Finance Committee, 24 Feb 2004

Meeting date: Tuesday, February 24, 2004

Official Report 261KB pdf

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Fire Sprinklers in Residential Premises (Scotland) Bill: Financial Memorandum

The second item on our agenda is further consideration of the Fire Sprinklers in Residential Premises (Scotland) Bill. We have with us Michael Matheson, who is the proposer of the bill, and David Cullum and Zoé Dean from the Scottish Parliament's non-Executive bills unit. Members have a copy of a written submission from Michael Matheson, a submission from the Convention of Scottish Local Authorities and some further information from the Scottish Federation of Housing Associations. I think that people should also have some papers that came in yesterday from the Scottish Association of Landlords.

I invite Michael Matheson to make a brief opening statement.

Consultation on my bill started in September 2001, at which point I actively sought information on which types of properties should have sprinkler systems installed. Some 50 per cent of those who responded to the consultation made it clear that housing for elderly people should be a priority. Last week, that view received support from the report on a two-and-a-half year study that was commissioned by the Office of the Deputy Prime Minister. A quarter of those who responded to my consultation stated that houses in multiple occupation should be a priority for sprinkler installation. Many HMOs are occupied by the vulnerable in our society, which is recognised by the fact that such properties now require to be licensed. Both the Prime Minister and the Under-Secretary of State at the Office of the Deputy Prime Minister have stated recently in the House of Commons that there is a case for installing sprinklers in properties that are occupied by the vulnerable.

Additionally, in 1998, the Department of the Environment, Transport and the Regions, published a research report entitled "Fire Risk in Houses in Multiple Occupation" that identifies HMOs as properties at risk.

I note in the evidence that has been submitted to the committee the suggestion that the current legislation for HMOs is adequate. I believe that that statement reflects the historical approach to fire safety, not only in Scotland, but throughout the world. Many of today's fire safety regulations have been shaped by our experience of previous fire tragedies. Given that Scotland has double the annual fire death rate of England and Wales, I do not believe that we can afford to wait for more tragedies before we take action.

Before we get caught up in the debate about the figures relating to my bill, it might be worth noting some other figures. The Scottish Executive report, "Fire: Raising the Standard" stated that the average cost of a dwelling fire in Scotland in 2000 was reported to be £17,200. In 2001, there were 8,934 dwelling fires, which adds up to a total cost to Scotland of £151 million.

As well as property costs and costs to the fire service, costs also arise in respect of injuries sustained from fire. In 2000, the then Department for Transport, Local Government and the Regions calculated the cost-benefit value and savings that would have been made if a fire incident had not occurred. It was calculated that the costs of the injuries were as follows: a minor injury was estimated to cost £9,920; a serious injury to cost £128,650; and a death to cost £1.145 million. Using those figures, we can say that the 88 dwelling fire deaths in Scotland in 2001 cost the country more than £100 million. In addition to that, there were 1,799 non-fatal fire casualties in 2001. If all of those were minor cases, that would cost a further £18 million and if only a quarter were serious injuries, the cost would rise by a further £70 million.

Before I invite members to ask questions, I remind them that the policy issues to do with the bill will be dealt with by the Communities Committee, which is the lead committee. We are concerned in particular with the financial memorandum at this point.

Michael Matheson said that he did not want to get caught up in the figures, but that is what we do in the Finance Committee. I find the policy issues interesting and I am in favour of having sprinklers in various types of accommodation, although the bill does not go far enough. However, we in the Finance Committee must make decisions based on the information that we have in the financial memorandum. There is a huge discrepancy between the figures that Michael Matheson has provided and those that were bandied about last week. The Finance Committee has asked for written clarification of those figures so that they are robust rather than being plucked out of the air.

The statistics that Michael Matheson cited a minute ago were interesting. Do they apply to housing for the elderly and to HMOs or are they Scotland-wide figures? If they are Scotland-wide figures, would Michael Matheson be able to disaggregate them for us to give us more information?

They are Scotland-wide figures. As I said before, we got caught up in a debate over the figures. The fire statistics do not break down to cover specific types of property; however, they give a general picture of HMOs covering a range of different types of properties, which are outlined in the financial memorandum and the policy memorandum. The statistics do not break down to cover sheltered housing complexes and other properties, for example.

If the statistics are not disaggregated, I find it difficult to understand how they are useful in demonstrating the cost-effectiveness of the bill and the costs for the types of premises that the bill covers.

I have some statistics here: the number of deaths that occurred in Scotland as a result of fire in 2002-03 was 84 and 30 of those individuals were over the age of 60. Some 39 of the fires were in flats, which tend to be the HMOs that I target. The figures do not break down any further; they are national fire statistics.

Being over 60 nowadays does not necessarily mean that one will be in sheltered housing. Sheltered housing is now for elderly people who are frail. It is unlikely that one would be in sheltered housing at 60.

I represent an area with a lot of flats, but many of them are not HMOs. Before the committee meets again, is there any way that we would be able to get slightly more—

The problem is that the national statistics do not break down further. All I can do is to refer you to the 1998 report that was published by the Department of the Environment, Transport and the Regions. That report specifically considered HMO properties and identified them as being a group of properties that are particularly vulnerable to fire because of the number of occupants who live in them. That research demonstrates that HMOs should be targeted when fire raising is being addressed.

A report commissioned by the Office of the Deputy Prime Minister was published last year after taking two years to complete. One of its key findings was that there is a cost benefit to installing sprinkler systems in properties that are occupied by the elderly because of the potential difficulties that they would have in evacuating the property if there were a fire.

Although the statistics in those reports do not break down in detail the fires that occurred in such establishments, they are two pieces of research that demonstrate that those two groups must be targeted when we try to improve fire safety.

I have one more question, although it strays slightly from the subject. If that is the case, why does the bill not cover residential and nursing homes for the elderly?

My original proposal was to include care home facilities. During the consultation, I received evidence from care homes that, because the new care regulations were kicking in, they were concerned about being overburdened with new regulation. At that point, they did not think that it would be appropriate to include care homes in the bill. On the basis of the evidence that I received during the consultation, I did not include care homes in the bill right at the start. However, the bill is drafted so that, under a schedule, care homes can easily be introduced through a ministerial order if that is thought appropriate in future. The move was primarily to prevent overburdening the care home sector, while ensuring that if ministers want to include care homes, they will have an easy way in which to do so.

Do we need to have a legislative mechanism in the bill to cover care homes or could the issue be dealt with through the care home standards under the Regulation of Care (Scotland) Act 2001?

I am not too sure about the care home standards, but the fire safety regulations that, in my understanding, apply to care home establishments are based on the building control regulations with which a facility must comply when it seeks registration as a care home.

Everybody is sympathetic to attempts to improve community safety and to protect firefighters and others who have to cope with fires. You gave us a lot of statistics on casualties and deaths and on the savings that might arise from the bill. However, we have heard evidence that smoke detectors might be more effective than sprinklers because they give people early warning of fires. A couple of weeks ago, we received evidence about mist systems, which might be easier to install in certain types of properties. Obviously, a different type of system would have financial implications. Why do you feel that the sprinkler system is the most appropriate method of protection and the one that the bill should cover?

The provisions for smoke detectors were introduced nearly 15 years ago. Sadly, in that period, the rate of fire deaths in Scotland has not dropped significantly. The fire service has carried out research that demonstrates that in around 60 per cent of the fires that it attends, smoke detectors are in place but do not operate. I will check that figure for the committee. Smoke detectors do not provide the level of safety that the fire service believes sprinkler systems would provide. When a smoke alarm goes off, the individual involved still has to be able to evacuate the premises. If the person has difficulty evacuating, their safety will be compromised.

The Scottish Association of Landlords raised the issue of mist systems with the committee. From a technical point of view, mist systems are somewhat different from sprinkler systems. First, as there are no European or British standards for mist systems, they have not been through a rigorous process to ensure that they are effective. Secondly, a mist system operates from a water tank, which must provide a water supply for around four minutes. A sprinkler system operates from the water mains system and must be able to supply water continuously.

After it was suggested to the committee that mist systems are cheaper and easier to install, I contacted one of the biggest fire safety companies in Scotland, which installs mist systems. That company said that mist systems are not simple, and certainly not cheaper, to install and that it is not inclined to use mist systems because no national or international standards exist for them. Sprinkler systems have had European standards for some time and a draft British standard, which arose from the Office of the Deputy Prime Minister's research on the effectiveness of sprinkler systems, is due to be finalised this year. The international experience is that sprinkler systems reduce fire death rates or increase survival rates in fires by up to 85 per cent. Detailed research has been carried out into sprinkler systems, but not into mist systems. Given that mist systems require a tank, they can involve more work than systems that simply run off the mains.

That is helpful. You mentioned the sad fact that smoke detectors in properties often do not work and do not provide protection. Does the research that you have undertaken show that sprinkler systems are fail-safe? Are they likely always to work or could the same situation arise?

One of the biggest difficulties that I have had with the bill is people's perception of sprinklers. I am sure that we have all walked through shopping centres in which we have seen sprinkler heads. Residential sprinkler systems are nothing like those systems—they are very sophisticated and have been on the go for a long time. The agenda began to be pursued in America in the 1980s and in Canada in the 1970s and technology has moved on considerably. Sprinklers are extremely safe and the failure rate is very low. International standards now exist and, because of international experience, we know with confidence that sprinklers work effectively. Research by the Office of the Deputy Prime Minister, involving a range of fire tests, showed that sprinklers tackle and control fires effectively.

You asked earlier about alarms. Installation of a sprinkler system does not mean that a smoke alarm is not installed, because having a smoke alarm remains an early way to be informed of a fire in the house. A smoke detector might be activated before a sprinkler system if the ambient temperature around the sprinkler head is not high enough. Smoke alarms still have to be fitted in a property that has a sprinkler system. The difference is that, when a sprinkler system is activated, it starts to fight the fire right away. A smoke detector only alerts people to the occurrence of a fire.

I have normally found knee-jerk reactions in politics, but Michael Matheson was taking action before everybody else had their knee-jerk reactions to the latest deaths in Uddingston. He is to be congratulated on his foresight.

I worry about whether implementing the bill would raise costs for residents of residential homes. Would the cost be inflicted on the older person whose life the sprinkler system could save? Would those older people pay directly for the system or would the Executive pick up most of the cost?

The bill could make provision in relation to care home facilities, but it does not do that. However, I can answer your question in relation to sheltered housing complexes, if that would help. The bill provides for the installation of sprinkler systems in sheltered housing complexes only when a building has been converted for sheltered housing or is new build, because that is the most cost-effective way of achieving the aim.

Last week, I visited several sheltered housing establishments, some of which have been on the go for some 30 years and one of which was being built. All those establishments were owned by different councils. While renovating and building the properties, the councils are taking the opportunity to install sprinkler systems. At an establishment in East Kilbride that South Lanarkshire Council is building, the cost of installing the sprinkler system is working out at about £600 per room. Such costs are being covered by the overall building or renovation costs that are being incurred, so they are not being passed on directly to residents. The councils are providing residents with greater safety and security by installing sprinkler systems.

The definition of sheltered housing is crucial to identifying the bill's costs. Is your definition in line with that in the Building (Scotland) Act 2003?

Building regulations contain no definition of sheltered housing. I noticed that evidence to the committee suggested that the definition was too wide. The definition in the bill comes from the Title Conditions (Scotland) Act 2003. My bill would put that definition in building standards. To tighten the wording, I added paragraph (b) to the definition in section 15 of the bill, to ensure that the definition does not include retirement homes that are in the private sector or were built by a private company. The definition covers only sheltered housing complexes. I have taken the Executive's definition of retirement or sheltered housing. My bill would for the first time put a definition in the building regulations.

I assume that you have read the Official Report of our earlier evidence session on the bill, during which Fergus Ewing asked John Blackwood of the Scottish Association of Landlords whether he would be prepared to meet you, because views still diverge on installation costs. Has that meeting happened?

No. I must meet several organisations as a result of the evidence that they have submitted. The Scottish Association of Landlords is one such organisation; another is the Convention of Scottish Local Authorities. The only meeting that is currently organised is with the Scottish Federation of Housing Associations.

Mr Blackwood said that the Scottish Association of Landlords' figure of between £5,000 and £7,000 was based on

"actual costs for systems that have already been installed, albeit in Edinburgh."—[Official Report, Finance Committee, 10 February 2004; c 1009.]

That is still quite divergent from the information that you provide. I hope that you can meet the association and report back to us whether there is common ground between you—I am not sure what the timing will be for concluding our report.

May I clarify some of the confusion around the issue? The financial memorandum that I provided to the committee uses a figure of £1,500, which was provided to me by the technical committee of the Residential Sprinkler Association, the governing body for installers of such systems—it is now called the Fire Sprinkler Association. The figure represents the industry's rough estimate of the cost of a retrofit installation in a two-bedroom property. The Office of the Deputy Prime Minister's report stated that the figure is roughly between £1,000 and £2,000—that is a baseline, average figure.

I cannot tell you how many jobs will cost £5,000—that will depend on the size of the property and the technical issues that might have to be addressed. However, I know that the baseline figure is between £1,000 and £2,000—roughly £1,500—and I can use that figure to estimate the cost for HMOs in Scotland. You cannot take two quotations and say, "This is the average cost." Research from Westminster demonstrates that that is not the case. As I mention in the financial memorandum, there will inevitably be differences in cost, which will depend on a property's size and number of rooms. It is impossible to predict how many houses will incur costs of £3,000, £4,000 or £5,000.

The difficulty is that witnesses provided evidence on the record—albeit anecdotal evidence of a couple of examples, which came from phone calls to a number of suppliers—of the cost of actual installations, rather than the anticipated costs that have been put forward by whichever source. It would be useful—and the committee would appreciate it—if you could meet the Scottish Association of Landlords and try to reach an agreement.

I am more than happy to do that. I can also provide the committee with a table of figures that the researchers at the ODPM have identified as the average costs for a range of properties, up to 12-bed care home facilities. Those figures might give the committee a better idea of the costs and they confirm my figure, as they estimate the cost to be between £1,000 and £2,000.

In his evidence, Mr Blackwood said that the Scottish Association of Landlords was not in favour of a blanket licensing condition. I asked him whether any local authorities had imposed such a condition on HMOs under their own aegis. He said:

"That has certainly happened in Edinburgh … The City of Edinburgh Council has said that, as a result of its own licensing conditions, it already requires fire sprinklers to be installed in some HMO properties."—[Official Report, Finance Committee, 10 February 2004; c 1010-11.]

Rather than add to the statute book, do you agree that one approach would be to lobby local authorities to look at their licensing regimes?

My understanding is that, in applying to a local authority for a licence for an HMO, owners must comply with certain fire regulations and that the local authority will take the advice of the local fire service. On the Edinburgh examples that were cited, I understand that, in order for the facilities to comply with the fire regulations and depending on the number of rooms in the property, fire escapes or stairwells of the American type would have to be installed, probably at the back of the building, in order for people to be able to escape.

Increasingly, local authorities are saying that such stipulations must be adhered to. However, they are prepared to make a trade-off: if a sprinkler system is installed, the authorities will not force the owner then to install such a staircase. Rather than pointing to stipulations under the licence, authorities are telling people that they must comply with fire regulations, which means having to install a staircase. However, if the owner installs a sprinkler system, the authorities will be prepared to relax the regulations, because the sprinkler system would provide what the authorities believe to be the necessary level of safety.

It has been pointed out to me that, in some local authorities, an HMO comprising seven or eight rooms can receive a licence, even if it does not have sufficient fire safety provision by way of an escape ladder or extra staircase. The owner might receive a licence allowing them to use only half the building—they may be allowed to use only three or four of the rooms. It is in the interests of the owner to determine what they need to do in order to use the rest of the property. They are being told that, if they do not put in a stairwell, a sprinkler system would cover the necessary safety provisions.

Rather than focusing on a stipulation in the licence as such, local authorities are increasingly prepared to relax the building regulations if owners are prepared to install sprinkler systems. That is happening not just in HMOs, but in private properties, including complexes such as retirement flats. The problem is that those properties are particularly vulnerable in the event of a fire, so the question is about driving up the standards in such properties, many of which are occupied by vulnerable residents. The best way of doing that, I believe, is through a change in the building regulations.

Those regulations satisfy the fire brigades and you have recognised that it would not be desirable to overburden agencies with additional regulations, yet that is one of the criticisms that people who have given evidence to us have made about your bill.

One of the fire service's main concerns on inspecting HMOs is that it believes that, even when those buildings comply with the fire regulations, they would be safer if they had a sprinkler system installed. However, because there are no building regulations through which that can be stipulated, the fire service feels compromised.

We are drifting away from finance issues here.

Well, regulations are—

I am anxious to get us back on to financial matters. I call Jim Mather.

You mentioned the United States and Canada, Michael. Do you have evidence from other jurisdictions that suggests that the cost of installing fire sprinklers will reduce over time with increased demand?

A number of European countries provide for residential fire sprinklers. The most recent jurisdiction to come on board was the Isle of Man, which last January passed legislation for the installation of sprinklers in a range of properties—new build and retrofits. The legislation comes into force this March.

The country with the greatest experience in this regard is probably America and the place that has been the real trail-blazer is Scottsdale in Arizona. Scottsdale introduced a local ordinance in 1986 for the installation of residential fire sprinklers. It carried out a 10-year review of the policy in 1996. That evaluation showed that, over the 10 years, the cost of installing sprinklers had dropped by more than 50 per cent. The main reason for that was that a market had developed, with more companies installing sprinklers and more competition. The costs of fires—the costs incurred by damage to property and the costs to the fire service—had also decreased. A whole range of financial gains were made as a result of the measures. The costs dropped fairly dramatically. The main cost savings were probably made in the first two or three years, when the figures dropped by about 40 per cent.

I am keen to develop that point. I refer to costs both to the public purse and to landlords, who are showing resistance to the proposal. Do you have a real feel for the cost alleviation on the fire service, the police and the health service if sprinklers are installed and are preventing fires? Clearly, there is a spin-off cost to those services. Both the police and the fire service turn out at fires. We must also take into account the cost of care of those who have been injured in fires.

Again, I refer to the evidence from Scottsdale in Arizona, where significant savings were made in the fire service, the health service and insurance as a result of the installation of sprinklers. Almost 40 per cent of the properties in Arizona now have sprinkler systems and it has been possible to make significant savings. I understand that that is one of the main reasons why the policy was introduced in the Isle of Man. From international experience, there is clear evidence that cost savings can be made. In my opening comments, I illustrated the costs of regular fire deaths and injuries.

I will give the committee a simple example. South Ayrshire Council has four blocks of flats that it uses for the elderly. Over the past two years, the council has adapted and renovated those flats. After it had completed the renovation of the first block, an elderly resident went out one evening for a few pints. When he came back in, he put on the chip pan and fell asleep. The pan ignited and the sprinkler system in the kitchen came on. The first that the man knew about that was when the fire service arrived at his door. The fire had been extinguished. It cost the council £300 to tidy up the kitchen and the man was back in his house within 48 hours.

There is a cost to the public purse and to local authorities when properties are damaged as a result of fire. Similarly, if a fire takes place in a housing association property, the housing association must meet the cost of repairing the damage. For a little investment—nowadays, the cost of sprinkler systems is almost the same as that of carpets—we can prevent that type of damage from occurring.

I return to the specifics of landlords' resistance to the proposal. Do you have any specific data on decreases in insurance costs, the alleviation of repair bills and the augmentation of property value when sprinklers are installed?

In the evidence that we have received, there seem to be conflicting views. One party was told that insurance costs might increase because of the potential for water damage. Others were told by their insurance brokers that costs were broadly neutral. The position in the UK is that insurance companies are broadly neutral on the issue—largely because there is not a critical mass that would allow them to be prepared to give a discount for sprinklers.

As I said, America has perhaps the greatest experience of extensive residential sprinkler systems. On average, insurance companies in America give people who have a full sprinkler system in their property a discount in the region of 15 per cent on their home and buildings insurance. For some insurance companies the figure rises as high as 20 per cent, whereas for others it goes down to less than 10 per cent. Such discounts are offered in America because there is now a market in this area. It is similar to the way in which people's car insurance costs may be reduced if they have a driveway. Insurance companies are trying to encourage people to install sprinkler systems and are discounting their insurance as a result.

I have some figures from Scottsdale, Arizona. Thirty-nine per cent of properties had sprinklers installed within 10 years. The average money loss in the event of a fire when a sprinkler was present was $1,544. The average money loss when there was a fire and no sprinkler was present was more than $11,600. That is almost a tenfold increase.

Did the installation of sprinkler systems have a tangible impact on property retail values?

To be fair, that is not really an issue for the committee. We are concerned with the impact of the bill on the Scottish Executive budget.

Touché. I accept that.

What about the impact on landlords?

That is a matter for them, rather than for us.

This is the first member's bill that the Finance Committee has had to consider. There seems to be a missing link; we have not had any figures from the Executive, despite the fact that Michael Matheson says that the Deputy Prime Minister's office has produced figures. Have you had any response from the Executive? What is the procedure? When do you expect to get a response? Some of our difficulties should be dealt with in part by a contribution from the Executive, which—so far—is lacking.

I have had four meetings with different ministers to discuss my bill. That goes back to September 2001. The most recent of those meetings was with Mary Mulligan. At that point, no matters relating to finance were discussed. The Executive has not contacted me since that meeting, which was approximately two months ago.

I have a question for David Cullum, because he deals with a lot of such bills. Is that the normal procedural route?

The Executive makes a submission to the lead committee in relation to all members' bills. The Communities Committee has called for evidence. I expect the Executive to have submitted, or to submit, evidence to that committee. Off the top of my head, I think that the deadline for giving evidence to the Communities Committee is the end of this week.

There could be an issue there. The Executive might well have policy issues with the bill. Equally, it might have issues with the financial aspects of its implementation. The Finance Committee is being asked to produce a report on the financial consequences of the bill without necessarily having all the evidence that it needs, as Fergus Ewing pointed out. There is a procedural difficulty that I can take up outside the committee, but it is a problem for the committee.

In the case of local authorities, private sheltered housing providers or landlords of houses in multiple occupation, it would be the rent payer who would pay through councils' housing revenue accounts, housing associations or—to a certain extent—housing benefit. Because the money would not be coming from the council tax, the Scottish Executive would not be paying, therefore I am not sure that the Scottish Executive has any involvement in the finance.

Fergus Ewing is shaking his head. It is obvious that he knows better than me, so perhaps he can answer my question.

You might well be right.

Housing finance is ring fenced and it comes from a housing revenue account, which is paid for by rents. That is my point. Is the Scottish Executive making any other financial input?

Kate Maclean's point is correct in the context of how the sprinklers might be paid for. Looking at COSLA's evidence, I suspect that the Executive would have some interest in the mechanisms through which legislation might be proposed in relation to what Michael Matheson is asking for and what COSLA is suggesting.

One of the problems that is being highlighted is how to deal with a member's bill. We want to deal properly and comprehensively with all the legislation that comes before us. If our locus is the consideration of the financial figure, we want to have the best possible information so that we can do our job properly. I am trying to focus on that point.

Ultimately, someone will have to pay, whether it is the public sector or the private sector. Someone will have to pick up the tab. A couple of weeks ago, the landlords said that the costs had been massively underestimated. COSLA's report is equally adamant that extending the requirements could have "enormous cost implications"; somebody will have to pay for that.

I was interested in what you said about Scottsdale in Arizona, but I am not sure that it helps us too much in a Scottish context. I have not been to Scottsdale, Arizona, but I know that many properties in the United States are wooden-framed properties into which it is relatively easy to fit equipment. I am thinking about old properties in places such as Edinburgh, Dundee and elsewhere in Scotland, where there are massively different tenemented properties. Surely, with such properties, it will be infinitely more expensive for whoever has to pay, whether it is the private sector or the public sector. Both sides are saying that.

The Finance Committee is responsible for getting realistic figures, so that we can balance against those figures the telling evidence that you gave us on how much fire is costing. Are we being asked to sign up for something, the cost of which we have absolutely no idea about? That is the worry.

We have been trying to clarify COSLA's evidence—particularly the cost aspects—since it was submitted to the committee, but we have been unable to do so. The City of Edinburgh Council predicted that there would be 3,500 renewals by the end of 2004. However, according to the Scottish Executive's statistics on HMOs—the most recent of which are from 31 March 2003, and which I have with me—only 2,859 applications were received for the whole of Scotland, so I do not know where the council gets its figure of 3,500 for renewals that are due this year.

Dundee City Council referred to £1.35 million, but there is nothing to explain how the council arrived at that figure or what the figure is based upon. The council expects to get some type of grant assistance, which would mean that its contribution would be £270,000. Again, I do not know where that figure comes from, which is why I have tried to contact COSLA to find out.

South Lanarkshire Council says that the outturn figure to build protection sprinkler systems is £1,500 per bedroom. On Wednesday, I visited a sheltered housing complex that South Lanarkshire is building and found that the cost is £600 per bedroom. That council also states that the cost of building personal protection sprinkler systems is £1,750. The council seems to be referring to two different types of sprinkler systems, but there is only one type.

I do not know where the figures come from or what they are based on.

Presumably they are based on existing properties. The figures for new build would be much cheaper. If you are going into—

But that is not what the submission says.

I do not know whether COSLA identifies—

The submission states:

"for personal protection sprinkler systems as £1750 per occupant."

Yes, but it does not say whether that figure applies to new build or old. It states:

"outturn figures for building protection sprinkler systems as £1500 per bedroom".

That does not necessarily mean new build.

There is nothing to explain how those figures were arrived at. That is the issue more than anything. The figures from the City of Edinburgh Council, Dundee City Council and South Lanarkshire Council may be correct, but I do not know how the councils arrived at them. I have serious reservations about the figures, given my own experience.

Although you and COSLA may be coming at the matter from different directions, you both agree on one thing, which is that we need more robust figures on the effect of adopting your policy framework. The risk is that we say, "We don't know, because we don't have the information about the implications," that the bill goes forward, and that judgments are then made about whether the bill is acceptable on the basis of information that is not resolved. That would be unsatisfactory from our point of view and from your point of view. We need hard evidence.

It is important to be sure that COSLA's figures are robust. I have serious reservations about the figures. The figure of 3,500 renewals for Edinburgh was submitted, but the Scottish Executive's figures show that the City of Edinburgh Council granted 247 licences at the beginning of the scheme in 2000, and at the end of March 2002 I think that the total was less than 1,000. There are 1,000 cases outstanding, but 247 plus 119 and the 1,000 pending cases does not come to 3,500. I do not know where the idea of there being 3,500 renewals comes from.

It is obvious that we require a reconciliation of the information so that we can identify the true situation. We must ask the Executive whether it can shed any light on the cost issues.

My understanding is that before you appeared here today, you underwent a substantial consultation process. We have heard evidence from the Scottish Federation of Housing Associations and Bield Housing Association. Did they take the opportunity to make a submission to the consultation? When did the process begin and how did it continue?

I started the consultation in September 2001 and it was completed at the end of December 2001, after three months. The bill would have been drafted much earlier had it not been for the Building (Scotland) Act 2003, which meant that we had in effect to redraft the bill as it stood at the time.

Both the Scottish Federation of Housing Associations and Bield Housing Association were invited to submit evidence to my consultation. I noticed that they said in evidence to the committee that they had submitted evidence to the consultation, but neither of them did so.

Perhaps if they had submitted evidence earlier, we might be further forward with some of the issues. The SFHA has submitted further evidence that RSLs own just less than 600 houses in multiple occupation and that costs will be associated with that. What is your comment on that figure and have you made allowances for it in your financial memorandum?

We checked with the Scottish Executive and Communities Scotland whether RSLs had HMOs that would be affected by my bill and found that they did not. I am not too sure where the figure of 600 comes from. It may be that housing associations have sheltered housing complexes, which are provided on an HMO basis, hostels for the homeless or women's refuges, which in any case are exempt from my bill. The SFHA appears to have got the figure from Communities Scotland, but we sought figures from Communities Scotland on the HMOs that would be covered by my bill and, at that point, RSLs did not have such properties.

That is helpful. It seems to me that some of those who submitted evidence to the committee might have misunderstood the scope and ambit of your bill. It might be helpful if you would spell out which premises would be required to have sprinklers fitted under your bill and when.

The 600 figure from the SFHA is most likely correct, but I am not too sure whether it includes the groups that are exempt under my bill; I suspect that it does. My bill will cover two types of properties, one of which is HMOs. When licence holders apply to renew their licence, their properties will have to comply with the provisions of my bill. The other type of property is sheltered housing complexes. Only complexes that have been converted for the purpose of sheltered housing or are new builds will be covered. The bill will not apply retrospectively.

That is helpful as well. We have had further evidence from COSLA, of which I think you are aware, since our most recent meeting. That evidence states that Dundee City Council estimates that the costs to HMOs in its area alone would be £1.35 million. Will you comment on the figures that COSLA has provided in the past few days? Do you believe that they display a correct understanding of your bill?

I am not sure where the figure from Dundee City Council comes from, but it is the council's estimated cost for the HMOs in its area. The council says that the cost would be £1.35 million. According to the Scottish Executive's figures for the number of HMOs, Dundee City Council has only 150 licensed HMOs with 100 licences pending. I have absolutely no idea where its figure comes from. It would be helpful to me if the committee were to pursue COSLA to try to find out how it comes up with such figures. The credibility of the figures depends on how they have been arrived at.

Another matter that has not yet been raised is that, in the background to your financial memorandum, you describe the annual maintenance cost as £35 a year per property. That is nugatory. However, in the last evidence session, that figure was described by the landlord witnesses as unrealistic. Will you comment on that?

The average maintenance cost of £35 was provided by the body that represents the fire sprinkler companies—the Fire Sprinkler Association. It is a broad figure of what it should cost to inspect a sprinkler system in an average two-bedroom property on an annual basis. There seems to be a myth about what is involved in inspecting such a system. Inspection involves checking that the caps that hold the sprinkler head to the ceiling have not been painted over and that the water meter is set to the right pressure for the system. It takes less than half an hour. The last time that I called out a plumber, I was not charged £70 an hour for the job; it depends where one stays, of course—other members might stay in posh areas. Just last week, I phoned a company to check how much it would charge and it gave me the figure of about £35, or at most, £50.

A relevant point that has not yet been made is that, under the Housing (Scotland) Act 1987, there is provision for the availability of grant aid to landlords who install a means of fire escape. The Executive has not told us, or you, how much money has been paid out each year in grant finance since 1987. We must find out that information and the Executive will have to tell us some time. However, is it your understanding that, in principle, less money will be needed if sprinklers are required to be installed—albeit in the restricted premises that are covered by your bill—and that that would be a cheaper method of Government intervention than providing grant money for creating fire escapes?

I understand that the 1987 act states that an HMO owner might have to provide a fire escape in the form of a staircase at the back of the property, and that the act allows for owners to apply for financial support to do so. I have no idea how well that provision is used—it would be helpful if the Executive could inform us how much money it allows for such provision.

I was speaking to an HMO owner a couple of weeks ago. He had a three-up property in which he had to install a stairwell at the back. He was informed that if he installed a sprinkler system, he would not have to install the stairwell and he saved himself more than £20,000 by doing so. The cost saving is significant if owners install a sprinkler system instead of a stairwell.

A huge amount of work and research has been done to produce the bill and the bill is a tribute to your work and that of Mr Cullum, Ms Dean and other staff.

Am I right in saying, however, that I was able to point out to you recently an area of research that has not been mentioned in your bill, namely research that was carried out by academics at Harvard University? The research sought to identify the most cost-effective method of Government intervention per life saved. The least effective method, at the cost of $20 million per life saved, was found to be Government intervention in regulating benzene emissions at tyre manufacturing plants. The most effective method of saving lives, which cost zero dollars, was through the compulsory requirement to install fire sprinkler systems.

You are right. You brought that research to my attention; had I been aware of it earlier, I would have included it in the policy memorandum.

At our previous meeting, Alister McDonald said, on Michael Matheson's consultation:

"I understand that the SFHA responded and that Bield Housing Association contributed to that response."

He added a caveat:

"Of course, the proposal then covered all dwellings and not only sheltered housing and HMOs."—[Official Report, Finance Committee,10 February 2004; c 1006.]

However, you say that you did not receive such a response to the consultation.

Both those organisations were sent a copy of my consultation document and were invited to submit evidence to the consultation. However, neither of them did so.

Okay.

When the Executive brings bills before the committee, we are, rightly, critical if it has not consulted proactively on the financial memorandum. In this case, there has been no proactive consultation with the Convention of Scottish Local Authorities or the Scottish Association of Landlords. I hope that the situation will be rectified and I appreciate that Michael Matheson is actively seeking a meeting with those bodies, which I hope will take place soon. I also note that he will have a meeting in early March with the Scottish Federation of Housing Associations. It would be useful to get conclusions from those meetings in advance of the Finance Committee's report, because otherwise it will be limited.

On a procedural matter, convener, if we are to be faced with further members' bills, it would be useful to know exactly what the role of the Executive and the Finance Committee should be. If we are approaching Michael Matheson's bill as we would approach an Executive bill, then it is up to us to call for evidence. It is up to us to judge whether it is appropriate for the Executive to provide evidence or whether we should ask for evidence first, given that some members' bills might not have a cost to the public purse. It would be useful to have guidance on that matter for the future.

Perhaps Michael Matheson can answer the bit of Jeremy Purvis's question that was directed at him; then I will try to deal with the second part of the question.

As I said already, I am more than happy to meet COSLA and the SAL. Since COSLA submitted its late evidence to the committee, I have been trying to meet it to clarify its figures. However, to date, we have had no joy in obtaining the details that we require. I point out that COSLA made a submission to my consultation exercise.

I understand what Jeremy Purvis says about consulting on financial memoranda. However, I am not conscious of the Executive consulting on financial memoranda. Perhaps it should do so. Jeremy Purvis should also bear it in mind that, as a member who is promoting a member's bill, I carried out a three-month consultation, during which organisations had an opportunity to provide input. It is difficult for me to enter into a further consultation on the financial memorandum once the bill has been drafted. I take note of what Jeremy Purvis said, but he must be realistic and consider the practicalities for a member who is pursuing a member's bill.

I accept that entirely and I accept also the burden that a member's bill puts on Michael Matheson, who has other work to do. However, for the committee to do its job of scrutiny as part of the parliamentary process, we must be fair to any bill that is presented to us, whether it is an Executive bill or a member's bill.

In the evidence, no one has pointed out that any of the figures in my financial memorandum are incorrect or have been wrongly calculated. Some of the figures that were provided in evidence to the committee, both written and oral, are highly questionable. The evidence does not say how the witnesses arrived at the figures that were given. However, that is an issue for the committee to pursue.

Right. I thank Michael Matheson, David Cullum and Zoé Dean for coming before the committee today. While they are with us, having heard the evidence from Michael Matheson and the questions from committee, members, I have to say that I am a bit concerned about the procedural issues that pertain to the way in which we handle the bill.

I want to do two things. The first is to speak to the convener of the main subject committee that is dealing with the bill. I want to identify some of its concerns and raise some of the issues that we have discussed today. The second is to reflect more generally on the issues that arise in relation to financial memoranda to members' bills and on our information requirements. Perhaps we can try to deal with those procedural issues as quickly as possible.

The clerks will have to prepare a report on the bill. In that context, we will have to seek other forms of evidence and we might need to take slightly longer to do so than we originally expected. We will need to satisfy ourselves more fully than we can at present about the information that we have. We might have to get back to Michael Matheson in writing to ask him questions to identify the mechanisms through which we can get a better sense of the financial implications of the bill.

Our job is not to decide whether the policy is good or bad but to focus on the financial implications of the bill. As far as that is concerned, I do not think that we are at a stage at which we could write a convincing report one way or the other. I think that we have to do a bit of work both on the general procedures and on specific aspects of the bill. Are members happy with that?

I would be more than surprised if the Executive has not already looked into the financial aspects of the bill; if it has not done so, it is not doing its job. The Executive should have had the foresight to present us with the background work that it must have done if it is doing its job at all well. It is remiss of the Executive not to have done so. The convener will have to take up that point with the Executive.

Sensitivities are involved in dealing with bills that are introduced by back-bench members. It is important to remember that members have their own positions. The bill is the member's bill—they introduce it and they have to be allowed to keep control of the exercise. However, before we make our report on bills, we have to be in a firmer position in relation to the financial implications than is the case with the bill that is before us today.

Following the discussions that I propose to have with the convener of the main subject committee that is dealing with the bill, I will come back to the committee next week with suggestions on how we can identify a way forward. I hope that that is acceptable to members. I am anxious not to lengthen the discussion much longer, but I will let Fergus Ewing in.

How very kind. I agree with the basic premise that we need to take our time and do our task properly. We cannot do that at the moment because we lack information, principally from the Scottish Executive. As Mr Cullum told us, the Executive's deadline for the submission of its memorandum is the end of this week. I presume that that will contain its estimate of financial costs.

I hope that at some stage we will have the opportunity to take oral evidence from the Executive. I also hope that we will be able to ask those who submitted evidence to the committee whether, in the light of the evidence—particularly the evidence that we heard today from Michael Matheson—they would like to reconsider some of their figures. I am thinking in particular of COSLA and other witnesses from whom we have heard.

When the convener brings back his proposals on how we take the matter forward, I hope that we will obtain from the Office of the Deputy Prime Minister the data and information that, by definition, it must have obtained in reaching its conclusion that the intervention would cost between £1,000 and £2,000 per case. I think that that was the figure that Mr Matheson mentioned. It seems absurd that we have not received from the Executive the information that is available from its counterparts in the UK Government. That is particularly so given the assurance that we are constantly given about partnership working between the Scottish Executive up here and the UK Government down there.

Mr Matheson might be able to give us the information that he has in that respect.

The study that was published last year contained a lot of financial detail. I will pass on a copy of the cost table that was provided by the researchers who carried out the report.

The only thing that I would say to the committee is that, if it decides to take further evidence, I would like an opportunity to respond to it.

I will need to identify the best way forward and discuss the matter with the committee soon.