Deputy First Minister and Cabinet Secretary for Health and Wellbeing
Nicola Sturgeon
Statement following publication of Firm Foundations: The Future for Housing in Scotland
Ocotber 31, 2007
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The importance of good quality housing cannot be overstated. The portfolio that I am responsible for - health and wellbeing - acknowledges the vital link between housing and health.
That was a link first recognised when John Wheatley, health minister in the first Labour government, pioneered the 1924 Housing Act to encourage the building of new houses at modest rents.
It is a link that this progressive SNP government is proud to restore. It is a fact that the Scottish housing system is not meeting our needs as a country.
The supply of houses to buy is failing to match demand, pricing first time buyers out of the market and in turn adding to the pressures on an already stretched social rented sector.
This frustrates the hopes and ambitions of individuals and families across the country. It leaves many in unsatisfactory accommodation, or unable to live near their work - a particular problem in our rural communities - and some without settled accommodation at all.
The causes of these problems are deep rooted and affect all parts of the housing system
This Government is determined to tackle them by reforming the housing system and making it fit for purpose.
Today, we set out our proposals for doing so in our discussion document, Firm Foundations.
The key message at the heart of our proposals is clear.
If people are to meet their needs and aspirations for housing that they can afford; and if the country is to benefit from sustainable growth, we must build more houses - to higher standards - across all tenures.
Let me first emphasise the point about variety of tenures.
There has been a fundamental shift in housing aspirations in favour of owner occupation. Part of government's role is to help people to realise that aspiration.
But government also has a duty to those who can't or don't want to buy a house.
To meet the needs of all in Scotland, our housing policy must provide choice and variety - a mix of houses to buy and to rent. That means taking demand for rented housing as seriously as that for owner occupation.
That is why the proposals in the document address every element of the housing system.
Our proposals are based on a clear recognition of the need to build more houses.
The current rate of new house building - 25,000 new houses a year - is simply inadequate. It can and must increase if Scotland's housing requirements are to be met.
I therefore propose to set a national goal to raise the rate of new housing supply to 35,000 a year by the middle of the next decade. 35,000 houses a year may seen an ambitious target but it is one I believe we must meet if we are to reverse declining affordability and I believe it is achievable.
But simply building where we can without regard to the nature of need in local markets, and to factors such as the availability of water and sewerage infrastructure and flood management considerations, will not be a sustainable solution to our problems.
We must get the balance right - across the country, between and within regions, and between tenures - so that we build the right houses in the right numbers in the right places.
That means adopting a more strategic approach to setting and meeting targets for new houses.
Local authorities and other key players such as Scottish Water must work together at a regional level to agree collective targets for new housing to ensure local housing markets meet demand.
And then - through the planning system -ensure that sufficient land is released, so that developers and builders can get on with delivering these houses.
This strategic approach to improving supply - which will also be assisted by the work of the Housing Supply Task Force - will be accompanied by initiatives to assist first time buyers, those who prefer to rent from local authorities and housing associations, and those looking for the flexibility of the private rented sector.
Assistance for first time buyers
Home ownership is the ambition of most people. Research shows that almost 90% of all people, and 60% of tenants in social housing, would prefer to own their home.
We want to help people realise that ambition.
To do so, we will establish a Low cost Initiative for First Time buyers - LIFT for short.
Firm Foundations: The Future for Housing in Scotland
Through LIFT, we aim to expand assistance for first-time buyers through a mix of Government grants, shared equity schemes, and mortgage related products and services.
We will fund this expansion by implementing our manifesto commitment to create a Scottish Housing Support Fund.
Already this year we are helping 1,800 households get their first foot on the housing ladder with Government grants to subsidise low cost home ownership schemes and we intend to extend and improve this model.
In addition, we will seek to attract private finance from mortgage lenders and investors to achieve more shared equity homes for more first time buyers.
More generally, we will work with mortgage lenders and investors to create innovative and viable financial products to make home ownership affordable over the long term - looking particularly at the feasibility of lowering mortgage costs for first time buyers. We will also consider further our proposed £2,000 First Time Buyers Grant.
And I can confirm that we will take forward the Single Survey which will typically save first time buyers at least £200 - £300 and ensure that all buyers have good information on the quality of a house before they place a bid for it.
Support for new council housing
Complementing these proposals are initiatives to support those who prefer to rent.
A third of all households rent their homes - most of them from local authorities or housing associations.
Many tenants see great benefits in social renting.
We want to make sure that these benefits are available to future generations.
That means ensuring that we build enough new houses for social rent. In our view, that should include building new council houses.
I can announce today that we intend to reverse the 30 year run-down of the local authority landlord role. This reflects our belief that local authorities have a continuing and developing role to play in the provision of social rented housing.
To encourage them to do so, I am proposing that Government should offer financial incentives to those authorities that have the ability to fund new build council housing through prudential borrowing.
Ending Right to Buy on new social housing
However, I recognise that this incentive in itself may not be enough to persuade local authorities to build.
Local authorities see little point in building new houses for rent if they are lost through the Right to Buy.
Many housing associations share this view.
I can therefore announce that we propose to end the right to buy for all new social housing built by local authorities and housing associations.
This will give local authorities and housing associations certainty when planning future developments and will, I believe, boost the supply of new houses to rent.
On the future of Right to Buy more generally, we stand by our Manifesto commitment to review the policy as a whole once we have a proper understanding of the impact of the modernised arrangements introduced by the 2001 Housing Act.
In short, this government will ensure that new social housing is safeguarded as a public asset for the benefit of current and future generations of tenants.
Support for housing associations
In looking forward to a role for local authorities as builders of new houses, I want to be clear that housing associations will continue to build the bulk of new social housing.
But I am equally clear that they must be more efficient at delivering new stock.
At present the subsidy that we pay them to build each new house is rising by 8% more than inflation every year.
That does not represent good value for public money and it is not sustainable.
I therefore expect housing associations to improve their capacity to deliver, so that they can achieve a great deal more for the support they receive from us.
We propose to encourage the creation of enhanced delivery capacity through a new funding regime that will award future subsidy on a strategic and competitive basis.
We also want to support more choice and variety in social housing by offering housing associations subsidy to build houses for mid-market rent.
In short the challenge in social rented housing is not just to spend more money but also to get more for the money we already spend.
Glasgow
Turning to the position in Glasgow, I said that I wanted to see progress with Second Stage Transfer and I am delighted that 16 Local Housing Organisations have been invited to submit Business Plans. I want to see GHA and the LHOs making quick progress so that tenants can be consulted and make up their minds on second stage transfer.
The private rented sector and homelessness
We recognise that the private rented sector has a large role to play in providing choice and variety in housing.
In particular, it provides flexible options for younger, mobile people in our towns and longer-term accommodation in the country.
A range of reforms have been introduced in recent years to improve the quality and management of the private rented sector.
As a result, I want to encourage the sector to play a greater role in meeting housing need.
In particular, I want local authorities to be able to tap into the sector's potential to meet Parliament's 2012 target on homelessness.
I will therefore consult shortly on a proposal to amend existing regulations to give local authorities more flexibility and enable them, where appropriate, to make more use of the private rented sector to meet the needs of homeless people.
I believe this will increase the options available to homeless people and also ease pressure on demand for social housing.
Higher environmental standards
So far, I have concentrated on our proposals for improving the supply of housing.
I'd like to turn now to the need for improved supply to be of high environmental and design standards and to contribute to the creation of sustainable mixed communities.
Higher standards of housing are vital to our vision of a sustainable future.
We are planning the housing of the future - and we owe it to the generations that will live in it to ensure that it is sustainable in its use of energy and materials and will play a positive role in enhancing the mix of our communities.
Housing is a major user of energy and - thus - a cause of carbon dioxide emissions. It must play its role in achieving our ambitious targets for reducing these emissions.
That means building on the high environmental standards set out in current building regulations so that over time we reduce the environmental impact of new housing developments.
It also means ensuring that planning policies help to create sustainable communities by promoting more environmentally sustainable transport, recycling of brownfield land and the continued development of renewable energy.
New settlements
We want to minimise the environmental impact of new developments by building mainly within and around existing towns and cities.
But there will be situations when new settlements may be necessary and desirable to meet demand in particular areas.
Where that is the case, we are determined to grasp the opportunity that it presents to achieve a step change in design, quality and environmental standards.
To help us realise that ambition we are proposing to establish a Scottish Sustainable Communities Initiative to encourage local authorities and their partners to bring forward proposals for sustainable new communities as part of their responses to the consultative draft of the National Planning Framework.
Meeting the SHQS
Building higher standards into new developments must be complemented by a continuing commitment to improve the standards and quality of existing stock - which after all is where most people live.
For social housing the Scottish Housing Quality Standard requires local authority landlords and housing associations to achieve decent physical standards - including energy efficiency standards - in all of their stock by 2015.
I expect all social landlords to continue making progress towards that objective.
In the past, there has been an assumption that local authorities that were at risk of failing to achieve this objective would transfer their stock to a housing association that would take on the responsibility aided by the Treasury's willingness to write-off housing debt in such circumstances.
I want to stress that such an option continues to exist and we will consider proposals from local authorities where there is tenant support.
We have also written to the Treasury asking it to consider circumstances, other than stock transfer, in which it would be prepared to write-off local authority housing debt.
Meantime, as an alternative to stock transfer - an alternative consistent with our wish to support local authorities as landlords - we see a case for local authorities retaining their stock, but establishing Arms Length Management Organisations to be responsible for delivering the authorities' housing functions.
Communities Scotland
Let me turn now to the future of Communities Scotland.
In reviewing its functions we have looked at the most effective structures to respond to the policy challenges we have inherited, alongside our aim of simplifying the public sector.
Our plan to enhance local authorities' role acknowledges their place in tackling these policy challenges and driving forward the improvements in the housing supply system we want.
But many of the challenges require intervention beyond the local authority level. We also have within Communities Scotland a considerable body of expertise available to us.
Taking these factors and our commitment to simplification together, I have decided to abolish Communities Scotland as a separate Agency and bring its main non-regulatory functions into the core Scottish Government to be directly accountable to Ministers.
This will provide the overall national capacity to drive through the reforms I have outlined today.
We will work with key partners to change radically the way we support housing investment. And we expect to see greater local influence over housing investment decisions by closer partnership working with local authorities.
While Communities Scotland has done good work in supporting local regeneration activities, we have decided to remove the middleman between the strategic leadership of national government and the role of local authorities and community planning partnerships.
These changes will mean that there is a single player at national Government level that is setting the strategic direction and providing support to the housing and regeneration sectors. We aim to have these new structural arrangements in place by Spring 2008.
I know that this has been an uncertain period for staff in Communities Scotland. I am grateful to them for their commitment. We will now work closely with the staff and the Unions as we move towards implementing the new arrangements.
Modernising regulation
We are also making significant reforms to how social housing is regulated.
Regulation has a critical role to play in protecting the interests of tenants and in maintaining confidence in the sector.
In reforming it, we propose to make three key changes to it:
o It should become more explicitly focussed on protecting and promoting the interests of current and future tenants;
o It should seek to reduce the burden of regulation and inspection on local authorities and housing associations, concentrating its efforts on assessing the outcomes for tenants; and
o In line with the thrust of the Crerar review, it should exercise its powers independently of Ministers - not as part of the core Scottish Government.
These changes are intended to enhance the role of regulation and its ability to drive higher standards for tenants across the social rented sector and ensure that the sector remains a viable and attractive part of the wider housing system.
Conclusion
The proposals that I have outlined today constitute a radical and ambitious package of reforms that will affect every part of our housing system.
They recognise the central role that home ownership plays in the system - and in society - not least in offering help for more people to buy their homes.
But they take into full account the need for a thriving social sector that can adapt to changing demand and offer more choice to those who cannot afford or do not wish to buy.
And they envisage a greater role for the private rented sector and its ability to offer choice and flexibility to particular groups during key points in their lives.
Above all, the proposals recognise the pressing requirement to increase the supply of housing across all tenures on the basis of constantly improving environmental and design standards.
We look forward to helping the local authorities, landlords, developers and builders provide the quantity and quality of housing that Scotland needs in the years ahead.
Firm Foundations: the Future for Housing in Scotland