Facing the chop

Imagine how you would feel about taking a 29 per cent pay cut. Then spare a thought for Scotland’s housing providers. Last month they learned that the national housing and regeneration budget for 2010/11 was being cut by almost £200 million on the previous year, down to £448 million. This includes a 33 per cent cut to the budget for new affordable housing, now down to £351.9 million.

The Scottish Nationalist government claims the picture is less bleak than it may appear, arguing it will end up spending more on new affordable housing than it originally planned to in the three years to 2011. Those affected by this year’s numbers hold a different view.

Here, Inside Housing talks to those who will bear the brunt of the cuts. Across the country, and throughout the sector, housing staff are bracing themselves for the worst. Many say there is little fat to trim from already lean organisations. Others believe the worst is yet to come, predicting front line staff and services will be worst hit. Some have never experienced budget reductions on this scale. Those who’ve weathered previous recessions contend this is the worst financial outlook they’ve faced.

But countering concern and uncertainty are pragmatism and grit. Things may be bad, but there’s a job to do. Read on for how Scotland intends to cope.

The homelessness worker

Name Brian Doherty

Job Resettlement and housing support services manager

Where The Simon Community, Glasgow

Budget cut impact rating 5/5

What was your reaction to the budget cut announcement?
To reduce a budget when there was already a greater demand than supply for services, a shortfall in new builds or quality tenancies available for people experiencing homelessness is only building on problems for the coming years.

How has the budget cut affected your working life?
Government budget cuts have had a real impact…
Homelessness services have been subject to fairly significant cuts, subsequently leading to full withdrawal of funding for one of our largest and most in-demand services, the resettlement and housing support service [which I managed]… Redundancy notices have been served to affected staff members, although the organisation has been able to redeploy some of the team [including myself].

How has it affected your service users?
Significantly. Many of our service users require long-term support in order to maintain and sustain their tenancy and prevent homelessness. There are concerns that there are not appropriate services available, thus increasing the risk of a return to homelessness and lost tenancies. Many of our service users have benefited from a continuum of services throughout their resettlement process and have reservations about engaging with other providers with different support arrangements.

Looking ahead, how do you think the government’s budget cut will affect your working life?
At present my post is redundant with noticed served. However, I have benefited from my organisation providing redeployment opportunities. In the long-term there has been a significant cut in homeless services and all organisations are feeling this. Workloads are increasing while funding is decreasing therefore putting a strain on service delivery, quality and availability.

How do you think it will affect service users in the coming year?
Not only will there be less availability of services for individuals but it may well be to the detriment of their health and wellbeing. Homelessness is more than not having a home; it is about people’s mental health, addiction issues, physical health etc and cuts will put a strain on other services such as the NHS, social services and criminal justice system.

The council housing boss

Name Derek Muir

Job Head of housing and neighbourhood services

Where Fife Council

Budget cut impact rating 4/5

What was your reaction to the budget cut?
There had been an expectation that in 2010/11 the affordable housing investment programme would be [reduced] in part due to the accelerated funds made available in 2008/09 and 2009/10. However, the provisional allocation is significantly less than anyone expected … The reduction in funding makes delivery of [the council’s] the affordable housing policy sites … harder to achieve.

What, if anything, had you done to prepare for it?
Fife’s strategic housing investment plan, prepared at the end of 2009, provided for a decrease in allocation of up to 30 per cent (although this does not reflect the high-level needs shown in Fife).

How much will your own budget be reduced this year?
Fife Council had set a corporate target for all services to deliver savings of 3 per cent per annum. The housing and neighbourhood service has achieved that for 2010/11 across all [areas]. The benefit from efficiency savings is retained within the housing revenue account and is currently being utilised to support investment in improved services.

Has the government’s budget cut affected your working life?
There is obviously a need to immediately respond to a budget cut such as this, through meeting with key partners, assessing how it will immediately impact on the strategic housing investment plan and site specific projects in the pipeline for 2010/2011. It’s also key to communicate information such as this into the wider local housing strategy framework, as there will be a direct impact on our targets for delivery of new housing over the coming years and our ability to contribute to a range of national and local priorities.

Looking ahead, how do you think the budget cut will affect your working life?
It makes it all the more challenging.

How do you think it will affect tenants?
No immediate effect on Fife Council tenants, who will continue to receive good-quality services. However, there will inevitably be added pressure on the housing system which will impact on our ability to transfer tenants, meet a range of housing needs - particularly specialist housing needs that can only be met through new housing - and national priorities such as the Homelessness 2012 agenda [which aims to abolish homes in priority need by 2012].

Have you experienced similar levels of cuts before?
Not in the life of Fife Council [created as a unitary authority in 1996].

Final word?

The Scottish Government’s Firm Foundations consultation [on the future of Scottish housing] at the end of 2007 contained a commitment to increase housing supply to 35,000 new homes per annum by the middle of this decade. Local authorities and their partners welcomed that vision for Scotland. It remains to be seen whether this vision can be delivered in the context of the recent announcements.

The architect

Name Andy Jack

Job Architect and director

Where social home specialists Assist Architects, Edinburgh

Budget cut impact rating 4/5

What was your reaction to the budget cut announcement?
Obviously that it would impact very seriously on the development programmes of housing associations throughout Scotland. Projects are on hold and projects that may have been considered a certainty are now not being considered.
The projects that are going on are possibly ones that have been in the pipeline for quite a while. That widens the gap between the need for social housing and the development of it.

What, if anything, had you done to prepare for it?
We were working on a procurement method for social housing through a group of the most active housing associations, and most of the new work we’ll get is going to be through this procurement framework. Over the past few years we were reasonably well placed with development programmes from the group. These have maybe slowed down but they are still going through, albeit less swiftly.

Has the budget cut already affected your working life?
It is going to be harder this year than last. I think we would be doing well if we were actually performing as well this year as we were last year. The reality is that there are fewer opportunities for new work, and individual practices will manage that reality to the best of their ability. There will be fewer projects going through than there were in previous years.

Have you experienced a similar level of cuts before?
This is the third recession that the practice has gone through. Each time, the construction industry has been the easiest target. However, we are seeing local authorities starting their own new build programmes, so there are still some growth areas, although not necessarily growth in the sector as a whole.

The finance director

Name Suzanne Cargill

Job Finance and corporate services manager

Where Angus Housing Association

Budget cut impact rating 3/5

What was your reaction to the budget cut?
We are obviously disappointed by the news of the government cuts. It is going to make things tighter but it is not unexpected. The government is trying to get the most out of every pound it puts in. If you keep making cuts you will get to a stage where you can’t possibly scale back anymore and development will not be viable.

What had you done to prepare for it?
We feel we are already very efficient in the way we work and build good quality homes for a good price so news of the cuts certainly puts extra pressure on. The main problem is providing the security for the lender, if you go down the cross-subsidy route that can only happen for so long so we are looking at other types of development, such as building for shared equity and mid-market rents, to spread the risk.

Has the government’s budget cut affected your working life?
This has not changed the way we work because we are always trying to be as efficient as we can be.

How has it affected your tenants?
The cuts will affect tenants because they will have an effect on how much we can develop. If we aren’t building new properties then current tenants who are unsuitably housed cannot be helped, neither can the many applicants on our waiting lists who desperately need to be housed. The cuts will affect rent, as increased levels of private finance [as a result of public cuts] need to be paid for.

The anti-social behaviour manager

Name Paul Robinson

Job Senior operations manager responsible for neighbourhoods services

Where Langstane Housing Association, Aberdeen

Budget cut impact rating 3/5

What was your reaction to the budget cut announcement?
I’ve been picking up on the various pre-electoral announcements. Those of us who have worked within local authorities and social housing environs for a number of years might have anticipated that national politicians would believe there is scope for economies to be made within our area of work.

How much will your own budget be reduced this year?
As to how they affect the day-to-day, it hasn’t registered yet. Firstly it will have to be discussed at chief executive and senior management level.

How do you think the cuts will affect tenants in the coming year?
I’m not sure there will be any impact - our tenants have expectations about the standard of response to the problems they are experiencing. This association has been very proactive in dealing with tenants’ complaints [about anti-social behaviour], and we usually manage to bring complaints to a conclusion ahead of court action. We’ve made progress and we can’t afford to let that slip.’

Looking ahead, how do you think the budget cut will affect your working life?
We will have to wait and see how the budget cuts ripple through to us. There might be some tough decisions to make in the future.

National housing association boss

Name Brian Geghan

Job Chief executive

Where Cairn Housing Association, 3,000 homes across Scotland

Budget cut impact rating 4/5

What impact will the budget cut have?
The biggest issue in Scotland is the cut in the affordable housing budget, which is for new homes. As far as maintenance is concerned most associations don’t get any help from government for maintenance.

What had you done to prepare for the budget cuts?
With the decrease in the amount of subsidy and need for private finance [for new development] we have had to very carefully consider each new proposal to see if the rental [income] is sufficient to repay private loans and make a contribution to the overheads of the organisation.

How will tenants be affected?
I’m not sure the cuts in new build will affect tenants, but it will affect applicants, because choice is going to become even more restricted. It will impact those in housing need. Those I feel for are young people, because if we can’t offer them some choice my fear is they will leave [Scotland], and vulnerable groups and other vulnerable people.

Have you experienced a similar level of cuts before?
In my 30 years or so I have been through two previous recessions, but I have not experienced anything as deep as this one. One thing that the papers in Scotland have been talking about is that there is going to be a massive cull of public sector jobs, and you can bet it will be the front line services that suffer.

The housebuilder

Name anon*

Job Housebuilder

Where UK-wide

Budget cut impact rating 3/5

What was your reaction to the budget cut announcement?
About 20 per cent of our business is affordable housing in Scotland so if the government cuts back on funding it impacts on the amount of social housing being built and the amount we can get as market share.

What had you done to prepare for it?
We have a separate company which delivers shared equity housing and that is something we could perhaps expand if public funding for affordable housing for rent is reduced. We are in discussions with the Scottish Government and people in housing associations about that. We would need them to accept it as a form of affordable housing supply [as part of the] planning gain [process].

How much will your own budget be reduced this year?
The effect is not immediate. It is difficult to predict the impact because it will be the year after and the year after that. We have got a year or so to find alternatives.

Has the budget cut already affected your working life?
Not yet.

Looking ahead, how do you think the cut will affect your working life?
I would hope the private housing market would go up over the next few years so we won’t be reliant on doing as high a proportion of our business in social housing. If the housing market does come back we would be doing less social housing in any case. Hopefully it won’t impact on us.

How has it affected your housing association clients?
Housing associations will have aspirations to build more but they cannot because they cannot get funding. They cannot say they can go ahead with things as much as they would like. It is having an impact on the supply of affordable housing.

How do you think it will affect your housing association clients in the coming year?
They are looking at alternative models of funding social housing with or without grant. They want to make their money go further are looking at innovative procurement [and we] hope our shared equity vehicle will help.

Have you experienced a similar level of cuts before?
I have not experienced a similar level of public cuts before. On the private side, I remember when it happened at the end of 1980s and in the early 1990s; that was pretty bad, but it is much more severe now because it is global this time.

*Inside Housing contacted several housebuilders. Only one was prepared to comment, on condition of anonymity.

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