Introduction

I’m pleased to be addressing this large and distinguished audience of housing specialists. I want to devote most of my remarks to considering the implications that Firm Foundations has for the social housing sector. In particular, I want to address some of the emerging concerns for the sector’s future - to which Cy alluded a moment ago. But first, let me say something about the process for taking forward work in light of the responses that Firm Foundations has generated.

We were delighted to receive almost 400 responses from a very wide range of organisations and individuals. We are considering these at present. To help us do so, we have commissioned Tribal Consulting to analyse every response and to produce a report of their analysis. We hope to publish their report by the end of the month. We will then want to spend some time discussing the results with CoSLA and other stakeholders before coming to decisions.

My aim is to have set out - by the end of June - the broad direction of our policies. Thereafter, I envisage a series of announcements on the detail of particular policies. Each of these policies will be directed towards the purpose that this Government has set itself. That purpose is:

“To focus Government and public services on creating a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth.”

It is – in effect – an overarching statement of intent that informs all aspects of our policies – including our policies and aspirations for housing.

The national conversation

Of course, the current devolution settlement constrains the ability of the Scottish Government to fashion a fully bespoke set of housing policies that would address all aspects of Scotland’s housing needs and serve fully the Government’s purpose. As part of the national conversation, we will want to consider how greater devolution might improve our capacity to achieve more through our housing policies.

The national conversation enables us to consider how far additional powers would help to develop policies on housing that would be more effective and more supportive of our purpose. I hope that you and other stakeholders will reflect on where there are gaps in our ability to develop policy in ways that would meet our needs. Please take this opportunity to help shape the Government’s thinking by sending me your views on where changes to our powers on housing and housing related topics would be most valuable.
Meantime, Firm Foundations provides Government and stakeholders alike with a challenging agenda for the coming months.

[back to top of page]

Supply issues and Task Force

Firm Foundations recognised that housing is critical in making progress on the Government’s purpose. It envisaged a housing system capable of providing opportunities for all to flourish and supporting sustainable economic growth.
And was founded on every part of the system having a role to play in making the system work properly. Its proposals ranged across all tenures with the following high level outcomes as their objectives:
• An increased supply of housing across all tenures, all of which is delivered on the basis of higher environmental and design standards;
• More choice of housing that those on lower incomes can afford;
• Housing developments that contribute to the creation of sustainable, mixed communities; and
• Social housing that provides better value for public expenditure.

Some have criticised the fact that so much of Firm Foundations was devoted to questions of supply – and that this had the effect of excluding other important matters, such as regeneration or the needs of particular groups. I believe that we were right to focus on the way the current housing system is failing too many people through its inability to match supply to demand - and to make addressing this failure a priority at this stage.

Firm Foundations set out our proposals to improve the integration of land use planning and housing strategy in support of a more effective housing system in Scotland. But these changes will take time to work through and there is a need to respond to the housing pressures faced in some of our communities now. That is why the Housing Supply Task Force is so important. It has now met formally on five occasions - as well as organising a number of seminars around the country. It is taking a twin track approach to its work by considering both geographical issues and more cross-cutting themes.

I am sure that many of you here today will have participated in events helping to shape the work on our studies of supply pressures in the Lothians, Glasgow and Clyde Valley and rural Scotland. But we have also been busy looking at the potential contribution of surplus public sector land, the capacity of the house-building industry and the role of community engagement in creating a supportive climate for new development.

Most of the initial work of the Task Force has been building up a good understanding of the issues affecting housing supply and taking views on potential ways forward. This evidence gathering phase has been assisted greatly by the contributions of all the local authorities, developers, housing associations and housing interest groups who have assisted the Task Force in shaping its agenda.

This first phase of work is nearly complete and the Task Force will publish a progress report in the next few weeks setting out what it has learned and the main issues that it intends to pursue.

[back to top of page]

Private rented sector
A greater role for the sector
I want at this point to say a few words about the private rented sector and also about an important consultation on quality in the owner occupied sector. Nearly 10% of households in Scotland now live in private rented housing.

And it is becoming increasingly popular as a sector which offers a wide range of choice and flexibility to a wide range of different types of tenants. We made clear in Firm Foundations that we want local authorities to work more closely with private landlords to encourage the private rented sector to play a greater role in meeting housing need.

We are carrying out a review of the sector to ensure that it is capable of delivering the right types of housing in the right places to help meet housing need. We want to engage with local authorities, landlord organisations and tenant representatives, to discuss options for securing this. Options might include building on existing initiatives to find good housing in the sector, such as the Rent Deposit Guarantee Schemes and Private Sector Leasing - and also exploring whether there are other cost effective ways for local authorities to make more use of what the sector has to offer in terms of meeting need.

Consultation on homelessness regulations
Also, we will soon be consulting on proposed amendments to homelessness regulations to give local authorities more scope to use the private rented sector to discharge their homelessness duties where this is appropriate.

While a social rented home may still be the most appropriate option for many homeless people, there will be others who find the private rented sector is better able to meet their needs for a particular type of housing, or for housing in a particular location.

[back to top of page]

Landlord registration

At the same time, we are continuing our work to improve standards in the sector through measures like the mandatory private landlord registration scheme and the new Repairing Standard, which came into force last September.

There have been some difficulties in implementing landlord registration and I am extremely pleased that application approval rates now stand at 62%. I know that considerable effort has gone into improving delivery over the past few months and we can see that this is now paying off. A particular mention is due to Aberdeen Council, given our conference here today, which, in the last month alone, increased their rate of approval by 25%.

There is work still to be done and I want to focus our efforts on enforcing the legislation and removing the worst landlords who continue to give the sector a bad reputation. But we can start to see how landlord registration is improving the sector and that private renting can be a good option for local authorities as they plan to meet housing need.

Landlord Accreditation Scotland
We recognise that the great majority of private landlords already do a good job, and we are pleased to be providing start-up funding for a new organisation – Landlord Accreditation Scotland.

This is owned by the Scottish Rural Property and Business Association and the Scottish Association of Landlords, and will set up a national voluntary landlord accreditation scheme to help us to enhance the image of private renting. The scheme will be launched soon and will provide training, advice and guidance for landlords, both to promote good practice and give private tenants peace of mind.

Quality in owner occupied sector
I also want to mention that we will shortly be beginning a major consultation on draft guidance and regulations to support implementation of key elements of the 2006 Housing Act.

The provisions in the Act represent the biggest change to private sector housing quality in 30 years, which over time will lead to a cultural change in attitudes to housing quality in the private housing sector. The Act places personal responsibility at the heart of the new approach, coupled with assistance for those who need it.
Local authorities will have the lead role in bringing about marked improvement in the quality of private housing in their areas, benefiting owners and the communities they live in – and we will support them in this work. We will also introduce changes which will bring about major improvements in the assistance available to people adapting their homes. The forthcoming consultation will be an important milestone in moving towards this new regime.

Energy efficiency
An important aspect of the quality of our homes is their energy efficiency. The energy efficiency of Scotland’s homes has been improving year on year - supported by Government investment in fuel poverty programmes and by the efforts of social housing providers.

The Sullivan Report, ‘A Low Carbon Building Standards Strategy For Scotland’, sets out a route-map to zero carbon new buildings. Its recommendations are demanding, but if they can be implemented, they will make a significant contribution to our proposed 80% reduction in carbon emissions by 2050.

[back to top of page]

The future of the social rented sector
Let me turn now to social housing and to some of the concerns that appear to be emerging among stakeholders. Firm Foundations acknowledged that the shift in favour of owner occupation over the past generation is of fundamental importance to Scottish society and needs to be reflected in our housing policies.

Just as importantly, however, was its recognition that not everyone wishes, or is able, to own their home – and so it took demand for rented housing as seriously as that for owner occupation. I’ve commented already on our ambitions for the private rented sector.

Our ambitions for social rented sector can be gauged by the range and scale of our proposals for the sector. Principal among these were:

• A new, positive role for local authorities as landlords;
• Ending the right to buy on new social housing;
• Improving the supply of new housing association stock by changing the way subsidy for new stock is distributed;
• Encouraging mixed communities through more variety and choice in the provision of social and affordable stock;
• More flexibility in how landlords improve existing stock and meet the SHQS; and
• A modernised independent regulatory regime based on the Crerar review principles.

Behind these proposals is our vision of a sector providing continually improving value for tenants, the communities that it serves and taxpayers.

We want to see local authorities, housing associations – and others with the capacity to do so - working together to realise that vision across the country.

Common Housing Registers
A practical example of this is our wish to see further progress in the development of Common Housing Registers. I know that developing and maintaining them is not always straightforward, but the benefits provide prospective tenants with genuine benefits. A CHR allows an applicant to be clear about the social housing on offer in an area, to register their need as widely as necessary and to revise information about that in one simple step.
This is the type of best practice to which we should be aspiring in social housing, and I welcome the efforts in areas without registers to invest the time and effort needed to develop a CHR. I am pleased that the CHR Support Service will continue to help CHR partnerships directly in 2008-09 and am committed to considering what more can be done to help landlords in this area

[back to top of page]

New council house building
Our proposals to support new council house building should also be viewed in the context of local authorities and housing associations working in partnership to provide more social housing. And I want to be clear that it is not intended to represent some diminution of the role of housing associations.

As we said in Firm Foundations, new council housing - of possibly 500 or 600 new houses each year for the next ten years - will augment the main programme that housing associations will continue to deliver.

That would be a welcome addition to new supply - and it would be madness not to tap into this source at a time of such intense demand - but it would not begin to match what we will be asking the housing associations to deliver.

Rural landlords’ pilot scheme
The same purpose – of augmenting the efforts of housing associations – lies behind the pilot scheme I announced last month to encourage rural landlords build new affordable rented homes. The pilot will be backed by £5 million of Government investment and will open for business in April.

Any rural landowner – including community buyout groups - who meets the eligibility conditions will be able to apply for grants to help them build new affordable homes on their land. In this way, we can provide even more homes for affordable rent to meet local housing need, all on land which we would have been unlikely to access otherwise. But, again, this is intended to supplement not displace the efforts of housing associations.I hope that this reassures those in the housing association movement who appear to see some hidden agenda here.

Concerns over competition
I also want to scotch concerns that appear to be gaining currency on the back of the proposal to introduce a competitive regime for grant. In essence, the proposal is to get much better value for our investment in social housing by identifying - through a competitive process - a few lead developers to undertake all new social housing developments in a given area over a specified period of time.

Our critics appear have three concerns:
• First, we do not recognise that the rising costs of subsidy that we cited in Firm Foundations are often driven by factors beyond associations’ control;
• Secondly, that switching to large scale, competitively awarded programmes would undermine – possibly even destroy – the community based housing association movement; and
• Thirdly that the large associations operating across the UK would always beat Scottish based associations in competitions for such programmes.

[back to top of page]

I want to address each of these.

On the question of costs, the argument appears to be that where costs are beyond the associations’ control, they will be what they will be - and if the Government wishes to support new social housing, its subsidies must recognise these unavoidable costs of doing so. We know that associations do not have complete control over their costs. But, given the combined pressures of high demand and particularly constrained public expenditure, we must get more for our investment in the sector.

The question is whether the current means of distributing grant supports that aim by giving the sector as whole the greatest possible leverage over its contractors and suppliers. On the face of it, distributing subsidy annually to large numbers of associations - for them to deliver developments of 14 units on average - is unlikely to help associations get the best deal from their contractors - or secure best value from public subsidy.

In fact, there appears to be some agreement – among associations and contractors - that annual programmes are inefficient and need to be replaced by a more strategic approach that allows everyone to plan delivery with greater certainty over a longer period. Such an approach is entirely consistent with the thinking behind local housing strategies assessing and determining how to meet need over the medium term. There is therefore some measure of common ground between the Government and other stakeholders that some useful change could be made to the current subsidy regime.

I want to build on this to develop a regime that allows the sector to deliver more houses for the public investment that it receives. This will be a major undertaking – and we will want to work with stakeholders to develop detailed proposals – on which we will consult before introducing any change.
A particular challenge in developing these proposals will be allaying fears that large scale competitive programmes pose threats to community based associations and to Scottish based associations’ ability to continue developing stock.

Our proposals sought to anticipate concerns about the future of the community based associations. Under them, the great majority of associations needing to acquire new stock – whether for growth or refurbishment - would no longer develop at their own hand.

Instead, lead developers would provide the other associations with stock through a partnership agreement that enabled the associations to specify the quality and standards that they required. A key criterion in identifying a successful lead developer will be their ability to demonstrate how they will meet their local partners’ particular requirements on cost, design and standards - for example in regeneration, rural or island areas. And if competition is successful in bringing down costs, the prospects for all associations needing new stock would be better than before - as any given level of available subsidy would go further in supporting the creation of new stock.

[back to top of page]

Given the apparent strength of views on this subject, it is perhaps worth stressing that competition is not part of a plan to force smaller associations to merge. Our objective is for a viable, thriving and varied sector, which is capable of addressing the needs of disparate communities and neighbourhoods across the country. What matters is an organisation’s ability to meet need and deliver services effectively and efficiently, not its shape or size.

Introducing competition as the means of driving more efficiency in procuring new stock should not be – and is certainly not intended to be – a threat to any organisations that are performing well and are focussed on the efficient delivery of high quality services to particular communities or neighbourhoods.

Finally, there is the question of whether the Scottish based associations can compete with those operating across the UK. I can understand why there might be concerns on this score. Change on the scale being contemplated can be unsettling – and in this case it will raise questions about the capacity and strength to compete of those associations that see themselves as potential lead developers.

I would simply observe that the sector has a history of thriving and adapting in challenging circumstances – and I believe that it will rise to this latest challenge. I’m not suggesting that this will always be easy. It will require prospective lead developers to make a hard headed assessment of their skills in light of the challenges posed by delivering efficiently large programmes that meet local needs.

Many will conclude that their future does not lie in that direction. However, in common with the community based associations, that does not rule out them acquiring stock and continuing to grow and flourish by playing to their skills and strengths in other parts of the business.

Being frank with you, I would be concerned if associations believed that they were somehow less complete or less valuable simply as a consequence of no longer having a direct development role.

Conclusion

When I talk of a thriving sector, I have in mind a sector that is providing ever better value for tenants, local communities and the taxpayer. And a new approach to developing stock is just part of that broad aim – and all associations will need to address difficult strategic and operational challenges in working towards it.
They will need to be clear as to the purposes they should be serving in the future – and these may or may not be the same as their present purposes – and the means by which they will achieve them. There is a challenge here for all social landlords – local authorities and associations – as they decide how to meet the needs and aspirations of their tenants and prospective tenants.
This week’s conference offers an excellent opportunity to reflect on that challenge and to share ideas about rising to it in the months ahead.