Official Report 249KB pdf
Good morning and welcome to the Local Government and Communities Committee. The only item on the agenda is evidence from Stewart Maxwell MSP, the Minister for Communities and Sport; Mike Foulis, the director of the Scottish Government's housing and regeneration directorate; and Mike Palmer, the head of the Scottish Government's social inclusion division. Welcome, gentlemen.
I am happy to respond to that point. I apologise to the committee for the delay in responding. It should not have taken that long, and I apologise unreservedly for the length of time it took for us to respond. We can agree or disagree on the content of letters and responses, questions and answers, but the length of time it took to respond was unacceptable. I will endeavour to ensure that that never happens again.
Thank you. The committee welcomes your comments. The letter was an attempt to engage with you in an honest way before we asked you to give further oral evidence on the issues. We accept your reassurance and thank you for it.
Briefly, if that is allowable, convener. I hope to provide some context for the draft budget.
I will come back in on specific issues, if that is okay, convener, but first I want to ask about the process. One of the briefings that we have received mentions the financial figure for making 1,000 extra, or equivalent—whatever they will be called—police officers available in communities. I realise that that matter is not a direct portfolio interest of yours, but the concordat mentions that that money
I suggest that you write to the Cabinet Secretary for Justice if you want details on issues relating to the justice part of the budget, but the answer to the general question on the impact on my portfolio of other changes in the budget is that I do not see why such changes should impact on my portfolio. We have set out clearly the money that is available and our plans and ambitions in our portfolio work over the next three years. I do not see why plans elsewhere would have an adverse impact on our plans.
I am talking about £54 million that will be transferred from a local government heading to a justice heading.
Which particular heading are you referring to?
Money will be transferred from local government.
Where will the money come from, in your estimation? I am sorry—
That is what I am asking. Where will that money come from? Will that transfer of money make an impact? The transfer is mentioned in the concordat and the papers that are attached to it. Neither justice nor local government are your direct interests, but given local government's strategic role in respect of housing and regeneration, will the money that will be transferred from the local government heading to the justice heading for the purpose that I mentioned impact on the amount of money that will be available for the worthwhile elements of your responsibilities?
No. I do not believe so.
Okay. That is interesting.
I am interested in what you said about affordable housing. I think you said that 30,000 affordable houses are not required. I want to refresh your memory. In February this year, you and 47 other MSPs signed a motion that stated:
Jim Tolson was elected only in May. Perhaps he will find over the four-year period that he will take views when things come along that are based on information that is at hand. I still absolutely agree with most of the motion that he quoted. We are still committed to the 2012 target, and we will do everything we can to maximise the number of affordable homes that are produced over the next three years, with the available budget. I have already said that, on a like-for-like basis, there will be a 19 per cent increase in the affordable housing budget compared with that for the previous spending review period. I therefore think that we will do exceptionally well on housing over the next few years.
As you said, the Bramley report appeared last year. You had the chance to take it on board before you signed the motion. You said that, with the comprehensive spending review, there is a change in the overall budget for the next three years. The big concern of many housing bodies throughout the country is that a large proportion—56 per cent—of the housing budget will go to local government. The money is not ring fenced and it is open to competition from other pressures in local government. Can you assure the committee and the housing sector that, with the budget that they have received, which is not ring fenced, local authorities will be able to achieve the targets on which you have touched, including the 2012 target?
I apologise if we are talking at cross purposes, but I do not recognise the figure that you have just stated. There has not been a 56 per cent cut in or removal of the housing budget, it has not been transferred to local government, it is still ring fenced and it is still under Government control.
I will check the point later.
You said that 30,000 homes for rent are not required. If there will not be 30,000 homes for rent, how many will there be?
We do not think that 30,000 homes for rent are necessary. Our intention is to build more affordable homes in the next session than were built in the previous session. One problem with the figure of 30,000 is that it relates only to homes for social rent. We believe that there is a much broader picture that includes low-cost home ownership and private sector and mid-market rent, to which I referred in my opening remarks. Affordability is not restricted to rent, but includes low-cost home ownership. People's ambitions and aims relate to a broader tenure picture—not all of them want to rent socially. Although we see that there is a clear need for more houses for social rent to be built, we do not believe that the figure is 30,000.
The campaigners focused strongly on homes for rent. I do not argue that there should not be a mix, but if the figure for rent is not 30,000, what is it? We all agree that it is important to have good-quality homes for rent. How many should there be?
I agree that it is important to have houses for rent, and we have signed up to producing and building more of them, both through the housing association or registered social landlord sector and through councils. Clearly, that represents a change from the past few years. However, until the consultation on "Firm Foundations" has taken place and we have discussed our intentions and the outcomes of the consultation with the Convention of Scottish Local Authorities and those in the RSL sector, it is not helpful to set a target for or to put a number on the number of houses for rent that are needed. Before we do that, we must know the level of sign-up by RSLs and councils and exactly where we are going. The situation will become much clearer after the discussion on the consultation document has taken place.
I am not sure which motion Jim Tolson was referring to, but I know that the petition that candidates of all parties were asked to sign before the election did not mention 30,000; it merely called for a significant increase in the availability of social housing. How will the Government's policies on the right to buy influence the achievement of useful outcomes in the provision of social rented housing?
We have made it clear that the right to buy has had positive and negative consequences. There have been a lot of positive outcomes: many people have been able to own their own home for the first time—people who wished to do so have taken that opportunity—and mixed communities have been created where they did not exist before. There has also been a downside—the removal of those houses from the social rented stock. That has been a difficulty for many local authorities over the past few years.
You have made points about new-build properties and the right to buy. What happens in the case of a tenant who has an existing right to buy in their present home who relocates? In my constituency, some high-rise flats might be demolished and the tenants of those flats—who have an existing right to buy—will go into a new build. As I understand it from an exchange with the First Minister in the chamber a few weeks ago, their right to buy will be preserved with regard to that new-build property.
That is correct, yes.
So your policy will apply only to new-build properties and new tenants. When councils build new homes that are tenanted by existing tenants, those people have preserved rights. Is that correct?
No, not necessarily. We are talking about a forced move. Those who are forced to move due to circumstances such as demolition will retain the right to buy; those who choose to move and take up the option of a new council property will not. New tenants will not gain the right to buy in a new-build property; those who are forced to move will retain the right.
Where do the cost floor rules apply? How many of those properties could be sold off in the first 10 years?
At present, those rules apply. We intend to change that so that tenants will not be able to buy those properties.
But they cannot buy them for the first 10 years because of cost floor rules.
The new rules that we propose—you have to remember that it is a proposal in the consultation document—will say that they cannot buy them.
They cannot buy them anyway.
What you said, with all due respect, was that you cannot buy them for a period of time.
For 10 years.
I know what the number is. We are saying that they cannot buy them. That is clearly a change.
It is a marginal change.
It is a complete change.
If someone is a tenant of a local authority for 25 years and the local authority builds new homes, will that tenant have to give up the right to buy if they want to get one of those new homes?
If they wish to take it and it is not a forced move.
So those long-serving tenants will not get access to the newer homes?
Of course they have access.
But they give up the right to buy?
They have access to those homes under the current arrangements. If they are renting a home from the council and they move to a new council home—which they are perfectly entitled to do—they will continue to be able to rent that home from the council.
We debated this issue in the first session of Parliament. A lot of what we discussed with regard to tenants' rights et cetera was effectively constrained by the European convention on human rights. What room for manoeuvre does the convention give you on this issue?
It almost goes without saying that any proposal we make will be compliant with the European convention on human rights. I am sure that you agree with that. We have put out a set of proposals, including the one under discussion, for consultation. I believe that our proposal is a positive move. It has been welcomed right across the sector—by local authorities, by RSLs and by many of the campaigning groups. It is a positive change that will not take away the right to buy from people who live in existing properties, but it will give local authorities the confidence to build again.
I fully agree with the policy. My point is that the Scottish Government could not take away those rights even if it wanted to—not that it would. It is important to remember that there are other legislative authorities that we must take cognisance of.
If a Government sets a target that it does not achieve, that creates a problem. A target might sound good in a press release, but it must be based on the reality of the long-term outlook for housing. I must be honest and say that we have put out a consultation document that contains many radical proposals for change in housing. The fact that it is a consultation document means that we must wait and see what the responses are. We will work with relevant organisations and the Parliament to see what is required. Some of the proposed measures may require legislation. Only at the end of the consultation process will we be able to take a focused and clear view of the number of houses that it is likely we will be able to build. If you want me to give you a target, our ambition is to build more affordable houses in the next few years than have been built over the past few years. I am confident that we will do that, but we will have to wait to find out what the consultation responses say before we can talk about specific numbers.
I have a specific question on the right to buy, in which I have a genuine interest. I am interested in exploring the definition of a forced move. If a constituent of mine who lived in a house that was deemed to be overcrowded was offered a bigger, brand new house that their local authority had just built, would they not be able to exercise a right to buy, ultimately?
That is why we are having a consultation on our proposal. I look forward to receiving your input into that exercise so that we can discuss how the rules would apply. Our proposal has been genuinely welcomed across the country. If you have issues with it or suggestions about how it could be refined, I will be happy to take them on board. That is what a consultation process is all about.
I am trying to get a feel for the parameters that the Government is putting around its consultation. That will make it easier for people such as me and for the RSLs in my area to respond meaningfully. If they are to understand the context in which the suggestion is being made, they must know what the expression "forced move"—which the minister used—means. That is what I am trying to explore.
A good example of a forced move is a move that someone has to make because their house is being demolished. The position is fairly clear. If a person is forced to move, they will retain the right to buy. We are consulting on where the line should be drawn. We are keen to implement the policy. With all due respect, the purpose of a consultation is to find out the views of different organisations, individuals and parliamentarians on how to proceed with a policy. That is what we are doing. If you have a view about our proposal—it is clear that you do—I look forward to reading your submission to the consultation.
I was trying to ascertain the minister's view.
A number of genuine questions have come up.
Which I am answering.
As people become elderly, their health might deteriorate. If someone has to move out of a top-floor flat in an up-and-down house, will they lose their rights? Is that considered to be a forced move?
I am not sure that there is any point in repeating what I have just said—that we are consulting on the proposed policy. The consultation is about discussing the issues around the policy before we proceed to introduce legislation. That is normal practice and has been for many years. I am not sure what would be achieved now by trying to lay out the rules for legislation that may appear at some future date. We have laid out the policy, and its details will be discussed during the consultation. We will hear whether people support the policy. If they do, we will hear how they feel the policy should operate in practice. That is perfectly normal.
The issue is whether the policy is real or illusory. The category could be expanded to include the scenarios that Patricia Ferguson and the convener mentioned, and I can think of others. For example, if a member of a household becomes disabled, they are normally given a high priority in allocation schemes, and they may well be allocated a new and purpose-built house by the local authority. That would be similar to the case of an elderly person, which the convener spoke about. But would those situations be described as forced moves? If you describe as forced moves the situations that I, the convener and Patricia Ferguson have highlighted—she spoke about homeless people and overcrowding—you will end up with so many so-called forced moves that the policy becomes completely meaningless. It will just be window dressing.
I disagree, as you will be unsurprised to hear. The policy is not window dressing; it is a genuine attempt to deal with some of the problems of the right to buy while retaining some of its positive effects.
If you expanded the category of forced moves to include the situations that we have raised, the policy would become illusory. So many people would qualify as forced movers that there would be very few new tenants and new builds, and your object would not be achieved. Do you agree?
That is a hypothetical question, which—
It is a commonsense question. If you have a principle but then ring it with many exemptions and qualifications, you can destroy the principle, can you not?
We do not intend to destroy the principle.
So the category of forced moves will be limited.
I think that we have dealt with the right to buy, so I want to move us on to some of the substantial issues to do with affordable housing. You said earlier that the previous Administration did not meet its targets. That is not the case. You will know that Communities Scotland met its targets each year. We could have a debate about what the targets were, but Communities Scotland was a hugely efficient organisation. I think that its administration costs were 3 per cent.
You asked a number of questions. The wider role budget was not cut; that is not true. On the setting up of the independent regulator, there is a clear intention, which I am sure that everyone would welcome, to keep regulation at arm's length from Government. That is the correct thing to do. There are no costs over and above what is already out there, so I do not know what you were referring to.
You will know that the wider role budget has in fact been frozen at the same level from 2008 to 2011, which is a cut.
The budget is being maintained, yes.
It is being cut, unless we are assuming a zero rate of inflation. I do not think that anyone is pretending that having the same money in 2011 as we have now means that the budget is the same.
You are correct to say that the wider role budget is flat over the next three years—it is £12 million, £12 million and £12 million. Interestingly enough, the spend in the current year is approximately £10 million. The amount of money that we are allocating is above the current spend levels, so that is probably not a cut.
So it is administered by the Scottish Executive.
Yes—by the Scottish Government, apart from in relation to Glasgow and Edinburgh, which you know about.
Yes, we know about that.
Yes.
I hear what you say about building 500 or 600 new council houses. Do you accept that the vast majority of houses for rent will continue to be built by housing associations?
Yes.
Can you say what proportion 500 or 600 houses will be of the annual build of social rented housing?
No. I think that we are back where we started. As I said, we will wait for the outcome of the consultation process. At the end of that, we will have an idea of the kind of numbers that we believe are achievable. However, I am confident that we can achieve a higher rate of delivery of houses in the next three years than was achieved in the past three years.
You say that it is not possible for the efficiency savings that you describe to kick in until April 2009, so we cannot calculate the efficiencies for April 2008.
We can make progress in year 1, but I agree—
How would that be?
I agree that progress will be much steeper and that the efficiencies will be greater in years 2 and 3 and beyond.
So, although the documentation says that the efficiency savings will not start until April 2009, that is not the case—they will start from April 2008. Aside from the issue of making progress, stuff will be in place from April 2008—there will be efficiency measures that can be seen on the ground.
As I have laid out, we cannot turn efficiency savings on and off—Johann Lamont knows that from being a minister previously. The amount of efficiency savings that we drive through will increase as the years go on.
But you now think that efficiency savings will be made from April 2008.
We are implementing changes from next year, which I think will assist. That will be progress.
Can you give one example of those changes?
Sorry, Johann, but I have a couple of supplementary questions, from Kenny Gibson and Bob Doris.
I welcome the strategic approach that the minister has told us about. In the next 24 hours, I will present him with a document from a substantial housing provider in my constituency—a housing association that has won the award for the United Kingdom social housing provider of the year. The organisation will be able to make efficiency savings of about 7 per cent, which will enable it to provide 170 houses for the public sector with no additional cost. Does the minister welcome the fact that the proposal will include a significant tie-in with the private sector, so that not only will houses be provided for rent, but mixed communities can be created, with owner-occupied housing alongside social housing?
Absolutely. We have made our position on that pretty clear. We are ambitious not only for the social rented sector, the low-cost home ownership sector and the private rented sector but for the private bought sector, too—the marketplace in private housing. The Government firmly believes that mixed tenure is the best way forward for many of our communities. Most people agree that ghettos, at either end of the spectrum, are the last thing that we want. We want people and children to mix in communities, as that is good for social cohesion. I welcome proposals from anyone that allow us to work hand in hand with the private sector on housing—I look forward to receiving that document from Kenny Gibson.
This is difficult, because so much has been covered, but I will start off with a supplementary question on discussions that you have had or will be having in connection with the "Firm Foundations" document. On the right to buy, many concerns were raised over what forced moves would mean. What are you doing to encourage registered social landlords and local authorities to engage with you, aside from producing the "Firm Foundations" document and hoping passively that they spontaneously come along and make submissions to you? What work is the Government doing to ensure that they will come forward with information?
We have an alliance here.
Personally, I thought that it was appalling. I would be interested to work out why those people who have always had the right to buy have not bought their properties. There might be an issue there. While the right to buy is being reformed for new-build property, the minister could perhaps try to work out why those who have been living in properties over the past 10, 15 or 20 years have never exercised their right to buy.
You have made a lot of points, and I will start with the last one, about community-based housing associations. As I have said many times, I welcome the housing association movement, which provides a vital service in our society—and that of course includes community-based housing associations. We intend to bring competition into this marketplace, which we believe will drive down costs. I anticipate a positive outcome for people.
This is perhaps a parochial question—it relates to your statement about urban regeneration companies and the additional moneys that may be allocated over the years. Will the urban regeneration companies continue with their stand-alone identities and get on with their work, or will they be subsumed into the community planning process? I am thinking about enterprise companies' roles going to local authorities. I would be quite happy to hear that the same will not turn out to be the case in this instance.
The answer is no, that will not be the case.
Fine—there was some idle chat about that.
I am not aware of any idle chat or otherwise on that point.
Pleased to hear it.
I understand the argument that you are trying to make—
No, I am asking a genuine question. How will the cost be brought down when the evidence says that the prime reason for the increase in the cost of house building is the value and scarcity of land?
I genuinely do not believe that the scenario that you are asking about will come to pass or that tension between organisations will somehow drive up prices or have the unintended consequence of local authorities holding on to land and not releasing it for house building by others.
So you have looked at the situation and you are satisfied that the pressure on land will not increase.
I personally do not envisage the scenario that you asked about coming to pass.
Have any of your officials had time to consider the point?
It is clear that we need an increase in land supply. We are positing an increase in house building from the level of 25,000 per year, which it has been at for several decades, to about 35,000 in the middle of the next decade.
The local authorities will need to give up their ambition to build on the land and instead hand it to someone else.
I imagine that many local authorities will seek to build in partnership with others. The days of large monotenure estates are gone—the amount of land that would be needed for them is not available, anyway. The picture is of more mixed development. If a local authority had an interest in a site, that site would be more likely to be developed with partners for a range of tenures.
If we have given local authorities the right to return to building houses, that right must be meaningful, yet you suggest that they will not build houses anyway.
I am genuinely interested in pursuing the idea of a lead developer. How would that operate in practice? My area has several good registered social landlords, all of which might build properties at some point in a year, although occasionally they might not be building, for various reasons. However, I am conscious that they are geographically based and that their developments are not necessarily close to one another. Their timeframes for planning might be different; development could be held up by the need to decant people from a site, the weather and land availability—all sorts of issues could arise. Those RSLs will not always have money at the same time for a build, or they might not need to build in a particular year.
You said that RSLs would not necessarily have the money at the same time for a development, but we are going into a new way of operating, so that point will not apply.
Not all the RSLs' money comes from the Government—they raise money themselves, too.
I understand that, but I was talking about the money that comes from the Government.
Will the Government's role be to co-ordinate that?
To co-ordinate what?
The bringing together of diverse schemes throughout a city, for example.
The choice will be with individual associations in the RSL sector. If they wish to come together to bid for the money that is available, that is sensible, because they will be much more likely to obtain the money with which to build properties. We will not force organisations to do that, but it would not be sensible for an association to strike out on its own to produce a contract for four houses in an area where a bigger contract could be created that would allow houses to be built for less money. That would be attractive to housing associations as well as to the Government.
Builders are good not just at delivering value for money but at imposing penalties when something goes wrong. If, through no fault of its own, an RSL's plans were delayed for three, six or nine months because of a planning issue or unexpected land remediation, that could blow an entire scheme for several RSLs and make progressing that well nigh impossible.
I do not accept that. Problems arise now with the weather or with planning, so the problems that could come to pass will not change. I do not envisage the problems that you suggest.
Clearly, tackling homelessness is one of the things that motivates local and national Government in relation to the issues that we are discussing. One of the national targets is that all unintentionally homeless households will be entitled to settled accommodation by 2012. What more can you tell us about the central budget for tackling and preventing homelessness? What areas do you think it should cover?
You will be aware, of course, that that money has been transferred into the local government pot. It is the responsibility of local government to tackle the issues that you raised. We have rolled up that money into the overall local government settlement to enable local government to carry on with that responsibility.
Does the Government have a view on the problems that are faced by local authorities in relation to their reliance on temporary accommodation to tackle homelessness?
Like other members, I am disturbed by the amount of temporary accommodation—sometimes called bed-and-breakfast accommodation—that is in use. Clearly, we want to drive that down and give people security of housing. It is perfectly appropriate to use such housing in emergency, crisis or short-term situations—that will always be necessary—but we do not want to have people living in bed-and-breakfast accommodation for extended periods. That is why we set such ambitious targets in relation to building more houses. The only way to solve the problem is to build more properties for people to live in, whether they own them or rent them.
Before I ask you about aspects of the central heating programme and special needs housing, I would like to make a small clarification in relation to our earlier discussion. You seemed to question some of my statistics on the basis of my experience in Parliament. I am not sure whether you are aware of the fact that I bring to the table 15 years of local government experience, the latter four years of which I served in a particularly senior housing position. I would think that the important knowledge that I have would help me to quantify points that I make today.
Minister, with deference to Jim Tolson, I should say that, as Kenny Gibson is going to lead a discussion on fuel poverty and central heating later, it would be helpful if you could answer Mr Tolson's questions on those subjects at that time, rather than immediately. At this point, you could, instead, deal with his questions on special needs housing.
If that is acceptable to Mr Tolson.
I just want to save your breath, because we will return to those issues later.
I am, somehow, not surprised.
I want to pursue some of the issues around homelessness. I was concerned to hear you say that the way in which you plan to deal with homelessness is to build more houses. By that logic, you would be able to say how many social rented houses you would want to build. Part of the problem is to do with supply. However, do you accept that, as The Big Issue in Scotland and others have argued, addressing homelessness is about supporting people through transition? Can you comment on the concerns that have been raised by a lot of the groups that deal with homelessness about the decision to lift the ring fencing around supporting people funding in the local government settlement? I understand that you are prepared to consider reinstating that ring fencing. Can you tell us how that would work, when you would do it and how you would monitor whether it was necessary?
A number of people have expressed concerns about the removal of ring fencing from the supporting people budget. First, however, I absolutely accept that we need to do much more than just build houses; I was answering a specific question. Clearly, this is about preventing homelessness from occurring in the first place and supporting people if, unfortunately, it occurs. Many people are homeless simply because we do not have enough properties of the right type in the right places and, ultimately, we want to resolve that problem. Nevertheless, I recognise that there are other issues.
Can you confirm that you are willing to consider reinstating the ring fencing around the supporting people budget if its removal is shown to have the effect that people fear it may have?
I have no reason to suspect that that will happen.
I understand that you have said publicly to The Big Issue in Scotland that you would be willing to do that. Can you confirm that that is the case?
I said, and am happy to repeat, that we are working alongside local government in partnership to deliver all local government measures in terms of supporting people and in delivering housing services. Clearly, that partnership is based on the concordat that has been signed, the overall strategic objectives, the national indicators and outcomes and, beyond those, the negotiation with individual authorities on single outcome agreements. With all of that in place, I have no reason to suspect that there will be any problem in this area. I have no evidence—perhaps Johann Lamont has evidence—that any of those budgets are under threat. That being the case, I see no reason why ring fencing would be reintroduced. However, in any partnership, if one partner were to break the agreement that has been put in place, things would need to be reconsidered in light of any changes.
We all know that there is a tension around housing policy. Local authorities have long expressed concerns about the capacity to deliver on the homelessness commitment by 2012 because other parts of the affordable housing budget are under pressure. If local government decided, for example, that it was impossible to meet that target—I asked John Swinney this question in the debate on the spending review, but I did not get an answer—would that be a ground for reintroducing the ring fencing?
There are so many—
Let me just finish the point.
I do not accept that suggestion. I also do not accept the idea that homelessness is somehow low on the priority list. In the concordat and the national indicators and outcomes, there are clear lines to the effect that both we and local government are signed up to the homelessness target for 2012. Given that fact—and given the fact that the target is a legal requirement under legislation that the Parliament passed, so local authorities have a statutory duty to meet it—I genuinely do not see where there is a problem.
So you are absolutely confident that local government will deliver the target and that you have measures in place to deal with it by reintroducing the ring fencing if the target is not met.
You are putting words in my mouth. I did not say that. I said that the target is already part of the agreement between the Government and local authorities. The target is clear in the documents and indicators that we published and it is also clear in the legislation. That is why we will also discuss with local authorities how they will meet the target because, obviously, 2012 is not that far away. We will work with local authorities to ensure that we achieve the target, which is extremely challenging. No one else in Europe has such a challenging target on homelessness, as I am sure you are only too well aware. We will do everything in our power to ensure that we meet the target and local authorities are signed up to joining us in doing that. We have a strong commitment from both central and local government to the homelessness agenda.
To be fair, Jim Tolson was not in the room when we decided that I would lead on this area, but my questions will be quite similar to those that he has already asked.
I reiterate that, as I am sure you are aware, the budget settlement is extremely tight. Within that settlement, we have managed to maintain the budget over the next three years. If you are asking me whether I would like more money to spend in this area, my answer is of course I would, but decisions have to be made about how we split the money between competing priorities. A decision was made to maintain the budget at its current level.
The contractors and Energy Action Scotland have been saying that their concern is not about whether it is appropriate for some houses to have cavity wall insulation but about the fact that the grant is less than the cost to the contractor. Contractors are effectively being asked to do installations that cost them money, and the figure is becoming increasingly unrealistic, especially as only 1 per cent of warm deal homes are getting all the measures that they require.
There is no contingency fund as such for this area. However, it is true to say that, in future years, as in all previous years, in-year adjustments will be made to the budget. I cannot say at this point what those adjustments might be.
Indeed, minister—we can learn from examples south of the border and pick up best practice. I still think that economies of scale are important.
A pilot is continuing and the interim results are about to be published. I will not make any judgment on the basis of interim results; I want to wait until the full pilot is complete and we have the analysis of it, which will perhaps be in the middle of next year. However, the initial results seem to suggest that renewables are effective in providing warm, dry homes. Again, my remarks come with the caveat that we must wait for the full analysis at the end of the project.
The minister is correct to say that there have always been waiting lists for the central heating programme, but my experience is that they have been relatively consistent over the piece. For my constituents in Glasgow, the average waiting time has been about three or four months, perhaps with blips here and there when there has been a particular problem with a particular house type. I have to say that, recently, people have begun to tell me that they have been allocated installation dates in June of next year. Those people are without heating or hot water. There is a need to keep the matter constantly under review and to consider whether a pattern is emerging.
The particular difficulty in the Western Isles, Orkney and Shetland was that almost no installations had been done there. A lot of installations had been done in other parts of the country, such as the central belt, including Glasgow. I am sure that Alasdair Allan can confirm almost no installations had been done in the Western Isles or the northern isles. Clearly, there was a particular problem there. That is why we met Scottish Gas and individual MSPs to try to make sure that we drove things forward. I can say to you that that effort will not result in a transfer of resources. We met Scottish Gas to ensure that it could meet the current commitment, and the arrangements that are in place will ensure that that happens.
But the overall waiting list is growing.
As I have said, the average waiting time has remained roughly the same. We keep the matter under review and we and our officials meet regularly with Scottish Gas.
The figures suggest—and your officials can confirm this—that compared with what is happening now there have at times been as many as 10,000 installations taking place. Of course, there have been peaks and troughs. That was always going to happen, given the way in which the scheme began.
My question is about the overall settlement as it applies to programmes in your domain, particularly the central heating programme. You and other ministers are constantly telling us that the financial settlement is tight, but will you confirm that over the next three years the Scottish Government has at its disposal more money than ever before, both in absolute terms and when adjusted for inflation?
I think that at the very start I said that there was an average 1.4 per cent increase over the three years. I also pointed out that the increase on the previous three years was an average 4.3 per cent.
But that refers to growth rates in the budget. I am trying to get on the record the fact that the settlement that you have described as tight is in fact more generous in real terms than any settlement that any Government before or since the Scottish Parliament's establishment has had at its disposal to deal with the responsibilities of the former Scottish Office and the present Scottish Government. Is that correct?
The amount of money in the budget has gone up, if that is the question that you are asking.
And it has gone up in real terms.
However, the costs of what we spend that money on have also gone up. Given that, the settlement is the smallest and tightest that we have had since devolution. I am sure that you will accept that that is also true.
No, I do not accept the use of the word "tight". If I had more money in my pockets than I had ever had before, I would regard them as well filled, not tight. There is a difference in language here.
It depends whether your pocket has an extra penny or an extra pound. You would probably notice the difference.
Well, you might notice the difference between a housing and regeneration budget spend of £480 million in 2007-08 and a projected spend of £572 million in 2010-11. By my arithmetic, that suggests an absolute increase of well over 20 per cent over three years. Is that not right?
In my opening remarks, I said that there was a 19 per cent increase in SR 2007 over SR 2004. I hope that people welcome that increase in funding. It is a good thing, and it shows that this Government prioritises housing.
Well, we will come to that. However, what we have in a so-called tight financial settlement is nearly 20 per cent growth over three years in the budget that is under your command.
In this particular area.
In the areas for which you are responsible.
No, no—
Sorry, I accept that you are also responsible for sport and so on. But there is still a 20 per cent increase over three years.
In the affordable housing part of the budget.
Right. As I read the budget, I see that most of that increase applies to the affordable housing investment programme.
Yes.
Indeed, with regard to affordable housing, you appear to have more than 20 per cent growth over the three years.
No, I do not accept that. A number of other areas have received real-terms increases, so it is incorrect to suggest that it is only affordable housing.
If you look at page 106 of the budget, as we have done, you will see that all the categories are flat. "Housing Markets and Supply Policy/Research" is flat at £2.8 million; "Running Costs" is flat at £25.1 million; "Tackling and Preventing Homelessness" is flat at £0.6 million; "Central Heating Initiative" is flat at £45.9 million; "Housing Voluntary Sector Grant Scheme" is flat at £2.4 million; something called "Wider Role" is flat at £12 million; and "Community Engagement" is flat at £3.4 million. That is one, two three, four, five, six, seven—
You stopped at an interesting place—
Hang on a second. You have 11 budget headings, and I have just listed seven of them that are absolutely flat over the next three years.
I noticed that you did not mention regeneration, which is—
No, I did not.
You did not mention the equalities budget, which has substantially increased, and you did not mention violence against women.
We are looking at different pages. The equalities budget is not on that page.
You said the areas for which I was responsible.
Actually, you corrected me and referred me back to housing and regeneration, which is the area that we are concerned with, and I referred you to page 106 of the budget—which, as you are aware, has nothing to do with equalities. I am focusing on what the Government has decided, as a matter of choice and of policy, are its priorities. You are entitled to take such a policy position, and I am not saying that you are necessarily wrong—I am highlighting this point. The reality of the situation, with regard to all those budget headings, is that you have decided to put all the additional resources that are at your command into the affordable housing programme, and—to a lesser extent—into the regeneration programme. Everything else is at a standstill. Is that correct?
Effectively, yes. We are prioritising housing and regeneration. I make no apology for that.
That is fine. You are entitled to do that, but what you want to do—and what we have discussed—regarding central heating is set against the background of a deliberate policy decision that the central heating programme will not be prioritised relative to other areas. Any changes or developments that you want in it will come about because you have decided, as a matter of policy, that the budget for the programme is going to be flat, because you want to put all your resources into other aspects of your programmes. Is that correct?
£45.9 million is a substantial amount of money to spend.
Absolutely.
As you are well aware, the programme is demand led, and the demand is increasing. We could spend substantial amounts of money and still not achieve an end to the programme. There is a block on the amount of money that we have in terms of the ability to install systems and work in the area. We do not have an unlimited supply of central heating engineers, insulators and contractors to do the work, so we are limited by the amount of people out there who can do the work. We also have to ensure that the budget does not run away from us in terms of the amount of money that we spend on the programme, as it clearly might if we took the lid off it.
Accepting those propositions, and accepting that the programme is demand led, the likeliest outcome of having a flat allocation is that the programme's waiting lists and waiting times will increase over the next three years, as opposed to the situation that has applied in the period since the programme was instituted. Do you accept that waiting lists and waiting times will get longer as a result of your policy decision?
No, I do not accept that. I accept that a massive jump in demand would bring a new and different series of problems, and it would make it difficult to reduce the average waiting time.
I accept that there is always a waiting time, because customers' requirements have to be assessed and installation has to be organised. There is always a waiting time from application to installation; it is a practical issue of the workmen having to do the job. However, members are concerned that the waiting time will be extended not simply because of the time that it takes to assess the needs and do the job, but because the budget is cash limited and is flat over the next three years. We are trying to establish whether the budgetary decision that you have made means that it is more rather than less likely that the waiting time will be extended.
I do not believe so.
Well, we can come back to that.
I want to ask about the contract with Scottish Gas, for which you and your various departments have responsibility. The fact is that you do not know what the waiting times are.
Is that a statement?
No, it is a question. Is it correct that you do not know what the waiting times are?
No, we have information from Scottish Gas.
Well, there have been a couple of parliamentary questions on the issue from your colleague Brian Adam, and one of the questions in the committee's letter to you asked specifically for information on waiting times so that we could get to the nub of the issue. Those questions were all answered in your name, in various ways, but they basically told members to ask Communities Scotland or whoever, because information on waiting times is not held centrally.
I would have to be reminded of the exact nature of the questions and the way in which they were asked. I have a funny feeling that the questions were worded in such a way as to require the figures to be broken down, which we do not do centrally.
I think that that is the nub of the matter. In our casework, many of us talk about average waiting times in, for example, the health service. There is an average waiting time, but there is also a time that is less than that time, which is the actual time for installation. We would like to have that information. Our observation is that as you extend Scottish Gas's contract, the waiting list seems to be getting longer, but the quality of the package that is being delivered is not as high as it used to be. Can you explain that?
I do not know where you got that information about the quality of the package being not as high.
I can help you, minister. We have received a copy of a letter that McSence sent to you on the central heating programme and warm deal scheme, which goes through a number of the issues that have been raised previously. The letter gives the view of the contractors and the representatives of the contractors. It states that
Yes, I am aware of it and I understand where you are coming from. The reason for the change in the figure is clear. At the beginning of the programme, 93 per cent of the homes in which systems were installed by the contractors had no heating system or insulation at all. Now, the situation has completely reversed: more than 90 per cent require replacement systems. For the most part, we are putting systems into properties that already have partial measures in place, such as loft or cavity wall insulation. You are talking about like for like, but the situation regarding the systems that we are putting in has changed dramatically over the past seven years, which explains the decrease that is mentioned in the letter.
So the contractor is wrong.
No, but the explanation for the decrease is not that the work is not being done; it is that the insulating work that is being carried out now is very different from that which was carried out seven years ago.
It is the contention of the contractors, so you will be writing to them—
It is the contention of one single contractor, I believe.
A few weeks ago, Scottish Gas assured the committee that waiting times were improving and that it had a new system for doing the work. At that meeting, it was announced that Scottish Gas's contract had been extended. Given the increase in waiting times, do you regret that that contract has been extended?
No, I do not regret it. Officials and I—officials more often—have had on-going meetings with Scottish Gas to discuss ensuring that the length of time that it takes Scottish Gas to do its part of the process is shortened as much as possible. Scottish Gas has accepted that it needs to do much better—it gave the committee evidence to the effect that it has found ways of reducing the length of time that it takes for installations to go through its system. On that basis, and because Scottish Gas provided the contracted number of installations and promised to install the additional numbers before the end of the year, there seemed no reason—on the basis of the available information—not to extend its contract for a further year.
Are you confident that Scottish Gas will increase its 12,000 installations—1,000 a month—to 15,000? I read that the new money would allow a further 1,500 installations. What has been promised—15,000 or 13,500 installations?
Two things happened this year. As I mentioned earlier, I decided in the summer to put in additional resources, which took the figure from 12,000 to 13,500. Last week, the cabinet secretary announced an additional £7 million, which takes the figure from 13,500 to 15,000. That was done on the basis of discussions with Scottish Gas, as the managing agent, in which it assured us that it is confident that it can install 15,000 systems this year.
When were we first assured that Scottish Gas would install 13,500?
I believe that it was during the summer.
I ask because, four weeks ago, Scottish Gas told the committee that it was doing 1,000 installations a month, or 12,000 a year, which is why I was surprised and puzzled when I read in the press that the 1,500 installations that the welcome £7 million injection will make possible will take the figure to 15,000.
Prior to last week, the arrangement was that Scottish Gas would install 13,500—up from the original 12,000. The money was awarded to Scottish Gas and it agreed to put in 13,500 this year.
It is a matter of record that Scottish Gas told us that it was doing 1,000 installations a month, and 12,000 in total. That was only a few short weeks ago, so there seems to be a discrepancy. You are telling us that you expect Scottish Gas to deliver 15,000 installations by the end of the financial year.
Scottish Gas has assured us that that is perfectly possible, and it believes that it will achieve it by the end of the year—the end of the financial year, not the calendar year.
We may wish to raise that with Scottish Gas.
The modernising private sector housing budget for 2008-09 is £9.9 million, rising to £14.06 million in 2010-11. What will that budget be used for?
Can you repeat those figures for me?
They are on page 106 of the spending review document.
I see the line that you are talking about.
In cash terms, the budget will increase from £10.2 million to £15.2 million. I apologise for providing real-terms figures, as the document lists the figures in cash terms.
The additional money is part of the process of moving from the current assistance-based scheme to the new loans-based scheme.
What is the thinking behind the money's remaining ring fenced?
We are in the middle of the process of changing over from grants to loans. The money is ring fenced for part of the time, until we make that move.
Homelessness continues to be a big issue. You mentioned that there is a statutory duty on the Parliament to meet its homelessness target by 2012. However, I refer you to question S3W-313, which was lodged on 29 May. In your answer, which appeared promptly on 7 June, you indicated that the number of households assessed as homeless under the homelessness legislation has increased steadily over the past 10 years, from 24,700 in 1996-97 to 36,625 in 2005-06. I understand that there has been a further 10 per cent jump. In the convener's constituency of Inverclyde, the figure has increased from 250 to 510 over that period. Given that, at the moment, there are about 40 repossessions a week in Edinburgh alone, and that there is considerable unease about the housing market because of the Northern Rock situation and so on, is it realistic to believe that the Parliament will be able to meet its statutory obligation by 2012? You have put a significant amount of extra money into affordable housing, but is it possible or practical for us to meet the target?
I hope and believe that the target is achievable. I do not underestimate the challenge: you have set out some of the problems that we face. I believe firmly that if we carried on with the previous regime we would not meet the target, which is why there must be a radical change in how we deliver housing. As I mentioned, we will consult COSLA and local authorities on how they will meet the target, although those discussions have yet to start. Both we and COSLA have concerns, but the bottom line is that both of us have signed up to meeting the target.
I understand that a tremendous amount of work is being done to meet the target but, if a year or two hence it does not look like the target will be met, will there be a way of putting in additional resources from contingency or other funding sources to ensure that the target is met?
We believe that the 2012 target is achievable. I hold to the view that we can meet it throughout Scotland. One reason for our making changes is to drive more efficiency into the system, so that we get more for our money. We have also increased the overall budget for the next three years. In combination, those measures will allow us to meet the target.
I am conscious that we have a range of issues to explore further, but time is not with us. I have a set of questions about how you calculated the baseline for the affordable housing budget. There is at least a credible suggestion that the current spend has been unnecessarily deflated, which makes the cut look less dramatic and the later increase look more dramatic. Perhaps we will have another opportunity to meet the minister to address the budget—I do not know.
On your question about the Scottish index of multiple deprivation, we will continue to use that measure. We are considering that in relation to the allocations.
Will the money be distributed to local authorities on the basis of the Scottish index of multiple deprivation?
Yes.
So it will not be rolled up with the normal local government budget.
It is not rolled up with the local government budget. We have brought it into the single deprivation fund, which is ring fenced and goes to community planning partnerships.
So the money will go directly to community planning partnerships and not to local authorities.
Yes.
So it goes to community planning partnerships.
The money is in the overall local government settlement, but it is ring fenced and will be used by community planning partnerships.
It is ring fenced for a year.
It is ring fenced for two years.
So why does the budget document have "1" after "Community Regeneration Fund"?
I think that that relates to the three funds.
That is a footnote.
Right—so the money will go to the community planning partnerships for two years. Therefore, projects such as the one that I described in my community can still reasonably expect to get funding that reflects local need and deprivation, subject to communities saying whether they want it. Will that remain?
Yes—I presume so.
You will know that the community planning partnerships have a strategic delivery role in relation to European moneys. Will that role remain if deprivation funding is secured for the partnerships? Is there is a way of match funding with European moneys?
To be absolutely honest, I will have to get back to you on that. I do not know the detail of that particular point, but I see no reason why that cannot happen. Perhaps my officials can help.
There is nothing to stop the money being match funded with money from any other funding stream. The fund is meant to be a catalyst investment fund. The overall direction of travel is for the fund to catalyse and lever in wider investment from whatever source. There is no reason in principle why that cannot be European funding.
So we will be able to clearly identify and track at least £116 million of community regeneration spend within communities via community planning partnerships. The fact that it is caught up in the section dealing with general settlements for local authorities does not make any difference.
The fund is £145 million a year. It is still ring fenced and they will have to report back on it.
I want to pursue this line of questioning to get clarity about how the money flows down. You are bringing together the three current funds into a single fund, which, as I understand it, is being incorporated into the local government settlement but is being ring fenced and is to be deployed by community planning partnerships. Does that mean that the Scottish Government will determine the amount that each community planning partnership gets from that fund or will you determine each local authority's share of the ring-fenced fund and leave it to each local authority to divide it among the community planning partnerships within its area? Will you clarify for me who has what responsibility?
There is one community planning partnership in each area. You asked about local authorities dividing the money among the different community planning partnerships in their area.
We have a sub-division of neighbourhood partnerships and so on. The nomenclature changes so often, minister, that I lose track of the acronyms. Something that was called the west Edinburgh community planning partnership, which covers organisations in my constituency, currently has a budget of something like £700,000, which is described as coming from the community regeneration fund.
There might just be differences in the way that we describe things. The money will go to a higher level than the one that you describe—it will go to the Edinburgh area and it will be up to it to decide how the money is distributed locally.
Right, so the money goes from the Scottish Government to the councils—albeit that it is ring fenced—and then to the sub-divisions within the council area.
The money goes to the CPP in Edinburgh, for example.
And then goes down to the next level.
Yes.
Okay, that is fine.
The fund is £145 million. That is what it will be over the next three years in each year.
Is it? There was no budget line for it. I thought that the spending review said that all the figures would be allocated as part of the local government settlement once an overall package deal had been done with councils.
We announced that it is to be £145 million in each of the years.
Oh, I see. I must have missed that, because it is not in the budget document.
I cannot remember. We did announce that it is to be £145 million.
Right, so it is £145 million, flatlined over the next three years.
It is £145 million in each year.
Like all the other flatlined budget lines.
It is not like all of them.
It is like the majority of them, except for one very generous one.
Thank you, David. Thank you, minister. There are a couple of outstanding points on which our clerks will write to you. We appreciate your attendance.
I will look at that again and respond as quickly as possible to any further letters that you wish to send on questions that you did not reach today.
Thanks for your attendance. Thank you, everyone.
Meeting closed at 13:05.