Official Report 290KB pdf
Good morning and welcome to the 27th meeting in 2008 of the Local Government and Communities Committee. As usual, I remind everyone to switch off their mobile phones and BlackBerrys.
I sincerely hope that I am not the only one around the table who is feeling the effects of being up half the night watching the American presidential election results. If I am, you will no doubt have some fun with me as a result.
Thank you. It was a late night for many of us, but the result was worth it, I am sure you agree. You mentioned several issues that the committee wishes to explore with you about the budget and timings.
I will resist commenting on the American election but, for once, my views are much in accordance with those of the convener.
I know that the committee is going to speak to the Cabinet Secretary for Finance and Sustainable Growth later this morning and I am sure that you will pursue those issues with him, given that it is his responsibility to ensure that the presentation of the budget is as full, meaningful and transparent as possible. Certainly, we as a Government are committed to ensuring that the way in which we present our spending plans is open to maximum scrutiny. The committee part of the budget process is extremely valuable. If there is any information whatever that the committee feels is not available in the draft budget document, I am happy to undertake to provide it.
Will you comment generally on the budget for housing and regeneration and how it compares?
The overall budget for housing and regeneration compares well with past years. The figures for 2009-10 are more than 24 per cent higher in real terms than those in the 2008-09 budget. Changes have been made to reflect the acceleration of up to £100 million for housing. The housing and regeneration budget covers many aspects and initiatives, which we will, no doubt, go into in some detail. The budget that we have set reflects the great priority that the Government attaches to increasing housing supply across all tenures—an objective that is not made easier in the current financial climate but to which we hold firm nevertheless—and our strong commitment to pursuing previous Governments' determination to spend money effectively to bring about the regeneration of some of our most deprived communities. Overall, I believe that the budget in housing and regeneration reflects those priorities.
Our budget adviser has provided a paper that highlights a £60 million cut in real terms in the housing and regeneration budget over the next three years compared with the figures in the spending review. We just got that information this morning. Would you like to comment on it?
If you look at the housing and regeneration budget, you can see that in cash terms in 2009-10 there is a 27.8 per cent increase on the previous year. In real terms, that translates to a 24.4 per cent increase. Obviously, the budget has changed from the spending review plans that were published last year to accommodate the £100 million accelerated funding, which comes from 2010-11, of which £30 million comes into this financial year and up to £70 million comes into the next financial year, which changes the profile of spend. The figures that I have quoted reflect that.
The Government has set in train a number of programmes in relation to home ownership and low-cost home ownership. Given the current economic and mortgage crisis that we are going through, is it appropriate that the Government is spending so much on that sort of programme? It might be advisable to put more investment into social housing, rather than low-cost home ownership or supporting the home ownership market.
That is a fair point. It reflects the balance of judgments that we must make and will continue to have to make in the next three years. It is important to make a couple of points. Most of the affordable housing investment programme's funding will be spent on supporting affordable housing for rent. That is how it has tended, and will continue, to operate.
Good morning, cabinet secretary. It has been suggested that some of the accelerated expenditure of £100 million will be allocated to the purchase of land, to add to the land bank for social housing, and that other expenditure might be on properties that have been constructed, to take some unsold inventory off the books of house builders. Other moneys from the total might be applied directly to construction, to sustain employment in the building industry. Do you have in mind a target for distributing the money among those purposes?
We have not set specific percentages for new construction, land acquisition or off-the-shelf purchases. To do that would be wrong, because it is important that we retain the flexibility to allocate the money in response to circumstances.
That is helpful. Can you indicate to what extent the housing associations that are buying, or negotiating to buy, off the shelf are obtaining a discount for such bulk purchases on the initial asking prices of the stock that is currently unsold?
I am not sure whether I am able to give you a figure on that—perhaps Mike Foulis can do so in a moment. We are trying hard to ensure that if we allocate money for off-the-shelf purchases—as we will—it will not just be in any area. We want to focus on areas in which there is greatest housing need, as it would be wrong to try to spend the money anywhere simply to get it out of the door.
Sadly, we cannot, but I will add to the cabinet secretary's comments. When registered social landlords are considering deals to buy off-the-shelf stock, we want to be satisfied that the price that is charged is comparable to the price that they would have paid to build new housing—that is an important benchmark. We do not want to pay more than we would have paid if we were to build new housing. That ties in with the cabinet secretary's earlier point about the need to focus the money on boosting economic activity.
As matters stand, do you have in your in-tray a series of proposals from social landlords around Scotland who are saying that they would like to buy 20 unsold houses here and 40 there? Is the in-tray full of such proposals?
There are a number of proposals. I mentioned earlier the £8 million, which, I hope, we will publicise soon. The reason why we have not done so, as members will understand, is that, particularly in relation to off-the-shelf purchases, there are commercial issues around going public before deals are done. Therefore, a range of off-the-shelf purchases are included in that. The balance of the funding for this year will include other off-the-shelf proposals as well as further accelerated site starts and land acquisitions. It is fair to say that there is a reasonable degree of demand for the funding, as one would expect in the current climate.
We have heard about off-the-shelf purchases and land purchasing, but you also mentioned the importance of helping the construction industry. Which projects will begin this financial year that will help the construction sector?
Of the £9 million that we have already allocated, £4 million is for accelerated site starts, which, as well as helping us to tackle housing need, will help to maintain employment and skills in the construction sector. I indicated that there are sites in Moray, Dumfries and Galloway, Argyll, the Borders and Fife—I am sure that we can supply the committee with more detailed information on the matter.
My question followed on from your broad description. How many of those projects will start this year and benefit the construction sector?
All those projects will start this year. I have covered the broad areas, but I am happy to give you the specifics.
I am happy to receive further detail from you in writing so that we have a greater understanding of what the impact will be this year.
Good morning, cabinet secretary. I will continue questions on the £100 million that the Government has brought forward. You touched on some important detail, saying that you plan to spend £30 million this year and £70 million next year. However, as you may have noted from some of the comments that I made to COSLA representatives last week, I am still concerned about the practicalities of delivering the programme either through building new build—it takes time to get land, get planning permission and build the properties—or making purchases off the shelf, to use a phrase that has been used quite a few times this morning. Can you give us an assurance that the money in the budget for 2008-09 and 2009-10, including the extra £100 million, will be spent fully? Are you certain?
I assure you that we will spend all of the money that has been budgeted for this year, including the accelerated funding. I hope that that is helpful. Members are aware, but I should have said for the record, that our local authority partners will provide £40 million of the £100 million. COSLA covered that point when it gave evidence to the committee. It finally agreed that contribution of £40 million on 24 October and it spoke to the committee about its ability to use identified slippage on capital projects to ensure that it can make the contribution.
I appreciate that answer. I hope that we agree to some extent on what processes are required to achieve your aims. I sincerely hope that the assurance that you gave the committee will come to fruition in supplying housing—particularly affordable housing for rent—but, if there is any slippage into the final year, that will change your programme significantly.
Cabinet secretary, I will press you on some detail. Last week, we took evidence that the good news was that COSLA's leaders meeting had agreed in principle that the £40 million should be found. What progress is there on who will contribute to that figure, how they will contribute, how much they will contribute and when it will happen?
COSLA had previously agreed in principle to making the money available, subject to discussions that we are having with it on its future influence on the allocation of investment in affordable housing. The full COSLA convention gave final agreement to that on 24 October.
Do you know whether any Government officials have been in discussion with COSLA officials on the matter? We were told last week that they would be. Also, can you give us a timeframe and tell us when you expect the money to be in the pot?
COSLA's contribution is £20 million in the current financial year and £20 million in the next one. The £20 million for the current financial year is available to be allocated as part of our overall allocation of £30 million.
What would you say to the local builders who will not see an acceleration in local programmes and will feel that they are losing out as they see the money going to other areas? Not all local authorities will benefit.
Obviously, I do not want to speak on behalf of COSLA on the matter, but it is confident that the money can and will be found from identified slippage. COSLA is not going to slow down other capital projects. Rather, slippage that has already occurred will allow COSLA to accelerate some of the investment.
We understand that the question of sourcing the money will be decided at the COSLA leaders meeting at the end of the month.
Good morning. We are talking about bringing forward £40 million of slippage. Although that is welcome, that money would otherwise have been spent on other programmes that local authorities had intended to run. Do you intend to replace that money?
I return to Jim Tolson's point. Local authorities will get back the £40 million that they contribute in year 3.
Generally, slippage is from programmes that cannot be enacted in a particular year for legitimate reasons, but clearly that would be planned money for future spend, so I am pleased to hear that point.
I am not sure why there should be the confusion or lack of certainty that Mary Mulligan describes. I have already mentioned the clear target that we have set ourselves, which, as I said, has become more difficult to meet, rather than less so, in recent months. The target is to ensure that there are at least 21,500 approvals for houses for social rent over the spending review period from the affordable housing budget. In addition, you will be aware of the £250 million allocation to the low-cost initiative for first-time buyers, and within that the open market shared equity scheme. We anticipate that 1,500 people will be helped into home ownership as a result of that scheme. The overall objectives of our spending plans on housing are clear.
You are correct to say that we are in the middle of a changing scenario, but can you tell me how many houses for rent you expect to build in this financial year?
We will have between 6,000 and 7,000 completions in this financial year.
The sum of £25 million is available to local authorities to build houses. What progress has been made on that?
Good progress has been made. We have agreed with local authorities the principles and criteria that will be used to focus the investment where it is likely to have most impact. As you know, the investment is intended to kick-start or to pump-prime—you may use whatever phraseology you want—new council house building. We have agreed an approach to assessing applications from councils. Shortly—probably in the next couple of weeks—we will write to councils inviting them to set out the details of how they intend to meet the requirements and, in effect, to make bids. We have agreed with COSLA the process for selecting successful bids. COSLA's shared services board will play a central role in that process. I am pleased with the excellent progress that we have made.
Can you clarify the issue of slippage? To put it in simple terms, let us say that a council is building a school and expected to spend £3 million or £4 million in a financial year on construction costs. If the contractor says that there is a problem and the school cannot be built on time, £1 million or £2 million may not be spent in that financial year and may be deferred to the following year—that is slippage. If the money is not drawn on for the purpose of reprofiling in your affordable investment programme, presumably the council that has the £1 million that is not needed for spending on the construction of the school, because of slippage in the construction timetable, can decide to spend the money on something else in its programme. Is that correct?
Yes. It is not for me to say what basic point you are trying to make, but I accept readily that we cannot spend the same money twice. Like any other spending decision, the decision to accelerate spending in one budget pot in one year has an opportunity cost somewhere else, but that is the decision that we have made—rightly, in my view. Many organisations in the sector called on us to accelerate housing investment this year and next; COSLA agrees with our decision. In the circumstances that we face, that is the right judgment. However, if we spend money somewhere, it follows that we cannot spend it somewhere else—especially given that we are operating within a fixed budget. We have to make such judgments on an on-going basis.
I accept that you are entitled to make such judgments. However, in COSLA's evidence last week there was a suggestion that slippage money from one financial year would never be spent in that year, that councils had no discretion in the allocation of the money and that it would all fall into the next year. The point that I tried to make, which you may have confirmed—you may want to clarify your answer—was that councils, by reaching an agreement with you on this programme and on the allocation of slippage money, have effectively given up the discretion that they would otherwise have had to use the money in other ways at that time.
It is not for me to speak for COSLA and I am desperately trying not to do that; COSLA gave its evidence to the committee last week. No doubt you can pursue the point about its discretion over the amount of slippage with the finance secretary later this morning, but I would be more than happy to come back to you with some firm and more detailed information about the rules that apply to local government expenditure, and the discretion that a local authority has if it does not spend money in one year, or if the money automatically gets carried forward to the next year.
They are supposed to have lots of discretion; there is no ring fencing.
They certainly have much more discretion now than they have ever had before.
We shall explore that. Thank you.
We have heard a lot about accelerating investment in the construction sector. I want to move on a step and talk about how we keep home owners in their houses when they are struggling with their mortgages. I would also like more information about the Government's mortgage to shared equity scheme. How much money has been put into that and how do you anticipate that the system will work?
As you know, we continued the mortgage to rent scheme that was established under a previous Administration in 2003, and we decided to subsume it within our home owners support fund. In addition to giving people the opportunity to move from mortgage to rent, we are giving them the additional opportunity, subject to certain criteria, of moving from mortgage to shared equity. We are working out the detail of how that scheme will work and we intend to publish the rules and criteria that will apply during the next few weeks. We will spend £25 million during the next two years to support mortgage to rent and mortgage to shared equity. The fundamental principle behind both schemes is that people should be enabled to remain in their homes, an option that would not necessarily be available to them in different scenarios.
The £25 million is a significant investment in keeping home owners in their homes rather than making them face repossession. How far will that £25 million stretch? Will 100 or 200 home owners be able to access that? Do we have any projections on that?
How many people the £25 million will be able to help will depend on a range of circumstances, such as the value of houses and so on. I can tell you the number that has been supported in previous years under the mortgage to rent scheme. In 2006-07, with less funding than we are committing just now, 173 people were able to stay in their own homes and move from mortgage to rent. Obviously I am talking about historical figures, but until now, everyone who has applied to the mortgage to rent scheme and has been deemed to be eligible under the criteria, has been assisted.
Is the £25 million a reprofiling of your overall budget, is it additional money, or was it pre-planned? I am trying to get at whether the money is a response to the international financial climate.
It is a response. I announced the £25 million support fund during my statement to Parliament in June this year in response to the consultation on "Firm Foundations: The Future of Housing in Scotland". That was in anticipation of a worsening situation in the housing market and, obviously, it has worsened considerably since then. The £25 million is an increase in resources. The spend in 2007-08 on mortgage to rent was less than £10 million, so we are spending £10 million during this financial year and that will increase to £15 million in the next.
You might be aware that at question time last week I asked the Minister for Communities and Sport about the position of people who fall into negative equity, who you had said would be able to apply for the mortgage to rent scheme. However, clearly there will be a gap in funding. How do you envisage that being dealt with?
I do not underestimate for a second the problems that are posed by an increase in the number of cases of negative equity. We are all aware of the issues that arise, not least the distress that is caused to individuals. I will repeat what I said last week: the fact that someone is in negative equity in and of itself does not prevent them from accessing the mortgage to rent scheme. Obviously, if there is a shortfall in the equity available, some form of arrangement would have to be entered into between the home owner and the lender. Some lenders might choose to write off the remainder, whereas others might set up repayment arrangements. Of course that requirement will exist in cases of negative equity.
Have you had any discussions with mortgage lenders about bridging that gap?
We have had discussions with the Council of Mortgage Lenders on a range of issues, and we will continue to do so.
Have you had discussions on that specific issue?
I have not, but officials will have had a range of discussions with the Council of Mortgage Lenders. As we continue to develop the arrangements for the home owners support fund, there is no doubt that that is one of many issues that we will require to discuss with mortgage lenders as we make progress on such matters.
When Mary Mulligan asked you about the number of houses for rent that you expected to build this year, you gave the number of completions. What is the difference between a house being built and a house being completed? How many houses for rent will be started this year?
We use two standards of measurement. For most people, the number of completions is what matters most. The second measure is the number of approvals, whereby houses are given the go-ahead and resources are committed to them. The number of approvals this year is estimated to be around 7,000.
How does that compare with previous years?
It is fairly in line with the figures for recent years.
Among the other issues that we discussed last week was the £25 million that is being made available to local authorities for council house building. Can you tell us where we are at in that regard? The evidence that COSLA gave us on the subject at last week's meeting was not very good because the organisation's housing spokesperson was not present. That is not my judgment—the COSLA witnesses confessed to us that they had brought the wrong people along to discuss those issues. They said that discussions were continuing, but they were unclear about who would benefit in local authority terms. They told us that the issue was still subject to discussions between leaders. It might be helpful if we could get an update from you on that.
I think that the record will show that I have already given the committee that update, but I am more than happy to run through it again.
Alasdair Allan led with a question on those principles last week because we wanted to have some understanding of what they were and of the local authorities that were likely to benefit in the bidding process.
I am not able today to give you the names of local authorities that will benefit from this money, because doing so will pre-empt the process that we have set with COSLA and have not yet gone through. However, I can tell the committee about the principles on which the decisions leading to the selection of bids from local authorities will be based.
How many houses do you expect to get for the £25 million?
You are going to stretch my ability at arithmetic, so Mike Foulis might have to help me.
I want to follow up a couple of issues that have been raised with the cabinet secretary. Although I welcome the Government's moves to deal with the housing situation, I am a bit concerned about the £8 million for off-the-shelf purchases for registered social landlords. Some housing association spokespersons have expressed concern that the quality and design of such purchases might not be to the standard that associations usually insist on from developers and builders and that they usually deliver. I would hate to think that we would spend £8 million on off-the-shelf projects, only to find that their quality and design build were not up to the required standard.
That is a reasonable question, but before I answer it, let me clarify that I did not say that all of the next £8 million would be spent on off-the-shelf purchases. Some of it is likely to be, but there will also be some land acquisition.
We have heard from the Scottish Federation of Housing Associations and local housing associations throughout the country about the amount of money being made available in the coming period. Will you give the committee some assurances that the pleas by housing associations have been listened to and that the housing association movement, through the SFHA, will be adequately resourced to continue its on-going building and development programmes?
I am a huge and passionate supporter of the housing association movement. Housing associations are the principal providers of affordable housing, and they will remain the principal providers of social housing. I suppose the easy and glib answer to your question would be to say yes—and I will indeed give you that assurance. Within that, however, I will repeat what I have said to the committee and Parliament on many occasions. We must drive efficiency in our housing budget as much as possible. That was why we took our decisions on the housing association grant assumptions this year, and it is why, over the next wee while, we will start to consult on the reform of HAG for the future.
You mentioned funding of £25 million for council houses, and my point is directly related to the HAG assumptions. You said that there would be a £25,000 subsidy per council house. HAG subsidy is considerably higher than that. I am trying to work out how councils can build council houses for £25,000 while housing associations are looking for £70,000 to £80,000 to build a social rented house. The difference stuck out like a sore thumb.
Well spotted. I am sure that we covered that the last time that I gave evidence to the committee. The £25 million is intended to pump-prime, as I said earlier; it is not intended to provide the same level of subsidy as we do through HAG to RSLs. I ran through the principles and criteria that will underpin our decisions on which council bids to approve. One of those criteria is that the local authority has prudential borrowing capacity or other resources of its own to bring to bear. That will influence which councils are able to participate in the programme.
I had been about to multiply by three the number of approvals that I thought we would get from the social rented sector, but you have clarified matters.
If it turns out that way, I will be delighted, but I suspect that that is not the intention or the way in which it will work.
I am pleased that the cabinet secretary recognises the contribution that housing associations have made. Although I am a new member of the committee, I acknowledge that you have spoken previously about changes to the HAG system. What are the benefits of doing that?
There are many benefits. I should explain by way of background—sorry if I am repeating myself or telling people what they already know—that we are trying to ensure greater efficiency in our use of resources in two ways. In this financial year, we made several changes to the assumptions that underpin the allocation of HAG, which drove some efficiencies. All that we did was to bring our assumptions into line with the assumptions that housing associations already made about, for example, rent levels and their likely increases and the numbers of vacant properties. That aligned better our assumptions with theirs. In future we intend to look to reform HAG more substantially and to make its use more strategic. We will launch a consultation on that in the very near future in which I am sure the committee will take a keen interest. I will be happy to come back and talk about the detail of that when the consultation is published.
So you see more private investment in such developments than there is at present.
That is not necessarily the objective; it is about how we enable housing associations to make better use of their public money. For example, we have discussed the concept of one housing association being the lead developer for a number of housing associations rather than a larger number of housing associations developing on their own. The consultation will further develop our thinking on that. That is the thinking behind our plans for the future.
I apologise, cabinet secretary; perhaps I did not put that question as I intended. In relation to Bob Doris's question, you gave a figure of £25,000 per house for local authorities. If you are reducing the amount of public subsidy per unit to housing associations, would that not mean that—
Sorry, I follow you now. We have reduced the HAG subsidy in this year through the changes that I spoke about. Although it might be that the future changes that we make allow us to reduce the HAG subsidy further, that is not the only benefit—it is about doing housing investment more efficiently. We have been open about the fact that we see housing associations relying more on their reserves. The most recent estimate of the housing regulator is that there is something like £300 million in reserves across the RSL sector. We would like to see housing associations draw more on their reserves.
So that effect might cause a change in the plans.
I am sure that you know that I will not answer that just now, before we have even launched the consultation let alone listened to the consultation responses. However, members can take it from what I have said—I probably should not say this, but I will say it anyway—that we will ask the sector to what extent it believes that the changed financial circumstances will have an impact on our plans. It is right and reasonable that we ask about that. If we ask that question, members can assume that we will be keen to listen to what the answers are.
I am picking up on that heightening of expectation. I understand that the UK Government is preparing a package of financial measures to stimulate the economy, just as we are doing here in Scotland. Does the Scottish Government expect to have an increased budget for housing and regeneration as a result of that process?
Obviously, the Scottish Government does not as yet have any detail about what the UK Government's plans are or what the value of those plans might be. I certainly hope that those plans are substantial, as there is no doubt that we need considerable reflationary activity. Over the past couple of weeks, we have heard signals from the UK Government that it agrees on that point, but the devil is in the detail and we await the detail. I certainly hope that, whatever spending flows from those plans, Scotland gets its fair share. If that happens, the Scottish Government will have decisions to take on how we allocate any additional funding. I hope that, from what I have said today and from the decisions that we have already taken, members can draw a sense of the priority that we give to housing and regeneration.
It is completely understandable that you want Scotland to get its fair share. We all want that. The Scottish Federation of Housing Associations, which you have admired greatly, wants to see its fair share as well. The SFHA has made representations that housing should get its fair share of any money that might become available through consequentials. I am sure that the cabinet secretary will fight for that principle in the Cabinet.
You can rest assured on that. I have read sections of the SFHA's evidence to the committee. It did not surprise me, as I think that the SFHA is absolutely right to make those points. Equally, I am sure that the committee will appreciate that I cannot sit here and spend money that is not yet available to the Scottish Government. We are getting into rather speculative territory at the moment.
As the cabinet secretary with responsibility for housing and regeneration, will you be fighting for that fair share of the budget?
You can rest assured that my voice will be heard loudly and clearly.
We hope for a positive outcome and we will examine that outcome.
Cabinet secretary, you may have read that the City of Edinburgh Council was talking about getting into the mortgage market and making loans available to home buyers. To what extent are councils in Scotland mortgage providers? Can you give us any information about that and about how the Government sees that aspect of support for the housing market?
Local authorities are not, to use your term, mortgage providers to any significant extent. I am not trying to dodge the question, but it is not for me to speak for individual local authorities or local authorities collectively about how they might seek to develop their practices or policies in future. As I understand it, making such loans is not something that local authorities currently do to any significant extent.
It is not a policy option that the Government considered appropriate to encourage as part of the package of measures that it announced in "Firm Foundations: The Future of Housing in Scotland" and its subsequent statements as the economic crisis has unfolded.
As yet, we have not encouraged local authorities to use the money that is available in that specific way but, as I say, we will continue to keep all these matters under review. It is clear that, in addition, local authorities have a degree of autonomy in how they spend their own resources.
As councils do not, by and large, have savers and depositors to provide the cash for such loans, I presume that local authorities that lend money for house purchase and act as mortgage providers can do so only if they, in turn, borrow the money either from a public source or on the wholesale money market. Is that presumption right?
As you are aware, local authorities have prudential borrowing capacity and prudential borrowing limits within which they must work. It is not for me to dictate to local authorities how they spend their resources or how they use their borrowing capacity. I am happy to talk to you for as long as you want about the priorities that we have set for the resources that we have and how we think those resources can best be used to help home owners, home renters and the housing sector.
In effect, the borrowing limits are set by the Government.
They will depend on the circumstances of individual councils.
So, if a council is borrowing for the purpose of making home loans, it is limiting its capacity to borrow for other investment purposes.
Presumably, yes.
I understand that an extra £10 million has been allocated to the central heating programme. How many extra central heating systems will that extra expenditure result in this year?
We intend to install a record number of central heating systems this year, as we did in the last financial year, when we installed just over 14,000 systems. That was made possible by the addition of £7 million to what had been planned. The £10 million that I announced a couple of weeks ago will allow us to achieve the same number of installations as last year and, I hope, to exceed that number slightly.
Do you anticipate a sustained level of investment for next year?
You will recall that we established the fuel poverty forum to examine our fuel poverty programmes and recommend how we might reform them to allow us better to tackle fuel poverty. Whatever else the current fuel poverty programmes have done—I do not for a minute take away from the benefits that they have delivered to many people—they have not allowed us to bring down the rates of fuel poverty. Fuel poverty has increased substantially in Scotland. The most recent figures, which are pretty out of date, suggest that perhaps a quarter of households live in fuel poverty. Given recent trends in prices, for example, I think that the figure would be much higher now.
As I represent a constituency in which 47 per cent of households are in fuel poverty, I appreciate those sentiments. You mentioned the review of the central heating programme. In reaching the budget decisions, did the Government take into account some of the criticisms that have been made in the committee and elsewhere of the way in which the central heating programme was administered by Scottish Gas and some of the past shortcomings of the scheme?
Absolutely. In the past couple of years, a range of issues has been raised about the fuel poverty programmes and how they operate. When we set up the fuel poverty forum to provide recommendations, it was very much our intention to put the programmes on a sustainable footing and to ensure that they work effectively and are better designed to tackle the issue of people living in fuel poverty. We will continue to spend the same amount of money—we are not reducing the budget in any way. We are committed to maintaining the budget for those programmes, but we want to ensure that the recipients of the investment are the people who are most likely to be living in fuel poverty. We have already done that in this financial year. At this stage, we have installed more central heating systems than had been installed at the same stage in the previous financial year. Further, because of the decisions that we have taken on prioritisation, the people who get the central heating systems are more likely to be in fuel poverty, which is very important.
Recommendation 16 of the fuel poverty forum report states:
As I said, we operate within a fixed budget, so any decisions that we take to increase one budget must impact on another budget. You quote from the fuel poverty forum report. Most people would agree that, given the rates of fuel poverty, we need to do everything in our power to maximise the resources that we bring to bear to tackle that problem. It is interesting that we are maintaining spend on fuel poverty programmes while Governments in the rest of the UK have allowed those budgets to decline. That is an indication of our commitment.
A test for any Government when it sets its budget is the priorities that it sets. I agree that tackling fuel poverty is a high priority. Is it a higher priority than a cut in business rates, reducing class sizes or the provision of free school meals? That is a difficult one.
I am not aware that any party lodged an amendment to the budget last year to change the spend on fuel poverty. It is open to any member of the Parliament to do so.
The committee might consider that.
We have given a commitment to tackle fuel poverty, and we can demonstrate that it is an extremely high priority within our overall spending plans. The money that we planned to spend in this financial year was maintained from previous years. As I said, Governments elsewhere in the UK have cut those budgets. In the course of the financial year, we have supplemented the money that we planned to spend, because we consider tackling fuel poverty to be one of our most important priorities, given how many people struggle with it. Three factors impact on fuel poverty: the price of energy; income; and the energy efficiency of homes. The Scottish Government can really influence only one of those drivers—energy efficiency—and that is what our spend through the fuel poverty programmes is designed to do.
We have enough trouble holding our Government to account, never mind the UK Government. The purpose of this evidence session is to scrutinise our budget. I am sure that you would agree that Governments can set an example. When they do so, it makes it easier to negotiate with people who have influence over other things.
We received a helpful briefing from Shelter Scotland. It made the point that, given the change in the funding situation for local authorities in relation to supporting people and homelessness moneys, it was difficult to see how those moneys had been spent. There was a suggestion that the information provided was not accurate because people had misunderstood the questions. Are you aware of that? Will you be able to resolve the situation?
I am aware that the figures for supporting people in the draft budget do not reflect the actual spend completely and accurately—in fact, they underestimate it significantly—which reflects how local authorities are reporting spend. It is clear that there are issues around that.
So you accept that there were some inaccuracies in the reporting and you are saying that that will be put right. As the convener said, we are here to look at the budget before us and we cannot do that properly if we cannot compare like with like.
Sure. I have said openly that the figure in the draft budget for supporting people underestimates the spend of local authorities. I suppose that it is better to be in that position than to be in the reverse position, whereby the budget overestimated the spend. I hope that the information that the committee now has provides a reassurance about the priority that local authorities are attaching to what is a very important area of spend.
Is that underreporting of spending not a result of an overreporting of spending on homelessness?
Can you expand on that point?
Shelter is suggesting that the figures have been reported the wrong way round and that therefore there would be less spend on homelessness.
I do not think that any local authority could reasonably be accused of not prioritising homelessness. One of the strong motivators and drivers that we have—I will be consensual and give credit to the previous Administration for this—is the target to eradicate homelessness by 2012, which puts a great onus and obligation on all local authorities to ensure that they are doing the work that is necessary to meet that target. The most recent homelessness statistics that were published show that, although there are some concerning trends, those trends come from more encouraging trends. With local authorities getting rid of the divide between priority and non-priority homeless people, as the demand rises, we are seeing more people in temporary accommodation, which we have to tackle. What underlies that is that local authorities are making progress in meeting the 2012 target, which is a very challenging target. I think that no one underestimates the difficulties in meeting it, particularly in the current climate. However, central Government and local government are committed to it. Obviously, that puts a strong obligation on authorities to ensure that they are spending resources adequately to meet it.
On the point that arose at the start of the meeting when we were comparing amounts in the spending review and the draft budget, I propose that we write to you for clarification on whether you agree with the figures that our budget adviser has provided.
I am more than happy to provide any further information. Most but not all of the changes in the figures in the spending review and the draft budget will come down to the £100 million acceleration. There is also the money that has gone into the local government settlement. We can provide detail line by line on that.
That would be fine. We are working to produce a draft report next week. It would be helpful therefore to have the information as soon as possible.
Meeting suspended.
On resuming—