The Scottish Government's Green Paper on housing concludes that

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					                        EDINBURGH TENANTS FEDERATION
                               Edinburgh’s Federation of Tenants’ and Residents’ Associations


                                          Firm Foundations:
                                   The Future of Housing in Scotland

                                                   A Briefing Note
                                                        December 2007
The Scottish Government has published a discussion document on housing called “Firm Foundations:
The Future of Housing in Scotland”. This is the first discussion about government housing policy in
Scotland since 1999, and everyone with an interest in housing is invited to give their views to the
Scottish Government by 25th January 2008.

The discussion paper can be found at www.scotland.gov.uk/publications/2007/10/30153156/0.

The Tenants Information Service has produced a briefing on the proposals which we commend to you.
This briefing from Edinburgh Tenants Federation sets the proposals within an Edinburgh context, as
Edinburgh has particular problems that need to be tackled.

The proposals in the discussion paper are framed around four key aims:
    increasing the number of houses in Scotland for rent and sale, and introducing higher
       environmental standards for them
    offering a greater choice of housing that people on low incomes can afford
    helping create sustainable mixed communities
    achieving better value for the public money spent on housing.

Plans include increasing the number of houses being built for sale, shared ownership and social rent in
Scotland each year so that by 2015 Scotland is building 35,000 new houses per year. Under the
proposals the vast majority of these houses will be built for private sale, with only a minority being
‘affordable’, for shared ownership or for rent.

We know that Edinburgh has a serious problem regarding housing supply and insufficient government
funding to build new houses:
    three quarters of Scotland's affordable housing shortage is in the Edinburgh area, but the city
       currently receives only 15 per cent of national funding. At the moment funding is allocated on
       the basis of the levels of deprivation in an area, not the housing need
    Shelter and the City of Edinburgh Council have been calling for 12,000 new homes to rent in
       Edinburgh alone
    Delays in negotiating and building ‘affordable’ housing as part of new building developments
       are resulting in only around 600 new houses for rent being built in Edinburgh each year.




             Edinburgh Tenants Federation 53 Blackfriars Street Edinburgh EH1 1NB
    0131 556 4406 0131 557 5385info@edinburghtenants.org.ukwww.edinburghtenants.org.uk
There are no funding commitments in the discussion paper. Will the Government start to fund housing
on the basis of actual housing need rather than levels of deprivation? This would give Edinburgh more
funds to help tackle the problems.

The discussion paper also calls on bordering local authorities to cooperate with each other to set
housing targets. So, for instance, Edinburgh and the neighbouring Lothians councils would be
expected to set a regional housing target. We know that our neighbours in the Lothians have more
ready access to building land and – in terms of building new houses to rent – can afford to build new
council housing by increasing their tenants’ comparatively low rents.

Furthermore, the paper suggests that in each region a ‘lead developer’ should be appointed. At present
the Council receives development funding that is awarded to five or six local housing associations to
help finance their building programmes. If this system is to be changed so that there is only one
recipient of funding, what might that mean for housing associations? Might we see yet more housing
association mergers as they compete for the right to build new houses?

The Scottish Government’s green paper on housing concludes that “social housing has a positive
future” but that the future “will depend upon a significant break with the past.” What might this mean
for Edinburgh?

The Scottish Government says it wants to encourage local authorities to build new council housing by
providing incentives to those who are able to borrow under the ‘prudential borrowing’ regime. This
means councils that don’t have substantial debts and high rents can borrow money to build new houses,
by increasing tenants’ rents to pay back the debt. This is not technically a new policy since councils in
East Lothian and Midlothian had already started using prudential borrowing to build new council
houses under the last administration.

The paper says that “if this practice were spread to all local authorities in areas of need that have
borrowing capacity, it could deliver between 500 and 600 houses a year over the next 10 years.” This
is a figure for the whole of Scotland, while experts have already predicted that Edinburgh alone needs
to be building 1000 houses a year over the next 10 years – this policy won’t deliver enough houses.

However, Edinburgh has a substantial debt already, the highest rents in Scotland, and is already using
its prudential borrowing capacity to bring its existing houses up to the Scottish Housing Quality
Standard by 2015. It will not be able to borrow more to build houses. So will this proposal really do
anything to help relieve Edinburgh’s housing crisis?

The green paper goes on to say that the Scottish Government will end the right to buy for new council
and housing association houses. Later it intends to review the right to buy for all other tenants. The
principle behind this is to ensure that houses remain in public ownership and the supply of available
homes to rent does not diminish.

This marks a significant shift in policy, although the right to buy in some parts of Scotland has already
been curtailed by housing providers obtaining ‘pressurized area status’ where housing stocks are at a
very low level. Edinburgh considered applying for pressurized area status but decided that it was too
late to have any positive benefits because the houses had already been sold.



             Edinburgh Tenants Federation 53 Blackfriars Street Edinburgh EH1 1NB
    0131 556 4406 0131 557 5385info@edinburghtenants.org.ukwww.edinburghtenants.org.uk
If Edinburgh can’t afford to build new council houses this policy is of little relevance since it has
already concluded that there was no real point in limiting existing right to buy.

The only way in which Edinburgh is going to be able to build more council houses – which all are
agreed are desperately needed – is for some or all of the current debt to be written off by the
Westminster Treasury, or for financial assistance to be provided by the Scottish Government. This
paper does not appear to be offering any new money, though the Scottish Government says it has asked
the “Treasury to consider in what other circumstances, besides stock transfer, they would be prepared
to write off local authority housing debt” in order to improve the quality of existing housing. The
implication from the way in which the paper is structured is that they are not seeking debt write-off to
lessen the burden on tenants’ rents or to enable councils to build new houses. This being so, is this
really going to do anything to help Edinburgh?

The green paper outlines a further suggestion to help local authorities that are going to struggle to meet
the Scottish Housing Quality Standard by 2015. They can create “a separate organisation that would
operate at arms length from the local authority to manage stock that the authority would continue to
own.” These are called Arms Length Management Organisations, or ALMOs for short, and this is how
around one fifth of all social housing in England and Wales is managed.

It is not clear what benefit an ALMO could bring. Would an ALMO be good for Edinburgh? Perhaps,
but only if tenants wanted it (and there is no indication to suggest that they would), and only if it would
make additional funds available through debt write-off or additional assistance. There is no mention of
tenants having any say in the decision to create ALMOs, and the green paper says that the Treasury
does not write off debt associated with stock managed by ALMOs. ALMOs with a lot of debt to
service (and Edinburgh would fall into this category) would still be constrained by this debt, plus
there’s a risk of tenants being further hit with additional management costs of running an ALMO.

The paper talks about there being arguments in favour of the Scottish Government giving additional
funding to ALMOs that are struggling with their debt burden, but only where an ALMO has already
improved its performance over a number of years in line with a programme agreed in advance. In
abstract this may sound reasonable, but remember that the proposal is to introduce ALMOs in order to
deliver the Scottish Housing Quality Standard by 2015. Local authorities – like Edinburgh - that are
struggling with a debt burden need additional funding or debt write-off now, not in several years’ time
when the funding crisis tenants face has become even more acute.

In conclusion, this green paper suggests it has answers to all Scotland’s housing problems, but in reality
raises nothing but questions about how any of the proposed solutions will bring any benefit at all to
Edinburgh.

In the last issue of Tenants Voice, ETF Convenor Betty Stevenson presented some criteria for solving
Edinburgh’s housing crisis:
         Make affordable rented housing a top political priority
         Deliver a major investment programme to build new affordable rented housing
         End the bias towards home ownership and make affordable rented housing available as a
             positive choice for a wider range of people
         End the Right to Buy

             Edinburgh Tenants Federation 53 Blackfriars Street Edinburgh EH1 1NB
    0131 556 4406 0131 557 5385info@edinburghtenants.org.ukwww.edinburghtenants.org.uk
          Write off outstanding debt to release funds to allow Councils to borrow to invest in existing
           and new housing
          Urgently create and implement a regeneration investment programme that will build the
           new communities that are required now.

To read the article in full, look at the last issue of Tenant sVoice which was sent out to all member
groups. It can also be downloaded from www.edinburghtenants.org.uk.

We encourage everyone to make their views known by responding to the Scottish Government and by
sending a copy to Edinburgh Tenants Federation.

                     _________________________________________________


Responses to “Firm Foundations” should be sent to:

The Housing and Regeneration Directorate
Social Housing Division
1H(S)
Victoria Quay
Edinburgh EH6 6QQ




             Edinburgh Tenants Federation 53 Blackfriars Street Edinburgh EH1 1NB
    0131 556 4406 0131 557 5385info@edinburghtenants.org.ukwww.edinburghtenants.org.uk

				
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