Meeting of the Parliament

Meeting date: Thursday, March 29, 2018

Official Report 970KB pdf

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Housing (Amendment) (Scotland) Bill: Stage 1

The next item of business is a stage 1 debate on motion S5M-11350, in the name of Kevin Stewart, on the Housing (Amendment) (Scotland) Bill. I invite members who want to speak in the debate to press their request-to-speak button now.

16:04  

I am pleased to open this stage 1 debate on the general principles of the Housing (Amendment) (Scotland) Bill.

I begin by thanking the convener and members of the Local Government and Communities Committee for their careful scrutiny of the bill so far. I welcome the committee’s stage 1 report, with its recommendation to the Parliament that the general principles of the bill be agreed to. I hope that the Scottish Government’s response to the report provides the committee with the assurance it was seeking from us.

I also thank the clerks for their work in support of the committee, and all the stakeholders who gave evidence to the committee. I particularly thank the Scottish Federation of Housing Associations and the Glasgow and West of Scotland Forum of Housing Associations, which, with other stakeholders, have worked closely with us throughout. I am pleased that stakeholders recognised the need for the bill, and support its principles. I look forward to that approach continuing as the bill process moves towards its end.

The bill is a relatively short but essential measure that amends a number of the Scottish Housing Regulator’s powers over registered social landlords. It also makes provision for ministers to be able to limit local authorities’ powers over housing associations.

The bill is necessary because of the decision by the Office for National Statistics to classify RSLs as public sector bodies in the national accounts. That decision was taken because the ONS, in light of the criteria that it must apply in classification decisions, judged that some of the powers that the regulator and local authorities may exercise over RSLs amount to public control of RSLs for the purposes of the national accounts.

If left unchanged, the classification would mean that all new net borrowing by RSLs, which would have been counted as private borrowing previously, would instead count against the Scottish Government’s borrowing limits. Therefore, although the classification decision might appear to be just a technical matter, it would have the real and significant consequence of placing a new and permanent burden on the Scottish Government’s finances.

One result would be that borrowing by RSLs to support our affordable housing programme would no longer count as private borrowing, but would instead count as Government borrowing, effectively adding £1.5 billion to our £3 billion investment in the programme and putting at risk our target of building 50,000 new affordable homes during this session of Parliament. As RSLs are independent of the Scottish Government, they are free to determine with their private lenders how much they borrow. Therefore, reclassification would have the consequence of the Scottish Government having to accommodate RSLs’ borrowing within its budget, without being able to control or limit the level or extent of that borrowing.

The purpose of the bill is to avoid that outcome by ensuring that the powers that the regulator and local authorities have over RSLs are consistent with RSLs being classified as private sector bodies. For the most part, the bill achieves that by amending those of the regulator’s powers that ONS identified as constituting public control over RSLs. The bill narrows the circumstances in which the regulator can appoint a manager to an RSL or remove, suspend or appoint an officer to an RSL; and it removes the regulator’s powers to give or withhold consent to actions by RSLs, such as disposing of their assets, or restructuring themselves.

The changes are necessary because, put at their simplest, the powers that they amend currently enable the regulator to act as though it were the actual owner of RSLs. That crosses the line between what the regulator, as a public body, is able to do in respect of bodies that are classified as private, and what is incompatible with that classification.

While the changes are significant, they go just as far as is necessary to secure reclassification, but no further than that. They do not alter the regulator’s single statutory objective, which remains safeguarding and promoting the interests of homeless people, tenants of social landlords and others who use the services of social landlords. They leave intact the majority of the regulator’s powers. That includes powers to monitor, assess and report on how well all social landlords are performing; set standards for RSLs’ financial health and governance; undertake investigations; and, where necessary, require landlords to take remedial action.

Those and other remaining powers will allow the regulator to continue safeguarding and promoting the interests of tenants and homeless people, not least by reassuring private lenders that RSLs remain attractive businesses to lend to.

Through my engagement with the SFHA and the Glasgow and West of Scotland Forum of Housing Associations, I have been encouraged to hear that they recognise that the bill represents a new challenge for their members and that they are ready to step up to it. In particular, they recognise that removing the regulator’s powers of consent over matters such as disposals and restructurings will place a greater onus on all their members to demonstrate to their lenders that they have robust and rigorous governance procedures in place. The committee highlighted that issue in the stage 1 report, and I know that the SFHA and the forum are keen to work with the regulator to ensure that the current review of its regulatory framework helps to strengthen further the governance arrangements that are already in place.

In our response to the report, we confirmed that we will use our regular discussions with the SFHA and the Glasgow and West of Scotland Forum of Housing Associations to confirm that the sector gives proper weight to that important matter—for example, through the provision of continuous training and development for members of governing bodies. We have also worked with UK Finance to address its concerns. In response to the committee’s recommendations, we will lodge amendments that will provide for the regulation-making powers at sections 8 and 9 of the bill to expire three years after the bill receives royal assent.

The bill is necessary to safeguard the Scottish Government’s finances and our ambitious affordable housing programme, and I am pleased that it commands cross-party support.

I move,

That the Parliament agrees to the general principles of the Housing (Amendment) (Scotland) Bill.

I call Bob Doris to speak on behalf of the Local Government and Communities Committee. Mr Doris, you have five minutes.

16:11  

I welcome the opportunity to open for the Local Government and Communities Committee in this debate on the Housing (Amendment) (Scotland) Bill. I thank all those who contributed to our scrutiny of what is mainly a technical bill.

It is worth highlighting at the outset that there was general agreement among those we heard from that the measures in the bill are a proportionate and necessary response to the decision by the Office for National Statistics to categorise registered social landlords as public bodies. The bill’s proposals are intended to ensure that the ONS reclassifies RSLs as private bodies by removing or limiting some of the Scottish Housing Regulator’s powers of intervention. The bill also provides ministers with powers to alter the regulator’s powers in the future, in order to ensure that reclassification of RSLs as private bodies. Those we heard from agreed that the only way to achieve those aims was through the bill.

If RSLs remained public bodies, their borrowing to build new affordable homes would no longer be considered private borrowing but would be brought on to the Scottish Government’s books, potentially adding £1.5 million of debt. That could have severe implications for RSLs’ contribution to the realisation of the Government’s 50,000 affordable homes commitment. We therefore agreed that the measures proposed in the bill were necessary. However, we noted that a few issues raised during our scrutiny needed to be addressed.

The Scottish Information Commissioner was concerned that the removal of some of the regulator’s powers could exempt RSLs from the need to provide information under the Environmental Information (Scotland) Regulations 2004. Although the Scottish Government proposes to bring RSLs within the scope of freedom of information legislation, the Information Commissioner was concerned that there could be a short gap between the enactment of the bill and the implementation of the FOI changes. That would mean that the EIRs would not apply to RSLs, thus making people unable to request such information during the gap period. The Information Commissioner was not able to say with certainty that that risk would arise, but he will have to reach a decision when the issue arises.

Both the Scottish Federation of Housing Associations and the Glasgow and West of Scotland Forum of Housing Associations assured the committee that they would encourage and direct RSLs, where possible, to continue to provide information under the EIRs during any gap period. On that basis and with those assurances and the relatively low level of risk involved, we agreed that having less formal arrangements to ensure that RSLs continue to provide that information is a more proportionate response than amending the bill.

Sections 1 and 2 of the bill narrow the circumstances in which the regulator can intervene where an RSL has failed, and those in which the regulator can remove managers or officials from an RSL or appoint managers or officials to an RSL. Most people agreed that the measures were appropriate, with some saying that they reflect how the regulator has actually used its powers, which the regulator has confirmed.

UK Finance raised one issue in relation to the powers, commenting that the definition of “failure” could be broadened to make it clear that the regulator can intervene where the RSL is failing, rather than when it has failed or becomes insolvent. It felt that that would ensure lender confidence in the market. The Scottish Government and the regulator, however, allayed those concerns by pointing to the statutory provisions in the Housing (Scotland) Act 2010, which set out regulatory interventions that the regulator will still be able to make following amendments made through the bill. The committee welcomes the fact that the minister has now also expanded the explanatory notes to provide that clarity.

Sections 3 to 7 of the bill remove the requirement for the regulator to provide its consent to RSLs where they wish to dispose of land or make certain organisational changes, such as a change in their constitution or restructuring, or to wind up or dissolve an RSL. The requirement to provide consent is replaced with the requirement to notify the regulator within 28 days of the changes being made. Any existing tenant consultation requirements are protected. The committee was broadly content that those proposals were balanced and we welcomed the reassurances that were given.

The importance of strong governance processes and their direct impact on the confidence of lenders and of RSLs themselves was highlighted to us. Although the bill removes some of the regulator’s powers in relation to RSL governance, it was encouraging to hear that UK Finance was comforted by the measures that stakeholders and RSLs will take to ensure that self-assurance processes are strong.

There are some additional powers in sections 8 and 9 that will ensure that the Government has the power to intervene and make additional provisions if we do not have the approach just right. The committee and the Government acknowledged that those powers do not have to last for ever; the bill will be amended at stage 2 to include a sunset clause, which we think is the proportionate, responsible and right thing to do.

The Local Government and Communities Committee is happy to agree to the general principles of the bill.

16:16  

This is one of those debates on a bill that does not exactly set the heather on fire, but which is important nonetheless. The Housing (Amendment) (Scotland) Bill looks, on the face of it, to be quite narrow and technical: a bit dull, you might think, Presiding Officer.

However, although the bill deals with specific accounting issues that are of interest to accountants, its implications will be far reaching. If the bill is not passed—although I am sure that it will be—that would make it extremely difficult for housing associations to play their part in meeting the Government’s affordable homes target. Although that might give Opposition spokesmen like me an opportunity to kick Kevin Stewart, which can be quite enjoyable, it would not be very responsible. So, we will support the bill at this stage and beyond.

It is useful to put what this is all about into plain English—at least, I will have a go. Registered social landlords and housing associations were classed as private bodies for accounting purposes until the Office for National Statistics decided to change their status to public bodies. The effect is that any borrowing that they do counts against the Scottish Government’s borrowing limits, which in turn means that the Government might have to limit what RSLs can borrow, which would not be good. We can see the problem. In order to remove those shackles, we have to reclassify RSLs as private sector bodies. However, we would not expect a private sector body to be as tightly regulated as our housing associations are by their housing regulator. That level of public sector control was one of the reasons behind the ONS switch in the first place, so we can see where it was coming from.

If we are to take RSLs back into the private sector, we also have to rein back the regulator’s powers. The bill tackles that, with the end result being that housing associations will enjoy more freedoms and will be able to deliver more. The bill is technical, but it is important.

It is fair to say that there has not been a great deal of interest in the bill outside the sector. The Local Government and Communities Committee received only 16 responses to its call for evidence, compared to more than 1,000 on the Planning (Scotland) Bill, which is a lot more controversial. People are generally supportive of the proposals, which will narrow the powers of the regulator to appoint a manager to an RSL, and to remove, suspend and appoint officers of an RSL.

The bill will also remove the need for the regulator’s consent to be given for disposal of land and housing assets by an RSL, for changes to the constitution of an RSL and for voluntary winding up, dissolution and restructuring of an RSL. The proposals provide the Scottish ministers with regulation-making powers to limit the influence that a local authority has over an RSL.

The Local Government and Communities Committee made a number of recommendations. I am pleased that it took on board the concerns of the Delegated Powers and Law Reform Committee about sections 8 and 9 of the bill, which have already been mentioned and which cover ministers’ regulation-making powers. The DPLR Committee considered that, in principle, the powers could be framed more narrowly. The minister agreed to add a sunset clause to both those sections, and he hoped that that—and his assertion that the powers would be used only for limited means—would address the concerns that were raised by that committee, which, indeed, they do.

Overall the bill is a sensible one that should proceed through its stages without fuss, and I commend it to Parliament.

Mr Simpson, I understood your explanation, so thank you for putting it in simple English.

I call Monica Lennon. You have four minutes, please.

16:20  

Well, the bar has been raised. [Laughter.]

I am pleased to open for Scottish Labour in this afternoon’s debate on stage 1 of the Housing (Amendment) (Scotland) Bill, and to state our support for it. I was worried that there would be a lot of repetition in the debate, but let us just call it consensus—we will be saying lots of similar things.

I am a member of the Local Government and Communities Committee, which has produced a stage 1 report on the bill. I joined the committee late, at the beginning of this year, as work on the bill was drawing to a close, so I must pay tribute to the convener, my fellow committee members and Elaine Smith, who was my predecessor as deputy convener of the committee, and who will speak later in the debate.

Scottish Labour supports the bill because, like everyone in the chamber, we agree that it is necessary and we understand that it is a proportionate response to ensure that RSLs’ debt does not affect the Government’s ability to borrow money and to build the affordable housing that is so desperately needed across Scotland.

Following the decision of the ONS back in 2016 to reclassify RSLs as public sector bodies in the UK national accounts, the bill has become necessary in order to ensure that RSLs can be reclassified as private sector bodies, as they were previously. As we have heard, and as the minister explained in his opening speech, if that were to be left unchanged, it would mean that any borrowing that was undertaken by social landlords would be counted as borrowing by the Scottish Government. As Government borrowing is limited to £450 million per year, and to £3 billion in total, that would potentially lead to a situation in which restrictions would have to be placed on how much RSLs could borrow.

As we have heard, the bill also seeks to make changes to the powers that the Scottish Housing Regulator has over RSLs in relation to their management and governance and how they buy and sell land. Reducing the powers of the regulator over RSLs will allow the ONS to reclassify them as public sector bodies, as they were before.

As we have also heard from the Local Government and Communities Committee’s convener, the majority of the evidence that was received by it has been supportive of those proposals, including that from the Glasgow and West of Scotland Forum of Housing Associations and the Scottish Federation of Housing Associations. Unlike with other bills, there was no need to consult widely, so the Government took the sensible approach of engaging directly with the regulator and with the groups and bodies that represent those who are likely to be affected by the bill’s proposals, including tenant groups. There appears to be broad agreement between stakeholders and the regulator that changes to the regulator’s powers will reflect actual practice, and that the narrowing of powers will not hamper necessary interventions.

Some concerns had been raised that the bill would potentially weaken safeguards, or have an unintended impact in respect of landlords falling out of the scope of the Environmental Information (Scotland) Regulations 2004, which was highlighted by Bob Doris. We welcome the fact that the Scottish Government has confirmed that it will look into making RSLs subject to the Freedom of Information (Scotland) Act 2002, should it be deemed that they will fall out of the EIR obligations. The fact that there would still be a gap between implementation of the bill and that of the FOI extension remains a concern, but we are all keen for the Government to work with others to resolve that, as the work progresses.

In conclusion, Scottish Labour will be happy to support the principles of the bill at decision time this evening.

I call Andy Wightman to open for the Green Party.

16:24  

Thank you, Presiding Officer. How long do I have?

Four minutes, please.

Four minutes? Goodness me!

Is that too much?

We will see how I get on. I will try to stay within scope.

Like other speakers and my colleagues on the committee, I acknowledge the purpose of the bill and agree with it. I think that I agree with everything that the minister said in his opening remarks—there is a first time for everything—and with what my convener said. We will vote for the bill at decision time, so I want to use my four minutes to discuss some wider aspects of housing associations that our deliberations on the bill raised in my mind.

In the 1970s, community-based housing associations and co-operatives began to flourish, mainly in Glasgow. They worked to improve life in the city’s tenements and to manage better and to improve tenement housing. That was a very welcome model of co-operation that, 40 years later, we would do well to reflect on, in terms of promoting more co-operative approaches to housing provision.

Housing associations have played an important role in the housing story since the recognition of registered housing associations in the Housing (Scotland) Act 1974. In a debate such as this, it is important to acknowledge the good work of housing associations—in particular, rural social landlords such as Lochaber Housing Association and Waverley Housing, which is in the Scottish Borders, as well as the urban organisations that house large numbers of tenants in our towns and cities. They are where we find our largest housing associations—for example, the Wheatley Group, which encompasses 12 business interests including Dunedin Canmore Housing and Glasgow Housing Association, and which last year reported a turnover of £275 million. In the course of its work, Wheatley housed 250,000 “customers”, as it calls them, across Scotland.

Although today we affirm the value and validity of housing associations as private organisations, it is appropriate to raise a question about where those organisations and the model are headed. For example, I think that we should differentiate between smaller organisations, which tend to use terms such as “tenants”, and larger operators such as Wheatley, which talk about “customers”. When the chair of the Scottish Housing Regulator was before the Local Government and Communities Committee in November last year, I put it to him that in his annual report he had highlighted the diminishing tenant participation in the larger housing associations compared with the small ones. That brings me back to my opening point that it is perhaps time to consider moving towards a more genuinely co-operative model for housing in the social sector.

When the minister appeared before the committee in December, he warned that if the bill did not proceed, the 50,000 affordable homes target would be at risk. That is true, and the bill will overcome that issue. I do not dispute that, but we need to remember that half of the Government’s affordable housing programme, at £1.5 billion, is funded by social tenants, and many of those households are among the financially poorest citizens in this country. It is incumbent on us to acknowledge that.

As I have argued, we should not ignore the role of individual tenants as full participants in housing associations. They are vital to the success of those organisations, which is why I regret the fact that, in many cases, tenants do not participate to the extent that they could. There is room for improvement on that. Those shortcomings are particularly important in the light of the fact that the bill will weaken public oversight of housing associations.

I agree with the general principles of the Housing (Amendment) (Scotland) Bill. Greens will support it at decision time. I look forward to stage 2.

There is a little time in hand. I was being a bit naughty—yes, I have my naughty moments.

I call Richard Lyle.

16:28  

I will get all that time, so thank you, Presiding Officer.

I welcome the opportunity to speak on an issue that is important to all our constituents, including mine in Uddingston and Bellshill. The bill concerns the responsible allocation of funds in relation to the Scottish Government’s debt limit, and it is on that point that I will begin my remarks. I have no doubt that no one in the chamber fails to recognise what an emotional subject housing is. I am also confident that most of us would agree that Scotland needs more public housing. The bill is simply a reasonable administrative necessity.

The member says that we need more public housing, but of course the bill classifies housing associations as private organisations. Does he agree that, as well as more housing association stock, we need more public housing that is run by councils?

Every house that is built is a house that houses a family. The member knows that as well as I do.

The ONS acknowledges that if we do not agree to proceed with the bill, RSLs will continue to be classified as public sector bodies in the national accounts, with the result that all new net borrowing by RSLs will count against the Government’s borrowing requirements. That would impose a significant, permanent and—most of all—needless burden on the Scottish Government’s finances.

I am sure that all members care about the Scottish Government’s ability to pay for the services on which Scottish people rely and that they do not need more convincing of the simple argument that a Government needs all available funds if it is to fulfil its obligations. Therefore, the Parliament should take steps to solve the problem of the classification of RSLs as public bodies by agreeing to the bill.

Our not agreeing to the bill would have immediate implications for the Scottish Government’s commitment to build homes for families, because our commitment depends on the Government’s planned financial support of more than £3 billion for our programme being augmented by private borrowing by the RSL sector of some £300 million a year. If RSLs’ borrowing can no longer be counted as private borrowing, the cost to the Scottish Government of delivering on the commitment will include RSL borrowing and rise to £4.5 billion, which is £1.5 billion over budget, as members have said.

The policy is similar to policies that are being pursued—for the same reasons—by the UK Government, the Northern Ireland Executive and the Welsh Assembly Government in their respective jurisdictions.

The bill provides that RSLs will no longer be classified as public sector bodies. Any funds that they borrow will therefore not come out of the Government’s limited budget and we will remain able to fulfil our obligations to all our constituents, including making good on our promise to build 50,000 new and affordable homes. I commend the bill to the Parliament.

16:32  

When I was trying to put my two girls to bed last night there was great excitement, because today is the last day of term. In the end, I said, “Do you want me to tell you what I’m talking about in the Parliament tomorrow? I’m talking about the Housing (Amendment) (Scotland) Bill.” Suddenly there was silence in the room and I was able to leave—the girls seemed not to want to engage with this vital subject.

To get your girls to bed, did you read them my speech? [Laughter.]

Even more exciting, I referred them to the minister’s biography, which got them overly excited.

Joking apart, although the bill is technical and will not, I suspect, be remembered by most of Scotland in the years to come, it is important, as members have said.

With your permission, Presiding Officer, I will stray away slightly from the bill, although I will stick with the subject of housing. Before I entered the Parliament nearly two years ago, I worked for a small charity that tries to get more affordable housing in Scotland by redeveloping empty church buildings. We worked closely with many housing associations across Scotland. My general view is that housing associations are doing a great job and are working with the Scottish Government to try to get the 50,000 affordable houses built within the next few years. I am sure that all members welcome that.

I hope that the powers that the bill will give housing associations to borrow and follow different accounting procedures will encourage some housing associations to build. I think that some housing associations have become slightly conservative in their approach to building more houses; I came across a number that were scared to go ahead, for different reasons. Housing associations have a responsibility to work with their communities, local authorities and the Scottish Government in that regard.

It is in everybody’s interests to get housing associations to develop if they have the confidence to do so. If Mr Balfour wants to outline some of the reasons that he came across and send them to me, I will look at them. My officials will help as much as they can with giving housing associations the knowledge and helping to set them on the development track if that is what they want to do. I will be quite happy to hear from Mr Balfour about the reasons for lack of development in certain places.

I will certainly take the minister up on his kind offer after recess.

The bill will give housing associations greater confidence to go forward. It is in all our interests for more affordable houses to be built in the Lothian region and across Scotland. For that reason, I welcome the bill and the fact that there is cross-party consensus on it. I hope that the bill will get through its final two stages quickly so that we can move on and see housing associations flourish as they seek to serve everybody across Scotland.

16:35  

I agree with what Kevin Stewart said when he moved his motion.

As the minister said, the planned 50,000 affordable houses, 35,000 of which are for social rent, could be put in jeopardy if the bill does not go ahead. We cannot allow that to happen. We should remember that, even if we achieve those figures, we will still face a housing crisis that must be tackled.

Last year, more than 34,000 homeless applications were made in Scotland. Even 35,000 social rented houses—if they are achieved, which I hope that they will be—will not solve the housing crisis. There are 130,000 households on local authority housing waiting lists, and almost 11,000 households are in temporary accommodation—27 per cent of them are living in bed-and-breakfast accommodation.

Can members just imagine young children sitting in their class of 30 pupils and, while some children are just getting on with their work, some are wondering where they will be sleeping that night? It is incredible that we have these housing problems in 2018 in Scotland. We need to tackle them.

The housing minister is fond of reminding us that, during the period before his party came into government, eight council houses were built.

Six.

It was six. However, it is interesting that between 1997 and 2007, 37,200 houses were built in the housing association sector. A lot of progress was made and I was surprised to discover that there are almost 280,000 units of housing stock in housing associations. We can therefore see that housing associations make a massive contribution in Scotland.

The minister was a councillor, as I was a councillor. One of the most difficult things for me—it has continued since I became an MSP—is people coming to my surgery or contacting me for help when they are either in inadequate housing or have no housing at all. That is why it is good that we have unity here today.

I, too, am glad that we have that unity today, because there is a lot of shared ambition across the Parliament to deliver affordable homes and homes for social rent across Scotland.

I recognise that, in Mr Rowley’s part of the world, Fife has done extremely well in adding to our programme during the previous parliamentary session and in the current session. I hope that that cross-party co-operation in Fife and elsewhere in Scotland will continue, so that we can resolve people’s problems with getting housing.

We need to work together because of the issues that I have outlined. It is not acceptable for us to have this housing crisis in Scotland. All parties should work together. People’s most basic right—to have a roof over their head—should be available to every individual person, every child and every family. I will therefore be pleased to work with the Government on this.

16:40  

Through the chair, I will say a couple of words to Andy Wightman, who gave us a 40-year horizon since housing associations came into play. “The Digest of Justinian” covered the co-operative housing associations in ancient Rome, and Babylon had co-operative models 2,500 years ago, so Scotland has come to the party quite late.

Members might reasonably ask why I am speaking in the debate. I forced my way to the front of a long queue that the whips had drawn up to fill the last speaking place from the Government benches. The temptation for my part arose, of course, when I read in the committee report at paragraph 10 that

“The Bill is short and technical”.

That word “technical” inevitably drew me in.

It is fair to say that this is not the most contentious thing that we have debated since I came to Parliament in 2001, but it is quite interesting. It illustrates some of the unintended side effects of revising the way in which we do accounting—in particular, the accounting of bodies that have to report their assets, liabilities, income and expenditure. In 2001, I found that, under the old financial reporting standard 17, the accounts for the private finance initiative contractor Kilmarnock Prison Ltd—I was interested in prisons at that time—treated Kilmarnock prison as a disposal in the second year of trading because it had a commitment in the 30-year contract to pass the prison to the Government. It vanished off the contractor’s balance sheet as an asset but, as far as the Government was concerned, it did not appear as an asset on its balance sheet until 30 years hence. That asset appeared on no balance sheet for almost 30 years, under the old system.

We are now under the international financial reporting standards and have a new thing called “contingent assets”. That means that the prison now appears on the balance sheets of both Kilmarnock Prison Ltd and the Government. The bottom line of all that, in relation to the issue that is before us today, is that we need to have the right balance as to where things appear in our public accounting.

The problem that has been presented to us by the Office for National Statistics is perfectly proper. The question is whether the associations were in a place in which they had sufficient freedom of action that they could control, manage, dispose of and buy assets without the Government telling them what to do. The next question is whether they were creating assets for the Government, and the final question is whether they, by their actions, created involuntary liabilities—contingent or otherwise—for the Government. It was uncertainties in those accounting areas that properly caused the Office for National Statistics to say that those bodies are connected to the public sector—although they are private bodies, as Mr Wightman reminded us—and are really part of the public sector. If that was the case it would, of course, inhibit the Government in its spending plans and, more fundamentally for the policy that we are interested in here, inhibit the ability of those societies to borrow money and build housing. Alex Rowley is perfectly correct to say that we have to build more houses, by whatever means.

When he read about the bill, did Stewart Stevenson come across comments by UK Finance that lenders might have to “ramp-up their ... due diligence”? What does he think about that point?

Answer and conclude, please, Mr Stevenson.

I was very pleased that UK Finance came to a position of supporting what is proposed—I gather that there was some doubt about that initially.

Elaine Smith makes a valid point: whenever we change a system, we risk creating greater complexity. That would not be good news if it got in the way of our building more houses and made life more difficult for housing associations. However, the bill strikes the right balance and I shall be very happy to support it, come decision time.

16:45  

Although I am closing for Scottish Labour, when the bill first came before the Local Government and Communities Committee, I was deputy convener of the committee. I was involved in taking evidence on the bill and I raised some concerns about some potential unintended consequences of narrowing the powers of the housing regulator. I will return to those concerns later.

As we have heard from the minister, the committee convener and most other speakers, the main thrust of the bill is to ensure that the borrowing ability of housing associations and other social landlords will not be counted as Government borrowing. That will be done by reducing the powers of the regulator over registered social landlords and allowing the ONS to reclassify them as private sector bodies. It will also ensure that the debt accrued by registered social landlords does not become subject to further restrictions or limits as an unintended consequence of the earlier decision taken by the ONS to reclassify registered social landlords as public sector bodies.

Those who know me will be aware that I am not naturally drawn to reclassifying a body from the public sector to the private sector. I note Andy Wightman’s comments on that, too. However, as we know, the consequences of not acting, which were clearly set out in evidence to the committee, would be that the Scottish Government’s target of building more affordable homes could be impacted almost immediately if unnecessary restrictions were placed on the borrowing ability of RSLs. As Andy Wightman said earlier, that would also impact on council house building. My colleague, Alex Rowley, made that point in his speech, too. That is why there is broad consensus that the bill is necessary and why Scottish Labour agrees with the Local Government and Communities Committee and will support the bill’s general principles.

Jeremy Balfour raised an interesting point about housing associations. It brought to mind the right to buy. I was involved in the issue of the extension of right to buy to housing associations back at the start of the Scottish Parliament. It is no longer an issue, but it would have been something that would have put off housing associations from building more houses.

On the issues of concern that have been raised about the bill, I agree that further work must be done to ensure that there is no reduction in the information that RSLs are required to provide to the public. That issue was raised at the committee. I appreciate the view expressed by the SFHA and others that they would continue to expect their members to provide the information that they are currently required to provide under the Environmental Information (Scotland) Regulations 2004. Nonetheless, it is still a matter of concern that, should an unintended consequence of the bill be that registered social landlords fall out of the scope of EIR, there might still be a gap in implementation between the passage of the bill and the extension of the Freedom of Information (Scotland) Act 2002 to RSLs.

Will the member take an intervention?

I am happy to take an intervention from the committee convener, but first I was going to say that I am pleased that the Scottish Government has committed to resolving the issue with the committee, as Monica Lennon mentioned.

It would not be ideal, but in theory, if the gap were very small, once the FOI legislation kicked in requests could be submitted under FOI and the information would still be given out. I hope that that situation will not arise and that housing associations will act in the spirit of the bill that we are discussing.

I am sure that the committee will take that on board at stage 2 and keep an eye on the matter.

At committee, I also realised that increased self-assessment for registered social landlords runs the risk of increased costs for RSLs. There is also an implication that local authorities will have reduced influence on housing association boards, with an associated impact on council duties with regard to housing targets and reducing homelessness. I am glad that the minister has agreed to monitor that, and, in particular, to ensure the right approach to tackling homelessness with the partnership and co-operation of RSLs. Andy Wightman’s comments on that were also interesting. I look forward to seeing how he takes that forward.

In conclusion, the Scottish Government has said that, without the legislation, there would be a significant permanent burden on Scottish Government finances and controls on how much RSLs can borrow. Although the debate has been fairly technical and has maybe not set the heather on fire, as Graham Simpson said, the consequences could be real for Government spend, housing waiting lists and homeless people. Therefore, the bill is important and, as a former homelessness officer, I feel very strongly about it.

As I have said, Scottish Labour will be happy to support the bill at decision time.

16:50  

I am very pleased to participate in this stage 1 debate and to close on behalf of the Conservatives.

It has been good to hear the contributions from members across the chamber, who support the principles of the bill. The consensus in the chamber is most encouraging. As a member of the Local Government and Communities Committee, I thank all those who have worked on the bill and look forward to its proceeding.

The Scottish Conservatives support the bill. We understand and acknowledge the reasons behind it. Graham Simpson talked about its importance—why it has to be passed—and he said that the Government and RSLs are taking a sensible approach to what is happening. That is important.

Monica Lennon talked about the powers, management and governance that are required, and Jeremy Balfour touched on housing associations’ lack of building and developments, and their fear. We need to take that on board, so I look forward to dialogue on that with the Minister for Local Government and Housing.

As other members have said, the change is necessary, because the Office for National Statistics reclassified our housing associations as public bodies. That means that any borrowing that is undertaken by them counts towards the Scottish Government’s borrowing limits. At present, Scottish housing associations privately borrow about £300 million each year, which is about two thirds of the Scottish Government’s capital borrowing limit. Without any changes to the current situation, it would be highly likely that the Scottish Government would be forced into imposing controls on borrowing by housing associations, and none of us wants that to happen. It could put in danger the Scottish Government’s target of building at least 50,000 affordable homes during this parliamentary session. The Conservative Party supports that goal. Meeting that target is a challenge, and we must ensure that failure to meet it is not an option. We need those houses now. It is therefore essential that the Office for National Statistics is able to reclassify housing associations as private bodies. The bill will enable exactly that by reducing and removing certain powers of the regulator, and we are happy to support that.

In keeping with the aim of moving away from the designation of housing associations as public sector bodies, it is welcome to see the proposals in section 9 to limit local authorities’ control over them. Giving ministers regulation-making powers for limiting or removing the influence that councils can have over housing associations is another necessary step to tackle the issue. It is very important that we ensure that that happens.

That is not to say that registered social landlords do not need to be regulated at all; they very much require to be regulated. It is vital that tenants can be confident in the knowledge that their homes are well maintained and that their tenancy is secure. A strong framework also gives funders of social housing the confidence to invest. That has been touched on already. There may be a lack of confidence to invest. We must ensure that that is not the case and that we manage to challenge that and ensure that investment happens.

The Scottish Conservatives are committed to strengthening building regulations to ensure the safety of the Scottish public and to increasing the number of affordable homes that are available across the country. We believe that the recommendations in the committee’s report and the bill seek to address the problems. Our aim is to strengthen and support any measures that will improve the housing sector. In turn, those measures will benefit communities throughout Scotland.

I support the bill.

I call Kevin Stewart to close for the Government. I was going to say that I call Alexander Stewart to do so. That would have been interesting.

16:54  

As long as you did not call David Stewart, who is not present at the moment. Maybe there are too many Stewarts; actually, there are never too many Stewarts.

I would like to thank those members who participated in this afternoon’s debate. I certainly appreciate the consensus that there has been across the chamber and I am glad that members have supported the general principles of the bill today, and that they have recognised that it is necessary in order to protect the finances of the Scottish Government.

As members will know, this Government has a clear and defining reason for making housing a priority. Providing good-quality, warm and affordable housing is vital in order to create a fairer Scotland, to secure economic growth and to support and create jobs. At the heart of that sits our commitment to deliver at least 50,000 affordable homes over the course of this session of Parliament, with 35,000 of those being for social rent, which presents a huge opportunity to meet the various housing needs of communities right across the country.

I am pleased to say that we are making good progress on that commitment thanks to partners in councils, housing associations, and the construction industry. Recent statistics show that approvals for new housing association homes are up 33 per cent on the previous year, helping to lay the foundations for a pipeline of proposals that are capable of delivering against the remainder of the 50,000 target by 2020-21.

Excuse me—there is too much chat in the chamber. What Mr Stewart is saying is riveting and members should be listening. [Laughter.]

I hope that I can continue to be riveting. Maybe the heather will, after all, be set alight this afternoon.

Let me be quite clear. The role of housing associations is not just about providing good-quality housing and services for their tenants, or building new energy-efficient homes; it is also about creating jobs, supporting vulnerable people—as Elaine Smith pointed out—and acting as an anchor for some of the most deprived communities in our country.

Given the crucial role that housing associations play, I am delighted that the need for the bill and its general principles have, from the outset, had the support of the sector. Both the SFHA and the GWSF have acknowledged the need for the bill—not least to underline the status of housing associations as independent, private bodies that are partners with the public sector, but not controlled by it.

Housing associations are key partners for all of us, developing and managing high-quality, energy-efficient housing across the country, and delivering the range of services to their tenants that I mentioned. Beyond that, they do so much to build and sustain the communities in which they operate, and long may that continue.

We—and they—agree on the need for them to have a strong and effective independent regulator, working on behalf of homeless people, tenants and others who use their services. One of the key benefits of such regulation is the confidence that it gives to lenders. That confidence enables housing associations to borrow at favourable rates, helping them in turn to play their part in delivering affordable housing.

Maintaining lenders’ confidence has been an important objective for the Government during the development of the bill. That is why we have been in regular contact with their representative body—UK Finance—throughout the process, and why we have used our response to the stage 1 report to address concerns that they raised with us.

Another priority has been to ensure that housing associations continue to provide information requested by anyone under the environmental information regulations, as has been mentioned by many members this afternoon. I am pleased that the SFHA and GWSF share that priority, and I am grateful to them for confirming that they will be advising their members to continue responding positively to requests for environmental information even if, once the bill has been enacted and brought into force, the Scottish Information Commissioner decides that the regulations no longer apply to housing associations.

I hope that those examples illustrate the positive and constructive approach that we and stakeholders have taken to the issues that are raised by the bill. I welcome the input of the Local Government and Communities Committee, and I hope that that will continue during its stage 2 deliberations.

I thank the officials who have had to deal with what some members have said is rather a dry piece of legislation. Personally, I find it all quite exciting, as I do all housing matters. I hope that, at stage 2, we will continue to have the co-operation that we have enjoyed so far, and I thank you, Presiding Officer, for the opportunity to hold the stage 1 debate today.