Local Government and Communities Committee, 11 Jun 2008

Meeting date: Wednesday, June 11, 2008

Official Report 240KB pdf

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Homelessness Monitoring Group

Under item 2, the committee will take oral evidence from members of the homelessness monitoring group on its work. I welcome Mike Foulis, director of the Scottish Government housing and regeneration directorate; Councillor Harry McGuigan, Convention of Scottish Local Authorities spokesman for community wellbeing and safety; Gavin Corbett, policy manager at Shelter Scotland; and Andy Young, good-practice adviser at the Scottish Federation of Housing Associations.

I invite our witnesses to make some introductory remarks. I do not know whether you have agreed that one of your number will make those remarks.

Convener, I will say a few words about the process that we went through. We reformed the homelessness monitoring group last year. We extended its membership to take into account some of the changes that have occurred in the landscape since the previous group did its work. We had representation from community planning partnerships and community health partnerships, but we cast the net a bit more widely across government and brought in the Ministry of Defence, the Department for Work and Pensions, and also the Scottish Prison Service because of the important role that it can bring to bear.

The work involved assembling all the evidence that we could find, assessing it, and producing our report. The evidence was in four main forms. First, there were the reports that local authorities had produced for us on the issues and problems in their areas and what they were doing. Secondly, there were the statistics that the Scottish Government collects, much of the information for which comes from local authorities. Thirdly, there was information from regulatory activity, with the regulation and inspection people from Communities Scotland, as it was then, represented on the group. Fourthly, there was testimony from the front line and the experiences of those who delivered the services and who could voice the issues of the service users.

We assembled that information, assessed it and produced our report, which indicated that there are four main areas in which we need to take action. We gave a greater emphasis to prevention than had previously been the case, we again picked up the well-known themes of the need to maximise the number of lets from housing associations and the private rented sector, and we also considered how we can ensure that at least some of the investment is targeted on the areas of greatest pressure. With COSLA, we are taking forward the agenda that is set out in the report and in the parallel report that was produced by two front-line homelessness workers who collected the views of their colleagues, and we are fashioning an action plan that we will progress in the weeks and months ahead.

Perhaps the most conspicuous, although certainly not the only, aspect of homelessness is rough sleeping. The Government has set itself some targets on that. Will you say more about that subject?

I will kick off on that and then ask my colleagues to comment, as a few of us will have something to say.

A lot of work has been done and progress has been made on rough sleeping. The rough sleepers initiative paid off with results and it has now been mainstreamed into homelessness activities generally. Many services are in place across the country, but the problems of rough sleeping are complex and difficult to deal with. They vary across the country and, for a variety of reasons, they seem to be concentrated most in urban areas. It is an area in which we are working with COSLA.

I will not say too much because I am not au fait with the detail of progress and operational management in each local authority. However, work on rough sleeping is a key priority in dealing with homelessness. It is a complex and difficult issue, and the identification of the rough sleepers is not always easy. There is a view in my own local authority that one consequence of immigrant labour is an increase in rough sleeping, and steps are being taken to address that.

There is no easy answer to rough sleeping, but dealing with it is certainly a priority in the homelessness monitoring group and in COSLA generally. Perhaps Shelter Scotland would like to comment.

The point about migration is important. Migration is one factor that has changed since the homelessness task force reported in 2002. We did not have a feel for how many workers would be coming from eastern Europe, but the number has been higher than imagined. There is a general feeling that such workers are particularly vulnerable to falling out of the system because, for example, they are not aware of rights. That probably needs to be examined.

The trajectory in rough sleeping was generally upwards from the late 1980s onwards. We have successfully halted that trend and produced some reductions but, as the report shows, there are areas where it is still difficult to provide services.

I do not want us to think that rough sleeping is done and dusted. Homelessness and local housing strategies need to pay specific attention to rough sleeping, probably indefinitely, as there will always be difficult-to-reach groups.

What are the difficult-to-reach areas in Scotland? Where is the problem biggest?

The report suggests that there are particular problems in some rural areas, where services are more scattered. The volume of homelessness in those areas is not huge, but it is more difficult to produce viable services there than in Glasgow and Edinburgh, where there is a concentration of homeless people and it is possible to create day centres and outreach services.

When announcing the cuts in housing association grant, the Minister for Communities and Sport said that one problem was that the Government had "unsustainable inherited commitments". Is the commitment on homelessness one of those?

That is an interesting question. I think that the minister responded to the point that you make. You will appreciate that I must be careful not to stray into political territory.

Can you confirm that the Government remains committed to the homelessness strategy and targets?

Ministers have committed themselves to the strategy many times.

So it is not unsustainable.

I think that the answer that the minister gave to that point, which was in a news release from the Labour Party—you will appreciate that I must tread carefully and avoid straying outside my area of competence—was that what he had said related to the cost increases that had taken place.

We accept that it may not be appropriate for you to answer Johann Lamont's question—we may need to be put it to the minister.

There are concerns in the sector around the issue, so we will ask the minister about it.

I want to flag up two issues. The first is the way in which the new funding is being used. The homelessness monitoring group was charged with the responsibility of monitoring what happens on the ground. With the ending of ring fencing and the rolling up of supporting people moneys, how will you do that? Have you influenced single outcome agreements? Do you expect that single outcome agreements will have to include an element that identifies the issue before they are signed off? If there is no more ring fencing and supporting people moneys are rolled up, by what process will you identify the distinct strands of the homelessness strategy?

Before asking Councillor McGuigan to comment, I will say some words about what we are doing through the housing support enabling unit. We are funding the unit so that it can monitor what is happening and liaise with the voluntary sector organisations, which receive about 70 per cent of the funding that was available previously. The unit is carrying out research into the impact of the removal of ring fencing. That research indicates that about a third of councils are offering uplifts and that funding has stood still in another third; three councils have reported cuts. We do not have much more information than that. Before long, we will consult on whether national reporting on housing support services beyond what is offered by the housing support enabling unit is required to understand the impact of the removal of ring fencing.

The picture that is presented in the homelessness monitoring group's report is consistent with my conversations with local authority chief executives. The flavour of what I have heard from them is that, before making significant moves, they want to look at the situation that they have inherited and to consider how best to organise services. They are focusing their minds on the opportunities that they now have to put services together with care budgets, to get a better result and a service that is more focused on the needs of service users.

On the previous question, on resources, COSLA has always taken the position that the target was a very challenging and ambitious one. We have always made it perfectly clear that resources would be required to enable the 2012 target to be realised.

On the second question, on whether COSLA has monitoring arrangements in place, negotiations are still taking place on the concordat and on how the key principles of homelessness are woven into the fabric of the single outcome agreements. Much work remains to be done.

I welcome the removal of ring fencing; I have always thought that it should be removed. Ring fencing compartmentalises things in a way that can paralyse the good that can come from interagency working and people taking corporate responsibility for the work that they undertake. I am confident on the matter. Indeed, indicator 22 of the 45 national indicators deals specifically with homelessness and the need for homelessness to have a high priority. I would not have it any other way.

It is early days; there are fragile bits to the whole business. Like Johann Lamont, I share the expectation that homelessness will not be trivialised in the single outcome agreement agenda.

I absolutely understand the perspective of those who argue against ring fencing, because not having it allows drive and some of the arguments in this area are to do with pace rather than principle. We heard from the official that chief executives have given a "flavour" of what will happen, but there is a huge gap between flavour and the certainty of evidence that the old approach provided. Are you saying that local authorities must include an indicator on homelessness in their single outcome agreement? What would happen if they did not? Would the Scottish Government refuse to sign off a single outcome agreement in those terms? What is important is not what happens at individual local authority level but what happens across the piece. The anxiety lies in whether homelessness will be treated in the same way throughout the country. The key question is whether a single outcome agreement that does not include an indicator on homelessness will be signed off. In other words, is it compulsory for an authority to have an indicator on homelessness in its single outcome agreement?

I do not suppose that it is compulsory. The whole concept of the concordat is about local authorities working towards a shared agenda and identifying the priorities that they see as appropriate to local needs. However, I think that it would be extremely remiss of an authority not to have an indicator on homelessness. If I were on the other side of the concordat or single outcome agreement negotiating fence, I would take very seriously an authority not giving homelessness high priority. Indeed, I would be astonished if that were the case. I do not know what is contained in each one of the single outcome agreements, but I cannot conceive of a situation where an indicator on homelessness would not be included. It would be perfectly valid to challenge any authority that made no robust mention of homelessness.

But—

As Mr Corbett and Mr Young have indicated that they would like to come in, I will give them an opportunity to pick up on the issues.

As Harry McGuigan said, the national performance framework has an indicator on homelessness that will be assessed across all local authorities, whether they like it or not. That assessment of progress towards the 2012 target will always be made, so the question is what indicators are used at the local level towards that end. From the single outcome agreements that I have seen so far—obviously, they are not yet complete—the situation is variable. Some authorities have indicators on specific aspects of homelessness such as the extent to which bed and breakfasts and hotels continue to be used, some have different indicators, and others have no indicator. Beyond the national indicator, it will be hard to assess progress at the local level, but perhaps that is the nature of locally negotiated single outcome agreements.

On monitoring, Mike Foulis gave a relatively positive picture of the impact of the changes to the funding regime so far. Year 1 was always going to be like that. When a new funding regime is introduced within a few weeks of the start of the financial year, it is unusual to get radical changes in year 1. In year 2 and subsequent years, we might see substantial shifts in budgets. The committee might want to return to that in future years.

Many issues around homelessness are about negative perceptions. In the housing association movement, there is a fear that the removal of ring fencing might have a negative effect on the vicious cycle of homelessness.

Can you give us any examples of what you are talking about?

The possible reduction in the housing support fund.

The point is this: what would the minister be expected to do if, in relation to the single outcome agreements, a local authority says, "We haven't got sufficient resources for this, and we believe that this other thing is a priority"? You can argue that you can build a consensus and deliver the appropriate funding in that way, but that does not ensure certainty. What actions can Government take to deliver that certainty?

I believe that the committee is having a session on single outcome agreements next Wednesday, so that will give you another opportunity to go round the course.

The single outcome agreements are meant to be an expression of local priorities—what matters in the local area—in the context of the national outcomes. As our work in the report illustrated, the extent of pressure in different local authority areas varies quite significantly. Given that different areas have different local priorities, you might expect to see rather different messages coming back from the single outcome agreements, which will reflect the circumstances that pertain in the various local authority areas. The local authorities are free to make their choice of indicators and so on, as they are supposed to reflect the local priorities.

To pick up on the points that Councillor McGuigan was making earlier, given the range of outcomes that we want the local authorities to be contributing to, it is hard to see how much progress can be made on a great deal of them unless there is an effective effort to deal with homelessness. The same thing goes for supporting people.

The documents are still in the process of being produced. The first round will be in place by the end of June, we hope, but that is only the start of a long process of continuous development. There has been discussion between the Government and local government in the lead-up to the point that has now been reached and that will continue. Next year, there will be an important move from having single outcome agreements that are primarily based on councils to having single outcome agreements that are the property of the community planning partnerships. That takes us into a series of areas that are relevant to what we are talking about this morning.

I thank Shelter for providing us with its useful submission, which contains a lot of interesting points, many of which I agree with.

The submission includes three suggestions that could help the Government to meet the interim targets and the final 2012 target. The second one is that efforts should be refocused on the provision of more lets within the housing system, and touches on issues such as the right to buy which, as you might be aware, is an issue that I have particular concerns about. Mr Corbett, you said that Shelter would like some reforms to be made to the right to buy. Can you outline to us what reforms are being suggested?

The third suggestion in the paper involves the housing options assessment. That sounds interesting, but I admit that I do not know a lot about it. There is not much detail in the paper about it, so could you flesh it out for us?

Sure. For some time, our stance has been that the right to buy needs to be made more responsive to local housing systems. The policy is relatively monolithic, although the Housing (Scotland) Act 2001 made it a bit more responsive by introducing the concept of pressured areas. However, the right to buy is almost 30 years old and a case exists now for making it more responsive, which includes giving local authorities and housing associations more discretion in a local housing system to determine the scale and terms of sales, clawbacks and discount levels, to make the right to buy fit with rather than ride roughshod over a local housing strategy.

The homelessness monitoring group's report mentions housing options assessment, which is being pioneered much more in England, although some councils in Scotland use it. It involves sitting down with somebody to say, "Let's look at your situation in the round and understand more fully why you've come to us today and all the options that might be available to you." A traditional homelessness assessment involves presenting the legal duties and describing the options, which are a council house or a referral to a housing association, whereas a housing options assessment involves understanding whether we can do something to prevent someone's homelessness more effectively, whether low-cost home ownership options might be available and whether accommodation in the private rented sector might be more appropriate.

Good homelessness assessment officers already do all those things—such work need not be called a housing options assessment to be done. However, in other parts of the UK, a package has been prepared to guide officers more fully through that more holistic process. That has a lot of merit if we are trying seriously to reduce homelessness at source—in other words, to prevent homelessness.

My next question is for Mr Young. Along with one of my colleagues, I had the pleasure of attending the SFHA conference yesterday. One big concern of many of the federation's members is about what many of us perceive to be a severe reduction in the housing association grant. How will that affect housing associations' ability to help in meeting the 2012 target?

In simple terms, it is relatively obvious that that reduction will make it more difficult for our members to build houses.

Will you provide details?

The squeeze on HAG will make it difficult for our members to borrow money to build houses. We build about 8,000 properties a year and I estimate that that number will halve.

I thought that the housing association sector built about 4,000 homes a year.

I am sorry—yes, the figure is 4,000.

So you think that that number will be reduced from 4,000 to 2,000.

Yes.

Thank you for that clarification.

We got there through team working.

Am I right to say that Shelter's submission says that land values are expected to drop because of the tight market, which will offset some of the HAG reduction and provide an opportunity?

That is speculation, but I am not sure whether that has been tested in any way, shape or form.

Has that theory been tested, Mr Corbett?

In general, the credit crunch and developments that are associated with it present significant challenges, but the effect might not be all negative. Elsewhere in the UK, a fund has been allocated to housing associations to allow them to buy homes off the shelf from developers that have a problem with selling them on the market. That is an opportunity.

One problem that housing associations have had in recent years is competing successfully for land in a rising market. If land values fall, that might present another opportunity. However, we cannot quantify whether the potential positive consequences of the credit crunch will outweigh its negative consequences.

Do you want to contribute, Mr McGuigan?

No, not really. It was just that—

I thought that you were trying to catch my eye. That is okay.

All that I would say—

You do want to contribute.

I was just going to say that I would not hold my breath for what has been described to happen. The situation is uncertain, but I do not think that developers will be queueing up to sell in that way.

Are discussions taking place inside the Scottish Government on how housing associations down south have been seen as a way of stabilising the housing market? It is clear that they are being pushed out into the private sector to borrow more at a time when the markets are volatile. Have you had any discussions about a different approach? If land values are falling, perhaps developers are staying off-site and housing associations represent a way of stabilising the market and doing things to increase the number of units that are produced.

The short answer to that question is yes. We have had discussions on that matter. We are also speaking to housing associations. The market is changing quite fast and no one really knows where it will go, so we are keeping an eye on it. However, the critical thing is that prices have to be right.

Am I right in thinking that you are asking housing associations to borrow more per unit from the private sector than they have done in the past when doing so is more expensive?

The changes in the HAG rates to reflect more closely what housing associations are doing result in an increased requirement for borrowing. We all know that there are changes in the funding market, but the indications from regulatory evidence are that quite a number of authorities are still managing to borrow significant sums at competitive rates.

Again, we might want to pursue that matter with the minister. The approach that has been taken seems to be counterintuitive in the light of what is happening elsewhere in the country.

Has there been any consideration, in the discussions that have taken place, of the implications of increased rents as a consequence of that approach?

Yes. The rent increase assumption, which is one of the assumptions that underlie the HAG rates, was changed in line with the assumptions that the housing associations made in their business plans.

So we can fully expect to see rents rising across the sector.

Rents will not rise any more than they would have done. A set of assumptions is made in calculating the HAG rate. We have related our assumptions more closely to the observed behaviour of housing associations, which projected in their business plans rent increases of the retail price index rate plus 1 per cent. That is more or less where we have put the assumption in the HAG calculation.

We will return to that issue.

Good morning, gentlemen.

The target is that every unintentionally homeless person should have a permanent home available to them. Will you clarify what is meant by the word "permanent", particularly with reference to rented accommodation? If, for example, a tenant has a short assured tenancy in the private sector, are they seen as having a permanent home for the purposes of the target?

No. The legislation gives examples of permanent accommodation, but the term is generally understood to refer to Scottish secure tenancies with housing associations or councils, or to assured tenancies in the private rented sector.

The Government's way of addressing the matter is to consider the interim accommodation regulations, which allow homeless people to be provided with accommodation that is not permanent. That is one way in which additional use of the private rented sector can be progressed without having to use assured tenancies. An alternative would be to review the tenancy regime in the private rented sector, which, obviously, should be considered.

Perhaps different members of the panel can explain councils' use of private lets to meet their housing provision requirements and obligations, particularly for homeless people.

That varies across local authorities in Scotland. There are some extremely difficult areas where local authorities are striving to use the private rented sector—Edinburgh is a classic example. However, as you know, a review of housing benefit is under way and we do not know how that will relate to market rent levels in such areas. If the review reduces the available support, it will create great difficulties, whether for people who currently use the private rented sector or for people whom the local authority intends to place in such accommodation. We hope that the Scottish Government will support any representations that we make on the review. We have already made representations on it and will make more when it is complete.

The use of private lets is difficult and can create situations in which homeless people cannot be accommodated in their own territory because the accommodation there is not affordable and available. Is that helpful to you?

It is. I am trying to explore a point that was raised in Shelter's submission, which is the extent to which the current situation in the housing market—particularly in areas such as Edinburgh that have strong buy-to-let markets where the supply of private sector tenants is drying up—provides opportunities for councils to bring some of the private stock into the pool of stock that is available to them for fulfilling their obligations. Do I take it from what you are saying that part of the issue is the relationship between the level of housing benefit and what the landlords in that marketplace regard as being a reasonable return?

I am saying that that facility has been used greatly in Edinburgh and other parts of Scotland. It is a worry to us all that, if the review reduces the housing subsidy that is used to support the rents that are asked for in the buy-to-rent market, that could result in a penalty to the local authority and the homeless people that it seeks to house in private rented accommodation. You are right that it could make more houses available, but that effect could be neutered if the Department of Works and Pensions takes a view along the lines that I have described. That would create problems.

Where such arrangements are being used at the moment—in Edinburgh, for example—what is the nature of the tenancy that is granted to the tenant?

They are non-secure tenancies.

In effect, they are short assured tenancies. Is that right?

In Edinburgh and most leasing schemes, the council is, in effect, the landlord and lets the property to the homeless person.

So it is a sublet.

Yes. The council lets the accommodation on a short assured tenancy, because it is only temporary accommodation. That is the crucial difference between such arrangements and finding more longer-term accommodation for homeless people in the private rented sector.

One way to deal with the difficulty that perhaps presents an opportunity, might be to offer landlords—particularly in cities where there is surplus of people who have invested in the buy-to-let market—a more permanent return and thereby bring their stock of houses into the pool that is available for social renting. Is that what we are trying to achieve?

Possibly. That is certainly attractive for landlords. The Edinburgh scheme has 1,000 tenancies in it now and most landlords are delighted because it provides secure income for five years and takes management responsibility away from them. We must ensure value for money; there is a question about that, because there may be alternative ways to invest the same amount of money in other forms of accommodation. However, it is also about choice and there is a pragmatic need for more lets. In rural areas, I can think of some villages where there is no social housing stock any more, although there may be private rented stock.

It seems to be perverse that, on the one hand, we want to ensure that people are housed in accommodation where they feel they have social networks, but on the other hand we insist that people go to the nearest town to get a council house or housing association house. A strong case can be made that, in such situations, we should use the private rented sector, if that is the person's preference.

One important feature of the excellent Shelter submission on progress on homelessness is the emphasis on prevention of homelessness. For example, page 3 states:

"the best way to tackle homelessness is to prevent it happening in the first place."

I am sure that we all agree with that.

However, the submission also says that

"research published in 2007 concluded that turning prevention commitments into practicalities still has a long way to go."

What kind of practicalities should be implemented to try to ensure increased prevention of homelessness?

Shelter is absolutely right that the issue is important. As I indicated, we gave greater prominence to prevention in the current report than it received in previous reports. One measure that the Government is taking to help push matters along is joint working with the Convention of Scottish Local Authorities: we have a secondee from North Lanarkshire Council, who is an experienced professional who will work with other front-line professionals to develop guidance and examples of good practice so that we can spread that around. That is part of the work we are doing with COSLA to make progress on the messages that come out of the report.

I was going to mention that officer. That is an important position that is being made available to the Scottish Government.

It is important to appreciate the opportunity for a new corporateness in the efforts on homelessness. In the past, homelessness tended to be the homelessness department's job—it got on with it, but there was no sense that the job was shared corporately throughout the council or with community planning partners. That new aspect will play a significant role in prevention and early intervention, which are crucial.

Mr Gibson asked about practicalities. I agree totally with the point about corporate working. One practicality that flows from that should be that housing management systems do not seek to evict somebody unnecessarily and then expect the homelessness section in the next office to pick up the cost. That still happens, although it is becoming less of a problem. Housing benefit administration still results in people going to court when it is the housing benefit system that is failing.

There are new issues on the horizon, such as the potential rise in mortgage repossessions. Scotland is in a strong position to anticipate and deal with that because, uniquely in the UK, we have a state-run mortgage rescue scheme on which to build. Discussions are on-going about ensuring that the approach to potential mortgage repossessions in Scotland is ahead of that in the rest of the UK. In train, we have section 11 of the Homelessness etc (Scotland) Act 2003, which should be implemented this year and which will require all landlords and lenders to tell their local authority if they are about to take action against a person. That should help us to anticipate when somebody is going to be homeless and to ensure that we respond to it effectively.

The prevention agenda will be built up with many small and commonsense measures put together in a big package, rather than with one big-bang answer. However, in our evidence, we suggest that the housing options approach to assessment will act as a hub for that.

I want to mention an excellent document that the Glasgow Housing Association has produced. You will not hear me praise such documents very often, but the association has produced an excellent tenancy sustainment strategy. We will encourage all housing associations in Scotland to use that excellent strategy as a model.

I agree completely with Councillor McGuigan's point about cross-cutting and working with community planning partnerships. Being an ex-councillor, I know fine well that local authorities care as much about homelessness and housing issues as the Scottish Government does and that they are as keen to tackle those issues.

What does COSLA do to ensure that best practice is implemented? One of my general concerns is that many bodies, whether in the national health service or local authorities, come up with excellent solutions to problems, but there are problems with sharing information. That is why I praise the work that Mr Young mentioned. Is there a mechanism through which to share best practice and experience among local authorities?

One of the main reasons why COSLA exists is to ensure that sharing of best practice and successful models in particular service delivery areas and so on are trumpeted, and that bad practice is identified and discussed. I have often been in discussions in which I have been able to see the faults of my own authority and in my position. I learn from that. That is one of the main things that COSLA is about.

COSLA does not enter into the process from a political perspective. We are also anxious to ensure that the Scottish Government is signed up as fully as local government is, and that the Society of Local Authority Chief Executives and Senior Managers is also signed up and is championing the corporate dimension that I talk about. That is how we can influence, persuade, sometimes criticise when things are going wrong, and seek an alliance of support for the general grain of good thinking that is out there. We can do a lot: indeed, we are doing a lot. In considering the homelessness situation, we contacted SOLACE to ensure that it was signed up as a champion.

We can often knock ourselves, but it is interesting to note that other countries, from Australia to the Basque Country, are looking at what is happening in Scotland. Are we also looking at what is happening south of the border and in other countries in regard to best practice in the registered social landlord and local authority sectors?

We are, but do not ask me to give you examples this morning. We are, in a prudent way, trying to identify successful ways of working: we are identifying the things that work and which make a difference and those that do not work and why they do not work. We have to look across the landscape—not just here in Scotland.

Mr Young talked about HAG, which is an average of £73,000 in Scotland and £62,000 in England. Is the Scottish Government trying to reduce that gap to get more houses built, rather than fewer, as has been suggested? The Cabinet Secretary for Health and Wellbeing stated that there would be no upper limit on the HAG when she was before the committee a few weeks ago.

The HAG is not my specialist subject, as you have probably already gathered. However, it is not quite as simple as comparing the Scottish situation to the English one. It is much more complex than that.

I do not think that it is simple, but the reason behind it is about getting a bigger bang for the buck. It is not about building fewer houses; it is about getting efficiencies into the system. Perhaps Mr Foulis can talk more about that—

Rents will go up.

I am sorry to hesitate. I was just waiting for the heckling to stop.

We need to explain the reasoning behind the HAG. I also note that the plan is for rents to go up by the retail price index plus 1 per cent. In my local authority, council rents have risen 7 per cent, so everyone is trying to generate more revenue.

That is a good point. We need to make our money work harder and go further because of the pressures that we are under, and because of how costs are rising. To have done nothing would have meant that we could have afforded to build fewer houses than we can afford to build since we adjusted the assumptions. Kenneth Gibson is absolutely right that there is a balancing point.

As I said earlier, we have adjusted the HAG assumptions to bring them into line with the plans that the RSLs have made and reported to the regulator. The Government's position is that it is adopting a more realistic set of assumptions in its calculation of the housing association grant. The assumptions are realistic in that they are based on what housing associations are actually planning to do.

Despite all the difficulties in the credit markets, housing associations in Scotland are in good financial health. The regulator tells us that they have significant unused assets on their balance sheets, as well as lots of free cash as a result of generous subsidy over the years.

It has become apparent in the past week or so that the programme for the current year represents a significant decrease in output. That is not directly related to the HAG rates but it is a problem, at least in the short term. This year, we will build 2,000 fewer houses than we built last year, according to the estimates. I do not want that to go unnoticed. It is a fundamental backdrop to the 2012 challenge.

The assumption that driving down unit costs will give us more houses is questionable. We also have to ensure that we build the right types of houses, otherwise we will recreate the situation of 30 or 40 years ago. The houses that were put up at that time are now falling apart. We must be careful to consider the whole equation, including the efficiencies that might be possible because of the bigger procurement approach or whatever. We must ensure that we build the right types of houses in the right places.

I agree. I have a final question on the credit crunch.

Sorry—I think Mr Foulis wants to respond to the previous question.

That is okay. I will try and run the meeting. You ask your next question.

Sorry. We are in the early days of the credit crunch, which might get a lot worse, although we hope that it will not. What impact will it have on our ability to meet the 2012 target, which will be more challenging than was anticipated a year or so ago?

As I mentioned earlier, it is likely that the number of repossessions will increase, but I do not want to overstate the implications of that for homelessness. Even if the number of repossessions increased by 50 per cent, that would not dramatically alter the number of homelessness applications because applications from those who have lost their homes because of mortgage problems make up a relatively small part of the total. The credit crunch might create pressures elsewhere in the market, so people might be unable to access accommodation in the first place and might be squeezed out, but that is hard to anticipate. It might be that some positives will come from the situation, although I agree that it is too early to tell.

My main point is that, in so far as we understand any of the implications, we should prepare for them. That is why I suggest that, if there is a chance that the number of mortgage repossessions will increase, we should consider whether the Scottish Government's mortgage rescue scheme is fit for the current context. We can do that now, without waiting to see whether the repossession figures change.

Despite Mike Foulis's description of housing associations as fine, healthy specimens, the Council of Mortgage Lenders told us yesterday that housing associations are now at higher risk than ever. That is worrying, obviously.

We know about the difference between the unit cost subsidies in Scotland and those in England, which Kenny Gibson pointed out. Do we know the difference in rents? How much more do people in England pay?

We know the difference, and we have calculated the impact on the grant levels. We have to be careful in looking at the English figures because the average includes London and the south-east, where the levels are high. In those areas, construction costs are much higher than they are in Scotland.

It is difficult to be precise, but if we compare Scotland with parts of England that are closer to Scotland, we estimate that about half of the difference is accounted for by differences in rent levels and quality standards. The rest is accounted for by differences in the amount of money that housing associations put in.

I appreciate the qualification, but there was no such qualification when we considered the subsidy that is now available and that is going to be cut. What are the headline figures for rents in Scotland and England? What are the total figures for England including the south-east and for England without the south-east and London?

I would have to find that out for you. I do not have that information to hand.

Would you please do that to inform the committee?

Yes. We can find that out.

Thank you.

I want to ask about the preventive aspect, but I will make an observation first. Given the context in which "Firm Foundations" was set out and the fact that the situation has changed so much, due to market conditions and so on, it is unfortunate that the Government appears to be persisting with the notion that housing associations are living off the fat of the land and that its programme will be a painless way of building more units.

We should take into account what the housing association movement is saying on the matter and what is happening elsewhere—I refer to the question of how the housing sector can be stabilised by using the housing associations. Judging from the comparative levels of subsidy in England and Scotland, was the trend not in the opposite direction until three or four years ago? Was the subsidy not lower in Scotland than it was in England? Might not the uncapping of rent levels in England have had a significant impact? Perhaps a broader view should have been taken of that.

You are basically saying that the rent levels are what housing associations would impose anyway, but presumably there will still be a cut in their moneys. It is that money to deal with specialist need that disappears as far as the prevention of homelessness is concerned—the thing that makes housing associations work is the thing that we lose.

That brings me to the broader point. There is genuine concern that, with local government and the voluntary sector under huge pressure, the bit that goes will be preventive work—that is, the soft end of what happens in schools and in the health service and of the delivery of statutory responsibilities. What reassurance can you give on the preventive work that has been done in the form of advice, outreach work and support for vulnerable families?

Other pressures at local government level are evident. When does an efficiency become a cut in preventive work? How do you stop preventive work becoming the place where organisations are most likely to go to reduce their spending?

There are a few points there. I do not think that HAG levels affect local government's ability to do its preventive work. What happens there is different and relates to different funding streams. This is often overlooked, but in the circumstances it is worth remembering that our announced programme is about approvals in a year, not completions. The number of units that will be completed this year is not the same as the number that will be approved this year. That point is worth hanging on to.

On the position of housing associations, we have maintained the wider role programme, which is relevant to some of the things that we have been discussing. The Government believes that the evidence that it has obtained from regulatory returns, from the actual performance of housing associations in raising money in the market in recent months and from the plans that are being made is that housing associations are in a good financial position.

Do any of the other witnesses want to respond to the question?

It is a difficult question to answer. Some housing associations do excellent work on homelessness, and some do not view it as the main priority. I am not sure that the level of HAG that they receive makes the difference. If there was a strong association between the level of HAG that a housing association gets and its ability to work effectively on homelessness, that would be more of a major concern, but I am not sure about that. The Scottish Housing Regulator has undertaken a study on homelessness this year, and we can perhaps ask it to explore the matter a bit more fully.

I was rolling up two separate issues in the one question, for which forgive me. There might be an issue for local government regarding preventive work and its corporate view of the world. I seek reassurance from the local authority witness on whether, if there is a squeeze on moneys in local authorities and you are asked to make efficiencies, you go to soft targets and the efficiencies become cuts.

My second question is: does the Government not accept that the financial markets are now more difficult places to borrow? Do you accept that you are asking housing associations to borrow more money at a time when the markets are more uncertain?

On the local government aspect, you are absolutely right: that situation may well arise. My colleagues recognise that the priorities that have been set for homelessness are crucial. Although ring fencing has gone, we acknowledge that we have an obligation to deal with some of the really hard targets that we face. The Scottish Government faces those targets too—we are not operating in isolation. I certainly expect the voices of COSLA and SOLACE to be persuasive in ensuring that it is not a soft target, but I have been in local government long enough to know that what you describe can happen.

May I respond, convener?

Certainly.

Thank you. I have two points. The settlement for local government allows it, for the first time, to recycle its efficiency savings. There is a 2 per cent efficiency saving target, but the money stays within the local government pot. The savings that local authorities make in delivering on that target can be recycled within their overall budgets, and the idea is that those savings will go towards the front line. Local authorities have told us that ring fencing involved a lot of bureaucracy and costs, so there ought to be some savings from having removed it.

On housing associations generally, HAG is about development and building new houses, rather than about how associations manage their existing stock—those need to be separated. The nature of the changes in the credit markets means that all borrowing is more difficult. Nonetheless, relative to other borrowers, housing associations are still safe and dependable customers, because they operate within a regulated environment, which we are maintaining and, I hope, strengthening. Therefore, they are able to borrow at more competitive rates than other borrowers.

We have heard in the evidence today—for the first time—that some of the building societies have described housing associations as high risk.

The Council of Mortgage Lenders told us that yesterday at the SFHA conference.

I do not expect Mike Foulis to respond to that today, as it is the first time that any of us has heard it. He may correct me if I am wrong, but from our discussions it seems to be accepted that HAG is linked to the quality and the type of housing, because it is linked to the sustainability of maintaining a house, and may—and, indeed, is likely to—affect rents. The question is about how much it affects them and whether people are able to afford them; it is about affordable homes. Am I wrong?

The point that I was making was that the ability of a housing association to do some of the work that Johann Lamont was talking about, and which Gavin Corbett mentioned, is not primarily determined by the level of HAG. HAG is for new development. Housing associations must run their continuing business in a way that meets their costs. There are issues around rising costs on that side of the business, but those are separate from the set of assumptions that we make about HAGs for associations that want to build new stock.

My question is really for Shelter. I note from its submission the discussion of its ideas on what it calls a "stock-take" of housing in Scotland. Are you able to elaborate on that?

Just to be clear, the focus is specifically on homelessness rather than on housing. Your question picks up on the point that Mr Gibson made about whether we are as in tune with international experience as we should be. I think that we are not. International eyes have been on us over the past six years, and we have been leading the world in this area. It is not common for Scotland to be doing that in other policy areas. However, we have probably not been looking at what is happening elsewhere in the UK and Europe. We should ask whether we are abreast of what is happening on homelessness elsewhere in the developed world and ensure that we learn lessons from that, instead of just communicating the successes that we have had.

We are six years into a 10-year programme and have massive experience of what has gone well and what has gone badly; we have talked about that today. Because we are still four years from the end of the programme, we have enough time to make changes if we need to do things differently—there will be another spending review before 2012. This is a good time for us to stand back—in a way that the homelessness monitoring group is unable to do, because it reports on an annual basis—and to consider with a degree of independence our progress towards 2012 and how well we are implementing all of the 59 recommendations of the homelessness task force. We should consider what we need to do between now and 2012 to take account of the changed external environment—some of the changes in inward migration that we discussed earlier and the changes of policy that the new Government has initiated, on drugs for example—and any current shortfalls. We have set out a number of ways in which that might be done. The committee, through its role in post-legislative scrutiny, could be involved, but the work could also be done by someone independent of the Government or in the Government.

To what extent is progress already being monitored?

Gavin Corbett put the same point to the homelessness monitoring group, which I chair, and we discussed it. In general, the people around the table struggled to see what a stocktake would add, as it would deal with the same evidence that we had considered and would involve speaking to people to whom we had spoken or who were sitting around the table. I understand the point that Gavin Corbett makes, but the group felt that it should examine the evidence, draw conclusions from that, publish them in a report, line them up with the work of the housing support project, identify what we needed to do and get on with doing it. However, we are happy to talk to COSLA about the issue to see whether there is a way through.

Mike Foulis has outlined a sensible way of progressing. Further down the line, we might consider carrying out a stocktake, but there is work to be done and we must proceed with it apace. We are perfectly capable of doing that.

It could be inferred from what Mike Foulis has said that local authorities have received a generous settlement, but we must be hesitant about affirming that. John Swinney admitted that the settlement is very tight and that it will be tough for us to ensure that we deliver the key services that we have pledged to deliver.

I want to pick up on a point that the Scottish Federation of Housing Associations made in its submission about the right to buy. Is it correct that you want to go further than "Firm Foundations" proposes and to abolish the right to buy for all new tenancies, not just tenancies for new homes?

That is exactly our position.

Can you explain the 10-year exemption for housing associations that exists at the moment and which you think should be extended?

When the Housing (Scotland) Act 2001 became law in 2002, housing associations were granted a 10-year exemption from the right to buy—the 2001 act did not permit housing association tenants with Scottish secure tenancies to exercise the right to buy until September 2012. It strikes me as being slightly ironic that the exemption should run out then, given that the homelessness targets relate to 2012. As a bare minimum, the minister responsible should exercise his or her powers under section 44 of the 2001 act to extend the exemption by another 10 years.

What is the turnover among tenants to whom the exemption applies at the moment?

At the moment it is nothing, because the exemption applies until 2012.

I was referring to the turnover of households. The issue is whether the right to buy and people owning their own homes produce a higher or lower rate of turnover. What is the current turnover rate in homes that are exempt from the right to buy?

It is difficult to measure the immediate impact, but in the medium and long term a house being bought removes it from the social rented stock.

Yes, but it does not necessarily remove it from the stock available to people who need affordable housing if they buy it under the right to buy and then have a house that is affordable to them through a mortgage.

At some point, that house would have become available to rent in the social sector; instead, it never will.

But equally it could become available for sale to someone who can afford to purchase it, or it might be let in the private sector to someone who needs a home.

None of which helps the homelessness situation or anybody in housing need who needs a social rented house.

It does help people who are homeless. We heard earlier, for instance, that the City of Edinburgh Council is renting some 1,000 homes a year that are then sublet to people who are homeless. That must help, must it not?

Only if the house were bought by someone who had the intention of renting it out privately at a later date, which in my view would be against the ethos of someone who would want to buy a social rented house in the first place.

But certainly not in my view—or in the view of the 300,000 people who agreed with me and bought their homes.

How many homes are we talking about? How many homes will become available to people to buy in 2012?

Housing associations in Scotland have 260,000 homes. They will not all become available. I am not exactly sure of the percentage, but some of the charitable organisations' stock will not become available.

Will you make some efforts to find out and give us that information?

Yes.

Thank you. Does anyone else want to comment?

I was going to comment, but I will leave it at that for the moment.

You are resisting the temptation—we will speak to you afterwards. [Laughter.]

The evidence report on the reformed right to buy that the previous Scottish Executive produced showed, fairly conclusively, that the right to buy reduces lets in the long term. In a situation in which we have a specific legal obligation to provide accommodation to homeless people, most of which is discharged by providing social rented let, the right to buy causes additional pressure. In the report, a really good graph—which is hard to describe—demonstrates that point well. I am sure that we can ensure that it is available as part of our evidence.

Mr Foulis, have there been discussions about extending the 10-year exemption?

The SFHA has made those representations to us, and we have been discussing them with it.

So it is on the agenda—you might end the right to buy for those who expect, after the 10-year exemption, to be able to buy their home.

I would be going too far if I said yes to that question. The point is that the SFHA has made representations to us, and we are considering them.

Has the Government got a view at this time?

No, we have not pronounced our definitive response.

Are you sympathetic or unsympathetic to the SFHA view?

It is one of a number of issues that arose out of the "Firm Foundations" consultation. There will be a statement later this month in the Parliament in which the Government's response will be set out.

On that specific issue?

It will cover the range of issues in the "Firm Foundations" consultation.

The COSLA position is that we would hope that local circumstances would influence the nature of any legislation on the right to buy.

May I ask for clarification? Mr Foulis, did you say that there would be a statement by the Government later this month on its response to "Firm Foundations"? That has not yet been timetabled by the Parliament, but is that correct?

Yes.

The Cabinet Secretary for Health and Wellbeing said that she was going to do it, but she did not seem to commit herself to responding to the Parliament's view on the "Firm Foundations" document, although that is a separate issue. David McLetchie will know from the Parliamentary Bureau, though.

With all due respect, the cabinet secretary has said that before.

What statement is forthcoming, and in what form?

As Johann Lamont and Jim Tolson said, it is the statement that the cabinet secretary said that she would make in response to the "Firm Foundations" consultation.

Will that be a statement to Parliament, or will it be a statement that the cabinet secretary issues?

The members who I referred to are indicating that it has been timetabled.

It has not been timetabled—I know that for a fact.

For clarification, is it intended that the minister will make a statement to Parliament to set out the Government's response to the "Firm Foundations" consultation before the summer recess?

Did the convener want to speak?

No.

I saw you raising your hand.

No, I was trying to get some order. I am afraid that you must make an attempt to answer Mr McLetchie's question; I cannot help you on this occasion.

The Government's intention is to make a statement, as it has said.

To Parliament?

Yes.

That is interesting; I will put that in my diary.

We have no further questions. I thank you all for your time, patience and co-operation.