All change, please

Scottish housing minister Alex Neil is in fine, rambunctious form. When we meet, the Scottish Government has just come under fire from senior housing figures for its 2010/11 budget, which will see the minister’s housing and regeneration spend slashed by nearly £200 million. Despite the budget-spawned battering and the unavoidable economic gloom, Mr Neil appears to be relishing the challenge.

He’s all smiles and bonhomie throughout the interview, held in his compact office somewhere in the immaculately designed rabbits’ warren which is the Scottish Parliament. Critics are treated with a slight shake of the head as if they have somehow missed the point.

Mr Neil’s approach during his first 13 months as minister for housing and community seems to have won him an extended honeymoon period. One housing association chief tells me that he seems to listen and understand more than some of his predecessors. How is this helping him to deal with the real challenges Scotland faces, though, and how is the Scottish National Party reacting to the criticism its housing budget has attracted?

The Scottish Federation of Housing Associations, for example, says it is ‘deeply disappointed’ by the budget and Shelter Scotland says that without more cold, hard cash the housing crisis will deepen. Mr Neil barely raises a brow as he sidesteps the slings and arrows of outraged housing chiefs with what appears to be well-practised ease.

‘Over the three-year period [2008/11] we will be spending more than we originally planned,’ he says. ‘What we have always said is over the three-year period up until this forthcoming year - from 2008/11 - we would spend £1.65 billion on the affordable housing investment programme in Scotland. We will end up spending £1.67 billion.’

Does this mean the housing minister considers his critics wrong, or that they are attempting to mislead people?

‘They know very well the reason our figures on paper look as though there has been a substantial reduction in 2010/11 is because we brought forward [money from the budget to combat the recession],’ he says. ‘They know that.’

That said, Mr Neil is prepared to recognise the Scottish housing sector is facing major challenges. Indeed, he begins the interview with a soliloquy on ‘five or six’ major hurdles - including a growing ageing population, maintaining housing quality and tackling the ‘record number of people on waiting lists’ for homes.

Modernisation

Mr Neil is certainly no shrinking violet when it comes to his preferred solutions. ‘Basically, our strategy is to modernise every aspect of housing strategy in Scotland,’ he states.

Bold though it may sound, this is no idle boast. For a start, the Scottish Housing Bill, introduced in the Scottish Parliament in January, will prune right to buy in the country in the manner of an overenthusiastic gardener with a new hedge trimmer.

It will scrap the right to buy for new homes and new tenants and extend local councils’ powers to suspend the policy in areas where housing supply is under pressure.

Mr Neil is at pains to quell suggestions that, with sales falling in the recession, this is little more than a populist waving of two fingers at one of the 1980s’ most controversial legacies, which his own SNP has never trumpeted. ‘We are not being driven by ideology,’ he says firmly. ‘We are being driven by pragmatism and the need to do something bold and urgent. We have upwards of 140,000 people - on current figures - on waiting lists in Scotland. Right to buy has been part of the problem. Since its advent nearly half a million houses in Scotland have been sold off.’

The Scottish Government estimates, he adds, that the reform will preserve 18,000 homes for social rent at the end of the decade that would otherwise have been lost to private individuals.

The move is just one of several which indicate how far councils have risen up the pecking order nationally. Their growing muscle is evidenced by Mr Neil’s confirmation that £25 million set aside for councils to build a new generation of homes will see each property subsidised to the tune of £30,000. In previous funding rounds, councils had been able to claim a maximum of £25,000, he states. He explains the change with a bold sleight of hand.

‘Some councils only got £10,000 per unit [in the past] because it depended on the business case they put forward,’ he states. ‘We don’t give money if it is not needed.’

After discussions with the Convention of Scottish Local Authorities, however, it was decided that in the latest round ‘everybody will get £30,000 per unit’. What, ahem, about those cases where the money is ‘not needed’? Mr Neil doesn’t bat an eyelid. Councils will be able to ‘plan better if they know exactly what the subsidy will be’. Upping subsidy per home will also help those councils edging towards their borrowing limit, he states.

‘Because this is the third tranche of funding, there will be very few councils that don’t actually need the £30,000 now,’ he adds for good measure. He emphasises that councils which obtain development funding must be onsite by the end of March 2011 and the total £75 million allocated since April 2009 should deliver up to 3,100 new homes.

Housing associations

Quickly the minister switches the chat to housing associations, for which it’s a different story. ‘From a Scottish Government point of view, funding through councils and the subsidy to councils per unit is significantly less than the subsidy we give to housing associations,’ he says. Warming to his subject, he adds that housing associations received an average subsidy of £75,000 per home last year. ‘This year, our average subsidy to the housing associations for each new unit will be in the order of £69,000 per unit. That is still more than twice what the local authorities are getting.’

Is he suggesting, then, that housing association development does not represent good value for money? Not a bit of it, he insists. ‘It is a bit [like comparing] apples and oranges. Local authorities are able to borrow [at cheaper rates than private lender dependent associations] from the Public Works Loans Board. It doesn’t matter a jot to us who builds the houses.’

There is still much room for efficiencies and reform which underline this lack of preference, he adds. The Scottish Government has established a working group between COSLA and the SFHA to look at developing a single funding stream for councils and housing associations. The group will report back later this year although Mr Neil says it is too soon to talk about early findings. He does add that the group’s remit will be extended to consider how councils and housing associations can work more closely together locally.

‘In today’s world we have got to improve the quality of existing homes and at the same time we have to reduce unit costs in relation to management, maintenance and repairs,’ he states. ‘It makes sense for councils and housing associations to come together, ideally to create a single delivery mechanism in each area.’

National housing trust

Another innovative idea Mr Neil confirms is under development is the creation of a national housing trust to buy unsold homes for council housing. This agency would effectively initiate a ‘three-way deal’ between councils, lenders and the government. Any council might borrow two-thirds of the money to pay for a housing development, with a government rental guarantee designed to attract investors.

Mr Neil estimates the plan, which he reckons should be up and running this year or next, could deliver up to 2,000 homes. He says there are ‘15 councils which are very interested and look as though they are going to sign up to it’.

The country is also weighing up plans to create a housing investment bank to help social landlords build more homes. This is still on the cards, Mr Neil says, but he remains tight-lipped about a timeline. The government will publish a discussion paper in May that will provide an update on this, he adds.

By contrast to his earlier defence of this year’s Scottish budget for housing, the minister admits the investment bank plans could move more quickly if there was more money available. But he lays the blame for any delays squarely at the door of fellow Scot and UK Chancellor Alistair Darling, who turned down a request to bring forward capital from Scotland’s 2011/12 budget to 2010/11.

‘That would make a lot of sense,’ he argues. ‘It would allow us to get the housing investment bank idea pursued and allow us to look at all the other inventive ideas we want to pursue.’ The UK Treasury’s refusal is, he thinks, ‘extremely short-sighted’.

‘We think Gordon Brown should be holding his head in shame for not bringing capital forward.’

With that the smiles are back and the Mr Neil heads off to get the third degree from Scottish MSPs during parliamentary questions on housing - another challenge he clearly looks forward to.

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