Official Report 422KB pdf
We need to proceed—Kenny Gibson is giving an interview.
I am grateful to the committee for giving me the opportunity today to discuss "Firm Foundations". As members know, it is a wide-ranging document that sets out ambitious and radical proposals for reforming and modernising housing policy, so that we can have a housing system that meets fully the range of housing requirements and—just as important—does so on the basis of higher environmental and design standards.
Thank you. Kenny Gibson has now returned from his moment of fame. We agreed that he would open this question-and-answer session.
I apologise for not being here at the beginning of the minister's statement, but I heard quite a lot of it.
That is the most pertinent question for the discussion. I hope that we all share the view that we must increase housing supply in the next few years. We have set an ambitious goal for house building. It has been acknowledged throughout the range of opinion that the target is ambitious, but also that it is important to set such a target so that we know what we are working towards. When we launched "Firm Foundations" in October, I was encouraged by the responses from those in the construction industry and the house-building sector who were confident that they could make a positive contribution to meeting the target. The target applies to all tenures of housing, which is right because we want to promote choice and variety but, within that, we want to increase the supply of social rented housing.
What actions has the housing supply task force identified to date?
The task force is examining a range of issues on planning, particularly geographical issues, for example in the Lothians. It will continue to consider those issues and to propose solutions when possible. That is work in progress. The Minister for Communities and Sport chairs the task force and is leading it effectively.
You touched on planning, which is important. Developers have expressed to me their exasperation about the time it takes for applications to go through as well as the expense and the laborious nature of the process. Sometimes, there is a lack of co-operation from planners in that they do not express exactly what they seek from developers. When planners give caveats and say that they are unhappy with a development, they are not always forthright in saying why they are opposed to it or what they would like to be changed. I realise that the new planning legislation has a role, but is thought being given to how we can streamline the process and reduce the cost of planning applications so that we can get delivery on the ground much more effectively and quickly?
The planning legislation has been reformed and modernised and it will bear fruit in the next few years. The planning framework must strike the right balance in considering developers' needs and our needs as a country to increase housing supply, while giving communities the opportunity to have their say and make their voices heard. You will know that consultation is under way on the national planning framework 2 and Scottish planning policy 3. Some of the issues that you raise are exactly those that the housing supply task force will consider. It aims to consider the more nitty-gritty elements about blockages and barriers and to come up with solutions. It is early days in the work of the task force, but I have a lot of confidence that, in the fullness of time, it will produce practical proposals.
The homestake pilot is being rolled out in six more local authorities. Why have those local authorities been chosen for the pilot?
We have picked areas where there is great pressure—hot spots. We want the new areas that we have added to the pilot scheme to include a mix of urban and rural areas, so that we can test the effectiveness and success of the approach. Edinburgh and the Lothians have already given us food for thought, and there are lessons to be learned from that pilot. The new pilot, for which earlier this week we announced £24 million of funding this year, will involve a more targeted approach than the original pilot in Edinburgh and the Lothians. For example, it will do more to target those who are currently in social rented housing. If we can help those people in social rented housing who are able to get on to the property ladder to do so, we will have a win-win situation—not only will we help them, but we will free up more housing for social rent.
The reason for my question is that the Isle of Arran in my constituency has the highest per capita level of homelessness and the highest house prices because of the desirability of the area. Does homestake have to be rolled out to an entire local authority area? Can specific areas within local authority areas not be chosen for pilots? Demand may be very low in some parts of a local authority area but very high in others.
We will consider further roll-out of the scheme as we learn the lessons from the pilots that are already established. Members will be aware that we have rolled out the scheme to Aberdeenshire, Aberdeen city, Moray, Highland, Stirling and Perth and Kinross. Concerns have been expressed that a more national roll-out of the policy would lead to inflationary pressures, so we need to ensure that we proceed sensibly and in a measured way. I think that we have taken the right approach, but we will consider further roll-out as and when that is appropriate.
I have a small question about the housing supply task force. When we took evidence from members of the task force, we—and, to an extent, they—were surprised that they had not been asked to publish a report. What was the thinking behind that decision? There is general agreement that a report by the task force might aid the debate on the barriers and real difficulties that we face in seeking to provide appropriate housing in areas where it is needed.
That is a legitimate question. We did not want the housing supply task force to be a body that did a lot of work to produce a big report that ran the risk of sitting on a shelf somewhere. It is intended to be more of a working group that looks at issues and comes up with solutions as it goes along. That is a better way of proceeding. However, the task force will produce a summary of its initial findings, probably around the turn of the financial year. That will give people an opportunity to reflect on the work that it has done and to comment on some of its early findings and the initial solutions that it is proposing.
I will leave it at that, as many other members have questions.
I want to ask a few questions about how we can get better value for money from the housing association grant. I start by noting the significant increase in HAG subsidy per unit that has taken place in recent years. In the previous financial year, that cost rose from £52,000 to £79,000. Why has it risen so dramatically?
I might not be able to give much insight into why the grant has risen so dramatically because I have been in my post for a relatively short time. Housing associations do a fantastic job; many in my constituency are first class. However, I hope that we can achieve some consensus on the fact that the level of subsidy per housing unit is unsustainable. If we do not tackle that to obtain more for our money, notwithstanding the significant increase in investment that we have secured for the next comprehensive spending review period, we will not deliver the increase in the number of houses for social rent that all of us want.
As a list MSP for Glasgow, I have met Glasgow City Council. One of its concerns in administering the HAG is that the clock is always ticking on the use of that money, which must be used because it cannot be carried over to a following year. Has that arrangement now been altered so that such money can be carried over? If so, will that situation continue? The city council has been concerned about that. If the HAG moneys could be carried over, the council, in conjunction with social landlords, could use them more appropriately rather than rush into developments to avoid losing money.
Thank you for making those important points. HAG money cannot yet be carried over, but we are happy to discuss that as part of the wider reforms to the grant regime. The point that you make has been made by Glasgow City Council and other councils and we need to address it in partnership with them.
I have a final question about choice in the housing market. We are committed to the social rented sector and we are looking at initiatives such as LIFT to get people into the private market as owner-occupiers. There is talk of the mid-rent sector in "Firm Foundations". As someone who might be looking to buy in the near future, I would choose to buy because it might be the only show in town for someone in my position. I might also be happy to move into the mid-rent sector if my experience of that sector in Glasgow had been better. I am keen to know how you will promote the mid-rent sector and whether you think that that would be a good use of taxpayers' money.
You have read in "Firm Foundations" that mid-market houses for rent have a role to play for the very reasons that you talked about. Many people find it difficult to get social rented housing in the area of their choice, and they might not be in a position yet to get their foot on the first rung of the housing ladder. There is a lack of houses for mid-market rent, which is why we included that in "Firm Foundations" for further consultation on how we might encourage more provision in that part of the market.
I am interested in that answer. My point was about making the mid-rent sector a positive choice for people who can afford to buy, but who might decide to go down that other avenue. A mixed economy in the housing market would be desirable in order to give consumers more choice.
It is about choice. All the evidence shows us that, rightly or wrongly, the vast majority of people aspire to home ownership. That is a fact. Most people want to buy a house if they possibly can. Some people cannot and might never be in a position to do so and that is why I believe passionately that we have to increase both the supply and quality of the social rented sector.
Good morning, cabinet secretary. I was interested when you referred in your opening remarks to reversing a 30-year rundown in the provision of social housing by councils. I have some figures from the Scottish Parliament information centre. I presume that you are aware that, over the past nine years for which we have statistics, from 1998 to 2006, the total number of houses built by local authorities in Scotland was 497. I wonder whether you are also aware that, over the nine years prior to that, from 1989 to 1997, the total number of houses built by local authorities in Scotland was 10,213—over 20 times the number achieved in the following nine years.
I have the statistics in front of me. I also know that in 2006, which is the most recent year for which we have statistics, local authorities built a grand total of six houses. Local authorities have a role to play in house building and providing houses. That is why we are proposing a scheme to encourage local authorities to build more houses where they have the capacity to use prudential borrowing to do so. The rate of subsidy that we would provide to local authorities in such circumstances is likely to be much lower than the rate of subsidy to housing associations because of local authorities' access to prudential borrowing.
Page 42 of "Firm Foundations" suggests that local authorities could use prudential borrowing to deliver between 500 and 600 houses a year. If my arithmetic serves me correctly, over a nine-year period—since we are comparing nine-year periods—your aspiration is to build about 5,000 houses through local councils, which is approximately half the figure that was achieved in the last nine years of the Conservative Government. Is a fair summary of the limit of the Government's ambitions that it wants to do half as well as the Conservatives?
We are coming from a base of local authorities building six houses in 2006.
That is not my responsibility.
I was not blaming you for it. I am trying to be consensual this morning, so I was not going to cast blame in any direction. I am happy to confirm that the number of houses built by local authorities in 2006 was not the fault of the Scottish Conservative party. The figure for 2006 indicates that there is greater potential for local authorities to contribute to housing supply, and we want to encourage them to do so. The extent to which they do that is down to them. I have been encouraged by the enthusiasm local authorities have shown for the proposal since we published "Firm Foundations", but clearly it is down to them and their capacity to use prudential borrowing. We are certainly willing to incentivise that to make it more possible.
I will move away from that point and ask a question about the proposed £2,000 grant that would be available to first-time buyers. Page 22 of "Firm Foundations" indicates that you will work with mortgage lenders and investors to assess the proposal. How far has that assessment process gone? When do you expect to publish conclusions on the desirability or otherwise of the proposal?
As members know, the consultation on "Firm Foundations" finishes at the end of the week. In a reasonable timeframe after that, we will make clear which proposals we want to take forward, how we intend to do so and on what timescale. It is no secret to committee members that the Scottish National Party thought that a first-time buyers grant could make a useful contribution to helping people on to the housing ladder. That remains the case, but as a minority Government we have listened to the views of other people and have committed to consulting on the issue before we reach a firm decision. We have not yet reached any firm or final decisions.
So a separate consultation, assessment or discussion on the issue is not taking place with mortgage lenders and investors, which is how the situation is presented in "Firm Foundations". It is simply one of the issues covered in your consultation.
As we also say in "Firm Foundations", we are having discussions about how mortgage lenders and investors can help us to help first-time buyers more. We want to discuss a range of proposals. You may say that the current climate around mortgage lending will make such proposals more difficult than we envisaged when "Firm Foundations" was published, but we want to see what contribution mortgage lenders can make to, for example, furthering the concept of first-time buyers grants and extending the help that we can give through the open market and new-build shared-equity schemes. We also want to consider how we can encourage mortgage lenders to put on to the market more attractive mortgage products for first-time buyers. We want to have discussions on all those issues to expand the range of assistance that we give to first-time buyers.
You will be aware from discussions that we have had in the Parliament that I have a long-standing concern about the number of people in our communities, particularly in the social rented sector, who cannot access housing that meets their families' needs. I am sure that you know that many people wait for years on a housing list to get suitable accommodation and that their needs often change over the years. The system is certainly not flexible enough to meet many people's needs and aspirations. Although I support the initial stance in "Firm Foundations" on removing the right to buy for new properties, have you assessed that proposal and what details can you give us on it? Have you considered taking a further step and removing the right to buy for existing properties, so that fewer and fewer people lose out on the houses that are purchased through the right to buy?
When I launched "Firm Foundations", I made it clear that if we are to invest ever-increasing amounts of public money in increasing the supply of social rented housing, it makes no sense to continue selling off that housing. That is why we propose to end the right to buy for new-build properties. We are still in a consultation period and we will listen to all the views that are expressed but, at this stage, we do not consider that it would be right to remove the right to buy for existing houses. As you are aware, the consultation paper suggests that if we remove the right to buy for new-build housing, an exception might be made for tenants who move into such housing because of demolition or refurbishment of their previous house. We have not yet taken a firm decision on that. We are considering the views that are expressed in the consultation.
I welcome those comments and I agree with many of them. That is my personal view as well as my political stance.
Many local authorities still have capacity for prudential borrowing, even taking into account their requirements to service debt and meet the housing quality standards. At the risk of repeating my answers to questions from Mr McLetchie, I say that it is right that we encourage those authorities to consider using that facility. Virtually all registered social landlords have said that they will meet the housing quality standard by 2015—obviously, whether they do so depends on their performance in the next few years, so it is important that they focus carefully on that. Some local authorities, for example the City of Edinburgh Council and Renfrewshire Council, are experiencing more difficulty with that, because they have high levels of debt and because housing stock transfer was proposed but not accepted by tenants.
You touched on the different subsidy options that exist. Will you indicate in more detail how subsidies will work in practice? For example, will they be provided through the affordable housing investment budget? If so, what impact will that have on development programmes for RSLs?
We await local authorities' responses to our proposals. Are you referring to subsidies to local authorities or the general subsidies that we discussed earlier?
I am referring to subsidies to local authorities.
The rate of subsidy to local authorities will be significantly lower than the rate of subsidy to housing associations, because local authorities have access to prudential borrowing. Before we start talking about what the rate of subsidy might be, it is important that we receive and assess local authorities' responses. Many of the initial responses have been positive, but a detailed discussion needs to be had before I can give a detailed answer to your question.
My first question relates to low-cost home ownership. I can never remember what LIFT stands for, but you will know. Why was an announcement on roll-out made before the consultation had been completed?
We decided that the issue was important and that we wanted to roll out the scheme—the low-cost initiative for first-time buyers. In the consultation period to date, there has been no suggestion that people thought that that was a bad idea. It was important to allow the pilot areas to know with clarity and certainty what the arrangements for the coming year would be. That is why we took the decision.
It might have been reasonable for you to wait until all the consultation responses had been received, because how we target support to encourage people into low-cost home ownership is an issue. There was always a tension with the homestake policy. You have decided to roll out the scheme in areas of high economic activity—what you described as hot spots—rather than in areas of regeneration and in communities in which there have been challenges, where the policy motive might be to have mixed tenure. That is a hard issue with which to wrestle. Why did you make the significant move of stating your priority before the consultation was complete?
I agree that this is a hard issue on which judgments must be made. You asked why we announced our decision before the consultation had ended. I remind members that we have announced a pilot programme, rather than a final national roll-out. The views that have been expressed in the consultation and the results of and evidence from the pilot projects will inform how we decide to proceed in the longer term.
But, to be fair, all the areas that you have identified are economic hot spots and not areas that need regeneration. If you wanted to test the effectiveness of the pilot scheme, would it not have been sensible to have used a range of areas, including, for example, some areas in Glasgow? I understand that you have an urban-rural divide across the areas, but you do not have the kind of divide that I have described. Is that a concern? The proposed £2,000 grant for first-time buyers appeared to be accessible to everyone, but there were faults with that and the grant is now to be targeted in the way that I have just described.
Sorry to interrupt you, but it is important to point out that what we have been talking about this week is the open-market shared-equity scheme. There is also the new-build equity scheme, which is a national scheme that is available in areas other than the six pilot areas for the open market scheme.
But you would accept that the pilot areas are uniform in that the key criterion is that each area is an economic hot spot.
I would certainly accept that they are housing hot spots. Issues such as increasing supply and helping people on to the housing ladder are complex problems. If there was a magic bullet solution to them, we would probably all have stumbled across it by now. I accept some of the points that you have made, and we will continue to consider them as we test the pilots. If those points are borne out, we will bear that in mind as we decide how to roll out the pilot scheme further.
I want to pursue the issue of efficiencies. Among community-controlled housing associations, there is concern about the assertion that there are inefficiencies in the system. My experience is that such housing associations are hugely efficient. A relevant comparator is the level of efficiency in the Glasgow Housing Association compared with that in local community-controlled housing associations. In my view, the efficiency of the latter is not accidental but arises from locality.
I repeat what I said earlier. I am a fan of housing associations and their work. Many housing associations in my constituency in Glasgow perform a valuable role in doing a lot of work that is wider than just providing housing. I know that it is not appropriate to answer a question with a question, convener, and I am not doing that, but I repeat the statistics that I used earlier: £79,000 average subsidy per unit in Scotland; £62,000 average subsidy per unit in England. We know that perhaps up to a third of the difference between the two figures is related to the fact that we have lower rents in Scotland, and our analysis suggests that building costs and land prices have been rising in Scotland, but when we look at the total costs per unit, we see that there is not much of a difference between north and south of the border. That then begs the question: what else is at play to account for the substantial gap between the subsidy figures for Scotland and England? I appreciate that local housing associations in Scotland do wider work, for some of which there are separate funding streams, but I do not accept that the gap can be explained away in that fashion.
But do you accept that you need to do more work on the reasons for that gap? For example, one reason might be that there are fewer community-controlled housing associations down south. Further, perhaps it is not an inefficiency if the money that is spent makes communities sustainable. Certainly, community-controlled housing associations would assert that there are diseconomies of scale in scaling up. The message from Glasgow is that scaling up does not work. More might be spent in subsidies for a housing association, but it might mean that there will still be a community in which people want to live 15 years down the track. Is work being done to interrogate the issue of efficiency?
We continue to do work around the issue. The reason why we are committed to further consultation on the range of efficiency measures that we want to bring in, in the next financial year and in the longer term, is that we are committed to getting to the heart of the matter.
A lesson that we have learned from history is that big house-building programmes need something else attached to them if they are to be effective.
The area is full of tensions, because there are many objectives that we want to meet. I make no apology for saying that we want to increase housing supply. My surgeries—and yours, I know—are full of people whose housing needs are not being met, so even without looking at the statistics I know that we need to increase housing supply across the range of tenures.
You have made it clear that the Government regards the private rented sector as playing an important role in meeting the Government's aspirations on housing provision. What consideration has the Government given to parts of Scotland where there is no meaningful private rented sector? I am thinking not just about my constituency, the Western Isles, but about parts of Lanarkshire, for example. Where do we begin in communities that have no private rented sector?
The private rented sector in Scotland accounts for around 8 per cent of all housing provision, which is not substantial. However, where that sector is available, we should try to ensure that it makes a greater contribution. We have said that when appropriate—I stress "when appropriate"—we want to enable local authorities to make more use of the private sector in meeting the homelessness target. There are homeless people who, because of their circumstances—particularly if they are young and mobile, for example—might find that the private sector caters for their needs better than does the social rented sector, at least for a period.
The Government seeks to address the needs of homeless people. What role do you envisage for the private rented sector in that regard? Are local authorities adequately funded to ensure that the private sector can play that role?
All local authorities are working to meet the homelessness target. We are about three quarters of the way towards meeting it already, with about 77 per cent of homeless people being classed as in priority need—the homelessness target is about ending the distinction between priority need and non priority need. There are some encouraging signs.
Good afternoon, cabinet secretary. At a previous meeting, when your colleague Mr Maxwell was with us, we discussed the ending of the right to buy—which you have touched on—and we discussed at some length the definition of forced moves. Has the Government's thinking on that developed since then? The committee was concerned that the definition was wide and we were at pains to understand the thinking behind it.
We have not reached a firm conclusion on that yet, and we will not do so until the consultation ends. I read the Official Report of the meeting that you mentioned, and I think that you make a reasonable point. It could be argued that when anybody whose housing is not adequate moves, that is a forced move. We have to find the right balance.
I will move on. I appreciate the rationale behind the incentives for new council housing and would not necessarily disagree with them, but I wonder where that leaves the city of Glasgow, for example. Given that stock transfer has taken place there, the local authority would not be the most natural recipient of any grant. Is any thinking going on about that scenario?
Obviously, we cannot undo what has already happened with Glasgow City Council and the GHA. I am sure that plenty of people in Glasgow City Council would say, off the record, that they would like to have a new role in house building. However, for the reasons you mentioned, that is perhaps not as practical as it is in other areas.
That is interesting.
You make reasonable points and I understand where the people who express concerns are coming from. We want and need to deal with the subsidy level, but I do not think that anyone would necessarily look at the situation south of the border, where there are very large housing associations and providers and there is perhaps greater uniformity of provision, and say that that is exactly where we want to go and what we want to do. We must maintain quality and sustainability.
My understanding is that one reason why the differential might exist between the situation south of the border and the situation here is to do with standards. I think that we all want to maintain, if not improve, the standards that we have.
I absolutely agree. We must ensure that we do that. However, I repeat that I believe that we all agree that we must radically increase housing supply. We have an increased budget to help us to do that, but it will not get us as far as we need to go unless we get more out of the money that we spend. That is a simple fact of life.
David McLetchie has a final, supplementary point on forced moves.
Cabinet secretary, you said that you estimate that some 10,000 to 15,000 tenants might have to be rehoused because their homes will be demolished, but you aspire to build 500 or 600 new council houses. I appreciate that the match is not exact—
The 500 or 600 new houses are what we envisage for local authorities; that does not include housing association new-build.
That is true, but the point is that we are talking about 10,000 or so people who are predominantly council tenants.
There will be a mixture, but you are probably right.
That is certainly the case in my constituency—
They will predominantly be council tenants and, in Glasgow, GHA tenants.
Okay. The basic point is that if there is a vast number of people who must be rehoused because their homes must be demolished, whose existing statutory right to buy will be transferred, and if it is reasonable to expect that not all but a fair number of those people will be rehoused in new council housing in their area, the ending of the right to buy might be more illusory than real in many areas.
I make a couple of points of clarification. First, the 10,000 to 15,000 people—that is our best estimate—will be rehoused not in one or two years but over a fairly lengthy period—
Yes, but the new building will take place over a lengthy period—
I think that I might end up by agreeing with you, so be patient. Secondly, not all those people will be able or will want to buy. The number of people in that position will be much smaller. However—this is where I come some way towards the point that you are making—that is why, as I said, we must consider carefully whether we want to make an exemption at all, because we need to strike the right balance between being fair and equitable and ensuring that we do not undermine the point of the policy. Those are the judgments that we will have to make.
Thank you and your officials for coming. We appreciated the session and we will take a strong interest in the issue as it develops.
Meeting continued in private until 13:00.