Official Report 325KB pdf
The second agenda item is on the budget process 2007-08. I welcome the Minister for Communities, Malcolm Chisholm, and invite him to introduce his officials. I understand that he would like to make a short opening statement.
I am sure that the committee has several issues to explore on the draft budget document. Given the time constraints, I will therefore keep my opening remarks short. I will introduce my supporting officials. To my left is Mike Neilson, the director for housing and regeneration with the Scottish Executive Development Department; to his left is Mike Palmer, the head of the department's social inclusion and voluntary issues division; on the far right is Carole Oatway, the director of investment at Communities Scotland; and on my immediate right is Stephen Sandham, the head of the department's supporting people unit.
I will begin with a question about the overall increase in the communities portfolio budget. The increase of 0.8 per cent in real terms for 2007-08 is considerably less than the overall increase in the Executive's total managed expenditure and significantly less than the increase in other Executive portfolios, particularly education and health. Is there a reason why the communities portfolio appears to have fared less favourably than other Executive departments?
I repeat my earlier comment that the budget is actually bigger than it appears in the document—I mentioned the receipts and the money from the central unallocated provision, which will boost the budget next year, particularly the housing budget. It is generally well known that health and education have been the big gainers in the distribution of the budget in the years of the Scottish Parliament. Health and education are ahead of the field and the other portfolios are behind them. In that sense, communities is comparable to all the other portfolios. However, in the forthcoming spending review, I will argue strongly for my portfolio in general and for housing in particular. There are a range of factors behind the situation, but it should not really surprise people, given the general decisions on priorities that have been set during the two sessions of the Parliament.
My colleagues have specific questions about housing, so I will allow them to pursue that issue. As you said in your opening statement and as you have just reminded the committee, we do not have a full picture of the communities budget because some matters have not been taken into account. Can the Executive take those into account and give us a better picture of the increase in the communities budget so that we can see the size of the increase?
The two points that I flagged up are the significant features. I am not sure whether these are the final figures, but the figures that I have at present are that receipts for next year will be £32 million and that £41 million will come from the central unallocated provision. That is the boost to the published figures that we will get. As I reminded members last year, local authorities invest about £500 million in housing. That will never feature in the Scottish Executive's budget, but it is relevant to housing in general.
I take the minister back to discussions that we had last year about transfers to the central unallocated provision. We were well and truly baffled on that occasion—maybe we can try again. I seem to recall that there was £26 million for community regeneration and affordable housing, which set alarm bells ringing in my mind. That money was transferred out of the departmental budget, technically, to the CUP. The minister reassured us that the money remained ring fenced for community purposes; however, he will not be surprised to hear that we want to return to the matter. For a kick-off, has the £26 million from the communities portfolio that was transferred to the central unallocated provision last year now been spent?
The simple explanation, in relation to the central unallocated provision, is that it is a rephasing of expenditure in relation to the community regeneration fund. Because the CRF did not start at the beginning of the financial year, the money will be carried over and the programme will run into the third year a bit. The more significant sums are in the housing budget. I have referred to money from the central unallocated provision for housing last year coming into this year's budget, although you are not specifically looking at this year's budget. There is £50 million coming into housing from the central unallocated provision. That is simply a rephasing. It is money that was granted for housing at the time of the spending review, but the phasing of that expenditure has changed. In other words, it could not be spent in the first year, so it is now being spent over a later period. The total amount that will be spent on housing in the three years is the same, and the total amount that will be spent on the community regeneration fund is the same; however, the phasing is different. That is the basic explanation of it.
That sounds alarmingly like the comings and goings in my household budget.
I do not follow what you are saying. It is basically a rephasing of the expenditure.
That is the conclusion that I drew from what you said. The money has now been spent.
Which money has now been spent?
The £26 million from the communities portfolio that went into the central unallocated provision.
The amount that has been spent on the community regeneration fund is the amount that was budgeted. The £26 million will have been spent at the end of the programme; in other words, it will be an extended programme.
So it has not been spent. It is still in the ether somewhere, is it?
As I say, it is just a rephasing. The money will be spent over the three-year period. If there has not been an increase in the expenditure this year, the programme will be extended at the other end of the period. Carole Oatway may want to add to that.
There is a bit of confusion.
You bet there is.
The £26 million is confusing me, as well. On the housing side, we put just over £90 million into the CUP. This year, we took £50 million back out and there is about £41 million to come out next year, as the minister said in his opening remarks. The £26 million is confusing me slightly. I know what we put in from the housing side.
Carole Oatway is talking about housing, but you are talking about the community regeneration fund.
It is both. The £26 million comprises £20 million from the community regeneration fund and £6 million from the affordable housing budget. It might be helpful if the Executive officials could engage with the committee clerks to clear the matter up.
Mike Neilson might want to comment.
John Home Robertson makes a fair point. The autumn budget revisions, which are due out shortly, will have the full update on money that is going into and out of the CUP. It is at the autumn budget revisions that money moves in and out. That information will be available in the next week or two.
The biggest part of this is the funding for housing. The issue with the CRF is just that there was a later start to the programme. It is the housing that matters. I am sure that, as part of your deliberations, you will examine the autumn budget revisions to which Mike Neilson referred. That is when the CUP is presented to Parliament, although we have pre-announced it at the committee, in a way, because that was the right thing to do. The autumn budget revisions will say how much is coming out of the CUP into housing or whatever.
I am relieved to hear you say that housing matters. It matters a hell of a lot, as far as many of us are concerned. You will gather that members of the committee are apprehensive about and a tad baffled by what is going on here. Is it anticipated that any funds will be transferred to the central unallocated provision again this year?
No.
So, it was a one-off, was it?
It was purely for phasing issues. Obviously, we want to spend all the money that is available during the course of this spending review period, and that is what we will do.
Minister, Mike Neilson just said that the autumn changes to the budget will be published. I am concerned that the committee and other committees of the Parliament that are currently examining the budget are struggling to come to terms with the issue. It becomes much more complicated when the Executive plans to publish that information after we have questioned you. It strikes me that it would have been better if the Executive had ensured that the publication was made available prior to the Parliament embarking on its budgetary scrutiny, which is a requirement of the standing orders of the Parliament and something that we know that we have to do every year.
That issue should certainly be raised with the Executive by the Finance Committee. It is a matter for the whole Executive rather than for my department in particular. There is always an autumn budget revision; who decides the date of its publication, I do not know. I agree entirely with you. I suppose that the document will be available by the time that the Finance Committee addresses the issue.
Okay. That is an issue on which the committee will want to reflect in its report.
I want to have another stab at some of the questions that John Home Robertson asked. I preface my questions by saying that I do not have a clue what we are now talking about. The committee probably shares my confusion.
I do not think that the money was put into the CUP last year; I presume that it was put in the year before. All the money that has been put in for housing will come out for housing this year and next year. It is as simple as that. Every single pound of the money that has been put into the central unallocated provision for housing will come out in this year and next year.
Can you explain to me what that £90 million was made up of, beyond its being for housing? You have talked about phasing. I do not understand why that money has not been spent.
Carole Oatway can probably explain that in more detail. It is to do with how housing programmes come on stream. I imagine that some of it was also to do with the profile of community ownership spending. Carole, can you explain that in more detail?
I will try to explain it in a bit more detail. The money that we got at the start of the spending review was profiled for a spend in a certain pattern, which is what happens when people are budgeting. The community ownership programme anticipated that it would start to spend more quickly than it actually did. We knew that the community ownership programme had the potential to spend later and we did not want to spend that money on other things; therefore, rather than lose the money, we effectively put it into a deposit account—that is, more or less, how the central unallocated provision works. We put the money in the CUP and said, "Here is the reprofile within which we will draw down that money." It was anticipated that we would draw down about £50 million this year and about £40 million next year. The full amount that went into the CUP was to do with the different phasing of the work coming on stream.
Okay. Was some of that money related to the Glasgow Housing Association stock transfer?
Yes, some of it was.
The vast majority of it?
Not the vast majority of it. Some of it was.
How much of the £90 million related directly to the GHA?
I am sorry, but I am not exactly sure of the figures. We will have to come back to you on that. It is not that the figure is unknown, but I do not have it to hand at the moment.
Okay. I will leave the matter for the moment. However, I would be grateful if the minister would write to the committee to advise how much of the £90 million relates to the GHA and the stock transfer.
Carole Oatway compared the CUP to a deposit account. Is it an interest-paying account? If not, is the money not worth less when you bring it back down in future years?
It is not an interest-paying account. Technically speaking, when it is brought back down it is worth less money in real terms. However, we have been successful in getting additional moneys each year into the housing investment programme over and above what we put in the CUP. We anticipate—we hope—that that will be the case again this year. There has been no material loss in terms of what we can do for the money.
In the spirit of the current confusion, does the minister agree that it is somewhat premature to discuss 2007-08 budgets in the absence of the outcome of the independent budget review group?
No. The independent budget review group did not even look at budgets for 2007-08; it was asked to look only at budgets in the next spending review period. In terms of next year's budget, what the budget review group came up with is entirely irrelevant.
Even though the Minister for Finance and Public Service Reform said that its report would be made available to members on completion.
That has been discussed in the Parliament. The First Minister made the Executive's position on the matter clear at First Minister's question time a week or two ago. The purpose of the review group was to consider the next spending review period. Obviously, its work will be considered and examined in that context.
Okay. I turn to the subject of new resources and transfers. Obviously, the money that has been allocated is most welcome, but what are the implications of the new resources and transfers that are listed in the communities budget?
The new resources and transfers are of little significance. In the main, they are things that we are moving between different departments. The most significant of them is the affordable housing investment programme, where money for capital grants to housing associations is coming from the Scottish Executive Environment and Rural Affairs Department. As the member will see from pages 31 and 32 of the report, the other sums of money are very small. Basically, they are movements in and out of different budgets.
Will you explain how the increase in the affordable housing investment programme will be used?
As we discussed earlier, the increase in the affordable housing investment programme is significant. As the member will see from page 35 of the report, it runs to about £56 million. We have explained the considerable resources over and above that that will come into the programme next year. That is why the actual starts next year will be at record levels. We are on a very welcome rising profile in terms of the number of new affordable homes that we are building each year. I think that the number will rise from a total of 7,100 or 7,400 this year—
It is 7,100.
It will rise from 7,100 to 8,000 next year. The amount of new build that is going on is significant. Of course, that increase is necessary. One of the main things to say about the housing budget is that we have two incredibly ambitious housing programmes. I am sure that the committee will want to ask me more about the supply issues in homelessness, which is an issue that makes us strongly committed to increasing the number of new affordable homes. Simultaneously, we also have to ensure that the current housing stock is modernised. Given the area's great investment needs, it was a tragedy that tenants in Renfrewshire voted marginally against stock transfer last week. That decision piles further pressure on to our housing budget. The problem is serious. However, the resources that are going in next year are a significant increase. I hope that that continues into the next spending review period.
You are comfortable that those new properties can be serviced by the likes of Scottish Water. You do not see any barriers in that respect.
Obviously, there have been problems in that regard and a great deal of work has been going on to try to iron them out. When I was in the Highlands over the summer, people involved in housing drew my attention to the issue. Over the past few months, a lot of work has been done to resolve those issues. I am not saying that there are no on-going problems. Certainly, in terms of the Scottish Water programme, the money is there. A lot of work is being done on the ground to align housing priorities with our investment in infrastructure, including water.
I turn to efficiency savings. My first question addresses an historic issue. Will you remind the committee of the target for efficiency savings in the communities budget and tell us what has been achieved to date?
The target has been met. I am not sure what the overall figure was, but it has been slightly exceeded. The bulk of that came from the efficiency savings that were made in Communities Scotland and within the supporting people programme.
I agree that major cuts—or should I say, efficiency savings; one must not use that other word—have been made in the supporting people programme. Anecdotally and from the evidence in our in-trays, we hear and see that those savings are having a practical effect; people on the ground are not being supported in the fashion that they were in the past. They are neither having services delivered to them nor being given the support of carers and so on. Some are now even being charged for services that previously were delivered free of charge. Are you concerned about that? Do you have any evidence that that is happening?
Obviously, we are watching that very carefully. As it happens, my next meeting in about an hour's time is with community care providers. No doubt, they will raise those issues with me. I sent the first returns from the local authorities under the "Supporting People Service review & Budget change impact Monitoring" to the committee in the spring. Without going through all the returns in detail, at that point—which was April—the authorities reported that there was only limited evidence of service reductions, no strong evidence either that particular client groups were being disproportionately affected or of job cuts across Scotland, and no evidence that authorities were increasing the proportion of income that they raise from charging.
Will the report to which you referred be published, minister?
Yes. When it is ready, I will send it to the committee, just as I sent the last one.
I have a question on an issue that was raised at a meeting of the Finance Committee. I think that we all concede that, at times, it can be difficult to measure what happens to the money in the communities budget. An improvement in a community may result from something tangential; with our budget, it is not simply a case of putting £5 in and getting £5-worth out at the other end. That is the difficulty, and we are talking about large sums of money.
Obviously, we continue to look at that issue. All that I can say is that the published report that the committee received showed that significant savings had been achieved from the remodelling of services and improved contract values. However, I am not complacently saying that we will not keep an eye on the situation. If genuine cuts were made, of course I would be concerned and I would want to ensure that those were addressed in due course. I say without any spirit of complacency that I think that a significant amount, or a majority, of those savings were genuine efficiency savings.
I want to pick up on the issue of getting the data. The efficiency outturn report states:
In addition to supporting people, the other big part of the portfolio that is relevant in this context is Communities Scotland. I have already given one example of efficiency gains where I saw for myself what is happening. I think that it is fairly easy to demonstrate efficiency savings in the housebuilding programme because we can compare what was with what is. Perhaps Carole Oatway can expand on that.
We can demonstrate that real savings have been made by looking at our systems to see whether the average amount of grant that is provided per property is increasing or decreasing. On the housing side, we are fairly confident that we can demonstrate efficiency gains.
I can understand that those gains are measurable, but that is not what I am talking about. I am asking about how we measure how we lift people and communities out of deprivation. Are systems in place that will ensure that the money that is spent makes a real and thorough change?
With respect, that is a different issue. That question is not about efficiency savings but about the effect of our expenditure on the ground. In "Social Focus on Deprived Areas 2005" and last week's Scottish index of multiple deprivation reports, which contain information on data zones, we have a wealth of new information that will allow us to compare the effect of deprivation expenditure over time. Those systems are being put in place.
I want to move on to the issue of affordable housing. In the draft budget, target 1 for the communities portfolio states:
That has been our definition of affordable housing for a long time. Affordable housing is social rented housing and low-cost home ownership housing into which we put public subsidy.
In relation to low-cost home ownership, what figure constitutes "low-cost"?
I have repeatedly asked about that. Through the homestake scheme, which is the flagship policy, we need to ensure that we present to people properties that are affordable. Typically, the recipient will pay 60 per cent of the cost, although the proportion can go as low as 50 per cent in some cases. Clearly, we do not want to offer houses that are too expensive. On that basis, I recently questioned the costs involved in some houses in one part of Scotland and, when the issue was investigated, it became apparent that things had not been done correctly. There must be a ceiling to what is offered through the homestake scheme.
In other words, the affordable level is not the 60 per cent or 50 per cent that people contribute under the homestake scheme. Are people offered an affordable home for which they must meet only 60 per cent of the price?
I think that the guidance states that people need to contribute three times their income. Is that right?
Basically, the measurement of how much people can afford is the mortgage multiplier that the building societies use. That figure can vary but it is around three times the person's annual salary. By setting what are considered to be modest salary levels, we effectively determine the maximum price that people can afford under the scheme because they can be given only three times their salary plus the homestake grant. We were keen to avoid putting in place a single band for every part of the country given that there are variations across the country. We left it to the local areas to determine, in line with guidance, what those bands should be. That certainly places a restriction on the maximum amount that people can pay for a homestake property.
Is the minister satisfied with the progress that has been made towards the target of
Absolutely. We have more than met our targets each year so far. Given the healthy budget position for next year, I would certainly expect to reach and, possibly, exceed that target.
What are the proportions of social rented accommodation and low-cost home ownership accommodation within that target of 21,500?
We are aiming to approve 16,500 units in the social rented housing sector and 5,000 units in the low-cost home ownership sector.
How many units were actually built last year?
We exceeded the target. Does Carole Oatway know the exact figure?
I think that the total was 6,520. It was an odd figure, but it was over the target by about 120 properties.
What work is being done to ensure that resources are put into tackling the acute lack of affordable housing that exists in certain areas of Scotland?
A lot of work is being done on that issue, but let me mention the two most significant things. Professor Bramley, who produced some work on the most recent spending review, has been working on housing needs across the country. His report, which will be published quite soon, will be an important factor in the next spending review. In addition, we have been consulting for some time on the strategic housing investment framework. Ultimately, that framework will lead to a revised basis for distributing housing money to the different local authorities. We have not made final decisions on that yet but, basically, the supply indicator will become increasingly important, particularly given our homelessness target. We need to ensure that areas in which significant supply shortages exist are given enough money to deal with the problem. We are actively looking at a better method of distributing housing money through the strategic housing investment framework. Professor Bramley's work will inform that piece of work as well as our wider spending review considerations.
Will Professor Bramley's review be available before the necessary arguments take place under the comprehensive spending review? Will the report definitely be available before then?
Absolutely. His report will probably be published before the end of the year.
I had wanted to continue on that point, minister, but you have pre-empted my question by answering it before it was even asked—how wonderful you are.
Local authorities will still be involved in those decisions through their housing plans and so on. We do not want to direct totally from the centre. Obviously, we will look at local authority allocations in general terms, but shortages within a local authority area will appear in the indicators and influence the distribution. Perhaps Carole Oatway can describe in more detail how the proposal will work for individual local authorities.
It is anticipated that the strategic housing investment framework will work by using the indicators to provide a first cut of the resource distribution that will then be refined using a bottom-up approach. By means of their local housing strategies and investment plans, local authorities will be asked to show us where the shortages are and where they need the money to be invested. We may—in fact, it is extremely likely that we will—alter the national distribution based on that information from local authority areas. That will provide the fine tuning that is needed to deal with the kind of issues that Cathie Craigie has described.
Obviously, the homestake scheme that was discussed earlier is vital to local authorities if they are involved in regeneration programmes—it is vital in helping people who need to get on to the property ladder. Can the minister assure me that the budget will be flexible enough to allow local and individual needs to be taken into account when the financial packages are being developed?
Would you say a bit more about what you have in mind?
Everyone's financial position is different. What might be affordable for one person might not be affordable for another, and the scheme has to be flexible enough to take people's individual circumstances into account.
There is flexibility between different parts of the country, but you are talking about flexibility within one part of the country. The bits of income that are applied have to be standardised. It is hard to see why we should support discounted childcare costs, for example, for one person and not for another. There would have to be some consistency within an area.
I might get into trouble from the convener for raising this, but in my constituency, the Ainslie Road and Maclehose Road scheme will be involved in a regeneration project in which homestake will play an important part. However, a pensioner on a fixed income is in very different financial circumstances to those of a young couple who have a much greater ability to generate income. Those different needs have to be taken into account to ensure that communities are kept together and that people are not forced out to other areas because of financial difficulties.
There is a detailed system and income is obviously the primary factor. Perhaps Carole Oatway will say more about that.
I can say a little bit to help members understand how homestake works. It is an incredibly flexible system. It is not designed to have a single application, nor is it designed to hit a single client group. One of its uses—I think that this is the one to which Cathie Craigie is referring—is in circumstances in which we want to encourage existing owners in a regeneration area to be able to take part in the regeneration project. In those circumstances, we do not require the same minimum stakes that people usually put in, but the stake depends on individual circumstances. However, if someone in a regeneration area sells their existing property for, say, £31,000 and that is all the money that they have, but the cost of a new home is £80,000, we do not expect them to put in any more than the money that they got from the sale of their existing property. That is flexible enough to allow us to deal with a host of circumstances.
I am looking for flexibility.
It exists.
To move on a bit, what are the implications of the results of the recent stock transfer votes in Edinburgh, Stirling and Renfrewshire for the affordable housing investment budget?
In the long run, they will have serious implications. I do not think that the results will make much difference to the budget that you are considering for next year, but the implications are obviously serious for the next spending review period.
You talk about an ambitious housing programme, which is welcome. However, many of our constituents are anxious that there is no evidence of that programme where it is required. You are aware of my concern about that. I sincerely hope that Professor Bramley will be able to give us something useful, but I also hope that the time has come for us to move on from writing reports about housing difficulties to actually building houses. You and I, Communities Scotland and, above all, local authorities know where the hot spots are, where there is a critical shortfall in the supply of affordable rented housing and where people are trapped in bad, overcrowded or unaffordable housing. What can you say today to assure us and the people who are stuck on waiting lists that they are going to see houses being built in their communities in the very near future? That will really make a difference.
We have already discussed how houses are being built in increasingly large numbers, but if they are not being built in the right places, the work on the strategic housing investment framework and the Bramley report is concerned to address that. A lot of money is going into house building and we have to make sure that all that money continues to go into house building. That is why—further to my previous answer—rents will have to take the strain when people vote no to stock transfer. That is made clear to people who are participating in community ownership ballots because the alternative is to take money away from the vital new-build programme. We will continue to build more houses and make sure that they are better targeted in the right areas.
Although the no votes are extremely disappointing—I share everyone's concern about them—there will obviously be significant savings.
I am not sure what "significant savings" you are referring to.
You will not have to write off capital debts or subsidise essential repairs.
We do not write off debts. That is why, from the Parliament's point of view, a no vote is a double tragedy, because a yes vote would mean money for nothing from the Treasury. We did not have to write off any debts, and we are in no position to do so without completely decimating the housing programmes. That is what a no vote is: people turning their backs on a massive free gift from the Treasury. We are not saving money at all, because we were not going to pay that money. Even the subsidies that were going in were going to be balanced by right-to-buy receipts that came in from the authorities concerned, so the actual contribution to community ownership from the Scottish Executive's budget would have been minimal. That is why the no votes are a fundamental problem for the Scottish Parliament, because we will have to pile the burden either on to rents or—although I think that this alternative is unacceptable—on to increased public expenditure, which will obviously have a profound effect on the new-build housing programme or on any other programme that you care to mention.
Is the matter likely to be revisited in years to come?
We are not going to revisit it. Obviously, we need to ensure that we win the forthcoming ballots, and then we can look at the situation and see how many authorities have voted no. All that I am saying is that it is a big problem that people will have to address. There is no easy solution; certainly, I have not heard of an easy solution—or even a difficult solution—from any other political party.
I realise that we are not having a debate about housing stock transfer, but I have one comment to make. When you put most of your eggs in one basket, there will be difficulties, and the Executive has clearly failed to explain its flagship policy.
First, we have not put all our eggs in one basket. A minority of councils are going down the community ownership route—many others can meet the Scottish housing quality standard without rents rising to unacceptable levels. Looking round the table, I can see that most members of the committee represent areas in which the council is maintaining the stock—the exceptions being the Borders, where stock has already transferred, and Highland. Therefore, we have not in any sense put all our eggs in one basket.
The Treasury is writing off housing debt where there is a yes vote. It seems to me that, if we need investment in housing—and we do—and investment to meet the quality standard, it is not fair that existing tenants are the only ones responsible for house improvements and rent rises. The minister should be arguing with the Treasury that, if we genuinely want to meet the quality standard, money must be made available through the write-off of the capital debt.
I am repeating myself now, but I merely point out that even the Scottish nationalists must understand that the Treasury cannot write off Scottish housing debt without writing off English housing debt. All that I am saying is that that figure runs to billions of pounds. Where community ownership takes place, new borrowing is not public expenditure, so it makes perfect sense from the Treasury's point of view to write off debt for community ownership but not for councils that retain their own stock.
If people are not going to vote for community ownership, are you quite satisfied that they should continue to live in appalling housing conditions?
Absolutely not. We are talking about debt write-off and saying that that is not going to happen. I put the question back to you. If you were in Government, what would you do with the situation?
Minister, we ask the questions of you here.
I am afraid not. With an election coming, we are quite entitled to ask questions of you.
Not at this committee you are not.
I am just trying to explain the situation that any Government would face. There is no way round the problem. The debt is not going to be written off, so if the investment is to take place, in Renfrewshire or anywhere else, that will be achieved through rent increases, through scaling down the investment requirements or, if this is what you want to do, through additional public expenditure, but that will have implications for an ambitious housing programme. I am asking people to face the facts. I am confronted by the same choices and difficulties that Tricia Marwick or anyone else would be confronted by.
Assuming that you are right and that local authority housing debt is not going to be written off, is the Executive planning any change in the way in which it approaches the forthcoming ballots, if it is so committed to getting a yes vote? The conditionality of debt write-off is clearly a gift to people who, for ideological reasons, would oppose community ownership under any circumstances. What can the Executive do to make the case more effectively in the forthcoming ballots than it has been made in the past few ballots?
We have to go on sending out the same messages. We have been actively campaigning on these issues nationally and locally, so a whole host of factors is involved. The ballots in Stirling and Renfrewshire will be analysed, as the Edinburgh vote was analysed last year, and it will be possible to work out exactly why people changed their minds and what factors influenced them. We do not know that at this stage.
That is what you have been saying, and tenants have been voting no. How can you make the case more effectively?
We shall certainly try, but we cannot fundamentally change the messages. All the people involved—not just me—must get better at communicating. I know that the no campaign has created barriers and sent out false messages, and we have to try to counter those. There is no easy answer to your question, but we must go on trying over the next few weeks.
I am conscious that time is tight and significant areas remain to be covered. I ask members to ask succinct questions.
The minister mentioned the ambitious programmes on housing and homelessness, and we all support the target to abolish the priority need system by 2012 to ensure that all unintentionally homeless people are entitled to permanent accommodation. However—there is always a "however"—are adequate resources being provided to enable local authorities to deal with homelessness, given the steady increase in homelessness applications in recent years?
As I said, I will argue for significant resources for housing in the next spending review. You would not expect the minister with responsibility for housing ever to say that we have enough resources. However, we should acknowledge that the significantly increased resources that we have received have resulted in the building of more new houses, and more will be built next year. We are moving in the right direction, but we must keep up the momentum in the years to 2012.
I was interested to learn that from 1993-94 to 2002-03 about 12,000 households per year made homelessness applications, but in 2005-06 the number of applications appears to have been about 18,500. Does the increase worry you?
The most significant factor behind the increase in homelessness applications is the new right to temporary accommodation that homeless people secured under the Housing (Scotland) Act 2001. In the past, people felt that they had no right to housing, so they did not bother to apply as homeless. We could almost say that we planned to increase the number of applicants who were recognised as homeless—we anticipated the increase. The number of households who are assessed as being homeless is no longer rising; rather, it is levelling off and we hope that it will fall.
Given the increase in applications, should we increase the target for 21,500 new and improved affordable homes?
That is exactly the territory that Professor Bramley has been considering. He will take account of all factors, including the new homelessness policies that will kick in during the next few years. I do not want to pre-empt his conclusions.
We move on to consider the central heating programme and the warm deal initiative. There appears to be a considerable backlog of people waiting for the installation of central heating systems. Am I right in thinking that there is a problem with the number of installations that remain outstanding this year? Is the change in the provider of the programme a contributory factor?
I understand people's concerns. It has been easy for people to conclude that any problems must be the result of the changed arrangements for delivering the programme as a result of our obligation to tender again for the programme's managing agent. However, the fact is that 12,000 central heating systems will be installed this year, which is the number that I would have given to committee members if they had asked me last year how many systems we planned to install—I cannot remember whether you asked me that.
Your answer raises issues that I want to follow up on. First, you said that demand for the central heating programme is greater than was anticipated in the most recent spending review. How confident are you that there will be sufficient resources to deal with the people who are entitled to receive central heating systems? How will we ensure that those people are not disadvantaged and left on an apparently never-ending waiting list for installation?
I want to do all that I can to ensure that waiting times and lists are reduced. As I said, I am actively seeking extra resources in next year's budget to deal with the issue. There has always been a waiting list and a waiting time for the central heating programme. The initiative was not designed to be an emergency programme under which people who did not have a central heating system could have one installed the next day. Obviously, we need to ensure that waiting times are as short as possible, but there is a problem as a result of increased demand. I am sorry that I can make no announcement to provide £X million to deal with the problem, but I am seeking extra money for the central heating programme to ensure that people do not wait too long. I understand people's concerns, but my main point is that the problem has been caused by increased demand, rather than by the transfer to a new managing agent.
I appreciate that you will not give a commitment today to provide additional resources. However, the eligibility criteria for the scheme will change in the new year. The change is welcome and the Executive should be congratulated for responding to the concerns of people like me, who argued that the eligibility criteria should be extended. The new arrangements will have financial implications, so when will the Executive bring forward the budgetary figures that will allow the change to be implemented? Will you consider the potential for much greater demand for the service than there has been in the past?
Like many other issues, this will fundamentally be an issue for the next spending review. Obviously there is one year left before that kicks in, which is the year that we are examining today. My basic objective for next year is to get as much extra money into the central heating programme as possible, so that that is kept in manageable proportions. However, as part of the work for the next spending review, people will have to look closely at demand for the programme in the next spending review period. This is another example of a situation in which we are the victims of our own success. The initiative is great and has been popular but that has meant that more people want to benefit from it and that people want more categories to be included. The reason why we are proceeding in a measured way rather than opening it up to further categories, as some people would like us to do, is that we want to avoid creating more issues of demand.
On the warm deal, you mentioned the extension of additional resources for local authorities and how that will result in greater home insulation services being provided to households. Are you aware of the tensions that exist, particularly for small and medium-sized companies that provide that service? They face difficulties in tendering for that work with local authorities. Can you guarantee that there will be a level playing field for all insulation providers in Scotland so that smaller companies will not be disadvantaged by the changes?
I am certainly mindful of that issue, not least because the convener has been raising it with me for some time. I think that I mentioned earlier that the great majority of local authorities have confirmed that the work will be carried out by contractors rather than by direct labour. Further, Scottish Gas has undertaken to use the contractors that were used by the Eaga Partnership. Concerns were expressed by social partnerships and others about what would happen at the transition point. However, I believe that since the new contract has started and the local authorities have started to develop their programmes, some of those concerns have been allayed. Obviously, if there are still issues of concern, I want to hear about them.
When does the Executive plan to introduce its regulations on the changes to the central heating initiative?
I have not got a precise date for that, but I am advised that that will happen within the next few weeks.
That was a great civil service answer.
There is no doubt that that is bound to have an effect; fuel poverty is influenced by the price of energy, people's incomes and the efficiency of their heating systems. Obviously, we can act most directly on the last of those three and can seek only to influence companies with regard to the price of energy.
With regard to the contract for the central heating programme going from Eaga to Scottish Gas, how long was the period between the start of tendering and the conclusion of the contract?
I do not know how long the process took.
The process started over a year ago, due to the European requirements that we had to follow. We had to employ procurement experts to ensure that we got the work right. The matter is extremely complex. The tenders went out during the course of this year and were returned within the normal period. We approached more people than returned tenders.
It has been suggested to me that the long tendering process has impacted on delivery of the programme. Are you saying, minister, that it did not?
Basically, I am saying that it did not. This year, 12,000 installations were budgeted for and there will be 12,000 installations.
I am not talking about installations. I am talking about the time that people have to wait for assessment and the waiting time for installation. Was there a difference between the waiting times during the period in which the tendering was taking place and those in the previous year?
As I have already said, there was a difference that was due to increased demand rather than to the new contract.
So, the difference has nothing to do with the tendering process.
That is correct.
Have you any concerns that there might be a conflict of interests as a result of Scottish Gas delivering the systems as well as being the provider of the energy?
No. Obviously, we have put in place systems to ensure that those two things are kept apart.
I am merely raising the issue, which is appropriate—we do not want people who have gas systems moving up the queue faster than people who do not have gas systems. No doubt you will be looking out for that.
The benefits of the systems are self-evident and I am reasonably optimistic that I will be successful in getting more money for the programme. The fact of the matter is that the budget line was set at the spending review period. The drop in the amount of money is mainly explained by the end of the money going to pay for central heating in Glasgow. Any other gap will be made up by the increased efficiency of the new arrangements. The budget line that Christine Grahame mentioned will deliver 12,000 systems. Of course, I want to deliver more than 12,000 systems, which is why I want to get extra money.
I never said that it was—I just wondered whether any measurement was being done so that you, or any incoming Government, could point to stats to show the impact of the central heating programme on the health of individuals and communities, and perhaps thereafter extend it to disabled or low-income families.
There is a lot of literature on health and housing, and on health and heating in particular. It is not obvious how we could measure the effect of just the Scottish central heating programme on people's health because it is self-evident that there is a multiplicity of factors. It is not obvious how research would be constructed in such a specific way, but we can draw on the larger body of more general research.
I will leave that point, as I am just doing supplementary questions.
There is certainly an issue about recalibration, which I have raised with the energy companies. They need to deal with that, and one company has done so. The more general issue follows what energy companies say, which is that they now buy their gas for next year, so there is some truth in Christine Grahame's point. We cannot exert direct control of their prices—we can just try to exert influence and pressure. I do not see what more we could do.
I asked specifically whether you had examined how some large commercial companies pay for their fuel. They measure the price over a period so that fluctuations are met through a contract. I do not know whether you have investigated that, and it may not solve the problem, but it might be worth considering for domestic consumers.
That is not something that I know about. I ask my officials whether they do.
The only comment that I will make is that companies have the capacity to absorb such shifts in prices, including upward shifts. The risk of doing the same for individual domestic customers is that they may not have the same capability to adjust to rapid increases in market prices. It comes back to the question of whether, in managing the forward contracts that have been mentioned, the companies move prices down at the same speed as they move prices up.
I simply ask that the minister examine the idea, because the situation cannot be sustained in which people, particularly those on lower incomes, have 100 per cent increases in bills. I know that the minister is making reasonable efforts with persuasion, but there must be other ways of dealing with the problem—perhaps through contracts—that would get people out of that situation.
I ask Dave Petrie to ask short questions.
I will be brief. The minister mentioned various terms of the new contract and what the contractor will have to abide by. I have heard concerns from constituents about one aspect, which is the final quality of some workmanship. I have heard that because people are getting the work done for nothing, contractors attach cables and pipes to surfaces instead of burying them or putting them into ducts. I take it that the new contract addresses that and ensures that certain standards will have to be adhered to. The contracts should be the same as any other central heating contract in that contractors must try to do the perfect job and not cut corners.
Some of the points that are made in the new contract are directly relevant to that, not least in respect of payment on completion, which could be useful in that regard.
I will ask a very quick question. How many eligible people do you estimate could benefit from the central heating programme? That figure might already be available.
That is an important and difficult question to answer on the new category. How do we know how many people who are on pension credit have partial heating systems? There is no way of knowing.
How do you know how much to put in the budget, in that case?
We will get an indication of demand over the next year. I am happy to be corrected if there is some scientific way of finding out, but there are inherent problems in measuring demand in any absolute sense. We can estimate demand—that is obviously what we will have to do. That is part of the problem. I am not saying that there is a scientific way of estimating demand. Apart from knowing that, we also have to know how many people's systems will break down in the next year or the next three years. We have an ambitious programme, but it is inherently difficult because there could be a lot more demand than has been anticipated—that is exactly what happened during this session of Parliament. We have to be careful in trying more accurately to estimate demand for the next spending review period.
Is that something that would come from local authorities through their strategic housing plans? Would they be required to include that?
A fundamental problem is the relationship between the eligibility of pension credit and the existence of partial systems. We do not have something that tells us which individuals have both, and I do not think that local authorities would be in a position to provide that information, either. It is difficult to get a reliable forecast.
If there is time, convener, I would like to ask one more question on this topic before moving on to the next one.
It must be very short.
Given the energy price issues that other members have mentioned and the longer-term energy security and environmental reasons for trying to reduce demand—the best way to get a smaller fuel bill is obviously to use less fuel—is not there a case for allowing the central heating programme to go beyond installing conventional systems and for considering systems such as heat pumps, which, in appropriate buildings, can dramatically reduce people's energy costs in the long run?
We are doing a pilot on renewable energy and central heating systems; I hope that it will provide positive results. Like Patrick Harvie, I hope that we can move towards installing those systems in the next period, primarily because of the environmental concerns that we all share, although such systems also have other benefits.
When will we see the result of the pilot?
We will certainly see it in time for the next spending review.
On the working for families fund, the Executive has a target of increasing by 15,000 the number of parents either going into work or moving towards paid employment. What progress is being made towards that target?
I think that we are halfway there. Mike Palmer can fill in more detail, but I think that the latest figure that I have seen shows that we have reached 7,500.
The figures from the end of June 2006 show that 7,500 parents have engaged with working for families. Of those, around 35 per cent have moved into employment, training, volunteering or education. That is pretty much the midway mark. We expect an evaluation of the programme to be presented early next year, which will give us comprehensive data on exactly how the programme is faring.
Is there a danger that the target presupposes that parents in certain situations ought to be moving towards paid employment rather than making a different choice in their lives? Does it create an incentive for the Executive to get value for money from what it is spending on the fund by getting people to make one choice rather than another?
The number of people who could benefit is significantly more than 15,000, so I do not think that we have to corral every possible person in order to meet our target. More than enough people want to be assisted into employment; when I meet lone parents around Scotland I hear them asking for more assistance. Often, it is the problems in the transition into work that put people off, rather than the fact that they do not want to work.
I certainly do not disagree with the objective of providing access to child care, but I just want to be clear that the Executive would not consider it in any way a positive thing if people who would prepare to make a different choice were to access child care in order to go into paid employment.
I do not follow what you are saying.
I am saying that the Executive would not consider it a positive step towards its target if people made a choice that they were not comfortable with.
I think I agree with you, but I am struggling to understand exactly what you are saying.
What issues have emerged from monitoring and evaluation of the fund?
We have commissioned an evaluation from an independent group from Napier University, which will deliver an interim evaluation next month and a full evaluation early next year. That group has not given us any indications of specific issues to do with the evaluation of the programme. We have revised some of the indicators that we used for monitoring steps that are taken towards employment, education, training or volunteering. We made those revisions to ensure that we can reflect some of the softer steps towards progress in that direction, which are real indicators of achievement for people who are in vulnerable situations and which we did not feel were fully reflected in the original set of indicators. That is the only major issue that we have encountered in monitoring and measuring the progress of the programme.
Will you explain what some of those softer steps are and what proportion of the 7,500 people are represented by that changed definition?
I cannot give an exact figure now, but I can certainly provide that information, if you want it. To give an example, a vulnerable individual on the programme who is doing two, three or four hours of volunteering a week was not necessarily being picked up through the previous set of indicators, because we had a harder set of indicators that showed only concrete steps towards employment or education. Having examined the data on the progress of the programme, we felt that it was important also to reflect other activities, such as a person's volunteering for a few hours a week. That decision was based on clear feedback from field workers who were operating the programme and who indicated that such activities were a real achievement for people in the programme and that that should be reflected as part of the journey towards employment, education and training. We therefore felt it to be important to reflect that in the indicators. That will all be made transparent when the evaluation is produced—everyone will be able to see exactly who has achieved what in the programme.
Is the Executive considering rolling out the programme throughout Scotland? What are the prospects for that?
We will consider that. Again, the issue is one for the spending review. The programme will run into 2008. We will need to consider it in the broader context of many other programmes, particularly the child care programme and our employability work. However, it seems to me that very good practice is developing in the programme, so we need to capture that and continue it in the future. I will certainly seek to do that.
I move on to the community regeneration fund. What progress have the community planning partnerships made on developing regeneration outcome agreements? What evidence do you have that the resources have been targeted appropriately? Some of the areas that the recent report on deprivation highlighted as being most deprived have been the most deprived for a long time and have been in receipt of regeneration funds. That suggests to me that the funds may not have been spent appropriately. How will the minister measure the outcomes from the resources and the targets that are set?
The fund is now distributed on a new basis, which we believe is an improvement. I am not here to defend every single penny that has been spent to tackle deprivation, but I know from my constituency that much of that money has been put to good effect. We have changed the focus by locating the fund within community planning—with the intention of allowing access to mainstream resources over and above those from the fund—and by basing the fund on outcome agreements. It is still relatively early days, although the regeneration outcome agreements are in place and annual reports on progress are produced. Basically, we have a better system, but it is not perfect. One of the many things that we will do in the next spending review period is to continue to review that system.
Most of us welcome the minister's remark that he is confident that what will happen in the future will be more effective than what happened in the past. The minister suggests that some of the measures will take a long time to seep through. When does he expect the targets that are being set to be met?
I said that we have already made progress. I was comparing the new system of regeneration outcome agreements with previous systems, which did not provide regeneration money on the same basis. The report that was published last week shows signs of progress, the most obvious of which is the improvement in the employment rate throughout Scotland. However, everybody knows that the problems of multiple deprivation are particularly difficult and intractable. We believe that we now have a better approach that takes into account a broader range of issues—not just physical regeneration, but other relevant issues such as employment, health and education. We are making progress, but I am not complacent and I accept that we have a long way to go. However, our present policy framework puts us in a stronger position than we were in under previous systems in the early years of Parliament and in the 1980s and 1990s.
You mentioned a range of areas in which you are targeting health and regeneration, but you did not mention leisure and sport. Do you expect investment to be made in local leisure and sport facilities for regeneration and to help to lift people out of poverty?
A balance is needed between what we require as priorities and leaving local authorities some discretion and freedom. I am pleased that Fife Council, which is in the area that Tricia Marwick represents, has ensured through its increased community regeneration fund that 2,000 children in seven primary schools have participated in physical activity. That is just one example of what is, as you say, an important part of the bigger picture. Fife Council made that choice within its general regeneration outcome agreements. Leisure and sport can be relevant in many situations.
I am conscious of the time, so I will be quick. How will expenditure in the current spending review period be evaluated with a view to informing objectives and targets in the next spending review? What are the main priorities for communities spending in the coming years? Are any fundamental realignments in spending required for the forthcoming spending review?
Obviously, a lot of work is being done on all the matters that those questions cover. As in other portfolios, it can be difficult to prioritise the communities portfolio because—as the range of the committee's questioning has suggested—many areas are important. As housing takes such a large proportion of the budget and we all agree that it must be a priority, it is difficult to see things dropping off the end. We must consider rigorously all the different programmes.
I have a very quick supplementary. How do you determine how the housing support grant is distributed? Can you explain why there is a drop in funding in the plan for next year compared with previous years?
Housing support grant does not currently go to most local authorities. I know that Shetland Islands Council receives some.
I am well aware that not all local authorities get the grant, which is why I am asking how you determine who gets it and who does not.
Most of it is from payment of hostels grants. Unlike in the past, most councils—apart from Shetland Islands—do not receive the grant. The bulk of the budget line is the payment of hostels grants to councils to meet deficits in the provision of hostel places for homeless people.
That concludes the committee's questioning to you and your officials, minister. I thank you for attending.
Meeting suspended.
On resuming—