single outcome agreements could provide an opportunity for consultation with community planning partnerships or local authorities. At what point in the process should organisations such as the SCVO become involved? Should it be before local authorities go to the Government to engage in negotiation? By that point, they already have an agenda and bullet points. Should there be pre-negotiations and discussions involving organisations such as the SCVO before it gets to the stage of the Cabinet Secretary for Finance and Sustainable Growth, John Swinney, speaking to Stephen Purcell?
I do not necessarily think that the SCVO should be engaged; it should be the sector. I agree that engagement must come earlier in the process. I was concerned that only 15 of the 32 single outcome agreements came out of an agreement with the community planning partners, which means that in only 15 cases is there a built-in engagement with the voluntary sector as one of the community planning partners.
Will those discussions be happening just now?
Yes, as soon as the single outcome agreement process begins.
There is one wee problem there. You are in the same position as some councillors who were not party to the agreements. For example, what you say would not resolve the issue of the criteria for the fairer Scotland money. In my experience, many of the people who are being denied funds to which they have become accustomed—although not necessarily entitled—do not meet the criteria for the fairer Scotland fund, which was worked out between COSLA, and the Scottish Government, and signed off by the council leaders. How do you get to a position where you have some say on the importance of the criteria of the fairer Scotland fund? You can be involved in the single outcome agreement discussions, but that does not change the rules of the game of the finance that flows to voluntary projects.
There is a feeling in the voluntary sector that, because of the timing constraints and so on in the first round of negotiations over the current three-year budget, there was inadequate opportunity for the interests of the voluntary sector and local communities to be fully presented to councils and the Government. The process was squeezed by the timing constraints, and the sector and many local communities feel that that continues to be a problem. It must be dealt with at the national level through the SCVO, Local People Leading and other bodies that represent the broader local community interest. It must also be dealt with in the community planning or single outcome agreement area.
Have the CVSs or the SCVO calculated the total value of the voluntary sector? I know that calculations have been done of the contribution of volunteer time to the voluntary sector, but has any calculation been done to compare the amount of money that comes from local authority funding with the additional moneys that come from elsewhere? A couple of weeks ago, I mentioned the Big Lottery Fund and the Calouste Gulbenkian Foundation, which plough a lot of money into the voluntary sector. I speak from almost 20 years' experience in the sector. It would be interesting to know about the pressures on the voluntary sector, not just from potential cuts in local government funding, but from potential cuts in funding from other sources. I know that some local authority funding levers in additional moneys that benefit the voluntary sector. Do the witnesses have any comment on that?
Local councils are one of the biggest single sources of funding for the voluntary sector. Much of the money goes into social care, but other moneys go to other voluntary sector activity. Central Government is a significant provider. The money from trusts and grant-giving foundations is a much smaller proportion of the overall sum. I do not have the exact figures, but I think that the proportion of the sector's total income that comes from grant-giving foundations is down at 5 or 6 per cent. We anticipate that the money that is available to grant-giving foundations will suffer in the next two or three years as a result of the loss of value of their investments and the likely hit on their income. Direct charitable donations from the public are a significant source of funding—the figure is about 13 or 14 per cent of the overall amount. We can provide more exact figures on that. Income from business and the corporate sector is a small part. Direct cash donations from business are below 1 per cent of the sector's total income and sponsorship makes up 2 to 4 per cent of the total turnover of the sector.
We have a statistical report on the sector that we can send to the committee if it is interested. That contains all the information that you have asked for.
That is helpful.
Meeting continued in private until 14:11.