Official Report 323KB pdf
Agenda item 3 is the budget process 2005-06. At its previous meeting, the committee decided to take evidence on objective 1 of the communities portfolio, with a specific focus on affordable housing. Therefore, we will take evidence today on affordable housing from two panels of witnesses.
It is a first step towards a significant increase in provision and the most significant increase for a considerable period. It is worth clarifying that the SFHA's calls for around 10,000 new homes a year to be built relate to affordable rented provision. The welcome figures that the Executive has announced in the past few weeks will result in around 6,400 rented houses a year being built by 2007-08, from a figure that is well below 5,000 at the moment. That is a real step increase.
On the day that the announcement was made, you issued a press release, which stated:
I will allow Nick Fletcher to comment, because that press release was from the Chartered Institute of Housing in Scotland.
The press release came from us. Our position is slightly different from that of the SFHA. We welcome the extra investment that is coming into affordable housing; it would be churlish of us not to say that, because the investment is significant. Our concerns arise when we look at the number of houses that that investment will deliver.
So you stand by the comments in the press release.
Yes.
I was going to ask a similar question. I know that many committee members have an interest in the matter.
The Executive clearly recognises that there is an issue about the supply of affordable housing. That is shown by the fact that it has been conducting a review since about last October, the interim findings of which were produced in July. I believe that the final findings are expected to be produced fairly shortly.
You have made your position clear. Given that you do not agree that the level of investment that the Executive has set aside for affordable housing will be sufficient to meet the demands that you forecast, what level would be required to meet the affordable housing target that the Chartered Institute of Housing in Scotland has set?
In our submission to the comprehensive spending review, we examined the number of extra houses that we are likely to need. As I said, we are looking at about 7,000 additional houses, on top of what is being built. It is difficult to get behind the figures because figures are not easily available from the Scottish Executive and Communities Scotland, but we did a number-crunching exercise using what figures there are and we reckon that an additional £331 million per year should go into the affordable housing budget. That is significantly more than the Executive has been able to make available.
When we passed the 2003 act, it was recognised that resources would have to go with it if we were ever to meet the demands that would be generated. It is easy to sit around this table and say that we need more money and more houses to be built. It is easy for you to say that as well, but, with respect, the communities budget is huge. What do you suggest to us, as a committee, that we should cut or transfer from the budget to achieve the level of affordable housing that you suggest? It is clear that the matter is about money and resources.
The matter is about money and resources. We should not cut the communities budget or shift things within it. As Shelter Scotland said, in real terms there has been a £100 million cut in the communities budget for the next three years. Shelter Scotland has not been able to get behind where that cut is, although to some extent it is down to the changes in the supporting people funding. We would like the underspends in other parts of the Executive's budget—which always happen, because not all budget headings achieve their full spending plan—to be transferred to the affordable housing budget so that, in time, we can deliver more affordable houses. That applies particularly to underspends on health and education, because housing has a big impact on those areas.
Would that be sustainable? If we want to make a substantial difference, should we rely on underspends? Should you not be looking for greater commitment rather than relying on money that might not be spent by other departments?
We would like greater commitment, but to be realistic we will have to wait until the next spending review to get that—the Executive will not change its position now. However, where there are opportunities to bring extra money into affordable housing let us take them, because we want to deliver more affordable housing so that the 2003 act can be delivered. Unless the Executive goes back and looks again at its comprehensive spending review, we will have to work with what we have and work towards the next review, making a stronger case to ensure that we get even more investment at that stage.
I imagine that the Scottish Executive has taken account of the market, including what land is available and what trades are available to build new houses. Have you done any research with the industry to find out whether it can meet the targets that you would like to see being set?
That is an important point. There are limited trade skills out there to deliver on the targets. We need to look at the overall number of houses that are being built in Scotland—I am not sure what the figure is, but it is around 19,000 to 21,000—and then to look at the proportion of those houses that are in the affordable rented sector. We could then redistribute the skills that are being used on building housing at the upper end of the market, which is not necessarily quite as important as housing at the lower end of the market is. There may be a need to redistribute skills and to look at how the sector approaches the housing market as a whole.
I read in your submission that
That could be the case. We drew that scenario from a piece of work that we undertook to look at a range of housing indicators on the level of supply and levels of housing need. Based on the modelling that the CIH announced, by 2017, we could get to the point at which the total number of households in priority need would not be much lower than the total number of lets that were coming on stream each year. The scenario raises significant questions about how we deliver affordable rented housing and how we meet housing need in the future.
In talking about budgets, it is easy to talk about a few million here and there. What would be the most effective way of spending the budget in order not only to supply affordable housing for the homeless but to meet demand?
We are presented with the problem of not having unlimited budgets on which to call. When we look as far ahead as we have discussed in the past few minutes, it is important to consider other ways of increasing supply that may have less or even nil cost.
My question was about the allocation of expenditure in the budget.
The expenditure should be going into the provision of affordable housing by way of housing associations developing affordable housing. Before we came into the meeting, David Bookbinder and I were discussing the fact that we do not make enough of the point that the public subsidy that goes to housing associations or registered social landlords also brings in private finance. That makes it quite an economical way of delivering housing.
I want to explore the issue a little further. David Bookbinder mentioned the fact that some of the targeted homes will be for low-cost home ownership. Are you concerned about linking the development of affordable housing with the provision of homes for ownership? I am thinking of the balance of private finance that is required and the need for the developer to turn a profit.
The balance is interesting. The provision of 5,000 low-cost home ownership houses over the three-year period is a significant number. We are interesting in exploring with the Executive how that might be divided up. Options such as making available cash sums of between £10,000 and £15,000 for people to leave a social rented house and buy privately—along the lines of the original tenants incentive scheme—could be seen as good value for money.
To develop the theme further, one of my bugbears for many years has been that homes from low-cost home ownership schemes can, in a short period of time, end up being sold on the open market, which affects communities terribly. I know that the Executive has upcoming proposals on shared equity and I hope that they will include a proposal to allow ownership to remain in the public sector. That would be possible; for many years, housing associations and various others have come up with ideas for that, but they have never been taken on board. Has either of your organisations provided strong submissions on the Executive's shared equity plans that detail how that could be done?
The SFHA recently had discussions with Communities Scotland. We get the impression that serious proposals are being developed that will enable retention within the public sector. It looks as though a fresh approach is being applied to address the disappearance of shared ownership as people staircase up. We may be able to address that and to do something different.
Our concern is that we should be able to recycle the subsidy that goes into low-cost home ownership. Too often, we are not delivering good value for money in terms of encouraging people into home ownership. The right to buy is an example of that. We are doing work at the moment to see whether we are getting value for money from the right to buy or whether we need alternatives.
I do not think that my original point has been addressed. There is concern that the amount of low-cost home ownership houses that are part of the three-year plan will drive the location and types of development schemes, because of the finance involved. Are you worried that that will dictate where the affordable rented housing is located?
There are land supply problems in all sectors, which affect, in particular, the provision of affordable rented housing. At this stage, given the scale of provision that is planned, we are not worried that that will impact much on the provision of rented housing.
Do the witnesses want to comment on the quality or accuracy of the statistical information on which the Executive based its assessment of and projection of needs for affordable housing?
As I said, one of the key documents on which the Executive relied was the report by Professor Glen Bramley. That was an important piece of work, which tried to model housing needs throughout Scotland. Some of the work was used in England as part of the Barker review. Professor Bramley's work represents an important contribution to attempts to set out a baseline, but we must be aware that it contains a number of assumptions and, as Professor Bramley himself has pointed out, a number of caveats. We are concerned that the Executive might have relied too heavily on the work, without taking account of the assumptions that it makes and we are concerned that perhaps there has not been enough focus on local authority local housing strategies. I acknowledge that not all such strategies are excellent documents; some have not been successful in developing the case for affordable housing needs. However, there is some danger of the Executive sidelining local housing strategies and relying on national research, rather than helping local strategies to develop into the strong strategic documents that they have the potential to be, which was the intention of the Housing (Scotland) Act 2001.
To back up Nick Fletcher's comments, I will give an example of the anxieties that many housing bodies have about the Executive's reliance on Glen Bramley's research. The research suggested that, purely in terms of the number of houses in a given area—let us say Glasgow—there might be a surplus of houses and that there is certainly not a net need. Professor Bramley said that the quality and let-ability of the houses were not factors that he took into consideration. The location of the houses was not considered, either. In effect, that suggests that if people are in housing need in the west end of the city and there is a surplus of houses in Castlemilk, the people need only to move from one part of the city to another. The consequence of that approach would be to assert that there are enough houses in Glasgow and that we do not need to build houses there. If we transpose that approach to a rural setting, people might move almost 100 miles but remain within the same local authority area. Our anxiety was that the needs figures in the research were based on the notion that, in at least half of Scotland's local authorities, there is allegedly a surplus of houses.
It is important to get the approach right. Nick Fletcher pointed to a situation in which the supply of affordable housing could become so tight that 100 per cent of allocations would have to go to people who are homeless. An area that I know well is nearly in that situation. There must be a few such hotspots in Scotland. Are you satisfied that the Executive is taking such matters into account?
Emphasis has been put on responding to homelessness needs. I am not sure that the Executive is yet convinced of the dilemma that will arise as the proportion of lets to homeless households increases, which will certainly happen when the Homelessness etc (Scotland) Act 2003 starts to be implemented, as Nick Fletcher said. There is a lack of recognition in the Executive of the fact that people might not be allocated a house unless they are homeless.
That was coming through loud and clear at my constituency surgery in East Lothian last night.
At the moment, our impression is that it is realistic. When one examines current figures, one is either examining the number of approvals that were made in a given year, or the number of completions. That always makes life difficult when one is making comparisons. At this stage, we have no reason to question the suggestion that 6,400 new rented homes can be provided by 2007-08.
Although I think that the target is realistic, it needs to be considered alongside the Executive's proposals for changing the planning system and the outcome of the recent consultation on Scottish Water.
We are coming to that later.
I have a brief question for Nick Fletcher. In your answer to Christine Grahame's first question, you were concerned about the projected numbers of affordable houses and in your report, "Is Anyone Home? Modelling Scotland's Affordable Social Rented Housing to 2012 and Beyond", you express concern that current building targets might not be being met. What are the implications of those concerns for the future use of the budget?
We are still waiting to get back some information on exactly what the output of houses has been. The Executive's target was to approve 18,000 affordable homes and its new target is to approve 21,500 affordable homes. We want to find out how many affordable homes are actually being built each year. Our initial concern was that those numbers of houses might not be being built, but we will have to wait until the Executive gives us the figures on that. If that is the case, it will mean that there will not be enough houses to meet future needs. If it transpires that, although we have the plans in place to approve the houses, we are not managing to build them for some reason, that situation will have to be examined. Our initial thinking was that that was the case, but we are trying to obtain the exact figures from the Executive to be certain about whether our assumption was correct.
Mr Fletcher, I have a point of clarification about evidence that you gave earlier on figures and data. It might be necessary to check the Official Report to establish what you said, but I think that you said that figures were not readily available from the Executive or Communities Scotland. What figures are not readily available? Should they be available? Do you remember saying that?
Yes. The fact that the budget changes year on year makes it difficult to examine the Executive's budgets when we are preparing our submission to the comprehensive spending review. It is difficult to analyse the budget, to consider the issues in it and to make comparisons between what has happened in different years, because the way in which the budget is set out changes year on year. Even the figures in the annual evaluation report and those in the initial CSR budget report do not always match, so it is difficult to get underneath the figures to find out where they are coming from. I am speaking monetarily.
So it will be difficult for me to do that, too.
Yes, although you are probably cleverer than I am.
I want to return to the right to buy. The position of SFHA is clear. Its written submission says:
Yes. Until there is a huge increase in supply through the new-build programme, we must consider any other possible way of retaining what we have and of keeping supply going in that way. Building houses for rent each year, even at the increased levels, but seeing so many houses sold, seems to be the wrong way of doing things. We can start only at a certain point with the supply issue. In one sense, we cannot stop the rate of sales under the right to buy. Even if that right ended tomorrow, there would still be plenty of sales over time, as the right will not be taken away from those who have it. It seems to us that even, for example, stopping the right to buy new lettings tomorrow would have a beneficial impact on supply long before 2012, including supply relating to the homelessness legislation.
Supporters of the right to buy would counter that by saying that the same level of total housing need will exist, so the issue is about new build and not about which sector of the housing market the houses end up in. They will still be there. Even when they are sold, they will still be lived in. How would you come back on that?
We would like to think that the need and aspiration that many people have to buy their house can be addressed in other ways. We have already considered the possibility that some low-cost home ownership moneys will be targeted at cash-incentive or similar schemes, and there are signs of that happening. We believe that the research shows that supply figures are indeed affected by right-to-buy sales and that there are other ways of addressing home ownership needs and aspirations. However, there is no doubt about the impact being slow—it is gradual. People buy houses and do not leave them straight away, so we are not talking about an immediate impact on supply. However, over time, the 400,000 houses that are lost to the rented sector in Scotland will have an effect on the ability to house people who are in housing need.
I have a question for David Bookbinder. Major changes were implemented to the right to buy as a result of the Housing (Scotland) Act 2001. I remember being involved with David Bookbinder at the time. Has the SFHA had time to do any research or gather information on the impact of those changes?
The question is timely, as we are conducting work at the moment. The committee will recall that the key implementation of extending the right to buy to housing association tenants has been delayed until 2012. Obviously, a number of housing association tenants have the right to buy anyway, as a result of stock transfer in the past, but the full application of the right to buy to the housing association sector, or to that part of the housing association sector that is not charitable—members will know that that part is exempted anyway—will be in 2012. At the moment, we are seeking data from our members about what they think will happen at that time, how much stock they predict that they will lose and over what period of time, and what effects that will have. As members know, even without an abolition of the right to buy, associations have the power in the lead-up to 2012 to make an application to the minister for a further period of delay to the introduction of the right to buy. What the political climate will be at that time and whether ministers will exercise the power to allow further suspensions is uncertain, but at the moment, we must assume that that might not happen and that large amounts of housing association stock will come under the right to buy in 2012.
Obviously, the SFHA has no concrete evidence of that as yet because it is has not kicked in.
It was 2002.
So we have had a wee while to see if there has been an impact. Is the maximum discount £15,000?
Now you are testing me.
From a distance, our assessment of the local authority sector is that the majority of sales that will have taken place will still be old sales, by which I mean that they will come under the old discount system. I think that there will have been very few sales under the modernised right-to-buy system so far.
It would be interesting to get information on that.
There are several issues that we still have to explore and members need to keep their supplementary questions short and succinct.
We do not seem to be able to discuss housing without considering the water and sewerage infrastructure, so it was no surprise that both of your organisations included it in their submissions. Like other members around this table, my constituency has problems, particularly in Strathspey where there are now serious development constraints—I have had a series of letters from Dr John Hargreaves.
There are probably two sides to that. One is that there is definitely an issue around communication or joined-up thinking on implementing developments. The other is part of the consultation on Scottish Water and it is about Scottish Water's priorities. It has had to have priorities set for improving the quality of water and as part of that, there might have been a danger of the prioritisation of new water and sewerage systems falling behind.
My point was that there is no point in setting out a local housing strategy unless it has been discussed with Scottish Water and it has built the water and sewerage infrastructure into its forward development and investment plans.
That is right and I heartily agree with you. If we have the opportunity to amend the 2001 legislation, which set out the basis for the local housing strategies, we should say that planners and Scottish Water, as well as registered social landlords, should be part of the development process for strategies so that they know what is going on.
I think they have to be part of the process. Representatives of Communities Scotland visited Poundbury in Dorset yesterday at the invitation of HRH the Prince of Wales. It was interesting that there were no water or sewerage problems there. This is probably outwith your remit, but why are water and sewerage not a problem in developing and building houses in England but a huge development constraint here?
That is beyond my knowledge. I think you have to consider the history of water provision in Scotland and the previous investment that has gone into it. Perhaps that has had an impact. I know that a key issue has been improving the quality of Scottish water, which has required a lot of money and has perhaps taken away resources and attention from the other issues that need to be addressed.
My question is directed at the Scottish Federation of Housing Associations. In your submission you expressed a concern about any increase in the contribution that developers might make to the wider infrastructure provision, given that funding would have to come through increased rents. Will you elaborate on your concerns?
What seems pretty certain to come out of the current Q and S III—the Scottish Water investment programme consultation process for 2006 onwards—is that developers as a generic breed, if you like, will have to contribute somewhat more than they contribute at the moment to the provision of infrastructure. Housing association developers that are building rented houses could contribute more only through getting an increased grant from the Executive or Communities Scotland, or by increasing rent. We do not believe that increasing rent is tenable, given the crucial emphasis on keeping rents affordable. If grant is to be increased, we are anxious that it is not taken from the already-announced programme, which is aimed at building houses rather than contributing to significant infrastructure costs. If the Scottish Water programme, which as you know is funded just from customer charges, is to be bolstered by taxation money or Executive money to assist housing developers to meet the infrastructure costs, we would not want that money to be pulled out of the existing development programme, which would just mean that fewer houses were built.
In essence you are saying that extra money needs to be given to offset the extra cost attendant on future infrastructure development?
Yes. On the big picture, it is hard to assess how much money will be needed per year—obviously it will be spread over a long period. We would not want to see the money come out of the existing development programme.
Do you think it would be sensible for separate budgets to be used in a sort of serviced land fund initiative, so that if developers in partnership with housing associations were going to build on a particular area, the services would be provided by some other method of funding? That could bring rents down.
I confess to not having a great knowledge of how those systems would work. You are right that a lot relates to how private developers and housing associations will work together. We know from considering current planning issues that that will influence the provision of housing in both sectors.
My question, which is for David Bookbinder, is on the transfer of development funding responsibilities to councils. We have discussed that previously in the committee, but why is the SFHA still concerned about it?
One great historical advantage of having a national body to oversee the spending programme is that although it is inevitable that some building programmes slip, sometimes they can also be brought forward. There are plenty of examples of that. Many issues affect the placing of bricks and mortar on land.
How does that sit with the argument that housing should be the responsibility of the community where it is really needed, rather than a national responsibility? Local authorities prepare housing strategies that highlight the housing that is needed. If, for example, money had been allocated to a housing association in Cumbernauld and it was not ready to build—although I do not believe that that would happen—surely North Lanarkshire Council could give that money to a housing association in Coatbridge that had a programme. If we plan, other programmes should be available. I have seen such developments in Lanarkshire. Why cannot a similar arrangement work in other local authority areas?
Our anxiety is that history suggests that such arrangements have not always been made. Some Government-funded programmes that have been channelled through local authorities, such as the rough sleepers initiative, the empty homes initiative and the new housing partnership programme, have ended up underspent in any given year.
Has the SFHA made inroads into the subject and had discussions with local authorities to allay some of its fears?
We have discussed spending programmes with Communities Scotland and the Convention of Scottish Local Authorities for some time. We agree on some matters but not on others. We agree with Communities Scotland colleagues that a national programme has business advantages. We believe that it allows money to be spent more efficiently.
The step represents a major policy change. How do your members feel about it, Mr Fletcher?
The decision was a major policy change. It was set out to an extent in the 2001 act and it ties into local housing strategies. David Bookbinder has a point about underspends, but it is going too far to say that we should not transfer responsibility and that we should go back to Communities Scotland, which was Scottish Homes, because that situation had problems, too.
Do you have any suggestions to help improve the general provision of housing? I am thinking of some of the past promotions that were not as successful as people hoped, such as that on shared equity and co-ownership, which seems a good idea but which never really took off. Could we do that better in some way? Land banks have hitherto been the prerogative of developers. For many years in Edinburgh, James Miller owned all the land and had a stranglehold on it. Is it possible to use a land bank system more to the public benefit? Is it possible to use the planning system to specify that big developments must include a certain percentage of social rented housing before they receive planning permission? I am interested in any constructive points on those suggestions or on anything else that would help us.
We are not clear whether some of the changes to the planning system that are necessary would require legislation or a different way of using the existing powers. You mentioned the present system by which developers may make available a proportion of a private development for use as social rented housing. That system is an important contribution to the provision of affordable rented housing and there are signs that its use as a planning policy is on the increase. However, we caution that it cannot be seen as the only way of procuring affordable rented housing because it is not the right way in which to lead the changes. An obvious example is that of luxury developments in rural areas, where two or three units may be available for affordable rented housing, even though the development is in the middle of nowhere and one needs a car to live there. There are many reasons why that system can fail. If the developer and the housing association are together at the earliest stage, with the local authority's input and co-ordination, such partnerships can work, but they are not the only way.
I thank the witnesses for coming. They have given the committee helpful information on which we will reflect during our deliberations on the budget.
Meeting suspended.
On resuming—
I welcome our second panel of witnesses. With us, we have Ken Ross, who is the chair of Homes for Scotland's planning policy committee. I understand that members might have been expecting Allan Lundmark to join us; unfortunately, he has been taken ill. We are grateful to Mr Ross for standing in at such short notice. Also present is Derek Logie, the director of the Rural Housing Service.
I apologise for not presenting you with a recent submission, but I spent most of last week on Iona, trying to get some houses built.
Did you succeed?
I hope that we are in the process of succeeding. The four houses that we are trying to have built will make a big difference to the small community on the island.
We welcome the increase, but it is not enough. The committee would not expect me to say anything other than that of course, but when the increase is spread over 32 authorities, you will discover that we are talking about just more than 100 extra housing units over a three-year period. That demonstrates that there is not enough money to support the needs that have been identified.
You have answered most of my question. Derek Logie said that 26 per cent of the relevant funding goes to rural Scotland, and I understand that there has been a £15 million increase in resources. Is that enough?
The issues for rural communities are distinctly different; the thresholds about which we were talking relate primarily to urban areas. Fresh initiatives are needed and we must work together on ways to try to solve the problem. The Highlands and Islands face particular issues, which must be considered in a fashion that respects their scale. We have to respect, as was said earlier, that four houses on Iona makes a huge difference, and that keeping them available in perpetuity as affordable units is important.
In Strathspey, most housing developments are of about 200 houses. How can we get best value from the budget without huge developments, and how can we have developments that are sensitive to small villages?
The reality is that housing associations find rural housing very difficult. Rural Stirling Housing Association told me that it cannot make any development of fewer than 10 houses stack up financially, even with the grant that it receives from Communities Scotland and the money that it can lever in from private finance. Even when housing associations do not have to factor infrastructure problems into the build equation, they find it difficult to build fewer than 10 houses.
Christine Grahame has indicated that she wants to ask a supplementary. I ask her to keep it succinct, and to follow on with her next question.
My succinct question—which was put to me when I was being briefed on this issue—is whether, in the case of sustainable communities in rural areas, enterprise companies should be involved. I believe that they are not involved in housing strategy at present. That is part one of my succinct question. Part two concerns land banks. People buy up land in picturesque areas, sit on it, and then build millionaires' houses. We have heard about it before, and it happens in the area I represent in the Borders. What can we do to stop it? Can we have compulsory purchase? Can we have a law that says that if a developer does not do anything for five years, we can take the land back from them for social housing?
On planning, we would like to see the development in Scotland of an initiative that exists in England called the rural exceptions policy, whereby permission to build is exceptionally given on land where there is affordable housing need. We would also like to see the freeing up of land banking money. Many communities that I work with saw the Scottish land fund as being a great way of getting hold of money to buy a bit of land to sit on. When, eventually, they did get money for housing, that land could be used to enable a housing association to develop in their community. The Scottish land fund has subsequently decided that it will not use its budget to help communities in Scotland, but wants its money to be spent on things other than housing. Communities are now looking for all sorts of ways in which to get money to bank land that becomes available. For example, the community on Iona that I mentioned has identified a site that it could get, but it is having difficulty getting money from the Scottish land fund to buy the site and to secure it. We would like some of the money that has been committed to housing associations to be given directly to communities and community trusts in order to enable them to hold such land for the future.
That would apply to the south of Scotland, too, I hope; it tends to get overlooked.
In the south of Scotland, we would need Scottish Enterprise's remit to reflect Highlands and Islands Enterprise's social remit.
Is the £15 million increase in resources that has been allocated to rural areas this year sufficient to address the problem of affordable houses? I think you said that the number of houses that would be built over three years is 100. The question of infrastructure costs does not concern only the Highlands and Islands; many rural areas have high infrastructure costs. Would you describe the allocation as a drop in a bucket, as a bucketful, as three pails or what? I do not want to lead you to your answer, of course.
In some respects, to have one budget paying for another did not make sense. Scottish Water's priorities have to be sorted out and Scottish Water needs to recognise its contribution to rural development and to sustaining rural communities. As David Bookbinder said, Scottish Water's priorities relate to water quality. It is right for that to be a priority, but Scottish Water is crucial to sustaining rural communities.
The SEPA situation really requires to be addressed. The problem is that SEPA has adopted a policy and a standard that is proving to be an impediment in all communities, whether they are in the east end of Glasgow, in the Borders or somewhere else in the south of Scotland. We are having great difficulty with SEPA. Technically, we can resolve issues with Scottish Water in many instances, and developers who work with housing associations are prepared to undertake whatever is necessary, but SEPA is proving to be a real problem. It is incumbent upon the committee to address that, which comes back to the issue of cascading the policy base. SEPA engages with us, but not meaningfully. It has an agenda that is, basically, anti any form of development.
Could I suggest that we write to SEPA—which will not give evidence—asking it to respond to what is being said? I do not think that we have yet had any evidence on this matter.
That is something that we could pursue, although it is not necessarily appropriate to do so in the context of the budget. We could more appropriately deal with it in our deliberations on planning legislation. I ask the clerks to note that.
I have a question for Ken Ross. You said that developers should have the right to supply low-cost home ownership without the use of an RSL, such as a housing association. How would that unit of low-cost home ownership be sustained?
There are many ways of doing that. We are considering why, in general, increasing the supply will help to drive down the inflation that currently exists. The industry is now operating in a system that is itself inflationary. We have been working to develop methodologies with a number of authorities by creating real burdens in titles and by working together with local authorities. For example, we are involved in a development in the centre of Glasgow, which we are specifically targeting as key-worker accommodation. There will be a cascade of key workers. If the accommodation is not taken up by them, people who work within a 5-mile radius will be targeted, then people on the waiting list and then the general public. My people say that we will never get past the key workers because there will be a queue as long as my arm for that accommodation.
Are you saying that developers can do that with no form of grant benefit from anywhere?
Yes, absolutely. We should not concentrate solely—as some authorities unfortunately do—on provision by registered social landlords. Although such provision is excellent, it does not meet even 25 per cent of need.
Do you depend on getting land very cheaply? I am just trying to get my head around how you can manage to do that, still make a profit for the developer and have a low unit cost in the first place. You must be getting the land very cheaply from the local authority.
No. We respect authorities' wish to put land to mixed use where we think that to do so is good planning. For major releases, developers are often able to do that where economies of scale exist and where we have worked with the local authority to ensure good planning that incorporates a proportion of affordable housing, which is normally about 15 to 20 per cent. We build that provision into our land acquisition and we factor it in so that the land that is identified for affordable housing is sold at a price that is discounted compared to the general marketplace; we work with the local authority to deliver affordable housing.
I am sorry if I seem to be pushing you, but I have to rush away. I stopped working in rural housing 10 years ago, but you seem to be saying exactly what I was saying 10 years ago, which is very frustrating.
I recently read a report that Mark Shucksmith produced in 1984—20 years ago—that said exactly what we are saying.
God. I was saying it then as well.
It is not surprising, considering what has happened. I do not want to hark back to the right to buy, but the right to buy has been a significant factor in rural areas. Over the past 20 years, 96,000 houses in rural areas have been sold and 31,000 have been built. It does not take a genius to see that we are running to stand still. In fact, we are not standing still—we are going backwards. The level of investment that is required to make up for what has been lost is considerable and will be considerable until such time as we are not selling houses any more.
As well as the development and planning constraints that exist, are there constraints on unit costs in rural areas that those who are funding the developments—Communities Scotland, the Government, or whoever—do not take on board in considering the difficulty of developing in rural areas, even with regional variation add-ons and so on? Do they allow for localised services, such as septic tanks and sewage treatment?
It becomes a numbers game. If you build 50 houses in Lochgilphead, you are delivering your spend and your units within Argyll, but it does nothing for Tayvallich or Crinan or the other small communities in the area, which each need four or five houses. The money will be spent there because it is easy to do so as land and infrastructure are available and the unit costs can be kept down because there are economies of scale. Our concern is that in sustaining small rural communities, the contribution that spending a little bit more makes to the shop, the school and the community as a whole has to be recognised.
So we do not look at the bigger picture.
No, which is why housing is crucial within the rural development agenda and must be placed centrally, along with social justice.
Ken Ross touched on this issue in one of his replies to Linda Fabiani. Does the industry have capacity issues in terms of fulfilling the Scottish Executive's commitment to constructing new homes? Is there the capacity to respond to the geographical focus that is required to address demand in areas such as the south of Scotland, greater Edinburgh, Inverness and the north-east of Scotland?
We can overcome the problems. There will be difficulties, but I give as an example the situation in Ireland which, with a population of just over 4 million, is building just fewer than 80,000 new houses this year. With a population of 5.3 million, we are building just more than 22,000 houses. Ireland's growth over the past three or four years has been dramatic, but with the expansion of the European Union it has looked for resources outwith the country.
I am glad to hear that health and safety is important to you. We will return to the issue of whether the industry has the capacity to meet the demands that are placed on it. I am not an expert on Ireland, but I know that it has huge problems with the drift towards the greater Dublin area and with trying to arrest that movement. However, that is for another day.
I have a more general point. I represent a largely rural constituency and it is good news that we are beginning to address the problem that has stacked up in some of our more remote communities. I suppose that it was inevitable that villages near popular golf courses would become attractive as far as the right to buy is concerned. There are rural communities on my patch where practically no local authority or housing association stock is left, which compels people on lower incomes to move out of the area. It is important that we reverse that trend.
I work with communities all over Scotland and the only community that I have ever been to where I encountered such nimbyism was in East Lothian.
I suspect that you might begin to find it elsewhere, which is why I am flagging it up.
Things are changing in planning. The recent consultation on planning for rural development has considered ways in which we could free up the development of housing in the countryside by, for example, removing the correlation between getting planning permission on a house and establishing whether that house will be for agricultural or forestry use. We need to recognise that people do other things to make their income in rural areas and the new guidance will look more favourably at enabling the development of housing on greenfield sites for people who are working in different areas.
I draw from that that you think that there is a case for planning authorities to be proactive in identifying areas where there is a need and, if necessary, to face down nimby-style objections.
Yes, definitely.
Currently, we regulate and control matters but we do not encourage and facilitate anything. We need a change of culture in the planning system to enable that to happen. In the recently published Scottish planning policy guideline 3, "Planning for Housing", the Executive identifies or suggests that long-term settlement strategies should be identified for each community, not just the cities.
If I may, I will bring us back to the budget that the Executive has set for new build. Previous witnesses said that the number of new units that is to be provided is insufficient for the demand that is predicted. If we put aside for a moment the assertion that large subsidies are not necessary for low-cost home ownership, on which we are agreed, is the budget realistic for the number of units that you hope will be built?
I am concerned about whether the number of units will be built. I have some sympathy with the answer that David Bookbinder gave earlier to Cathie Craigie's question about whether the local authorities are capable of delivering. Sometimes a misunderstanding can arise, in that authorities think that an oven-ready product is available and that, if one project cannot proceed, something else is sitting on the shelf and can be plugged in quickly. If funding is devolved to local authorities, we are concerned about whether all of it will be used, and used effectively, on an annual basis; we are concerned about the lead-in time of assembling sites, getting the necessary consents and resolving the various infrastructure issues associated with Scottish Water, educational facilities and roads. If an authority is unable to utilise funds on one project, it needs to have a queue of other projects that are capable of coming forward in order to utilise the funds.
Your concern is more about the practical hurdles that have to be overcome than about the size of the pot.
If the pot is insufficient, we are concerned about how needs and demand will be met.
I back up what Ken Ross said. I spoke earlier about the increased costs of small developments in small rural communities. If the Executive wants to achieve the given number of units for the given amount of spend, it will not go for small rural developments but will opt for the larger schemes in larger villages and towns that allow it to achieve that kind of spend. The only way of achieving those aims in small communities is to make a substantial increase in the low-cost home ownership element of any development, as that is the way of bringing in more private money.
I have a question on the point that Ken Ross made about funds being insufficient. Most organisations welcomed the huge amount of funding that the Executive announced, although I accept that we are all guilty of saying that funding is never enough. I would like the industry to be able to meet the challenges that are out there.
We are actively working to encourage people into the industry. Quite often, we have a problem in doing that; indeed, I have to say that construction is not always the most attractive of professions. I think that that is a cultural issue—people like to talk about "my son the doctor", not "my son the joiner". When we have advertised apprenticeships, we have been appalled at the lack of take-up. As a result, we are trying to work closely with local authorities and enterprise agencies on the issue. After all, most local authorities will work with developers and enterprise agencies to provide employment opportunities for youngsters in any major project.
My ears pricked up when you said that funds were insufficient. How would you cope if the minister were to say this morning that, after listening carefully to the evidence from the SFHA and the Chartered Institute of Housing in Scotland, he had accepted that their figures are correct and that he should be investing all the additional money in additional units?
Are you talking about how we would cope with building those units?
Yes.
I should clarify what I meant when I said that funds were insufficient. I recently took part in a local plan inquiry in which we debated the issue of affordable housing. The housing needs assessment identified that 413 units a year needed to be built in the local authority area, but the money from Communities Scotland would have funded just over 100 units. Simply to meet the needs of that community, we would have needed four times the funding. That is why I think that the funds are insufficient.
Am I right in saying that the industry would find it difficult to cope if more money were available?
Not at all. We would be delighted to have the opportunity. I should perhaps highlight a particular example.
The convener is looking at me, so you will need to highlight it very quickly.
Years ago, in 1981, we were building fewer than 100 new houses a year in Glasgow. The industry is now sustaining an average output of between 2,500 and 3,000 units a year from that standing start. I remember that, when I addressed the planning committee at the time, a councillor said to me, "Son, son, where are they going to come from to buy your hooses?" I said, "Give us the land and we'll build the houses. We'll put our money where our mouth is. Give us the chance. Challenge us to do it and we'll build them." Perhaps now I should also add, "Give us the funds and we'll build them."
So it is not quite so simple.
If our policy is to build as many houses as possible for people to buy, to provide as many houses as possible for social renting and still to allow builders to make a reasonable but not extortionate profit, how do we attack the issue of the infrastructure? Does the Executive have to invest more in Scottish Water? Do we have send the Black Watch and the tanks into SEPA? Do builders and developers accept that they will have to provide more infrastructure on the land that is being built on or does the Executive have to provide more funds to allow the social rental sector to pay its share of the infrastructure costs? How do we tackle that problem?
Extra funds have been allocated from the Scottish Executive to Scottish Water to enable development in rural areas. I cannot remember off the top of my head how much has been allocated, but I think that it is £40 million. That is welcome and will go some way towards relieving the blockages in many parts of rural Scotland. However, we do not think that that is sufficient; there needs to be an additional amount.
Issues relating to education, roads and other elements of infrastructure are essential. Affordable housing requires to make a similar contribution to the contribution that mainstream housing has to make. That must be respected in the funding that is provided by the Executive. Scottish Water's analysis indicates that more than £1 billion of investment is required. Scottish Water has a backlog of many decades' investment and it is being affected by an interest burden that it has had to provide for, which is a problem that the English water companies have not had to face. We have to take such issues into account.
Thank you for joining us today and for your evidence. I am sure that, in our next session, with the Minister for Communities, many of the points that you and our first panel members made will be reflected in committee members' questioning.
Meeting suspended.
On resuming—
I call the meeting back to order and suggest that members who are on the telephone should conclude their calls. Patrick Harvie should terminate his call or leave the committee table. I ask all members to show the committee some respect in future. If you need to make calls, you should do so outside the committee room.
Thank you for your welcome, convener. I in turn welcome you to your new position. I look forward to working with the committee. I was pleased to hear the last bit of the evidence from the previous witnesses from Homes for Scotland. I think that you received evidence from the Scottish Federation of Housing Associations, with which I have had a meeting in the past month, and the Chartered Institute of Housing, which I will meet soon. I was going to introduce my officials—thank you for doing so for me.
Thank you very much. I am sure that committee members appreciate your comments. You touched on a number of issues that my colleagues will want to pursue with you further.
The Scottish housing quality standard is an important feature of the housing landscape in Scotland. As we said in the debate two weeks ago, the twin thrusts of our policy are to increase the supply of affordable housing and to improve its quality. That certainly concentrates the minds of local authorities. The route that they take towards reaching the housing quality standard is up to them, but they know that they have to reach it.
Are you confident that those local authorities whose long-held position is that they want to retain their housing stock and that perhaps even have a good record as landlords will have sufficient money in their budgets to allow them to retain their stock and meet their targets?
It might be that some councils cannot meet the quality standard without community ownership. That is entirely possible because capital and borrowing are required and councils have to be able to sustain that borrowing. It is the rents that have to be able to sustain that, so meeting the target will be difficult for a high-rent, high-debt authority. We know that that was the position in Glasgow although community ownership was attractive to the council for other reasons, and Edinburgh is not fundamentally dissimilar. In a high-rent, high-debt situation, it might be that community ownership is the way to achieve the scale of investment that is required. I certainly could not say that every local authority will definitely be able to meet the quality standard without community ownership.
Do you know how many councils could take advantage of prudential borrowing? If they did that and rents were increased accordingly to service that debt, how would that tie in with benefit issues, given that housing benefit comes from the UK Government? Have there been discussions between appropriate departments about the effect of that on the block grant?
The officials might want to answer that in more detail. It would probably be the lower-rent authorities that would go down the prudential borrowing route, which would not have the implications for housing benefit that there might be if a high-rent authority went down that route.
It would in the overall—
It would in the overall scheme of things, but prudential borrowing is not a concession to Scotland; it is a United Kingdom arrangement and obviously social security is tied into the general prudential borrowing regime throughout the UK, so no specific Scottish factors are involved. Quite a few authorities have increased their borrowing as a result of the prudential regime, but it is early days and we do not have hard-and-fast figures. Perhaps Mike Neilson has something more specific to say about that.
A number of authorities have the scope to borrow more without raising rents because they are in a relatively comfortable position. We will have a good picture across all authorities in April next year because by then they are all due to produce delivery plans for meeting the housing quality standard. That will be the critical stage.
I take you on to target 6, which relates to antisocial behaviour in which the committee has taken a considerable interest in the past. The target will require minimum standards for the provision of core services to deal with antisocial behaviour by March 2006. Much of the resources to allow local authorities to meet that target will be managed by the local authorities and concerns are being expressed about the constraints that are being placed on the authorities and about whether they will be able to meet the targets. Which services are included in the target?
I have some difficulty with that because, as members know, I no longer have responsibility for that area—indeed, I have never had responsibility for it—so you might want to call Cathy Jamieson to the committee to ask her about that.
I will just add one point because I used to be responsible for antisocial behaviour at official level. The critical point is that the figure for antisocial behaviour initiatives in the 2002-03 budget was zero. We are talking about new programmes, which in the current year and next year are being built up to steady state. The view was that the funding that is allocated should be able to cover the new activities in relation to community wardens, antisocial behaviour hotlines, local authorities' response teams and other such areas.
The committee might want to raise some of those issues with the Minister for Justice before reaching conclusions.
I want to ask about cross-cutting involvement in improving communities. Will the minister give an indication of what his department hopes to achieve and how other departments will help? For example, does the Scottish Executive Development Department provide encouragement and help to people to start small businesses, community businesses, social enterprises, small co-operatives and so on, or does the Scottish Executive Enterprise, Transport and Lifelong Learning Department do that? Are there sufficient resources for that and for matters such as education and health in communities that need more help?
You raise many areas that we could talk about, but I will start by considering the social economy, in which area we are lucky to have an expansion of the budget. You will have heard about futurebuilders Scotland; decisions are imminent about how that significant fund of £18 million over two years will be distributed. The initiative has been warmly welcomed by the various social economy organisations, big and small. I was proud to meet one of those organisations last week to discuss some of the issues. The social economy is an important area and a social economy unit is to be established in Communities Scotland—Ian Mitchell, who is sitting on my far left, will be involved in that, so he might want to comment.
That is helpful. The draft budget and "Building a Better Scotland: Spending Proposals 2005-2008: Enterprise, Opportunity, Fairness" seem to contain different figures for the percentages of non-housing money. Are you happy that there is enough money in the budget and that you will achieve the targets?
I think that I might have dealt with your point about the percentage of non-housing money when I said that fuel poverty and homelessness had not previously been included under housing. There might be other factors, but I think that that is the main factor that explains the difference in the percentage figures. There is also a healthy increase in the money for affordable housing.
I will move on to fuel poverty. The minister announced—it was reported widely in the press—that he intended to write to power companies to urge them to lower their prices for Scotland's poorest pensioners. As someone who has campaigned on fuel poverty for a long time, I welcome that. If the fuel companies do not respond to the request, how will you ensure that pensioners are not in danger as a result of inadequate heating in the winter months?
We have an ambitious target on fuel poverty, which is to eliminate it by 2016, and we will take every action that we can to achieve that. The details of the future fuel poverty programme have not yet been announced and we have not come to final conclusions on it, although in targeting the money that is available to reduce fuel poverty, we will try to have the biggest hit possible. We will provide more information on that when we reach our decisions.
Under the central heating programme, when we install central heating systems in the houses of eligible people, as well as putting in insulation measures, we also undertake a benefit check on the applicant to ensure that they maximise the take-up of available benefits for their circumstances.
I am aware that that happens. I am also aware that a number of organisations are involved in the issue, not just the minister's department. I welcome the continued commitment in the budget to achieving our goal. The central heating programme and the warm deal have been a success story, but I agree that the story is not yet complete. I have long encouraged previous ministers to extend the central heating programme to include pensioners who have inadequate or partial central heating systems and I hope that that will happen.
Officials can give more details or may correct me if I am wrong, but I understand that the main part of the change is to do with part of the existing budget being transferred to the Glasgow Housing Association. As members know, central heating was to be part of the association's community ownership programme. The central heating commitment was also slightly delayed in respect of other local authorities, but I think—Mike Neilson or someone else will be able to give more details or will contradict me—that the most substantial part of the reduction from 2006-07 to 2007-08 is to do with the ending of the grant to Glasgow on the basis that all the houses in Glasgow will have central heating. I ask the officials whether that is basically correct.
That is correct.
The reduction in the budget also reflects the fact that the programme is delivering, in that the targets have now been achieved in the local authority sector, except in Glasgow, where we are still working. We continue to work on the private sector side, too. The reduction reflects the fact that we are delivering what ministers set out to deliver at the outset of the programme. As the minister has said, future targeting is now being considered.
I want to return to the minister's letter to the electricity companies and the mains gas companies, which is a welcome initiative. It would be interesting to know what the response is.
That is certainly an issue. I will have meetings with companies in the near future, and we will certainly take up the issue with them.
I invite Christine Grahame to ask her succinct question about fuel poverty, and to follow on with her questions about affordable housing.
My succinct question is: have you had any replies from the power companies? Which ones have replied? What did they say?
I have seen at least one reply asking for a meeting, which there will be. That reply was from Scottish and Southern Energy.
So there has been only one reply so far. How many power companies—
I have seen one reply. I must be careful, because although I try to see all the letters that come to the Executive, I cannot promise that I see all of them immediately. I add that qualification. I recall seeing the reply that I mentioned, but that is not to say that other replies have not come in that I have not seen.
No doubt you will tell us about those replies as soon as they arrive.
As in all other areas, the experts do not all agree on matters. Officials will want to say something, as most of the work was done before I was around, but I know that a great deal of work went into the matter.
I simply want clarification. I am not an expert in the matter, but the CIHS says:
We simply have a disagreement. Of course I have respect for our experts in the field—Bramley and the CIHS—and I have had dealings with them for a long time, so I look forward to discussing the matter with them. The reality is that there are different analyses that come to different conclusions. To some extent, I am repeating myself, so it might be helpful if Mike Neilson or another of the officials supplements what I have said.
I will add only two points. Waiting lists are not a reliable way of examining net housing need, because people are on them for a long time and we get lots of duplication. We recognise that they contain information about demand, and that is factored into Bramley's work, so it is included in the analysis. We are asking for perspectives on Bramley's work from all the bodies from which you have taken evidence so that we can refine that work.
That was the CIHS's comment. It has said that you will not hit the target in 2006 and will miss it by 2,000 homes. We will just have to come back to the matter in 2006 and find out who is right.
There is obviously a disagreement, as there is on the other issue. Perhaps James Hynd has something to say about that.
As a delivery agent responsible for hitting the target, Communities Scotland is monitoring it closely, and we are bang on target to hit it. Sitting here at the moment, I can say fairly confidently that we will deliver 18,000 new or improved homes over the three years.
We keep using the term "affordable housing". Is there an agreed figure for what is affordable and what is not? We all know of cases of people who are in properties that are nominally affordable but are far from affordable if somebody in the household gets a job that means that they are not eligible for full housing benefit. It is a bit of a trap.
There is a general definition, but I do not think that there is a specific definition of affordable housing as being a rent under a particular amount. Perhaps Mike Neilson has some details on that.
It would be helpful if we could get a note on that.
The existing definition is this:
It might be helpful if we could get a note on that theme, because it is an important issue.
John Home Robertson raised an important point. I get the feeling when we talk about affordable housing that some of us are talking about rented housing and some are talking about low-cost, first-time-buyer property. When I speak about affordable housing, I usually think of property for first time buyers, and I do not include rented stock. With the Scottish Executive and the different organisations that represent housing interests, we must agree on what we are talking about. I am not necessarily looking for an answer, but there is confusion.
That is an important point. Until I was asked the question I had not really thought about it. I suppose that in my head affordable housing relates to social rented housing plus low-cost home ownership. That is my practical definition, which is perhaps different from yours. When we are talking about the figure of 21,500 houses, that is what we are talking about.
Yes. Social rented housing and low-cost home ownership are combined in that figure.
It would be useful to have a clear idea of what is an affordable rent and what is regarded as low cost.
There is no difference.
There should be.
I realise that some of the disagreements about the 2012 date might concern the right to buy. As you know, we are committed to delivering to Parliament our report on the effect of the right to buy by September 2006, in order that stock can be taken of it in the light of the significant changes that were introduced through the Housing (Scotland) Act 2001. We will consult stakeholders on the content and structure of the report and the process for its preparation. I hope that that provides reassurance that we did not just pass the legislation and now we will forget about it.
But do you acknowledge that there are areas where we are losing affordable rented housing faster than we are replacing it and that, given that some such areas are already in severe difficulties, it might be necessary to adopt special measures to correct the balance?
My point is that they have the option of applying for pressured area status if there is a big problem.
The problem already exists; it is too late. I know of villages on my patch where no affordable housing is left. How do we get it back again?
I do not think that it is too late for anybody to apply for the status if they want to. Actually, I think that an application has been received.
Just one?
There is one. There could well be more.
We will have to see how many applications are made for pressured area status and how the Housing (Scotland) Act 2001 protects communities that are in danger. This morning, we heard quite a bit of evidence from the Chartered Institute of Housing in Scotland and the SFHA that the right to buy is having an adverse effect on the number of houses that are available for rent. In a debate a fortnight ago we heard the same thing.
The main research work focuses on the report for 2006. Existing tenants retain their existing rights; new tenants will be getting new rights. Inevitably, the effect is modest early on, as a relatively small number of people will have the new rights. It looks like there has been a bit of an increase in right-to-buy applications, almost as a result of the announcement of the new arrangements, despite the fact that the people who already have rights are not losing them. That effect seems to be levelling out a bit, but it is too early to say what the overall impact of the new arrangements is, because the number of people concerned is so small. Furthermore, they will only have been tenants for a relatively short period.
The Chartered Institute of Housing in Scotland has voiced concerns about the fact that the current building targets that the Executive has set might not have been met. It would appear that the institute is having difficulty in getting the relevant information from the Executive. Are you in a position to inform us whether or not the targets are in place and are being met?
I cannot remember the exact words that he used, but I think that James Hynd said a few minutes ago that he was pretty confident that we would be meeting the targets that have been set. I think that that was for 2006.
Yes.
The proportion of the housing budget that has been committed to the provision of affordable housing has increased substantially. Is that due to the transfer of a substantial number of houses, or are there cuts elsewhere in the budget that have allowed that increase to go ahead?
No, there are not cuts elsewhere in the budget. Extra money was put into affordable housing from the spending review. There is £40 million of spend on new affordable housing for 2006-07, and there is £83 million for 2007-08. The biggest increase is to do with the money from the spending review. However, the situation is more complicated than that. I referred to extra money, which does not appear directly in the housing lines. At the risk of confusing matters, I ought also to mention the substantial sums of money for community ownership. For reasons that the committee will understand, that money does not always get spent within the expected timescale. The good thing is that the money can now be held over and spent in subsequent years. In fact, there is more money in the community ownership budget this year than is being spent. The money for that budget can now get spent over the next three years, which gives a further boost to what can be spent on new affordable housing. There are a series of reasons for that increase but, as far as I can see, none of them is to do with cuts somewhere else in the budget.
Staying on the subject of affordable housing, but moving on to rural areas, we heard evidence earlier from Derek Logie of the Rural Housing Service. In the first few minutes of his remarks, he claimed that we were spending less on rural housing now than we were 10 years ago. How did the Executive decide on the level of funding that will be used specifically to tackle the problems of affordable housing in rural areas? Would you care to comment on the remark made by Derek Logie this morning?
I am surprised by his statement. As I said at last week's question time, spending on affordable housing in rural areas in Scotland is £80 million, which is a 91 per cent increase since the start of the Parliament, when it stood at £41 million.
Perhaps the committee would like to investigate the issue further.
Under the heading that relates to delivering sustainable and affordable housing, the spending plan shows a real-terms reduction over three years of 1.3 per cent, which is a reduction in monetary terms of £8.17 million. How can you talk about increases when what is happening is that there is a reduction over the period?
Which particular line are you looking at?
My information comes from the Scottish Parliament information centre researchers.
I was talking about the affordable housing line, which is certainly increasing significantly. In real terms, the affordable housing line is going up from £286 million in 2004-05 to £359 million in 2007-08. The issue that we have been discussing is the supply of new affordable housing. The other line will include various other housing budgets. The line that we are talking about does not include money involving the supporting people fund.
Perhaps this matter might best be resolved in writing. I am looking at a figure of £652 million for 2004-05, which decreases to £643 million in 2007-08.
The line underneath that line relates to new affordable housing. You are looking at a line that relates to more general housing issues, including fuel poverty.
If money for affordable housing is increasing within the umbrella budget, what is decreasing to fund that, given that the overall budget is going down?
As we said earlier, one line that is decreasing is the one that relates to the central heating programme, funding for which is decreasing as a result of the targets being met. That appears as one of the components of the top line. As the minister says, within that overall sum, the affordable housing budget is increasing in real terms.
We will need to examine the figures a bit more closely.
Apart from the central heating budget, I am not sure that any budget is decreasing between 2006-07 and 2007-08. I am not entirely sure how the table that we are talking about is constructed. Perhaps Mike Neilson can help us out.
There are a couple of issues to note, one of which is the issue of Scottish Homes' debt redemption. At the beginning of the period that we are talking about, the interest charges on Scottish Homes debt are in the budget but, because the debt has been redeemed, that element simply disappears as it is not needed any more. That funding becomes available for affordable housing spend in rather a hidden way. A similar situation arises in relation to some capital receipts, which would otherwise be used to pay off the debts. That is one of the most obvious factors. In total, all of that amounts to around £30 million a year.
I think that quite a lot is hidden in these budget documents, which present quite a challenge to MSPs, year on year. It would be helpful if we could get information such as the information we received this morning in advance, so that we could read it. If we are ill-informed because we have received information at the last minute, we will not be able to have a worthwhile debate.
Land ownership, the cost of land and infrastructure, especially in relation to water, all raise issues. As you can see from page 104 of the draft budget document, we have an urban land fund, so we are mindful of the need to put resources into land acquisition.
Strathspey has development constraints because of the lack of Scottish Water infrastructure. Many Highland villages are growing to about two or three times their previous size because developers require economies of scale for development when it would be more sensitive in the Highlands to have smaller developments. What can you do to overcome the need for the economies of scale required to establish utilities infrastructure?
If Margaret Curran met landowners, I shall certainly meet them, too.
I understand that infrastructure cannot be upgraded and expanded everywhere at the same time. One issue is that adequate funding for infrastructure must be available throughout Scotland, but the other issue is local prioritisation, which can only be agreed locally with Scottish Water.
Some of my questions have been answered, but I will ask two succinct questions. A parliamentary answer to a question that I asked said that local authorities had identified that 300,000 housing units could be built in the next 10 years, but that half of those could not proceed because of water and sewerage constraints. I am sure that the minister or his team is aware of that. I have heard whom the minister will meet. That is a substantial number of houses. What radical work will you do to end that blockage?
I am told that rural housing investment will fund more than 1,400 new affordable homes this year, but James Hynd may want to comment on that.
What about the figure of 100 extra units?
I just do not recognise that figure. As the minister said, funding for the rural programme in the current year initially stood at £65 million. Over the course of the year, that funding has been increased to £80 million to reflect the fact that additional affordable housing money has been found. Some of that will go into land banking, but a rural programme of 1,400 units will still be produced this year. Decisions on the size of next year's programme have still to be taken. That is the scale of the programme as we move forward.
I will check the Official Report afterwards—perhaps I misunderstood what was said.
Before I ask my question, I want to clarify that my understanding is that Derek Logie was talking about the situation 10 years ago rather than the situation when the Parliament was set up. I think that he was talking about funding for affordable rented rural housing.
We can check that.
There are huge problems with rural housing. People find the sheer cost of developing housing in rural areas to be frustrating, especially when developers are asked to provide two houses here and three houses there. There are many issues involved, some of which are about unit costs. As the new Minister for Communities, will you adopt a new approach to rural housing? For example, will you ask Communities Scotland to acknowledge that it is not possible to cap the unit cost of houses in some remote areas?
I am keen to consider all those issues, but at the moment the best thing to do is to hand over to the person who has been dealing with them and is therefore more expert.
In general, Linda Fabiani is right. The current arrangements for grant programmes need to be examined and that will be done as part of the affordable housing review. We will consider how those programmes should evolve to reflect the changing pressures in the housing market. We are engaged in discussions with Highland Council, which is developing a revolving land bank fund. It has approached us to find out whether we would be interested in participating in that. Those on-going discussions are an example of our responding imaginatively to local pressures.
We heard the same comments when were talking about such matters 10, 12 and 15 years ago—I remember trying to set up such initiatives. We always got to the last fence but could never get any further. I make a plea to the Executive to bite its lip and get on with things.
Thank you for raising those issues, which I will certainly look into.
I want to ask about targets 8 and 9 in the section of the draft budget on communities. Target 8, which is about removing child care barriers so that people can enter work or move towards entering work, says that it is aimed at
Kay Barton will correct me if I am wrong, but as I said in my statement, child care is in more than one budget; in fact, the largest amounts of child care money are in the budgets for education and young people. It is a specific fund—the working for families fund—which is increasing by £5 million a year over the spending review period. It is to that fund that the specific target refers. Kay Barton can perhaps say a bit more about that in a moment.
I will say a bit about the working for families funding that is behind target 8 and the target of 15,000 families. It is a combination of funding, which goes to the 10 local authorities that have the greatest needs. Within those authorities, we have target groups and communities of interest. Our target groups include lone parents and families in which there are particular stresses in the household; there might be drug or alcohol problems, or a disabled child. They are people who need child care over and above what the normal run of child care can provide. The care might have to be more flexible; for example, it might be that they need child care in the evenings or at weekends or it might be that they need more intensive support for their children. The 15,000 people who take advantage of the working for families services will be people who cannot use the child care that is provided through the normal child care strategy.
Are you saying that the child care services will be provided from a combination of money from the children and young people's budget and the communities budget?
We are just relying on our working for families fund in the communities budget. In the target, we will count people over and above those who are served by the children and young people's budget.
Before we let the minister off the hook, two members have indicated a desire to ask a couple of final questions. I will allow Mary Scanlon to go first, followed by Cathie Craigie.
I had not realised that I was getting back in; I have just tidied up all my papers. Sorry about that. I was prepared at question 1.
That is fine.
Concerns were raised with the committee this morning regarding transfer of development funding to councils. The Scottish Federation of Housing Associations believes that that is not a sensible course of action for the Scottish Executive to pursue. It feels that, in the hands of a national body, money that is not spent in any one area can quickly be vired to another area. It believes that it would be—in its words—"highly unlikely" that any protocols could be agreed among 32 local authorities.
That is an important issue that is still under discussion; in fact, we are reviewing the matter and discussing it with the various stakeholders. It was featured in Inside Housing last week because I had mentioned it at the Tenant Participation Advisory Service conference. That is one side of the coin. I am sure that some local authorities might give you a different view, but the reality is that there are other options that are, perhaps, somewhere between the two.
I very much support the idea of passing development funding to local authorities. It is not just a matter of arriving at a date when the funding will be passed to all 32 local authorities; there are standards that have to be reached. I realise that you were not the Minister for Communities when the Housing (Scotland) Act 2001 was passed, so perhaps one of your officials could advise the committee what standards have to be reached by an authority in order that the development funding can be transferred.
There are a number of criteria, but I am not sure that I can list them all. They relate to the quality of local housing strategies and the relationships with the local RSLs in terms of proper arrangements being in place. There are other criteria, but those are the main ones.
There are also operational criteria that concern delivery of programmes. Local authorities must satisfy us that they are able to deliver them at least as effectively as Communities Scotland delivers housing investment in its areas.
I thank the minister for attending today. I am sure that it will be the first of many appearances at the committee. I also thank the officials who joined him.
Meeting continued in private until 13:28.
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