Official Report 223KB pdf
For agenda item 2, I welcome our witnesses: Nicola Sturgeon, the Cabinet Secretary for Health and Wellbeing; Mike Foulis, who is director for housing and regeneration in the Scottish Government; and Ann Thomson, who is head of social inclusion and voluntary issues in the Scottish Government. I invite the cabinet secretary to make brief introductory remarks.
Thank you, convener.
We appreciate your opening remarks.
Cabinet secretary, given the changes to the financial landscape to which you referred, what do you expect will be the impact of a reduction of £178 million in the housing budget over the coming year?
I will address the point and I do not want to be pedantic, but it is important to stress that the housing budget is not being cut and is being maintained over the three-year period. The Scottish Government's overall capital budget is reducing and, in light of the current financial challenges, the ability to maintain spend on housing over this three-year period is important. That spend is 19 per cent up compared with the previous comprehensive spending review period. I will return to the challenges associated with the reprofiling of the spend but, as I have already indicated, I dispute and will continue to dispute the notion that the housing budget is being cut.
Cabinet secretary, you are suggesting that the only way to resolve the situation is for the pre-budget report to bring forward yet more money from future years' spend. Could you not also have got a commitment from your Cabinet colleagues to increase spend to fill the gap this year from other services, showing a priority for housing?
Let me deal with both those points, starting with the 2010-11 budget.
The stakeholders from whom we have heard evidence so far have been very concerned that, next year, the funding for housing will be reduced. Although they accept the cabinet secretary's statement about the £1.65 billion, when that budget was decided three years ago we were in a different financial position, so we have not seen the kind of commitment to housing that we might have expected.
On Mary Mulligan's first point, I was not trying to misrepresent what stakeholders said or put words in their mouths. Their comments are in the Official Report for everybody to see. I know that people are concerned about the level of housing investment next year compared with this year. I am concerned about that, too. The point that I am making is that that is not an indication of a lack of commitment from the Government; it is a consequence of the decisions that we have taken—decisions that were designed to be flexible in light of the financial and economic climate—to accelerate money into this year. We cannot spend money twice, so spending it this year means that we cannot spend it next year.
Alex Neil stated that the accelerated funding would
You will remember that we accelerated £120 million, £40 million of which was accelerated into 2008-09. Of that money, £11 million was spent on land acquisition—some of the land is being used this year to support site starts—£8 million was used to support immediate construction, and £13.5 million was used for off-the-shelf purchases, which will have helped to secure jobs in the private building sector. Overall, our economic recovery plan is estimated to have supported or protected about 15,000 jobs. I will correct the figures later if I do not have them absolutely right, but I think that 5,000 of those jobs were protected specifically through accelerated funding not only in housing but across Government. From memory, about 2,000 of those jobs are in the construction sector.
In evidence to the Economy, Energy and Tourism Committee last week, Michael Levack of the Scottish Building Federation pointed out that 8,500 jobs have been lost this year in the construction sector, on top of 20,000 the year before. He raised several issues. Like most of the stakeholders who come to the Parliament, his targets and ambitions are not aligned with what the Government has available to spend. He claims that the acceleration was not enough, that it has taken time to wash through the system, and that too much was spent on land acquisition and buying existing stock. As a result, he claims, the construction sector has not benefited.
I have not spoken to Michael Levack personally, but I am pretty sure that colleagues in Government will have done so. We can provide details of those discussions. We are happy to speak to him and any other stakeholder. We have regular discussions with a range of stakeholders about what the Government is doing to support economic recovery and what more it could do.
I hope that Mr Levack's comments have been fed back to you, because he highlighted a number of areas in which the Scottish Government is clearly responsible for speeding up the process and, indeed, could do so. He mentioned PPP, for example, and said that certain public-private projects have been in the system for three years without any plans to build houses arriving.
But you will know—
I will give you an opportunity to respond in a moment, cabinet secretary.
I will deal in a moment with some of those points but, with respect, I think that when we discuss the budget we must be as accurate as possible, and it is important that I explain what lies behind some of the headline statistics that you have mentioned.
You have previously mentioned funding for housing through the European Investment Bank. Will you comment on that?
The European Investment Bank has said that £50 million of funding will be made available to registered social landlords in Scotland this year. That money is part of a total of £450 million, I think, that the European Investment Bank will make available throughout the United Kingdom. It is a significant chunk of money.
Do we know how much the bid is for?
Some £50 million will be distributed among RSLs in Scotland. The application process is still under way, so I cannot say how many RSLs will benefit, but it could be a few.
Michael Levack's evidence to the Economy, Energy and Tourism Committee last week has been quoted. He mentioned the lack of private finance initiative projects. I have been looking through the Scottish Parliament information centre briefing for the local government and communities budget, which states that there is
They are doing so to a significant extent. I do not have the relevant page of the budget document in front of me, but the requirement to make PFI payments will continue for a significant number of years and is increasing. Money that is required to make PFI payments is therefore not available in other parts of the budget for investment in new projects.
It is important to put on the record that PFI projects do not represent money for nothing.
Exactly. That point is very well made.
The money must be paid back, and there are consequences of that in other parts of the budget.
Some £40 million of the £120 million was accelerated into 2008-09. Earlier, I gave a rough breakdown of that money—£11 million for land, £8 million for construction and £13 million for off-the-shelf purchases. The sharp-eyed among you will have realised that that leaves £7 million, some of which went to the home owners support fund and £2 million of which went to the Devanha project.
The important thing for me was that a housing association that has used part of the £11 million to bank some land that it would not otherwise have got will already have had a sort of subsidy, in that it got that land. I just hope that the efficiencies will work their way through the system and that that use of land acquisition money will be taken into account when the housing association seeks a HAG subsidy for a project.
In that circumstance, the HAG subsidy could well be lower than it otherwise would, because the costs of acquiring the land were lower because of the opportunities of which the association was able to take advantage.
You are on record as saying that you want to draw down money from 2011-12 to 2010-11 to support the construction industry, and you have received support for that stance from many people, including our witnesses last week, among whom were representatives of the Scottish Federation of Housing Associations. However, they told us that they work on three-year budgets rather than year-to-year budgets. It might therefore be beneficial in your discussions with the UK Treasury to seek to draw down money not from only one year ahead but instead to speak in the round. I am not suggesting that you go for a three-year drawdown, but there are ever decreasing benefits from drawing down that capital expenditure, so it might be good to talk to the UK Treasury about how it can be phased out. You might instead look for funding over three-year periods, which the SFHA and others would support.
I take that point. I was about to be light-hearted and say that it will be a step in the right direction if we can focus on winning the argument for next year. However, the general point about three-year funding is well made, and everyone accepts the desirability of enabling people to plan ahead in that way. Obviously, as I said to Mary Mulligan, the level of approvals that we will be able to achieve next year depends partly on the money that we have next year and partly on the money that we will have the year after that, because of the way that housing investment is funded.
We have talked about how many jobs have been lost in the construction industry. You said that the industry has been sustained, to a degree, so the figure could have been higher. How many jobs might be at risk if there is no drawdown from 2011-12 to 2010-11?
I cannot put an absolute figure on that, but it is clear that there will be an impact. Given that I have argued that the record spending this year has helped to sustain employment, logic tells us that if we go from spending around £650 million on housing, as we are doing this year, to spending at the levels that are expected next year—I repeat that that is not a cut, because of the reprofiling—jobs will be at risk.
More than 1,000 jobs could be put at risk.
Not accelerating further capital into next year's budget will have an economic impact, including on jobs.
There has been discussion about unit costs. How does that affect the Government's policy on the balance between different types of social housing?
Our overall objective is to get more efficiency out of the money that we invest, which is why we took steps to reduce the HAG subsidy rate and the level at which we subsidise affordable housing. We have had considerable success in that regard. The HAG subsidy level dropped to roughly £78,500 in 2008-09—it was almost £85,500 in the previous year. The HAG subsidy rate, which is the percentage of unit costs that is met by subsidy, has gone down from more than 70 per cent to 60 per cent. We are getting more for our money. People in various areas have described the approach as a cut, but last year the subsidies delivered 400 additional houses. It is not a cut; it is about getting greater efficiency out of what we spend.
In reaching decisions about unit costs, how much weighting is given to local variations in the cost of building?
There is a fair amount. We set the HAG subsidy target and make assumptions that help us to determine the rate and level of HAG subsidy, and we look closely at local circumstances, which is why the subsidy that is given to a housing association in Alasdair Allan's part of the country, for example, might be different from the subsidy that is provided elsewhere. We take into account a range of factors that are sensitive to local variations.
What room remains for efficiencies to be made through co-operation between RSLs and local authorities?
There is still considerable scope for efficiencies. There is scope for us to drive more efficiency in the affordable housing investment programme. There is also scope for the sector to consider how it can be more efficient: I am sure that there is an appetite in the sector to do that.
There has been a bit of a debate on that point—you will have seen the evidence from last week. Everyone wants good value for the public purse. Are you convinced that the efficiency agenda for the housing associations represents where you want things to be? Some housing associations complain that they are using their own reserves to fund or subsidise some developments.
On your first question, we still have a long way to go with regard to efficiency, and I do not think that we are where we want to be. That is challenging for the sector, and it is challenging for the Government—efficiency drives always are—but the rewards, in the form of more housing, are attractive enough to make it essential. There is a lot that the Government can do, working with the housing sector, to make things even more efficient.
On the controversial issue of the reserves that RSLs and housing associations hold, are you still of the view that those are substantial amounts of money that could be released?
The picture will vary among organisations. We know from the regulator that substantial sums of money are held by RSLs in reserves. In fairness to RSLs, a lot of that money is required for other purposes, such as meeting the housing quality standard. I am not suggesting that that money is just lying there doing nothing. However, it may well be that more of those resources could be put to work in delivering new housing. We continue to work with the sector to ensure that the resources that are currently available are being used as efficiently and effectively as possible. We are also considering as imaginatively as we can where new and untapped sources of finance might be available.
Right on cue, David McLetchie has a question.
Good morning, cabinet secretary. I have a few questions on targets for affordable homes, relative to what we have achieved so far in the three-year programme. As I read in your "Affordable Housing Investment Programme 2008-09 Out-turn Report", we have managed to achieve 6,260 completions.
There have been 6,220 completions according to my figure, but if you want to give us 40 more, I will take them.
I am looking at table 5 on page 10 of your document, which says 6,260. We will not argue about the 40. The Government's overall target was to achieve 21,500 affordable homes over the three years from 2008 to 2011. By our different reckonings, that means that we have about 15,300 homes to go this year and next. Are you confident that that target will be met?
Achievement of the 21,500 approvals over the three-year period remains our firm intention and ambition and we are working hard to try to achieve it. On the balance that you spoke about, our published target for approvals in this financial year is 8,100. We are confident that we will meet that target for approvals.
As I understand it, the Government's objective is to approve and consequently develop 21,500 affordable homes. Correct me if I am wrong, but that number will be a mixture of homes for social rent, for mid rent and for purchase through shared ownership and shared equity. If I understand the completions figures correctly, roughly 70 per cent of the 6,000-odd homes will be for rent and the balance will be for sale at affordable prices under low-cost equity schemes. Basically, that means that you have about 4,300 or 4,400 homes for rent. Shelter and SFHA tell us that Scotland needs 10,000 new affordable homes to rent each year. Does that mean that, on projections, the Government's programme will deliver fewer than half the homes for rent that those organisations claim we need?
I will try to answer that in stages. First, I confirm that you are absolutely right that the 6,260 completions figure is the total in the AHIP budget. It includes houses for rent, shared equity and all the other things that you mentioned.
Yes. It is interesting that you have mentioned the right to buy. In the affordable housing investment programme, how many people are you aiming to help to buy their homes at a discount?
As David McLetchie will be aware, last year and this year we invested £35 million in the home owners support fund. This year, there is also the local improvement finance trust programme and £60 million has been invested in the open market shared equity pilot which, according to my figures, will this year help 1,500 people to buy their homes.
So, 1,500 people will be helped to buy their own homes with public funds. If your right-to-buy changes go through, how many people will be denied the opportunity to buy their very own affordable home in which they will have lived for many years?
One person's threat is another person's opportunity. We have been discussing the need to increase the number of houses for rent, and I am the first to concede that there is huge pressure on the availability of such housing. Although the number of houses that are sold through right to buy has declined because of reforms that have already been made, something like 3,000 homes were still sold that way last year. The following estimates have to be treated with caution because of the change in the financial climate but, if no change is made to the right to buy, there could be between 46,000 and 84,000 such house sales from 2012 to 2022. We estimate that our reforms could reduce sales by about 20 per cent, which means that over those 10 years we would retain an extra 10,000 to 18,000 homes and make them available for people to rent. I think that that is important, given the current climate and pressure on rentals.
On the one hand you are introducing a programme that in one year will give 1,500 people the opportunity to buy their homes with a measure of public subsidy and support and, on the other, your reforms to another programme will—according to the upper figure that you have mentioned—deny 1,800 people the same opportunity. As a result, the net increase in affordable home ownership in Scotland will be 300.
Our objectives are to ensure mixed housing tenure and to strike the right balance. I sense—in fact, I am sure—that I do not agree with David McLetchie's way of looking at the situation. We think that it is right in certain circumstances to help people to get a foot on the housing ladder, which is why we are introducing the open market shared equity programme. I do not think that that is inconsistent with the belief that when we invest large amounts of public money in building new houses for social rent we should not undermine the impact of that investment by allowing those houses to be sold off.
We will debate the right to buy when the Government produces its plans on that. I simply observe in passing that, as a result of the right to buy on council estates, there is now more mixed tenure in Scotland than there ever was before.
Yes, but fewer houses are available for social rent, and that is a significant problem.
Yes, but there are no fewer homes for working people to live in, because they were not demolished; instead, they were improved. Anyway, that is another issue.
Sure, but if people cannot afford to buy the houses, they cannot live in them.
We will deal with that when we consider the forthcoming housing bill, as Mr McLetchie said. You may ask your final question, Mr McLetchie.
It is about delivering the programme. We talked about accelerated funding and I think, cabinet secretary, that you said in response to an earlier question that you hoped that land acquisition this year might lead to actual building starts next year. I put it to you that that is a bit optimistic, given the evidence that we have received from housing associations that there is about a three-year period from start to finish. They have to get the land, get the planning consents, do the design, carry out the tendering process, do the procurement and then get the diggers in before they reach the stage at which a house is completed and the keys are handed over. Based on experience, three years is a more reasonable timescale for that. Is there evidence that housing associations are accelerating the development process? The Government is accelerating the funding, which is fine, but are housing associations accelerating the timescale from start to finish?
From reading the Official Report of the committee's previous meeting, I know that some stakeholders pointed out that the process can take three years—you are right about that. However, it is important to say that the land acquisition part of the process does not always come at the start and that it can come later. Partly through the accelerated funding, we have accelerated the land acquisition process. There is evidence that land that was acquired last year through accelerated funding might be in use for site starts this year. We will look for more detailed evidence on individual projects that we can provide to the committee to help to illuminate that point.
From a different perspective, Shelter's written evidence—I am sure that if you have not read it, your officials will have—stated that the need to provide rented accommodation means that the low-cost initiative for first-time buyers—LIFT—and other opportunities for people to purchase homes and get on the first rung of the ladder should not be the priority, and that the £35 million should be shifted. What is your view on that?
We have not taken final decisions about that for next year. You will get a mix of opinions on that issue, and none of those opinions will be invalid.
I am just testing the evidence.
Exactly.
Given that we are fast approaching 2012, when the homelessness target should be achieved, are you comfortable that we are moving in the right direction and that the target can be met? What measures in the budget have been proposed particularly to achieve the target?
In short, the 2012 homelessness target has always been challenging and remains so. We remain committed to it—there is absolutely no question about that—and are confident that we are making progress towards achieving it. As you will be aware, we established the 2012 steering group, which is made up of the Government and the Convention of Scottish Local Authorities, to monitor progress towards the target, to ensure that good practice is exchanged and to ensure that every step that can be taken to advance that is being taken.
Are there any parts of the country where that is a particular issue and where efforts have been made to divert budgets?
I do not have the breakdown of local authorities in front of me to say which have made better progress than others or where particular challenges are, but we can easily provide the committee with that information.
That would be helpful. Does the number of new houses that are being built include some housing that is reprovisioning and not new as such? Houses come to the end of their natural lives and have to be replaced. In many areas, multistorey flats are undergoing phased demolition. Will you talk about that? Are there figures that demonstrate the breakdown?
I can provide those figures. I do not have them in front of me, although they are probably deep in the outturn report. Given where we both come from, you know as well as I do that there is a live debate in Glasgow about the future of multistorey flats. Generally speaking, HAG subsidy can support reprovisioning and refurbishment as well as new build and, as we would with any application for funding, we would consider any project on its merits.
It would be helpful if we could have the breakdown.
I am more than happy to provide you with it.
In evidence to the committee, the Scottish Federation of Housing Associations suggested that a rolling infrastructure fund should be established to help the private sector and the RSL sector improve and increase the quality and availability of housing. What thought has the Government given to that? Does it intend to implement that as part of achieving some of the key targets on which we have touched?
I am not sure that I can say much more than I said in response to Mary Mulligan's point about infrastructure except that I agree with the thrust of your question. Given the changes in the economic climate, it is much more challenging to get infrastructure funding for housing developments than it was, for reasons that we all understand. We are acutely aware—and, if we were not, would be reminded regularly by many of our stakeholder partners—of the need to consider innovative ways of unblocking some of the infrastructure blockages. We are actively considering that at the moment. I cannot provide more detail to the committee on that today, because we have not taken decisions on it yet, but I hope that I will be able to do so in the not-too-distant future.
I hope so, too, and that there will be more flexible ways of financing and keeping people in their homes. I do not know whether you can add anything about that. We have already touched on the key points.
I am not sure that I can add to what I have already said, but I note and understand the committee's interest in the matter.
The committee agreed to focus on housing and poverty during its evidence-taking on the draft budget, and we will now move on to questions about poverty.
Good morning, cabinet secretary. I welcome your opening comments on the Scottish Government's commitment to tackling poverty, particularly child poverty, but I am concerned about the economic situation, to which you also referred. We are potentially looking at increased unemployment and at other aspects that will impact on the Scottish Government's ability to meet its targets for tackling poverty. More important, those things may prevent the child poverty targets that the UK and the Scottish Governments have set from being met. In your opening statement, you said that measures such as income maximisation would be applied. How do you maximise income when people are facing redundancy and the loss of income?
That is a big, wide-ranging and important question. I will do my best to talk about as many strands of it as possible.
I am pleased that you referred to last week's evidence by Jim McCormick. He said that the provision of free prescriptions and free school meals did not target directly those in poverty, and that other measures could and should be put in place to tackle poverty at its source. What would be your response to that?
As I said in my opening remarks, we should do what we can to mitigate the effects of poverty, but the long-term difference will be made through what we do to attack the root causes. That is why other work across Government, such as the early years strategy and the report on health inequalities, is important. The work that is being done in those areas is concerned with a much longer term than other work and does not bear fruit immediately, but it is designed to deal with some of the underlying causes of poverty.
Have you thought about freezing the council tax for the lower bands, which would help those who are more in need, rather than having an across-the-board council tax freeze?
Our draft budget involves a total freeze on council tax, which demonstrates that that is our preferred option. We think that that is the right thing to do because, for 10 years, a range of people on low incomes but above benefit levels—pensioners and so on—had been under the cosh in terms of council tax increases. There were increases of 60 per cent in the period of the previous Administration—or 100 per cent, if you count the last couple of years of the Tory Government. It is right to give people across the board relief from council tax increases, and it has become even more right to do so in the current financial climate.
I was interested in whether the issue had been considered. I understand that the outcome of your considerations is what is before us in the draft budget. I accept what you said, so I will move on.
We could answer that question in a variety of ways. I could ask why, if there is such a need out there, we were the first Government to decide to go ahead with a town centre regeneration fund—
Eventually.
I accept the role that the Parliament played in ensuring that we had the fund. Let us accept that the fund is a good thing that will benefit communities throughout Scotland, including an area in my constituency and areas in committee members' constituencies.
I remind Mr McLetchie that his proposal for a £20 million town centre regeneration fund was unambitious. I welcomed the allocation of £60 million, although my constituency has not yet benefited from the fund.
There is still hope.
There is indeed and I look forward to the beginning of November.
No, it is not, because our budget next year is £129 million less than we thought that it would be, so we have to reduce our commitments. We have taken decisions that will protect the health budget from the implications of the capital cut.
But you are saying that you will take £173 million out of the affordable housing programme and £60 million out of the town centre regeneration fund. We are continually being faced with cuts in the budget—
If I can respond—
I will ensure that you have the appropriate time to respond.
That is why I wanted to know why, when it was clear that the demands were there, your priority was not town centre regeneration funding, and what your priority would be instead.
May I respond now, convener?
Certainly.
Apologies for interrupting.
Accepted.
Thank you.
That is your decision, cabinet secretary.
Actually, it is Parliament's decision now.
Obviously, and what the committee says in its report will be a decision for the committee. We will take into account not only Mary Mulligan's view but the evidence that we have heard from stakeholders, the cabinet secretary and others.
I am sure that the cabinet secretary will agree that when it comes to poverty—whether it is in her constituency, my constituency or anywhere else in Scotland—our regeneration areas suffer particular blight, according to socioeconomic indicators such as high unemployment. There is a real need to lift those areas, yet the Government has reduced the regeneration budget from £118 million in 2009-10 to just £33.5 million in 2010-11—a massive 71.6 per cent cut. Is that not hitting hardest the people who most need our help?
First, I gave information on that in response to a question from the convener. As we have just discussed, the change in the regeneration budget is largely down to Parliament's decision to have a one-year town centre regeneration fund for this year; therefore, in this year's budget that is reflected in the regeneration budget. However, because that was a one-year commitment, and we are not doing it next year, that money does not appear in the regeneration budget.
I still call it a cut, although I accept your first point about the bulk of that money coming to the town centre regeneration programme. However, the decision about where the money comes from is a decision for you and your Government. I suggest that that decision has impacted particularly adversely on the people in our society who need our help the most.
With respect, the town centre regeneration fund was not originally planned for this year's budget—it is an addition to the budget. From experience in my constituency, I know that the fund will have significant benefits that were not anticipated at the start of the financial year. That is an unalloyedly good thing, with no downside.
The cabinet secretary may want me, Mary Mulligan or other members to do her job for her, but it is the Government's responsibility to make decisions.
We have set out our decisions in the draft budget. It is for Parliament to decide whether it agrees with them or whether it wants to recommend changes. If it wants to recommend changes, it must deal with both sides of the equation. Of course it is the Government's job to make decisions. We have done that in the draft budget, which is the collective expression of our priorities—where we think that we need to spend money.
I am sure that the cabinet secretary and her colleagues are aware that, even if the fund were to continue, there are limitations on how it could be spent. The regeneration game is long term. We and other committees have been told in evidence that funding was allocated in July and must be spent by the end of the financial year. That limits what can be done.
In the draft budget, the fairer Scotland fund is rolled up in the local government allocation. Are you completely confident that, although that budget will not be ring fenced, it will still be used for the purposes for which it was intended? In your discussions with local government about the concordat—your historic or otherwise agreement—will you make provision for any special mechanisms to secure the money absolutely for those purposes?
You make an important point. It is in the interests of all of us that this spending has the impact that we want it to have. The rationale for removing ring fencing and mainstreaming the money into overall budgets is to enhance the autonomy and flexibility that community planning partnerships have in spending it. The idea is that they will use the entirety of their mainstream funding to ensure that they are meeting the objectives of the fairer Scotland fund.
When Mr Maxwell was in your ministerial team, he announced allocations for local authorities throughout the three-year period. Are those still the amounts that will be allocated to local authorities?
Yes.
That is interesting.
After our exchange at last week's First Minister's question time, I have written in some detail to Mary Mulligan on this matter. She might not have received the letter yet—I do not think that I have it front of me myself—but I certainly signed it in the past few days.
Sure. So the management element and the others that you mentioned are not part of that tender package.
I think that that is the case.
I was also intrigued by Alex Neil's comment to a colleague that the applications of less than half of those who were surveyed for stage 4 of the energy assistance package had been successful. Why is that?
I am looking into that at the moment. As you are aware, a major advertising campaign for the energy assistance package is under way, and we are working hard to increase the number of applications to the programme and to ensure that calls are translated successfully into measures. I will certainly share with the committee any future findings or reflections on the matter.
I realise that there are different stages to the package, but when you say that 12,000 people have been helped, what exactly do you mean by that?
The benefits checks that we carry out at one of the package's early stages have resulted in a total increase in income of nearly £400,000 or an average of £1,300 per person. Moreover, there has been a total reduction in fuel bills of £45,000 or an average of £150 per person and a further £3 million reduction in bills—or an average of £5,000 per person—as a result of energy efficiency measures. That significant work is helping a lot of people, but obviously those statistics show what is happening at a particular point in time.
I have one more question on that. Given the amount of detail that you have, I am surprised that you—I do not mean you personally, cabinet secretary, but your team—do not know why only half of those who apply for stage 4 are successful. Perhaps waiting until the end of the first year is not the right thing to do. I would have thought that you would want that information as soon as it is available.
Sorry, perhaps my answer was not entirely clear. From the detail that I have given you, I hope you accept that we are not simply waiting until the end of the year. We are monitoring the success of the programme carefully, on a month-by-month and week-by-week basis.
That certainly was not how I read Mr Neil's answer, but we can look at it again, no doubt.
Okay—I will read it again, but that is certainly my understanding. We will clarify any remaining questions that you have on the issue once you have read the answer again.
For clarity, and while we are chucking around figures, on the 3,000-plus central heating systems that have been installed, if we take out the legacy figures, how many remain?
I do not have that figure with me, but I can provide it for the committee. It is a moving feast, so the figure moves every week. I do not have the figure for this particular moment in time.
Can the officials help? Is it under 200 or under 500?
We do not have the figure with us, but we can get it for you. From memory, in the most recent answer to a parliamentary question on the issue, the figure was 173. However, the figure is moving all the time, so it will have already moved on.
I understand that. What is your estimate of or target for the number of installations? I am trying to find out how far away we are from the expectation. At 173, how far have we got to go?
We are not setting specific targets for every stage of the process. The energy assistance package is a different approach from the central heating programme that went before it because it deals with people's energy inefficiency and fuel poverty in a holistic way. Obviously, people will be helped at different stages. We are investing £45 million a year in the programme, and that is intended to lever in additional funding through the carbon emissions reduction target—CERT—scheme. I am not saying that, by such and such a date, we will have done X number of people at each stage. We will assess the programme in its entirety at the end of the year.
I presume that the people who work with you, when working out the figures, would at some stage have estimated the number of installations that would take place in the year.
That depends to an extent on the different bits of the package and how many people are helped at the different stages.
I understand that but, at stage 4, you would have expected to help X amount of people with advice on energy and other issues, and you would have expected another group of people to apply successfully to have a central heating system installed. From the Government's calculations with its partners, how many would we have expected?
I can provide the committee—although not right now—with statistics on the number of people whom we would expect to have helped at each stage. The point that the committee must understand is that stage 4 is not only about central heating. People can access a range of measures at that stage. Central heating is one of them, but air-source heat pumps are another.
There is not a constituency MSP who does not understand or has not struggled to understand the system. We get people in our constituency offices every day of the week asking about the issue. It is a genuine constituency question.
I understand that. Committee members will also appreciate that record numbers of central heating systems have been installed in each of the two years of this Government. We have designed a new programme—in partnership with stakeholders on the forum that we set up—that is about helping a much broader range of people in a much broader range of ways. The commitment to that is absolute, but we need to ensure that the money that we are investing is genuinely tackling fuel poverty. Many stakeholders thought that that was not the case with the previous programme.
Well, tremendous demand exists out there for that money. If the number of installations is only 173 so far, let us hope that we can increase that figure and that the people who deserve help receive it.
Clearly, the interventions to deal with fuel poverty are many and varied, between the Government's activities and the CERT scheme and so on. Do the public understand the many different options that are available to deal with fuel poverty?
Part of the objective behind the energy assistance package is to streamline things so that people have one point of access from which they can receive appropriate advice. From the public's point of view, I suspect that the range of potential support that is available could be confusing. When people phone up the energy assistance package helpline, they are signposted to the right support that is available for them. That support might be about benefits uptake, energy efficiency advice, working with an energy provider to be put on a lower tariff or even, under stages 3 and 4 of the package, physical measures in the person's home. The energy assistance package is intended to streamline the whole system to make it easier for people to understand.
On that issue of streamlining, does the Government have a view on the wider issue of private house repairs? Many houses in the private sector might need measures other than loft insulation if structural problems, for example, are the source of fuel inefficiency. Is wider consideration being given to the issue of private house repairs?
Obviously, the private housing repair grant is available—it is now rolled up into the local government settlement—so considerable resource goes into supporting people in private housing to make repairs to their homes. In addition, as the committee will be aware, John Swinney made an announcement at the weekend about a loans scheme that will provide loan funding to those who seek to make changes for energy efficiency purposes. A wide range of work needs to be done, and is being done, to tackle the energy inefficiency of our housing. Obviously, the Government set itself ambitious targets under the Climate Change (Scotland) Act 2009 and private housing generally will have a big contribution to make in meeting those targets.
Finally, do you have a view on how the package ties in with the Westminster Government's cold weather payment? The system of cold weather payments has been criticised for failing to attack some aspects of fuel poverty—I declare an interest as someone who lives on the west coast rather than on the east coast—because the measurement is based on frost rather than on wind chill.
I know that how the payments are triggered during very cold spells is an issue. The matter is reserved so I cannot remember all the details, but I know that it is virtually impossible for people in some parts of the country to be eligible for such payments.
I want to ask about the fairer Scotland fund—or the former fairer Scotland fund, to be more accurate—in the context of the next budget settlement. The fund's budget was £145 million for the current financial year, but it is being rolled up into the overall local government settlement. Correct me if I am wrong, but my understanding is that the local authorities' divvying up of the money is in accordance with the previous mechanism—the Scottish index of multiple deprivation—which is different from the formula for the local authorities' divvying up of the general grant. Presumably, that means that in order to do the divvying up for 2010-11 and future financial years in accordance with the SIMD formula, the Government must have a notional aggregate figure in mind for the money that will be divvied up on that basis, as opposed to the formula for divvying up the rest of the money that goes to our councils. Is that correct?
Yes, up to a point. You are right that the fairer Scotland fund has been allocated on the basis of the SIMD. As I said in response to, I think, Patricia Ferguson, all community planning partnerships have made allocations from the fairer Scotland fund total of £145 million for the next financial year. That money has been allocated on the same basis as previously—albeit that the ring fencing has been removed—so the money is still being allocated on the basis of the SIMD. For future years, that will be subject to discussions that we will have with local authorities about the basis for the allocation of the money. Your general analysis is therefore right, except for the fact that we have not yet taken decisions about how that will be done in future years.
In future years, if the formula for division differs from the general formula for division of local authority grant allocations, it will mean that the Government must always have in its head what the global sum is when it does the sums; otherwise it could not do the arithmetic.
I understand your point, but we have not reached a view with local government about how that money will be allocated in the future. You will be aware of broader looks at the allocation formula for local government, and decisions on that have yet to be taken. However, I understand your point.
So, in fact, the longevity of the SIMD as an allocation basis is up for grabs, and it might end up being subsumed in a new or revised general division formula.
That is speculative, because we have not taken a decision about the future allocation methodology for that particular sum. The ring fence has been removed from next year on, although the allocation for next year is still based on the SIMD.
And it is the same global sum, so that budget or sum for division is effectively frozen at £145 million.
Yes—for 2010-11.
I want to take the cabinet secretary back to the first part of today's session, which was on housing. The Scottish Federation of Housing Associations indicated in its evidence at last week's meeting that a local authority was in discussions about a large-scale transfer of its housing stock. Are you aware of any discussions of that nature? What impact, if any, would that type of transfer have on the draft budget?
We are not involved in any discussions of that nature at this stage.
That is fine.
As there are no further questions, it remains for me to thank the cabinet secretary for her attendance. We will suspend for a couple of minutes until the convener gets back.
Meeting suspended.
On resuming—