Budget Process 2003-04
I welcome our visitors, some of whom are better acquainted with the committee than others are. I particularly welcome Iain Gray, the Minister for Social Justice, to his first meeting of the Social Justice Committee. We wish him all the best in what is now not a new post for him—he will be well into it by now. However, this is the first time that he has come before the committee.
I welcome Margaret Curran, the Deputy Minister for Social Justice, who is, like the soaps, here fairly often. I also welcome Mark Batho, from the Executive social justice group; David Reid, from the finance division; John Breslin, from housing division 1; Geoff Huggins, from housing division 3; and Maud Marshall, from Communities Scotland, which has a very different role from the one that it had in its previous existence as Scottish Homes. The minister may want to make a brief introduction before we move to questions.
Thank you, convener. I am pleased to be here to give evidence on the draft social justice budget. Thank you for your kind words. I intend to claim newness as an excuse for many months to come. I was still claiming to be the new Deputy Minister for Justice around the time that I demitted that post.
I appreciate that the committee's time is limited and that the meeting is running a little behind schedule, so my opening remarks will be brief.
This is the first stage in the process of consulting both the Parliament and the Scottish people on the draft budget for 2003-04, as set out in the recently published annual expenditure report. The budget is presented differently compared with previous budget documents. We think that that is an improvement and a move towards greater transparency, but we are keen to hear the committee's views on it. We are always interested to hear whether we could make further changes to achieve clarity. We have also sought to make clear in the AER how and where provision from end-year flexibility will boost the baseline planned expenditure as set out in the report.
I will highlight some key points, beginning with the draft housing budget. We propose an increase of 11 per cent over the current year's spending plans. That aims to build on the delivery of our key housing policy priorities, with which the committee will be familiar. They include: tackling homelessness; promoting renewal through community ownership and empowering tenants; and reducing the number of households in Scotland that live in fuel poverty. The planned resources for 2003-04 will deliver support to councils in progressing proposals to transfer their housing into community ownership and provide continued support for the five-year programme to 2006 to install central heating for council and housing association tenants and in private dwellings where the household includes a pensioner. The resources will be used to deliver the recommendations of the homelessness task force and will provide £10 million towards carrying out the recommendations of the housing improvement task force, which we will debate later today in Parliament.
Our spending plans will allow us to continue to make progress on our long-term social inclusion strategies, which include extending the funding to the nine former regeneration programmes until 2004; extending to March 2004 the designation periods of five new SIPs that were due to expire; and consolidating our work to empower communities so that they are at the heart of our regeneration efforts.
Finally, we have maintained our funding for the voluntary sector and for equalities. That allows us to continue to contribute to empowering our third sector—the voluntary sector—as a key social partner in Scotland and to move towards a more inclusive and just society. I am happy to take questions from committee members.
Thank you. I will kick off the questioning. The social justice budget covers a range of cross-cutting issues that span a number of departments. Different components of housing spend, for example, are hidden in different departmental budgets. That makes it difficult to obtain a comprehensive picture of current housing investment. Will you outline what procedures are in place to measure the contribution that other departmental budgets make to the social justice budget? What mechanisms are adopted to encourage other departments to make such contributions?
When it comes to resources, that is difficult to achieve, but the issue is always at the forefront of our minds. You rightly say that many of the concerns in the social justice portfolio cut across other departments and other colleagues' portfolios.
Our general policy remains attempting to mainstream cross-cutting issues, rather than to pull together additional pots of money, resources and programmes. The latter approach has let other areas of the Executive's work off the hook in the long run; it has allowed them to see some of the issues as separate and additional. That is not the direction in which we want to go.
There are two aspects to the question. How are we to be transparent in the way in which resources are used in cross-cutting areas? How do we ensure, when planning resources, that they are allocated to areas in other departments? The first aspect is difficult. In previous years, there has been some discussion with the Finance Committee about how the budget document represents the wish to be transparent. Efforts are being made in the current annual expenditure report to present a more rounded picture of housing and education in particular.
However, to be honest, I would have to recognise that that work remains incomplete. On housing, for example, it is difficult to indicate expenditure that does not come directly from the Scottish Executive's housing budget. An example of that is the improvement and repair grant, which is part of the local authority single allocation. That means that the moneys for the grant do not appear as part of housing investment, although they are clearly significant.
When we are planning resources, the key process is the spending review process. As we enter this year's process, we have tried to build on previous experiences. I will have bilateral meetings and discussions with all colleagues who are involved in cross-cutting social justice issues. I will do so in order to ask them how their allocation of resources will achieve the Executive's objectives.
In the next fortnight, a joint meeting of the two key Cabinet sub-committees has been arranged. Those sub-committees are the social justice sub-committee, which I chair, and the integrating children's services sub-committee, which the First Minister chairs. The joint meeting will allow us to make a particular examination of the social justice issues that affect children and young people. In such meetings, we can look across the portfolios to ensure that proper account is taken of the social justice issues in the spending review.
In many ways, the social justice milestones remain the touchstone against which each department and each minister is required to check their resource allocation and policy development. I intend to continue the previous Minister for Social Justice's programme of bilateral meetings with colleagues. That enables me to check developments in each department against the social justice milestones.
How we mainstream equality is connected to the cross-cutting issues. Will you indicate the role of the equality unit in the budget process? What is the reason for the reduction in the mainstreaming equality budget, which will fall in real terms by 7.5 per cent between 2001-02 and 2003-04? Given the Executive's commitment to mainstreaming equal opportunities, is that reduction appropriate?
The Engender women's budget group, which yesterday gave evidence on social justice issues to the Equal Opportunities Committee, has highlighted the importance of mainstreaming equalities into the housing budget. Will you comment on that?
If it is acceptable to the committee, I will ask Margaret Curran to comment on that, as she takes the lead on equality issues.
There was a lot in that question. I will try to answer it but if I forget to answer something, come back to me.
I have previously discussed with the committee the role of the equality unit. As Lyndsay McIntosh will verify, I have also had long discussions with the Equal Opportunities Committee on that issue and on the whole mainstreaming agenda. In fact, we recently had a seminar to broaden and deepen our understanding of mainstreaming and of how we should take the issue forward.
The role of the equality unit is essentially one of facilitation. We have stood against setting up a strong central equality unit that would implement the equalities work for the Executive because that would essentially work against mainstreaming. That is why the budget is as you have outlined. If I felt that the equality unit was not able to deliver because of the money that it received, we would certainly reconsider the issue. However, it seems to me that we are moving forward in the way that we said we would.
In many of our discussions, it is becoming apparent that the whole issue of mainstreaming in the budget is actually very complex. Deep-seated change is required. The report to which you referred gives us credit for the work that we are doing. The current international research flags up the fact that many other Administrations are also having difficulty in moving beyond the aspirational to deliver the detail. For example, I believe that the Australian scheme has recently collapsed. We have deliberately taken the position that we will implement mainstreaming in detail stage by stage. We recognise that it will take us some time to get there.
The approach taken in the annual expenditure report was agreed with the equality proofing budget advisory group. We agreed that some sections would be given only in outline but that we would go down to a deeper level in certain other aspects of the budget. As the Engender report indicates, there is a need to go into greater detail to spell out more targets, but we have said that we will do that stage by stage. That is where we see the work going.
In your earlier reply to the convener, you mentioned that the social justice milestones, which are set out in the social justice annual report, cut across different Executive departments. The Executive reviews and reflects on whether there has been progress towards reaching the milestones, but how are the milestones translated into the budget process? How are they reflected in the different budget headings?
Behind your question is the question of whether the social justice milestones influence resource allocation. I would argue that they do, but constant vigilance is required to ensure that those who own the different milestones acknowledge them and take them into account.
I guess that Margaret Curran and I have the responsibility of leading by example, as we are responsible for some social justice milestones. In many ways, the milestones must be the first thing that we look at when we consider how to allocate resources and whether we should shift resources from one area of spend to another. Secondly, we need to be involved in a constant process of discussing with colleagues the social justice milestones for which they are responsible. We need to work with them to monitor whether policy development and resource allocation help them to achieve the social justice milestones.
To some extent, that cuts across the work of almost every colleague in the Cabinet. There are some quite important criminal justice social justice milestones, for example. The key forum for those, I guess, is the social justice Cabinet sub-committee. When the First Minister took office, at the end of last year, the Cabinet went through quite a rigorous process of examining ministerial committees—their remit, purpose and membership. The number of such committees was reduced but those that remained were given a new, higher status by becoming Cabinet sub-committees. At the time, I argued for the poverty inclusion task force to remain and to be recast as the social justice Cabinet sub-committee.
One of the changes is that, as the chair of a Cabinet sub-committee, I am required to make a report to Cabinet at least once a year to explain the way in which the committee has pursued its remit. The key remit of the social justice Cabinet sub-committee is to ensure that progress is being made throughout the Executive towards social justice milestones and that we are devoting and prioritising resources for that. In a way, it is quite a bureaucratic process, but it is necessary. Once resourced decisions are made, it is too late to change them because the pass has been sold.
The Executive has set itself the goal of reducing child poverty. Recent reports suggest that we are not winning that fight—in fact, some people suggest that we are only firefighting. What is the Executive doing in the budgets that we are talking about to tackle child poverty?
As I said in response to an earlier question, the budgeting and resourcing process that we are entering—the spending review—will involve a key meeting between the two sub-committees that have an interest in children, young people and children's services. At that point, we will consider the policies that can contribute to the reduction of child poverty and the level of resource that we allocate to them.
We must examine the statistical returns that came out last week. Much of what is measured by those statistics depends on benefits and income levers that lie outwith our control—I know that committee members are aware of that—and we must consider the possibilities that are provided. For example, if there were changes to the tax and benefits system, to encourage the provision of child care either generally or for a specific purpose such as to allow lone parents to take up further or higher education opportunities, we would have to ensure that, in the areas for which we have responsibility, resources were made available so that Scots could take up the opportunities that were afforded to them. For instance, we would have to ensure that the child care provision existed.
We need to consider what the statistics that have been published tell us. In Scottish terms, the shift in the headline measure of children in families that are living on 60 per cent or less of the median income, after the deduction of housing costs, is 1 per cent, from 29 per cent to 30 per cent. Statistically, that 1 per cent shift is not significant. The base line is 1996-97, when the figure was 34 per cent and the trend was rising. That trend has been reversed and is heading in a downward direction; however, it is disappointing to see that upward blip whether it is statistically significant or not.
There has been enormous progress in relation to absolute measures of poverty compared with the 1996-97 base line. The 34 per cent figure has dropped to about 21 per cent. That 13 per cent drop shows clearly that there is a downward trend. However, we are chasing a moving target because, over the same period, incomes have increased generally by 13 per cent, so the median figure has increased.
I gave those figures to the committee in a genuine spirit of information giving, but I do not hide from the fact that the 60 per cent median figure is the headline figure. It is extremely disappointing that the figure has not fallen more. We must consider how we can ensure that the downward trend continues.
Evidence has highlighted inconsistencies in targets and monitoring. For example, there are rough sleeping targets, but it is difficult to monitor whether those targets are being met. What measures does the Executive intend to take to monitor targets and ensure that they are met?
That question relates to the question that I just answered. The social justice annual report—which we have pursued since 1999—states how important but difficult it is to measure and monitor targets. However, we can be proud of our record over the past three years. First, whenever we have discovered that statistical information does not exist or is not significant, we have invested in ensuring that we improve the situation for the future. Secondly, we have been rigorous in putting into place appropriate methodologies for different milestones.
Rough sleeping is an excellent example, because there has been significant criticism in the media—for example, in The Big Issue—of the rough sleepers unit's approach in England to ascertaining how many people are sleeping rough. The approach in England is to make a head count on a particular night. That approach has not been taken in Scotland. Work was done with the homelessness task force to develop a prevalence approach that works over a two-week period. That is more rigorous than counting heads on one night in a month. The initial results from the first prevalence study showed that an average of 64 or 65 people—I think—were sleeping rough in Scotland, while 150 emergency hostel places were available. That illustrates the discrepancy between available provision and demonstrated need.
I gave that information in detail because it provides a good example of our effort to have appropriate methodologies. However, we continue to have a problem with methodologies that deal with, for example, child poverty. I know that committee members took part in discussions on the social justice annual report earlier this year or at the end of last year. The committee will know that 30 per cent of households with children live on less than 60 per cent of the median income, However, it is difficult to translate that figure to establish how many children in Scotland are affected.
We discovered that the statistical sample in Scotland is too small to translate. Rather than pretend otherwise, we owned up to that—which is to my predecessor's credit. We have made an additional investment to ensure that that particular monitoring expands its sample in Scotland to give us something that we can translate into an absolute number. We still do not have the information, but we certainly will have it for this time next year. I hope that we may have it in the autumn at the time of the publication of the social justice annual report. This is a complex and difficult area but we have put in the effort to provide genuine, open and transparent measures.
I want to ask about end-year flexibility and on-going underspends. Throughout the budget document we find references to the allocation of EYF money over a three-year period. How much has already been allocated—to the social justice budget in particular—and can you explain how underspends and EYF from one year are allocated over a three-year period? Are they really allocated over three years or are they simply lumped into one year? Is the mechanism sufficiently transparent?
I will try to explain but I will ask David Reid to talk about the mechanism used; he will be able to explain it better than I will. I think that there is £131 million of EYF in the social justice budget. That money is referred to in different places. Cabinet decisions are taken on underspends and I think that I am right in saying that many of the references in the annual expenditure report go back to money that was carried forward from 2000-01. The Cabinet agreed that some money should be moved into the social justice budget and should be carried forward over three years.
Is the process sufficiently transparent? No attempt has been made to make it less than transparent but the process is complicated and convoluted, as is the presenting of that process to the committee, the Parliament and the public. If anyone can suggest how we could do it better, we would be more than happy to listen.
David Reid (Scottish Executive Finance and Central Services Department):
We have tried to identify the numbers for end-year flexibility and to distinguish them from the planned numbers, which are the ones shown in the columns in the main tables. All EYF for all programmes is summarised at the beginning of the AER in a single table. In the chapter on social justice, the summary table—table 7.1—gives the full amount of EYF in the footnote. Therefore there is no question of the numbers in the tables being enlarged beyond the planned figures.
Money that was carried forward from 2000-01 into the year that has just finished—in which a substantial proportion of EYF was to be spent—is mixed with other EYF that was to be spread over the three years. In the footnotes, we have tried to identify when money is to be carried forward for three years. When it is not explicitly stated that carry-over is for three years, the carry-over is simply from the year before last into the year that has just finished.
The big carry-forward numbers relate largely to the community ownership programme because of slippage of one kind or another. Because that funding is related to commitments that have already been given, we have to keep moving the money forward until what is happening on the ground catches up.
So a huge big cash injection is coming at some time in the future?
Not so much a cash injection as—
A perceived cash injection?
A bonanza?
Do not be outrageous, Lyndsay.
The spending will eventually take place, but we hope that sticking with the presentation of planned numbers will not distort what the Executive appears to be planning to spend at any one time. The expenditure on community ownership will eventually take place. The process itself is just a continued rolling forward of the end-year flexibility arrangements. It is like having a certain amount of money in the bank. If it is not required in 2001-02, it will roll forward into 2002-03, when a substantial amount of the spending is expected to take place.
The key thing for simpler souls, such as me, is that rolling funds forward across three years allows them to be spent when it is possible to spend them. I will say something about that in a minute. The important thing is that those funds are shown separately from the baseline. We have tried to be transparent on that in the report.
The money is a once-and-for-all amount. Whether we spend it in one go in a particular year or in three tranches across three years, at the end of the period, it ain't gonna be there any more. That is why it is important to keep that money separate from the baseline, which, to my eyes, still makes it look like a bit of an add-on. However, the money is important to implementation of our policy programme because, as David Reid correctly said, community ownership money is by far the most substantial amount of money that is carried forward year on year. It is allocated to specific housing projects, many of which are stock transfers and partial stock transfers in a number of different cities.
Those transfers are specific projects, so the reasons why they have not happened are different in different places. However, we have rigorously insisted on a process of winning over tenants, making clear to them what is involved in the transfer and giving them the opportunity to express a view in a ballot. It is fair to say that that has taken far longer in most cases than was originally envisaged when the resources were made available. The important thing is that the resources that were provided for that process have been protected and sustained. That is the policy purpose behind what you see in the budget.
That leads me nicely to my next question. The Executive is pursuing a policy of stock transfer. That policy means that the Treasury will meet local authorities' residual housing debt while the Scottish Executive will meet the breakage costs. I cannot find in the budget any indication of how that will affect future budgets. I am not saying that the effect should be included, but will you give me an idea of it? In particular, will the additional money that will be in the Scottish block grant as a result of the Treasury taking on residual debt be reflected in expenditure for community regeneration and affordable housing or will the additional funding just be lost somewhere in the Scottish Executive's overall budget?
Your question contains two questions. The first is, if, for transfers to proceed, we require resources to pay breakage costs, where are they in the budget documents? The second is, if the Treasury's payment of the residual debt means that we have resources to service debts that we will not need to service, where is that shown?
Probably the easiest way to answer those questions is to talk about the biggest stock transfer, which is in Glasgow, because the breakage costs there will be the most significant. In the arrangement with the Treasury, the payment of the breakage costs must be done firstly out of the receipt from the transfer. Any positive receipt from the transfer will go towards the breakage costs. In the case of Glasgow, that is £25 million. If the breakage costs are more than that, finding the resources to cover them is our responsibility.
That resource is not shown explicitly in the budget document. There are two reasons for that. In examples such as Glasgow and the Borders, we expect that the requirement to pay the breakage costs will occur in 2002-03. When the draft budget for 2002-03 was prepared, the arrangement with the Treasury was different, as the committee knows. Therefore, that is not reflected in the document. We cannot change the figures because they have to comply with the budget bill that the Parliament passed. There will have to be adjustments to take account of the new bill.
It would have been wrong to prepare the 2002-03 budget on the assumption of a particular outcome to a ballot of tenants. The budget for 2002-03 was therefore prepared on the basis of, for example, Glasgow City Council continuing to be the landlord for 80,000 tenants.
Now that we know that the Glasgow ballot result was positive, we will meet the breakage costs from a number of sources that appear in the budget document. The first source is the receipt from transfer that I mentioned. Secondly, there is the conversion of part of the housing revenue account from capital consent to grant because, once the debt is dealt with, a section of the HRA will no longer be required. The third source is the community ownership budget. Fourthly, we will seek from the centre any additional resource required. I am therefore confident that we will be able to meet the required breakage costs. The breakage costs do not appear in the document, for the reasons that I have given.
The second question relates to the money that would have been expected to be required in my budget to service a debt such as that of Glasgow or the Borders. Some of that money has been reallocated. For example, in Glasgow, some of it has been reallocated to the £417 million that is provided for demolition and reprovisioning. That will be met from the resources that are no longer required.
A balance will be available in the Scottish block for the Scottish Cabinet to decide how it should be prioritised and spent. I think that that is a potential gain for the Scottish Executive's priority areas. It allows us to achieve the objective that the resource was identified for: the shift to community ownership and the refurbishment and reprovisioning programme in Glasgow. Not only will it be more likely that the housing priorities will be achieved because there is an additional £417 million, there will be extra money available for the Executive's wider priorities. Some of that extra money might return to housing expenditure, but ministers might feel that it would be better spent on other priorities.
I am conscious that we are beginning to run against our timetable. With the agreement of the minister, I propose that we continue until 12.45 in order that we may explore the issues further. I apologise for the fact that the committee came to this part of the agenda late.
I want to deal with the issue of greater community engagement. The level 3 figures for empowering communities indicate a figure of £5.2 million for next year. It has been suggested that, rather than allocating funds from the top down, the Executive might consider using social inclusion partnership priorities or community plan priorities in local authority areas that would match the increased resources to those identified priorities. In other words, the money should percolate up rather than trickle down. What is your view, minister?
In the context of our community regeneration statement, Margaret Curran has been doing a lot of work on the issue of social inclusion partnerships, so I will ask her to answer your question.
We agree with a bottom-up approach in many respects. We allocate resources to SIPs on the basis that partnerships discuss how those resources are allocated and determined according to local priorities. A lot of Scottish Executive funding is distributed on that basis. We support the idea of community determination of and engagement in those spending processes. All Executive departments try to encourage that and the Executive is trying to ensure that it happens more often, as our community planning proposals demonstrate. We see the partnership process as a way of improving service delivery, as well as encouraging engagement in the processes and developing a feeling of community ownership of the issues that we are trying to address.
I was thinking of what we were saying earlier about end-year flexibility and the ways in which money can and cannot become available.
I have always been a big admirer of the way in which ministers pass the buck and share responsibility but, as I would hate for Maud Marshall not to be granted a speaking part in this discussion, I will direct my question to her, although it is also directed to the minister. Can you advise how long the Executive expects what is left of Scottish Homes to remain in existence? What will its eventual wind-up mean for the social justice budget?
As you directed the question to me as well, I will start the answer and Maud can finish it.
Scottish Homes is responsible for around 3,000 houses. Many of those are in areas that have undertaken a ballot and are preparing for transfer and others are in areas that are preparing for a ballot. We would like all the Scottish Homes houses to be transferred to other landlords and Scottish Homes to be wound up. I cannot say how long that will take because the important thing is that satisfactory arrangements are arrived at for the tenants. Although our commitment is not open-ended, we will make a decision based on how long it takes to ensure that the arrangements are properly administered.
Maud Marshall (Communities Scotland):
I am loth to pass up the opportunity to speak, but I doubt that I have anything to add to what the minister has said, although I can supply you with the specific figures. Just more than 1,200 houses are awaiting transfer following successful ballots. Of the remaining 1,930 houses, just fewer than 900 are awaiting the outcome of a ballot and the remainder are involved in a process of consultation with tenants.
I know that we will be dealing with the housing improvement task force this afternoon and I appreciate that we are dealing only with the report on the first stage of consultation on the matter, but I would like to ask about it anyway. Minister, you said earlier that you had allocated £10 million to the housing improvement task force budget. What was that for? Have you any plans to revisit the issue of the reduced funding to the repair and improvement grant sector through the lack of earmarking in recent years? Will any money in the social justice budget be used to examine the work that is being done in that sector?
In all honesty, I think that the £10 million is a sign of good will. The report on the first stage of consultation on the housing improvement task force scopes the problems that have to be addressed and we welcomed that. If we had prepared our budget for 2003-04 and had not made provision for the funding of the housing improvement task force, we would have been criticised.
I am sure that the issue of time scale will be part of this afternoon's debate. The housing improvement task force has a two-stage task. It has achieved its first stage and the next stage involves producing solutions and recommendations. We expect that it will complete that task early next year. Some of its recommendations might require the passing of legislation, which would mean that they would not be implemented immediately. I do not expect that the most significant element of resource that will be required to progress the recommendations will be required in 2003-04, but I hope that we will be able to implement some of the recommendations in that year, which would require a relatively small amount of resources. I am thinking about resources to support changes to systems or information and not bricks-and-mortar solutions, for which £10 million would not go very far. I expect the £10 million to be used for such things. However, I cannot say what it will be used for, as it is there to respond to the housing improvement task force's recommendations.
I hope that there will be further resources. I cannot commit resources beyond the planning period or beyond the spending review period and I cannot commit a future Administration beyond the election, but it is clear that the housing improvement task force is undertaking an important job for Scotland's housing stock and Scotland's owners and tenants. It has identified a number of issues on which we must act. We are coming to some of those issues late in the day; action should have been taken some time ago. I expect it to make robust recommendations. If I have anything to do with matters, I expect that we will have to allocate resources beyond 2003-04.
I want to deal with the voluntary sector. The Scottish Council for Voluntary Organisations and the committee have frequently said that added resource comes into society in general from the voluntary sector beyond the money that is used to fund it. That is not always fed into budgetary targets and is not always appreciated. Perhaps the best-value element of the forthcoming local government bill will offer an opportunity to move forward in that respect. Does the ministerial team have a view on how the voluntary sector's added value is reflected and whether it might make a difference to budgetary allocations?
The voluntary sector and voluntary organisations can make a case around added value. First, they can make a case in respect of the depth of their engagement with the communities in which they work. They can engage in a way in which it is sometimes difficult for statutory sector bodies to engage, although we should not say that they should not attempt to do so. Secondly, the voluntary sector can make an investment in social capital in the communities in which it works through providing volunteering opportunities and raising the general level of activity and engagement of citizens. It is fairly straightforward to say that, but it is difficult rigorously to measure or acknowledge such investment. We are in the early days of trying to acknowledge it properly.
I wonder if the legislative opportunity comes too soon. That is not to say that we do not have an interest in that. Indeed, yesterday, I chaired the bi-annual meeting of the voluntary sector forum, in which the Executive meets the voluntary sector—which is represented largely by the SCVO and its policy committee—and we discussed that issue.
We can take the argument forward in a number of ways. First, there is the development of the best value regime. As I deal with that development at a ministerial level, I have to bring proposals to the table. Secondly, we are beginning to set in motion the agreed review of strategic funding with the SCVO and I do not doubt that it will make arguments about value added. Thirdly, we are working on the social economy review, which is in a late draft. As one would expect, it also refers to the issue. Finally—I report this from the voluntary sector side yesterday and I hope that it is right—the Audit Commission has started work on how to measure and acknowledge added value.
To answer Mr Brown's question, perhaps we are slightly further back than he hoped, but the issue is certainly live and work is being done on it.
On fuel poverty, the target for the number of central heating units installed under the central heating initiative is quoted in the annual expenditure report as 10,000 units, but it is given as 12,000 in the draft budget. Will the minister explain the reasons for that reduction? Will that impact on the scheduled completion of the central heating programme?
I have a note here that does not explain the reduction; it goes back beyond the time when I became the Minister for Social Justice. The initial 12,000 was a mistake or miscalculation and the target is 10,000 for the first year.
The crucial question, which is the second part of your question, is whether that change will affect the delivery of the programme. I remain confident that over the period to 2004 for the social rented sector and to 2006 for the private sector we will deliver for all those who qualify. We have a substantial investment to do that. We will invest £30 million this year and £40 million next year—perhaps those figures should be the other way round, but the figure will be £70 million over this year and next year. I am sure that we will be able to deliver.
On the 10,000 target for the year that has just ended, some report returns from local authorities are still to come in. It looks to us as if we might fall slightly short of target on the local authority and housing association side in the first year. We believe that in the private sector the Eaga Partnership has already met its target of 3,500 by the end of the financial year that has just passed. I think that we will get to 8,500 or 9,000, so we will miss slightly the target of 10,000. There are identifiable reasons for that. There have been hold-ups in the gas supply and in the supply of new meters by Transco. We have been held back a bit by early problems that the local authorities have had in identifying tenancies that qualify.
I expect that we might not spend £5 million of the £28 million that is planned to be allocated in the first year of the central heating initiative. I am very confident that the resources that we have this year and next and the processes that we have put in place to deal with some of the early problems will allow us, over the piece, to deliver for all those tenants and for older people in the private sector.
I take it that one of the constraints has been the shortage of qualified heating engineers.
I do not decry the importance of ensuring that the supply is available. The only real information that I have on that comes from Eaga, the private sector project. It tells us that it has not had problems with finding contractors who are able to meet its requirements. A number of different bodies have raised that concern with me.
I am not sure that we have hard evidence that the shortage of engineers is holding up the supply, but we remain vigilant because there is a potential problem. I have not seen evidence of the shortage manifesting itself. If anyone has such evidence, I hope that they will give it to us. We would certainly try to address any shortage of heating engineers. Other matters, such as the Glasgow housing stock transfer and the refurbishment programme, will have an impact on the supply, if not immediately this year, then later this year and in following years. We are alive to potential problems.
The warm deal is a related issue. The £500 limit for the grant has been in place for some years. Is there an intention to increase the limit to take account of inflation? Is there provision in the budget for that and for cross-subsidy, for example, in relation to tenement stock? Gable-end housing can cost significantly more to heat. At present, there is no provision for cross-subsidy.
The short answer is no. There is no direct resource in the budget to increase the £500 limit. The resources were in place to achieve our target of 100,000 houses. We have overachieved on that; the most recent figure that I have seen was 120,000 houses. The Housing (Scotland) Act 2001 commits us to explaining later this year our strategy to eradicate fuel poverty by 2016. The Scottish fuel poverty advisory group, which is similar to the advisory group that worked on the central heating initiative, but which includes representatives of groups such as Friends of the Earth Scotland, is working on the strategy. A consultation began in March, the closing date for which is, I think, the end of May. I think that the advisory group will meet today. That matter is progressing. If the group felt that an increase in the £500 limit might have a powerful impact, I would expect it to make that recommendation.
We have had interesting discussions on cross-subsidy, for example with Transco. We want to work with partners to develop the issue significantly. Perhaps Geoff Huggins will say something about that. We are interested in innovation and in pulling together different strands of resource so that they work in concert to deliver what we want.
Geoff Huggins (Scottish Executive Development Department):
The advisory group is considering local energy partnerships, such as the work in North and South Lanarkshire and Dundee. Those partnerships are intended to identify, through comprehensive energy surveying, the mechanisms and features that can be put into people's houses. Using the range of resource flows, the partnerships will match people with grant schemes such as the EEC—energy efficiency commitment—arrangements, the warm deal and other work by local authorities and social work departments. The partnerships will aim to ensure that, where possible, measures to take people out of fuel poverty are established. Those measures might involve combining budgets. We are considering that matter. One of the key outcomes of the work by the fuel poverty advisory group is that we offer advice to a wider range of authorities. We hope to say more about that in the final version of the statement.
We are trying out cross-subsidy in relation to houses and households rather than to the programme.
We have met our target of overreaching our target by only 15 minutes, which is not bad. If the committee wishes to pursue issues that we discussed, we might do so in writing. I trust that the minister will feel able to respond. I thank him for attending and for his comprehensive responses to our questions.
Do members agree to consider a draft report on our response to the budget at the next meeting?
Members indicated agreement.
Members should start to think about giving to the clerks information and comments for the report.
Meeting closed at 12:43.