Official Report 143KB pdf
The committee will consider the draft Housing Support Grant (Scotland) Order 2000 under the affirmative procedure. We have before us an Executive note, a report by the Scottish ministers on the draft order, the draft order itself and a committee paper prepared by the clerk, which includes a note on the procedure. I thank Martin Verity for that. Do members have any questions on the procedure?
I have a couple of detailed questions. The prior year adjustments that are referred to in paragraph 12 of the ministers' report—
Is this about procedure?
No.
As there are no questions about procedure, does the minister wish briefly to speak to the instrument?
The draft Housing Support Grant (Scotland) Order 2000 sets out the amount of HSG payable to local authorities in the year 2000-01. One or two authorities—Shetland Islands Council and Comhairle Nan Eilean Siar—remain in receipt of grant in respect of housing costs. HSG remains a substantial proportion of HRA income for those two councils, and without that subsidy rents would have to increase to about £70 a week. The other element of the HSG is hostels grant, which is payable to authorities on the basis of the estimated deficit between hostels income and expenditure. In 2000-01, 20 councils will be in receipt of grant totalling £3.4 million.
After discussion, we will move to the formal procedure.
I want to ask about the prior year adjustments. Paragraph 12 of the report refers to
Being a tremendous expert in this field, I will ask Douglas Hamilton to answer that question.
John Ritchie may also want to contribute. The latest year for which we have audited information is 1996-97.
We have some audited information for 1997-98, but we have chosen 1996-97 to allow us time to receive returns from all the authorities, even though that seems a long time ago now.
I would have thought that the final year figures would be available much sooner.
That has to do with the auditing process and the time that it takes for the figures to come through.
My other point relates to hostel support. With the exception of the two councils that have been mentioned, I think that all the grant is for hostel support. The figures appear to bear little relation to what one would imagine would be the requirements of each local authority. I appreciate that this is a device to balance the books, but it seems a little odd that Glasgow City Council should receive a payment of £298,549 and that City of Edinburgh Council, which also has a significant homelessness problem, should receive £355,059, when other, much smaller councils with a less pressing problem receive proportionately higher amounts.
The income and expenditure figures were submitted to us by councils and subsequently audited. This is the deficit that councils tell us they face in running their hostels service.
Is there any central control that would allow us to direct this money to the places where it is most needed? Charges can be fixed and expenditure can relate to management costs and so on. Is there a principle underlying the way in which the Scottish Executive allocates this funding?
Probably not. We rely on councils to provide the information, which is then subject to audit. I think that I am right in saying that there is no central direction.
This is purely a deficit subsidy. Councils tell us what they need to balance the books and we give them that through the hostels element of the housing support grant.
Do councils calculate the figures on the same basis, taking into account overhead costs, central support and so on?
We assume that they compile their figures on the same basis. At the end of the day, everything is audited. Some councils will have more costs than others. Some may have spent more on providing new hostels, so they will have higher loan charges than those that have not spent much money on new provision. That is taken into account in the figures that we have used to calculate the grant.
As you have noted, adjustments are made in future years on the basis of the audited information.
I notice that the only two councils that qualify for housing support grant are Shetland Islands Council and—I do not know how to pronounce this—Comhairle Nan Eilean Siar. I understand that both authorities are considering whole-stock transfers. If they were to be successful in that, would that mean that in future no council in Scotland would receive housing support grant?
On the basis of the current calculations, that would be the case.
I was surprised to hear you say that COSLA had not made any comment on the Housing Revenue Account General Fund Contribution Limits (Scotland) Order 2000. I hope it has made a comment on the draft Housing Support Grant (Scotland) Order 2000, as I have here a report from March 1997, when the Tories last issued housing support grant orders. Over several pages, it criticises the way in which housing support grant was distributed across Scotland. I see Bill Aitken smiling.
A measure of COSLA's hypocrisy.
At that time, one of COSLA's major criticisms of the Tory-controlled Scottish Office was that the assumptions about rental income were always higher than the reality and that the assumptions that were made about the costs of management and maintenance for local authorities were always lower than the reality. As a result, it criticised the allocation of housing support grant as completely unjust. Has COSLA made similar criticisms of the draft Housing Support Grant (Scotland) Order 2000?
Not this year. Over the past two years there has been some criticism, but not to the same extent.
That is testimony to the missionary work that I am undertaking in visiting every local authority in Scotland—I have reached No 29. It is understood that the more Glenmorangie people consume, the easier it becomes to pronounce Gaelic, so John McAllion should have a good go at that. We have not received any submission from COSLA on the issue that he raises, although there have been discussions with housing conveners in COSLA on broad issues related to the housing bill.
Can we assume from that that there has been a radical reordering of the assumptions about rental income and management and maintenance costs since Labour came to power? Is that why COSLA is quiet?
Since 1997, both the rental costs assumption and the management and maintenance costs assumption have remained broadly in line with inflation.
So COSLA just does not say anything anymore.
In many authorities, debt levels have been the primary factor behind rent increases. A diminishing number of rent payers are having to fund an increasing debt in parts of Scotland, depending on the composition of the local authority. The figures suggest an alarming picture. Housing needs to be reviewed within the context of tackling the debt issue, and new housing partnerships create opportunities in that regard.
The housing support grant is not part of the assigned budgets, so if these authorities dropped out of the housing support grant, that money would not necessarily be available to go towards other services in the main part of the Scottish block. Because it is part of annually managed expenditure, that money may not be available to transfer to other services.
What would happen to it?
It would be lost. The Treasury would keep it, because it is part of annually managed expenditure.
So it is not part of the Scottish Executive block?
It is part of the overall block, but it is not part of the departmental expenditure limits. As part of the annually managed expenditure, it is subject to review each year by the Treasury.
So it would stay within the Scottish block, but it would be up to the Scottish Executive to decide how to spend it?
No, if it were deemed that that annually managed expenditure was no longer required, the Treasury would retain it.
The Treasury in Whitehall?
Yes.
In the context of transfer, which was the situation that Mr McAllion was envisaging, if those two councils were to transfer houses to community ownership, there would no doubt be a requirement for support in relation to the council's residual debt. That is where new housing partnership and other resources would come into play, so that there would be continuing support in relation to the council's residual debt.
But it would not come from this housing support grant money?
No.
It would come from somewhere else?
That is right.
On the role of the Treasury in this, in 1979 the housing support grant was £564 million, which has now been slashed to £30 million. If you chose to increase the housing support grant, would decisions about where and how you spend it still be subject to negotiations with the Treasury as opposed to control within the Scottish Executive?
The housing support grant is part of annually managed expenditure, which is subject to review with the Treasury each year.
This is another example of the devolved Scottish Parliament still being beholden to the London Treasury on housing, which is a devolved matter.
The housing support grant still exists to provide for some of the things that you have mentioned. It does not do some of what it did before.
The situation may well evolve over the years. Fiona Hyslop mentioned hostels. As the minister said, the homelessness review is examining that to ensure that a stream of resources continues to support councils in their duties in relation to homelessness both as they exist and as they may subsequently be developed. The homelessness review will examine that matter closely to ensure that resources are available. The other scenario is the possibility of transfer. If that were to happen, the support would come to councils in other ways.
A lot of questions have touched on the relationship between rents, rates, council tax and the general taxpayer. Is the Scottish Executive minded to consider an independent review of the way that housing revenue is organised, especially with the background of changes such as stock transfer? Those are major policy issues, which would be informed by an independent inquiry.
There has been no call for one.
Is it an idea that you might be prepared to take on board?
As you know, I am happy to take on board any views on housing for the betterment of the Scottish public.
I invite the minister to move the motion.
Motion moved,
That the Social Inclusion, Housing and Voluntary Sector Committee in consideration of the draft Housing Support Grant (Scotland) Order 2000 recommends that the Order be approved.—[Mr McAveety.]
Is any formal debate required?
Motion agreed to.