Chamber and committees

However, you do not have clarity on that right now.

Thank you, convener; I will do my best.

What will our witnesses be able to do as a result of the bill that they cannot currently do? What will they have to do that they do not currently, not including meetings or reports?

I will start with our colleague either from the local authority or the health board, because they probably have the most interest in the bill. Perhaps Dr Crighton could start. [Interruption.]

Finally, UK oil production peaked in 1999 and we have known for about a decade that there was uncertainty. Although the most recent announcements and decisions have clearly increased the urgency, it has been clear for some time that Grangemouth would need to change what it produced at some point in the future. When did the work to look at the feasibility of providing feedstocks for biorefining start? Did it start in earnest after Petroineos said that it was looking to close down Grangemouth, or was work done on that before the announcement?

That would be very helpful. Thank you.

I should begin by explaining that I lodged my amendments because Graham Simpson beat me to the punch in submitting his amendments on the application of the rent control cap.

I very much welcome the Government’s move, because clarity and certainty are very important for investment. The fundamental principle in relation to some of the debate that we have had so far is that we are in the middle of a housing emergency that has had the effect of rents increasing well above wage inflation, which is intolerable.

We must attempt to come up with effective remedies, which includes ensuring that we have investment in housing supply, because fundamental to the issue is the decrease in housing supply. In my view, that is having a direct impact on the affordability of housing both for people who rent and for those who are owner-occupiers.

I believe that it is of critical importance that we have controls that protect people against excessive rent increases. No one can look at what has happened in recent years and think that we can stand by and do nothing. We have already agreed not to go into economic theses, but there is a point to make about the way in which price setting, supply and demand work in conjunction with one another. Often, when prices increase because of a reduction in supply, price controls can have the inverse effect to what was intended. If price controls are not considered holistically, they can be inflationary.

I very much welcome a consistent formula for the application of a rent cap. Ben Macpherson has made the case that a rent cap could disincentivise landlords from acting in a way that is generous and reflects the needs and requirements of their tenants. If that were expanded across the market, we could well end up with a mechanism that does not act as a ceiling, but as a floor, which would be perverse. For example, if we end up in a lower inflationary environment of 2 per cent or lower, charging 1 per cent over and above that rate would mean that renters would experience inflation that is well in excess of general inflation, which would be perverse. Therefore, it will be important that we have a mechanism that allows adjustments to be made if rents are being held above inflation, or, indeed, if other circumstances have changed. If we do not, we could incentivise landlords to use a rent cap as the mechanism by which they increase rents, and we may well see it being baked into tenancy agreements from the beginning, which would ensure that the formula becomes an automatic increase.

I welcome Katy Clark’s amendment 412 and Edward Mountain’s amendment 147. We may well disincentivise investment in properties if landlords have no ability to adjust rents. The ability to alter rent on the basis of changed circumstances and rents that have been previously set is important not only in particular cases but more generally, as we are dealing with the fundamental mechanisms by which prices are set. If that is not done in a way that reflects how the market operates as well as the behaviours of landlords and tenants, the effects could be counterproductive. I have lodged my amendments because I do not want the proposed rent cap to act as a floor—it must act as a ceiling. Therefore, there needs to be a mechanism for adjustment.

I heard what the cabinet secretary said about the wider reflection and consultation process, which is important. For that reason, I will not press my amendments 61A, 61B, 63A and 64A to 64C. However, I believe that my concerns need to be reflected in the bill at stage 3. Even though the bill may not include the precise mechanisms that I have proposed, I think that it should include broad regulation-making powers and broad objectives in order to provide clarity of intent and to ensure that such a mechanism is put in place. Failure to do so could mean that, although the bill intends to protect renters, they may face higher prices. None of us would wish to see that outcome.

I should begin by explaining that I lodged my amendments because Graham Simpson beat me to the punch in submitting his amendments on the application of the rent control cap.

I very much welcome the Government’s move, because clarity and certainty are very important for investment. The fundamental principle in relation to some of the debate that we have had so far is that we are in the middle of a housing emergency that has had the effect of rents increasing well above wage inflation, which is intolerable.

We must attempt to come up with effective remedies, which includes ensuring that we have investment in housing supply, because fundamental to the issue is the decrease in housing supply. In my view, that is having a direct impact on the affordability of housing both for people who rent and for those who are owner-occupiers.

I believe that it is of critical importance that we have controls that protect people against excessive rent increases. No one can look at what has happened in recent years and think that we can stand by and do nothing. We have already agreed not to go into economic theses, but there is a point to make about the way in which price setting, supply and demand work in conjunction with one another. Often, when prices increase because of a reduction in supply, price controls can have the inverse effect to what was intended. If price controls are not considered holistically, they can be inflationary.

I very much welcome a consistent formula for the application of a rent cap. Ben Macpherson has made the case that a rent cap could disincentivise landlords from acting in a way that is generous and reflects the needs and requirements of their tenants. If that were expanded across the market, we could well end up with a mechanism that does not act as a ceiling, but as a floor, which would be perverse. For example, if we end up in a lower inflationary environment of 2 per cent or lower, charging 1 percentage point over and above that rate would mean that renters would experience inflation that is well in excess of general inflation, which would be perverse. Therefore, it will be important that we have a mechanism that allows adjustments to be made if rents are being held above inflation, or, indeed, if other circumstances have changed. If we do not, we could incentivise landlords to use a rent cap as the mechanism by which they increase rents, and we may well see it being baked into tenancy agreements from the beginning, which would ensure that the formula becomes an automatic increase.

I welcome Katy Clark’s amendment 412 and Edward Mountain’s amendment 147. We may well disincentivise investment in properties if landlords have no ability to adjust rents. The ability to alter rent on the basis of changed circumstances and rents that have been previously set is important not only in particular cases but more generally, as we are dealing with the fundamental mechanisms by which prices are set. If that is not done in a way that reflects how the market operates as well as the behaviours of landlords and tenants, the effects could be counterproductive. I have lodged my amendments because I do not want the proposed rent cap to act as a floor—it must act as a ceiling. Therefore, there needs to be a mechanism for adjustment.

I heard what the cabinet secretary said about the wider reflection and consultation process, which is important. For that reason, I will not move my amendments 61A, 61B, 63A and 64A to 64C. However, I believe that my concerns need to be reflected in the bill at stage 3. Even though the bill may not include the precise mechanisms that I have proposed, I think that it should include broad regulation-making powers and broad objectives in order to provide clarity of intent and to ensure that such a mechanism is put in place. Failure to do so could mean that, although the bill intends to protect renters, they may face higher prices. None of us would wish to see that outcome.

The cabinet secretary is setting out the rationale with regard to investment and economic shocks. What consideration has been given to the overall economic effect that both the price cap and the exemptions may have? There is an overall effect in relation to price setting and the effect on supply and demand. Without going into a full economic thesis, I note that those go beyond simply investment and economic shocks, and there will be behavioural effects that may have unintended consequences. What consideration has been given to the broader pricing dynamic that the price cap will create?

Does the cabinet secretary recognise that the intention behind the amendments goes beyond simply allowing correction for individual landlords? I agree with the broad principle of having a consistent approach to the rent cap in order to provide confidence to the sector, but there is a risk that it could act as a floor rather than a ceiling, and unless there is some adjustment mechanism, it will essentially incentivise all landlords to increase not up to, but at, the level of the cap. If we assume that the Bank of England achieves its inflation target, 1 per cent over that would, in essence, mean that rents would increase by 30 per cent more than inflation, unless an adjustment mechanism were provided. Does the cabinet secretary acknowledge that that is a risk and that some consideration needs to be given to the dynamics of how the cap would operate?

I accept the fundamental point that we need to ensure that people have an affordable home. However, would the member acknowledge, on the basis of what she has just said, that the housing supply is going down and the number of starts and completions has fallen to the lowest level since the global financial crash? We must, absolutely, seek to ensure that rent is affordable for people, but there is also an impact on the incentive to invest across all sectors, among not just private landlords but housing associations and others. We are in a dynamic situation, but, fundamentally, the housing emergency is being caused by the fact that the number of homes that are being built is decreasing.

Will the member give way on that point?