 Good morning and welcome to the 22nd meeting in 2022 of the Local Government Housing and Planning Committee. We have received apologies today from Annie Wells and Mark Griffin. I would ask all members and witnesses to ensure that their mobile phones are on silent and all other notifications are turned off during the meeting. First item on our agenda is to decide whether to take items 3 and 4 in private. Item 3 is consideration of the evidence that we will be hearing this morning on the affordable housing programme during our pre-budget scrutiny. Item 4 is to consider our approach on the levelling up regeneration bills legislative consent memorandum. Are we all agreed? Agreed, thank you. Now we turn to agenda item 2, which is to take evidence as part of this year's pre-budget scrutiny, which is focused on affordable housing provision in Scotland. We are joined in person for this session by Professor Ken Gibb, who is the director at the UK Collaborative Centre for Housing Evidence at the University of Glasgow. Aaron Hill, who is the director of policy and membership from the Scottish Federation of Housing Associations. Fiona Kell, who is the director of policy at Homes for Scotland. We are also joined online by Elsa Rayburn, who is the chair of the Community Land Scotland. Serena Peake, who is the acting policy manager of the Association of Local Authority Chief Housing Officers. Mike Callaghan, who is a policy officer from the community's team at COSLA and Gary Fairlie from Midlothian Council, who is the director of corporate services. He is also appearing on behalf of COSLA today, so welcome. I now open up the session to questions from members and I'll begin by asking about national targets and outcomes. I'm interested to hear from panellists. Actually, just before I dive in, a little bit of housekeeping in terms of how we'll do this. What we try to do because of time is that members will possibly direct their initial question to somebody. If you want to come in, please just indicate to myself or the clerk, or if you're online, indicate in the chat function with an R. Back to the questions. On national targets and outcomes, do panellists think that the Scottish Government targets for housing needs and outcomes are clear? Furthermore, do those targets need to be revisited? I'd like to start by asking Mike Callaghan, then Professor Gibb and Sharina Peake. Mike, can you hear me now? I think that in respect of national targets, our position was that we, at Organisation COSLA, were very supportive of the construction build of affordable housing, but we got a common position with the Scottish Government in respect of the delivery of it across our local communities across Scotland. It's my understanding, going back from the past, that we weren't particularly involved in the establishment of national targets with the Scottish Government. As far as I'm aware of the rationale for it, we haven't been clear on that from our perspective on how that was developed. We've also had an issue with some of the rationale for the Scottish Government's affordable housing supply programme targets in respect of COSLA leaders at the end of last year in November. We're quite unanimous that we felt that the benchmarking framework and the differential between local authorities and the RSL should be eliminated. It's unfair and it passes a burden of potential increases and went on to tenants. I'll give you a good example of that. For example, in the Highlands and Islands, the construction houses can cost local authorities up to £12,000 more than it is from the RSL sector. I think that this is a real impediment to local government and it's something that we would have much preferred working in partnership with the Scottish Government and having a joint discussion in respect of how to develop targets for the affordable housing supply programme, which we're very supportive of, but clearly now, even since the end of last year when it was discussed at COSLA leaders, the macroeconomic facts have changed so much in terms of inflationary pressures, cost of living increases, supply chain factors, cost of materials and a whole range of factors that have changed even more so. That's a need for more joint discussion in terms of how we establish targets realistically, as well as taking into account the decarbonisation agenda as well. Ken, what are your thoughts about the targets? I should start by declaring an interest as well. I'm a committee member of Shelter Scotland. In the sense that the overall target is slightly odd, the national target, because it relies on the research that's been done, the national affordability needs assessments, there seems to be a very strong consensus around that, and that's the kind of starting point where the discussion goes. To that sense, to the extent that one accepts the methodology and the way it's done, it's a perfectly reasonable way to approach this. It's very much the way it's done elsewhere and has a long lineage attached to it. There's two things I'd say, one in amplifying what Mike's just said. I think there's always going to be issues about the level of the proportion that goes to social housing and the proportion that goes to affordable housing, and again there's a kind of consensus around the 70-30 split. In a sense, once that's made, the funding falls on behind that, and we may be going to talk about this later on, but there are trade-offs if you're going to make changes to it, because if there's a funding envelope, that's what you have to work with, so there's going to be implications of that. The other thing I think I'd say is, in the Stamplify what Mike's said, is that a really critical fact is clearly the benchmarking, and I think there are good things about the benchmarking outcomes, increasing the levels of grant across the board, and narrowing that division between RSLs and local authorities, but the division still remains, and it still seems to be premised on things which aren't really evidenced in a satisfactory way. I mean, I think if we go back to 2011, you know, a long, long time ago, we had this financial capacity study in Scotland, which was very controversial, but actually in principle a really important piece of work, and what I said in my written evidence was, I think, it really behoves us to have an externally transparent, accountable financial capacity study to at least evidence that the positions that councils and housing associations find themselves in, and more than that, it needs to be disaggregated to pick up exactly the points that Mike's been making about specific places. Thanks very much, and Shreena. Good morning, everybody. Apologies for the camera this morning. So your question there is about clear targets. I think that the target is clear. Do they need to be revisited? I think potentially yes. My colleagues have kind of set out some of the issues that we're seeing at the moment. Obviously, we have to achieve 70 per cent of affordable housing by 2032, which is not very far away, and given that the economic situation that we've been finding ourselves in and will continue to find ourselves in is not changing, it means that the continued pressures for high construction costs, supply chain issues, now with decarbonisation we've also got the added issue of what does that supply chain look like and the skills and workforce available to install, manage and maintain air source heat pumps, ground source heat pumps and the likes. A labour market, there's very few people that seem to be in it, so we're all kind of fighting for the same labour to come onto each of the different sites. All of those costs are just adding up and adding up, so on average the cost at the moment per unit is well over £200,000 which is unaffordable and unviable for lots of projects for local authorities. Mike touched on the point there about RSLs and local authorities having the benchmarks aligned. I think that that is definitely needed. The cost is not any different to an RSL building or a local authority building, so we're all in the same situation. We're all trying to deliver the target and I think it should be fairer that local authorities are giving that additional benchmark to bring them up. Those would probably be the points that I would like to make on that and more importantly what we need to remember is that whenever there are an additional cost to be met that will essentially get passed on to tenants and we are building affordable and social homes. We need to remember that not all of our tenants will be in a position to be able to absorb high-rent increases and we need to also bear in mind that we're about affordable rent. So we have to manage that line really carefully. Our duty is to our tenants. Thank you. Thanks very much. I'm going to move on to another question which has kind of connected a bit to some of what's already being brought up. In our call for evidence for this meeting we received a comment from a few councils that suggested that the current subsidy system does not allow councils to fully meet the housing need of those with particular needs including wheelchair users. I'd be interested to hear if anyone is aware that there are some housing needs that are not being addressed and if so how could this be improved? And maybe Aaron? I'll come to the specifics in terms of those with additional needs in a moment. I think colleagues have already touched on the danger here of the overall deliverability of the programme and I think that threatens all types of housing at this stage. Shireen has just talked about the cost increases that local authorities have seen. We surveyed our members a couple of weeks back now and they're reporting that over the last year the cost of developing a home has increased by an average of 17%. That's just in the last 12 months and the 12 months prior to that was pretty similar. Over the last two years we've seen the average cost of building a home go from 150, 160,000 to, as Shireen has said, more than 200,000 in many instances now. That varies by location in the highlands, islands, rural areas. We know that that is much more acute driven by supply chain issues, by inflation. I think the question is, can we deliver housing needs generally? If we can't do that, then we're going to let down a lot of people, particularly those with the highest needs. I think when it comes to those with additional needs, wheelchair access, those sorts of things, I think the grant system is fairly flexible and allows for that. I think probably where we could see improvements is in identifying that need further down the line. Sorry, earlier down the line. We've been waiting for a number of months for Scottish Government's review of housing for those with varying needs. That's faced a number of delays because of issues with Ukraine, the work that's going on to rehouse refugees, issues with Covid. So it would be good to see that move forward and we can really get into the detail of some of those questions because I think that's driving a lot of that uncertainty right now and it would be good for that review to begin. Thanks very much. Is there anyone else who wants to come in on that particular question? If you don't have to. Thank you. Just picking up on Aaron's point there, the housing for varying needs is a policy that really could do with getting bought forward and being reviewed. I think it would definitely help to make sure that that is included in part of all of our new builds. At the moment, local authorities will be delivering at least 10 per cent of their new builds as fully wheelchair accessible homes, ground floor, which is brilliant. But the problem is that we are not always able to build larger homes. So where you've got a family that needs to have a ground floor home, we're probably not building anything beyond a two bed. Which again means that not everybody who has those specific needs is getting that need met in terms of their housing provision. We also do a lot of work with our colleagues in health and social care to make sure that their service users are also getting allocated some housing in new builds. But that becomes really difficult to do because they don't have sufficient funding to be able to come in and have core and clusters on a new development. So it's about aligning all of those fundings and making sure that when we're building, we're building holistically and we're making sure that multiple service users needs are being met. Even just as an example of bariatrics, that's reinforced floors, it's widened doorways, all of those types of things, those all need to be considered much further forward in the design stage. But then that's an additional cost and who does that fall to? Should it be health and social care? Should it just be part of new build homes that they are built to this standard? So I do feel like the housing for various needs would help to kind of set out who's responsibility it is and what level of need we're building to and future proofing to. Thank you. Thanks very much for that. Those are very useful points, actually. I'm going to move on to another question that's around kind of place. I'm going to direct this to Ken and Elsa. So many communities in the Highlands and Islands have suffered historic underfunding as we've kind of started here and forced depopulation leaving them fragile and with declining populations is a crucial that we support these communities and create communities where people feel ownership. So with this in mind and the emphasis on the importance of place in the Scottish Government's housing to 2040 policy document, is there anything the Scottish Government and its partners need to do to ensure that new affordable homes are developed in sustainable places where people actually want to live or I would say actually in a sustainable way as well. So Ken, maybe you want to pick that up? Yeah, I don't have as much to say but this is, I probably have to say, about other things but I would make two points. One is that there's a 10% target isn't there within the housing affordable supply programme that's targeted towards rural remote and islands areas. I think the issue is, I mean this issue does a lot of things and there's a lot of broader rurality things I guess that would be important here to make primarily is that, and this is a broader point but it has specific rural dimensions which is the worrying reduction in the SME building sector which is particularly important in a rural context because you simply won't get larger builders taking part in those kinds of smaller programmes where the small size is really important to what's trying to be achieved. So I think it's a place where the Government want to consider, given its objectives and its outcomes around rurality that it might want to think more about what else it can do to support the SME sector. I think I quoted a number from inside housing that said across the UK there'd been a 70% plus increase in bankruptcies amongst house builders and that's particularly aimed at the SME sector. Thanks for that. Do we have Elsa? Elsa, would you like to come in on that question? Yes, thanks, chair. Sorry, I missed a little bit of your question but hopefully I've got a question. I can give it again if you want. In terms of developing... Go ahead. Okay, thanks chair. So I think in terms of sustainable places addressing the really serious issues of population in targeted areas across the Highlands and Islands and in the south of Scotland which we mustn't forget at all which is also experiencing depopulation in communities. I think this is where community-led rural housing really comes to the fore because communities that are in charge of developing housing to address these particular issues take a really holistic view of the problems. So we've seen in places like Scrontium the housing is linked to school so they've actually developed a new school together with housing in all the ferried on mull. The depopulation again was very much linked to the school role and they focused on developing housing to attract new families. So I think in terms of are we building homes or are we building communities and places it's a really important point for the affordable housing programme that it is able to take that more holistic view that smaller numbers are more appropriate in very rural and remote areas and perhaps at a level that RSLs are not able to intervene at the issues around land supply again which communities can perhaps unlock in different ways to RSLs and local authorities. Community-led regeneration just look at those broader issues and the point that Ken was making there about contractors I know some communities are now looking at building the local contracting base on egg. We're trying to support local suppliers and contractors to feel so we start to bring back that base of very small SMEs HIE I know we're looking at modular construction and the opportunities for that type of construction approach in particular rural and remote areas and that's worked quite well all the ferried on mull. I think there's a range of opportunities at the moment and it would be good to be able to bring those together and share them more widely and ensure that they are supported by the broader and place-based approach to regeneration rather than just housing. I've also mentioned that communities when they're looking at housing projects will bring other types of services whether that's health services or schools or community hubs because they have access to the sorts of funding regimes that perhaps the other suppliers in the sector don't have. Those are the points I want to make around place-based regeneration and community-led in that they're more flexible and have access to different funding regimes but on the downside it is a really complex approach that communities do need which is why the role of the rural housing enablers is really important if communities have those technical skills and capacity and just a point on the targets and how that's working Ken did mention the 11,000 rural housing target that's in the plan so there are around large communities at the moment in the rural areas 1,000 houses in Inverness is great it addresses a lot of the issue there but 1,000 houses in the north west highlands across 100 communities or 150 communities would be absolutely transformational for rural Scotland so I think the nuancing in the target is really important as well and I think it's probably a moment that's not being addressed thanks very much Elsa that's really useful thanks for your insight so we're going to move on to another theme oh no sorry we've got two more people to want to come in so Aaron wants to come in and then Fiona yeah thanks for me it's really interesting that we're talking about place and sustainable places and I think really positive that we're doing so two quick points I would make if we are going to move the dial on this we need to start seeing housing as infrastructure and joining it up with other infrastructure of national importance and I think we've missed an opportunity in NPF4 to do so not listing housing as something of national importance when it comes to infrastructure is a missed opportunity on the positive side I think if you look at the work that's being done in the south of Scotland around economic development there there are organisations that really get this and the south of Scotland enterprise group the work that they've done on that economic vision really talks about the importance of housing in thriving rural communities and in places where depopulation is happening you know I've heard the chair of that organisation say that my economic vision will only be as good as the homes that people live in and that's been driven by organisations like Yildon, like Berwickshire housing like Scottish Borders Housing Association being at the table and being involved in those and I think that's the way that we can transform this discussion is making sure that housing is at the table for these economic discussions around place and around infrastructure Thanks very much for that Can I just check with you that I think that's a really important point about housing being and infrastructure and that the draft MPF4 had it was a missed opportunity did you put that in the consultation because it was a draft and we never know what might come through in a few weeks time Yeah we've said that in our response and I think overall I'm sure we'll be able to talk about MPF4 later but the disappointing thing is that MPF4 should be driving from a planning perspective strategies that we've got out there like housing to 2040 and as it stands we don't see the linkage between those two documents as clearly as it could be Thanks very much Fiona First of all just to echo exactly what Aron has just said about MPF4 I was pleasing a couple of years ago the Scottish Infrastructure Commission did identify housing as a national investment but it was definitely a missed opportunity not to say that in MPF4 what we pick up on was particularly was issue around the SMEs worked that we've done with our members recently indicated that around about 35% of all new homes that are built in Scotland are built by SMEs but what we also know is that the number of homes built by SMEs in 2019 was about 2,000 less homes than was delivered in pre-2007 before the last crash now if we see the same impact coming as a result of the looming recession and economic conditions that we find ourselves in now then I think we're in really serious trouble with the SMEs and we already know a number of SMEs have approached us and other similar bodies that they are experiencing real difficulty in delivering affordable homes in rural communities in particular and the number of them their ongoing business viability is under threat currently this is something that's coming this is something that's sitting with us at the moment so I think it's a priority looking at the support for SMEs should be very high on the agenda Thanks for that Can I just check so that when they come to you with expressing this challenge of delivering is it the usual things that we've started to hear over and again around lack of labour people with the skills and also the material costs? Yes absolutely I've said particularly cost labour it's affecting everyone across the board but the SMEs who maybe have a tighter cash flow position than some of the larger home builders will find it much more exacerbated Okay great thanks Now Sherina you would like to come in as well Yes thank you so I think the points that have been made have been really good and the points about the SMEs we have to also consider that place is more than just building it and leaving it it's sustaining it and it's managing and maintaining it so when we're looking at all of the different parts that go along with building communities sustainable urban drainage green roofs, blue roofs, decarbonisation all of these types of things these all require ongoing management and maintenance and for my colleagues who are in the highlands and islands even being able to get somebody to come out and fix an air source heat pump that's broken can take days and days and days or weeks and weeks because if that energy company doesn't have other work to do on the island then they're kind of looking at it like well what's the cost benefit of going out and doing one job it's better to wait for there to be a few more jobs but that does not help the communities where people are living when they need the repairs and the maintenance to be done so I think it needs to be much more joined up when we put on to the energy companies to say well actually the highlands and islands are as much a part of the mainland of Scotland and the duty and making sure that you're out and able to take care of the products that you've installed is needed and obviously we can't really push that from our ends as local authorities or ourselves that needs more of a push from maybe government or other governing bodies thank you back to what Ailsa was bringing in in the beginning where she was talking about the need for a much more local base as she was describing is happening on egg and Ailsa you'd like to come back in thanks chair actually it was just to make that very point that actually how we support those SME local communities is absolutely critical recognising the geographic remoteness of a lot of these places the point that Serena was just making there in terms of getting contractors out is really difficult so people tend to go for the traditional models that they know the guy down the road can fix and that absolutely takes out of scope a lot of the new approaches that we all want to see happening on housing development so support at a very local level for SMEs but through the enterprise agencies or other organisations and through organisations like Skills Development Scotland and in schools is absolutely critical you know that's a long term but we need to start now okay great thank you very much so now we will move on to the next theme and I just want to say we have quite a few other questions to get through but some of them are directed specifically to some of you so the next theme is progress in delivering affordable homes and balancing priorities and I'd like to invite Paul McClellan with a few questions and this is really talking about as I said progress in delivering affordable homes and balancing priorities and the witnesses I've referred to the need for social owners to balance investment and decarbonising their own stock of affordable homes and Professor Gibbar I remember your session here when you talked about the cost I think I've been, I think if I'm right saying it was about £32 billion I'm thinking about more local authority in the share it is you're talking about £600 or £700 million in East Lothian roughly in terms of what the challenges would be and looking at that I suppose it's how can both aims be achieved and how can the Scottish Government use its budget to facilitate this and what way can look at increased resources prioritising one name or another for me as well as at what level is that scoping being carried out by each local authority or by each organisation I'll probably come to yourself in the first regard and then probably speak to Mike and Gary from COSLA in that regard I've had previous discussions with SFHA about this as well and I know this is an issue that they've been looking at it's a really significant issue and I think ultimately housing associations the starting point is housing associations want to be able to deliver both of these ambitions they're the right thing to do for communities in which we work but doing so at the moment in the current cost current inflation an economic environment is really really difficult just to take it back a step in terms of how housing associations are financed because this is really really important when we build new homes about 50% of the costs covered by private lending and that private lending is based on a return on the additional rent that is built from those homes as it stands the work bringing existing homes up to standard through decarbonisation doesn't have an obvious revenue output so there is no clear site on where additional revenue will come into the business so the assumptions that have been made previously by government and by others simply cannot be applied to decarbonisation so we know that this can't entirely be paid for by Scottish government this is going to be a partnership with private sector private lenders probably some new lenders that we've not worked with before yet worked out with government what that split is and that needs to be done so done so urgently there's a huge amount of uncertainty around this at the moment because we're reviewing Scottish government are reviewing the energy efficiency standard for social housing so we don't really know what standard we're building to we're waiting for interim guidance on what should be done while that review is ongoing and that means that the work that is needed to bring in the right skills to bring in the right materials can't be done until we have that certainty so we've got a looming target in 2032 but with now another year of lost time where we're not going to know exactly what that finance arrangement looks like exactly what that standard looks like so the pressure is only going to grow over the next decade on housing associations to do so I think just to make a final point there are finance models out there so energy sprung in the Netherlands has been delivered successfully in a number of places the future generations commissioner in Wales has put out a really interesting framework for how this could be done every single one of those models requires significant government investment way above what is currently being invested and to not bring that forward will mean that housing associations ultimately don't have the capacity to deliver on decarbonisation the trade-off if we're going to deliver decarbonisation without that government support will be that we don't build enough homes so there's a lot of work to do we've been calling on Scottish government that was done as part of the work on Zest and we're still pushing for that we've seen some positive movements from the Zest report in the last couple of months but it would be good to see that be brought forward I'm going to probably bring in Gary and Mike and see the best person I suppose one question is in terms of the scoping work that's actually been carried out or do you find your members have done that detailed piece of work to say this is how much it's going to cost in terms of if it is over that certain period of time and whatever it is but I don't know how detailed that work has been carried out by the Federation at this stage it will vary from member to member to be honest the starting point is we're building from the highest standards in Scotland so we know that the gap we have the bridge is smaller than many other parts of the housing world but that work is progressing varying speeds the net zero heat fund provided by Scottish government had a channel for that sort of research and we're waiting to hear back we know that it was massively oversubscribed it's very difficult to do that scoping work and to have that certainty over costs while the review of issues is on going and that review is a positive thing we need to get that standard right but it just adds uncertainty to the equation Mike, Gary, I don't know who the best person would be to speak from a cosy point of view just the same kind of question obviously from local authorities aspect in terms of how are local authorities looking at de-carbonisation and also building new housing stock I don't know who the best person is from cosy point of view to coming on that one is I'll maybe start off some initial comments on that, that's a very good question because I think there's quite some immense challenges I mentioned a leader's position at the end of last year but there's so many new challenges which I just said with Ukrainian arrivals as well as inflationary pressures on supply chains and the cost of the materials and as Aaron rightly said de-carbonisation energy efficiency of housing stock each two is not optional it's something that we'll have to strive for our housing stock and it's something that we have a number of challenges that we are presented with in respect of affordable housing and I think really to maintain good progress as a need for a sort of reflection a time to really take account with ourselves Scottish Government and other key stakeholders of how we take this forward and have a bit of balance and alignment of Scottish Government priorities clearly we agree with the fact that affordable housing by local communities across Scotland but at the same time we've got other targets from other parts of the Scottish Government on each two de-carbonisation of housing so the need for a balance and alignment of what's achievable and where resources are going to come from to achieve our joint objectives and also there's a need to look at alternative ways of working for a public sector organisation for example in NHS some significant recruitment issues and the need to get more staff and a lot of them from overseas and in the need housing and this is another dimension to the challenges that we have Thanks Thanks for that and I don't know if Gary would come in that and I'll probably ask you the same question in terms of the scoping that's been carried out by local authorities or estimated costs at that stage of where are local authorities in that regard because I think that that would be the first step in terms of mentioned by the Federation but also in terms of looking at detailed plans in terms of that so I don't know how far that works progressed within the local authorities So coming on that chair I suppose local government probably welcomes the targets and the question for me gets right to the heart of the issue of the assessment of the affordability of those targets and absolutely focusing on the affordability of rents for tenants being for me the starting point I think it's fair to say probably still in the foothills of really getting into the integrity of that assessment and what is deliverable with the resources and the current level of subsidy from general taxation and ultimately the rents or taxpayers through government subsidy I haven't we haven't done a local assessment on that but and I haven't seen any national assessments in terms of whether these targets are really deliverable and what trajectory that would bring to rents and of course of tenants now facing all sorts of pressures around their cost of living and that the affordability of rents will differ across the country and will have shifted since the programme targets were set through housing 24 etc so I think for me that's the issue that now all local authorities and layers of government now need to turn to their attention to what are the implications of the targets and what are the calculations that sit behind the deliverability of those targets Thank you for that I know you spoke to us before about the report I know if you have anything that you want to add to that in terms of just what you've heard because I know you gave us an evidence and I still remember that evidence session you gave us and quoted quite a bit but I don't know what your thoughts are in terms of striking the balance I think this is the number issue for me I always when I talk to students about this there's like three issues here using rents to contribute to a new build programme using rents to contribute to decarbonisation using rents to contribute to asset management and housing quality standards sorts of issues and that puts tremendous pressure on the affordability of rents going ahead and that's obviously very concerning I think we are at quite an early stage with the decarbonisation process so I think landlords are putting a lot of time and work necessary but really important and risky activity in terms of decarbonisation I've been in debates before about decarbonisation one of the things that social landlords have said is that they worry about innovation risk they worry that they will press ahead with an initiative with a certain kind of technology and three years down the line it's clearly not the best thing to have done and they simply can't know that in advance so they're understandably hesitant I think as Darren said really important issues here are about the partnerships of funding and how we try to bring in new partners or find new ways to have long-term funding for this which is at a societal level so it does seem it's a public policy issue and maybe in these people at the Scottish National Investment Bank to be more and more involved perhaps but the other thing I would say from direct anecdotal evidence of one observation on the board of are working very hard to try to understand the sort of implications of doing each one and what might follow on from after that so the review is being watched very closely so I'll leave it at that No, thank you for the good Sorry to interrupt but Shreena would like to come in as well Yeah, Shreena Thank you So in terms of the competing priorities for local authorities I think several people have already pointed them out but we do also have our capital investment programme so we're still working our way through bathrooms and kitchens that need to be replaced on a cyclical basis we've obviously got the each two standards that will be coming out in the decarbonisation on top of that we're then also trying to build new homes all of which costs considerable sums of money and I suppose when we go back to our tenants and we ask what do you want the priority to be it's their homes it's making their homes comfortable, warm fuel efficient so that's I think where we need to look at the starting point is how do we best serve our tenants and I know that the Scottish Government wants all of the new build homes to be built by 2030 to 110,000 but with the best will in the world local authorities and RSLs cannot do all of the priorities and meet all the timelines and the targets so I suppose our question is what does the Scottish Government want the priorities to be but we also need to take into account that we are landlords and at the end of the day we should be listening to what our tenants say and making sure that their homes are as best as they can be that they're energy efficient I think also one of the other points is the just transition we need to remember that across the authorities we've got quite a few will have mixed tenure stairs and that poses another issue for those tenants where they are a minority in a block getting renovations done to their home to make them as energy efficient as possible and how do we make sure that those owner occupiers and private landlords are able to participate in this in an affordable way another point again going back to our tenants all of these additional costs will have to be picked up in some way by tenants and we need to remember that our tenants are the least able to pick up large rents Professor Gibbs point is out there that we do all have apprehensions about the infrastructure and all of the different technologies that are coming out and are our tenants being pioneers to see which one works best and how do we future proof that costs additional money that in the next 10 years we're not going to think oh crikey we shouldn't have used air source now hydrogen or whatever it may be is the preferred model so I think it's all of those different risks that we're trying to take account of but we must not forget tenants are at the heart of what we do and we need to make sure that they are coming on this journey and that this isn't being done to them because it's a lot of upheaval potential decants if we're putting back in hot water storages they're losing a cupboard I know it's small things but that's how people enjoy their homes and the other point about fuel poverty obviously at the moment it's never more acute in our minds the fact that we have got tenants who will be in abject fuel poverty and we will have a lot of vulnerable tenants who will need a lot of additional support and we must not forget those tenants as well who are perhaps disabled and are using equipment, oxygen that needs to be plugged in the ability to just turn off your electric and just not use it is not going to be there for them so anything that we do to improve homes must not push our tenants into further fuel poverty thank you I'm conscious of the time my next question I think most people have kind of answered this was talking about to what extent is development of new affordable homes by councils and RSLs impacting on tenants' rents and affordability I think we've kind of heard probably more expansive in terms of that in regards to obviously retrofitting and so on and what impacts that has I don't know if anybody else wants to add anything because I think most of the panellists have mentioned that but Aaron Zee you went in again just on the pressures of that where is the affordability line if you like for tenants Aaron probably first and then Gary after that I think to start the rent decision that housing associations can have to take this year is the most difficult I think they've ever had to take I think it is widely accepted that housing associations will raise their rents by significantly below inflation and that puts enormous pressure on business plans in a way that we've not seen before so when you ally that with the decarbonisation agenda with the new build what we will see this year is money taken out of the business plan over the long term which makes that harder affordability will be the key driving factor for every housing association when they make the rental decision this year and in future years but ultimately we are going to have to balance the pressure that that brings on the business plan over the long term the ability to repay finance the ability to deliver on those ambitions that we've talked about and as I say I think what we're going to see this year is significantly below inflation we support our members extensively with their assessments of affordability we've got an affordability tool that's provided by housemark which has all of the latest data on the cost of living and all of the decisions will be informed by that but as you can imagine that's putting out some very difficult figures this year I think it's interesting that in Scotland I think it's a really positive thing because it controls for the social housing sector and I think when you look at the stats across the UK Scottish social rents are lower than Wales in England and I think that is a direct result of there being no government intervention actually because I think government intervention often drives uncertainty and can have unintended consequences of housing associations taking the maximum rent rise they can under that government policy whereas I think affordability has remained at the heart of rent setting in Scotland elsewhere so I think it's really important that we protect that independence and we protect housing associations efforts to deliver on affordability we know that the lower rents in Scotland drive lower poverty rates than other parts of the UK and housing associations will remain committed to that affordability That's great, thank you for that Gary I just wanted to refer back to the written evidence in terms of the affordable housing supply programme grant the evidence points to the trajectory of that in terms of the percentage share of new builds funded by Government grant reducing and indeed I think in the evidence we point to potentially reducing to 34% or below so that the point I wanted to make is that the government subsidy for new affordable housing is on a downward trajectory per unit at a time when we are as social housing providers can addressing all these competing demands Thank you for that Ken I just wanted to build on what Aaron just said it's been really alarming the last week I think the plans in England to set a 5% rent cap across the social sector which is we have this long tradition in Scotland that government doesn't intervene in this let rent structures flow to a large extent that 5% cap might put quite a lot of pressure on people in other parts of the UK to do something similar we need to be really clear about the consequences that has that Aaron has just put out Do you want to pick up question 11 while you are on this is the question for Aaron Yes, and this one is for yourself Aaron, in terms of the tender price index for a measure that has increased in places and you've kind of touched on this about new affordable homes is there a more appropriate measure to use in terms of that? I think where I'm going to learn about what the measure is, I think it's really important that it picks up inflation in real time in the current circumstances I've given you the stats on development on maintenance we're seeing even greater increases so 20% to 35% inflation over the year 10% to 15% on labour and we've had more than one housing association tell us that a like for like maintenance quote from last year has come back 50% higher this year so I think what's really important is however Scottish Government are assessing inflation on the benchmarks that they get in real time information I think previously the Scottish tender price index probably hasn't been fleet of foot and hasn't picked that up quickly enough but I do think as part of the benchmarks review what we're seeing is more proactivity from Scottish Government in terms of getting that real time information directly from housing associations and I think they are developing a fuller picture now than they've had previously so hopefully that moves one of the challenges around the benchmarks I have to say Scottish Government have been incredibly flexible and incredibly helpful in the current circumstances because more and more bids are coming in for funding way above benchmark and they genuinely fulfil the spirit of the previous review the review of the benchmark level isn't due until the end of this financial year by which point they are going to be entirely out of keeping with where they were when the Cabinet Secretary announced them previously so I think there's something about what are the triggers for reviewing those more quickly and that means that information you'll get in needs to be live and needs to be much more much more real time Thanks very much Now I'm going to go to questions from Willie Coffey Thanks very much, convener and good morning to everyone I was hoping to pick up a few issues in East Asher Council's submission and pick on Mike and Gary from COSLA just to see whether some of the issues raised in my council's submissions are reflective across Scotland and shared by our COSLA representatives One of the big messages that came out of that submission for me Mike and Gary was that East Asher was talking about the decision really whether they should invest in existing stock or new build and it's clearly a choice that many councils are going to have to face so they were saying that in fact they said that it's untenable to consider both strategies without an on-going assessment of the impact of boring and all the factors that colleagues around the tables have mentioned so far, is that view that it's effectively untenable to do both shared by yourselves as COSLA representatives and spokespersons? I'll just be becoming the first I think essentially each local authority always have priorities and there's obviously a need for affordable housing but there's also a need to maintain existing stock and that's obviously looking at upgrading where necessary but also looking at decarbonisation initiatives too but bottom line is local authorities have obligations to the tenants and respect of their properties so it's really quite a hard ask actually when local authorities in a position where it has to ensure that existing housing stock is well maintained, is upgraded where necessary as a landlord which can only be expected but at the same time it's obviously looking ahead where there's a need to provide more affordable housing in a local community so it's really quite a top position and I think East Ersh's position is quite reflective of probably quite a number of local authorities across Scotland who are in that position financially with local government finance obviously public sector funding thinning and all the other financial pressures that local authorities are under in respect of a range of other priorities for housing so I'm not sure if Gary wishes to add to that Yeah, thanks funding models untenable signs probably a fair assessment the significant costs that have been evidenced and reported around zero carbon agenda for social housing along with the continual upgrade of housing along with building more houses without having a very adverse effect on rent levels it would be untenable to do them all and I think it comes back to the discussion that's been this morning about the affordability of rents to tenants and what those rents can sustain in terms of any form of capital investment whether it's more investing in more homes or in better homes through that investment and therefore it comes to the question of the level of government subsidy through general taxation that is brought to the table to support those investment demands and I think that's the conversation that really hasn't a mature conversation around that hasn't happened and really needs to happen around the what is deliverable within the funding models and what needs to change in the funding models to achieve the ambition that everybody has Thank you for that they were saying that they feel of course that it's more important to build the house types that the local community and population needs rather than hitting perhaps a target of a numerical target of 110,000 across Scotland, does that ultimately leading as to where we will end up we perhaps won't hit that target we will focus on local needs and they also mentioned the difficulty in replacing or building some of the larger properties that were lost during the right to buy and so they be more expensive to build would impact on our ability to deliver on a numerical target so is that a kind of concern shared across other authorities in Scotland would you say both Gary and Mike happy to come in there I suppose it perhaps demonstrates through some of the earlier questions when we talked about wheelchair accessible housing and I suppose it's back to that what's the local housing needs assessment of houses that are required rather than focusing on the target on an absolute number of houses I think just to add what Gary said I think he's absolutely correct each local area has different demographics we'll have some areas where we'll need more specialised housing for people with disabilities all the people at the demographics particularly in a local authority area so it really is trying to balance that and address that issue for each local authority area and come to a local local solution I think we we've got to continue challenges on housing right across Scotland as local communities and would ever more I think it's something that we want to strive to achieve targets and where we can look to the work with the Scottish Government and other stakeholders to see what more can be built but it's looking at, as Gary rightly said the financial challenges of this and what can be done to achieve that Thanks One of the other comments made by the authority was concerning the grant levels the Scottish Government has already shown in that where if a council provides sufficient evidence then it's hopefully granted and that funding can be made available but I think he's certainly said it's a when a site by site basis or project basis is there an issue in there that we need to improve and make that a bit more seamless do you think? I suppose that the issue with benchmarks and the lack of parity between RSLs and local authorities means there's a disincentive to bring forward sites that may be well above benchmark and secondly there's an additional administrative burden in terms of going through that assessment so it's a more complex process to secure the subsidy so that that best delays sites coming forward and delays sites going to construction at worst don't come forward that with a higher level of subsidy might have been financially made viable There's a couple of people who want to come in Fiona, you wanted to come in on this I think the whole issue and the word that you used of untenable is a word that I'm hearing a lot from members at the minute if we look at it from the point of view of the home builders so we represent private home builders and RSLs and we estimate that together our members deliver so of the 6,000 affordable homes delivered last year about 5,000 of those were delivered by our members so that either came through a section 75 contribution from their private house building arm or as a contractor and if we look just at that contractor side so that's the contracting arm of larger home builders and over the course of August we were asking all of our members about the issue about affordable housing now responses from those contractor arms came back and said to us that next year they are estimating between a 10% and 30% reduction in the number of homes that they will build as a contractor for RSLs and local authorities next year they estimated that there will be 100% reduction now that reduction is as a result of them being unable to enter into contracts which are simply unviable now once we accept that the government has is able to show some flexibility in terms of the contracts the sheer pace at which inflation is going at the moment means that it's often impossible to enter into a fixed price contract because the suppliers won't fix their prices so what we're left with then is as we've heard the very well articulated reasons why RSLs and local authorities are unable to pass additional rent costs onto their tenants and that's fully understandable the rest of that risk then is often sitting with the contractor and the contractors are now in a position that they're saying we can't take that risk either because it will put our businesses under so a number of them have come back and said anywhere between a 10% 10% to 30% and in one instance they said they were just moving out of that market completely and that's quite worrying in terms of the overall numbers of homes that we're talking about needing to be delivered picking up on Fiona's point there that's exactly what our local local authorities are saying the tenders are not coming in at fixed price we are cautious and obviously risk adverse and will not want to proceed with projects that are unviable and almost go ahead with them and then ask for forgiveness after we've overspent and hope that we get money payback to us so we will be cautious and like my colleague Gary said there it will mean that we don't want to not able, I shouldn't say don't want to we're not able to take forward projects one of the other constraints as well that none of us have picked up on is land local authorities have what land they've got available and being able to buy any additional land up against other people in the open market means that we're probably very unlikely to buy more land and where we do buy it it may not always be in the places where people want to live or where it's needed so those are all of the other issues that local authorities are trying to contend with when it comes to pulling together their programme for affordable homes delivery so I think going back to one of the other points there about local authorities saying it's untenable to build that's definitely the feeling of the members that I've been speaking to if it's not untenable then it certainly means that there will be a slowdown delivery of new affordable homes that's definitely the sentiment that I'm hearing thank you I'm not sure if there's just one last final query I think from a cosla colleagues if they're still still online it's reported that the UK Government might be thinking about introducing the right to buy bringing back the right to buy for housing association homes and East Asia made a specific response saying that they would consider that that could make the situation worse especially in the current climate is that view shared by our friends and colleagues from cosla? I think I've brought that that's a really good question as an officer I agree with that position respect that that's the cosla factor that will mean that there will be less housing stock available in the social rent and this is an area that we need to increase our capacity and investment and the availability of that would have negative implications sort of a local thought for housing associations as well there will be less social housing availability across Scotland so this is something that wouldn't be particularly at all desirable just to come in on the point around right to buy I would agree entirely with what Mike has said there are a number of people living in social housing who aspire to own their own homes and it's really important that they are provided with a range of home ownership options so we could do much more of things like shared ownership which staircase people up to full ownership of those homes without losing social housing stock so I think the reintroduction of the right to buy that for local authorities over housing associations would have a detrimental impact on our ability to meet the needs of those in poverty and those who require social housing thank you very much for that happy to hand back to our colleagues thanks very much Willie so we're now going to move on to questions still on the same theme from Marie McNair thank you chair and good morning panel it's great to see yous and thanks for your time I think my first question has been touched on but I'll continue to ask it to see if there's anything further more to said but what impact will the reported rises in services among small and medium sized house builders have on the local delivery of affordable homes and I'll put that to yourself you on the first and anyone else who would like to add to anything further okay thanks very much I think as we've already touched on there is undoubtedly going to be a reduction in the number of homes that's being built it's a simple basic economics mathematical equation as you were and we know that definitely the impact is being felt with SMEs I think what's important to emphasise is the social and economic value that we put on delivering homes of all tenures that so we estimated that in 2019 approximately 22,000 homes were built in Scotland across all tenures and that contributed about 3.4 billion GVA to the Scottish economy supporting over 79,000 jobs per annum so a reduction in the number of homes that's being built directly impacts on the housing needs of the country but also then on the social and economic contribution that home building can make and it's worth recognising that that is across all tenures so we know that around about 75% of the affordable homes built last year sorry, around about 30% of the affordable homes were built directly as a contribution through section 75 so as a direct result of the number of private homes that's being built so if the number of private homes that's being built falls directly then the number of affordable homes that will be built will also fall so I think it's really important that we look at the overall contribution of housing of all tenures and what that makes to the society and economy of Scotland particularly when we're going into tough times ahead thank you I think it's a really important issue in many respects what seems to be happening to the SMEs seems to be symptomatic of other worrying concerns being to sound very depressive here but a lot of housing commentators are predicting a housing market downturn now housing prices are still rising 8% to 10% a year but there seems to be mounting evidence that that will be reversed the transactions will fall and the prices may fall too and that as Fiona has just been saying does have direct effects on the economy if we know that house building, house construction, housing activity in general has large multiplier effects that works in reverse as well if that is drying up so I think we do seem to be in this peculiar position of having in our generation unprecedented inflation and at the same time we seem to be moving into a recession with many global factors behind it and that's going to have impacts on the housing system as a whole and it will probably lead to UK Government intervening probably through things like stamp duty which is the go-to policy it's not particularly brilliant or clever policy but that's what they often seem to because it's easiest thing to do but if people aren't transacting it's not going to make that big a difference so I think we do need to think about this in this bigger context another thing that will have a big impact on shaping the future of those affordable supply programme is the ability to build social housing when the market is finding it more difficult than it is presently even though it's just been saying it's not easy at all just now Thank you Anyone else want to come in? Can I move to my next question? Okay my next question I'll direct it to Ailsa Rayburn Your submission states there's unnecessary complexities in the funding and planning processes which if addressed could speed up the process and enable more communities to deliver hyperlocal schemes that meet local need and you've touched a bit on that in an earlier response but can you expand on that and maybe suggest any improvements that can be made and that's to Ailsa Ailsa can you hear us? Here we are Ailsa did you hear the question? I'm having a really bad connection issues this morning and I've just gone off so I'm using my phone so I apologise if it's not very clear but I did hear the question from Miss McNair In terms of opportunities to speed up and make the process easier for these hyperlocal schemes access to land is an issue which is all within this committee's remit in terms of ensuring that communities have better access to land for the community by land form legislation funding obviously the Royal Alliance Housing Fund and the continuation of that was extremely welcome and the Royal Alliance Housing Team as has already been referenced in other conversations are incredibly helpful in trying to bring schemes forward but there are issues over how the fund works and with small tweaks to the fund around the benchmarking and feasibility from stage 1 and also at the moment it's not the fund is not taking account of the need and energy efficiency targets so communities are having to find additional funding to secure that and then some of the conditions can be too prescriptive on tenancy and tenure type and have the need for mixed tenure actually making a lot of the schemes particularly placemaking based schemes work it's also very time consuming and the way it works in terms of community having to get to fully tendered cost stage before they get confirmation of their stage 2 funding is extremely expensive so communities are often difficult to achieve so there are things that can be done in terms of changes to the housing fund and the way it works really and tweaks are really substantive I think that the intermediary organisations like the community housing are absolutely critical in the process because as all of the other participants will know developing housing is a very complex and technical process and communities don't tend to have those skills so building in those intermediaries and supporters is really helpful to contribute to making projects going forward and we've also touched upon the role of planning and particularly the point that Arun was making around housing being seen as the infrastructure in MPF4 that was certainly the focus that we made and our submission to MPF4 that housing is one of the building blocks of a successful Scottish economy not reflected in MPF4 at the moment so hopefully again when the committee comes to hear the MPF4 progress that point can be made so I think there are a number of issues around land supply around funding, around planning and about support for communities all of which are within remit without huge additional resources required to being invested the issue around contractors and skill shortages is already touched upon at length and communities are looking for very local ways of trying to address that and often obviously they're working on very small 4, 6, 8 units schemes which are much more deliverable by very local contractors rather than perhaps the larger scale ones that most of the RSLs are dealing with thank you Thanks Ile. Your submission says that some house builders have well considered projects and viable you've touched on that earlier but can you provide a bit more detail on that and what can the Scottish Government do to address this? The issue about unviability a large amount of it comes down to we've touched on this issue about risk sharing and who shares the risk for the unprecedented cost inflation that we're saying at the minute the supply chain won't fix their prices therefore it's more difficult for the contractor to fix their prices therefore the RSLs, local authorities understandably don't want to enter into those contracts so the whole thing comes down I think there's an opportunity for the Scottish Government to consider some form of risk sharing or underwriting some of that some kind of risk pot that might sit in a contract that if price rises go over x per cent then everyone takes a percentage share of that so if you share in reward you share in risk as well so I think there's something around there I think certainly accelerating improving the overall operating environment for building homes and speeding up the process as was touched on previously planning applications for major developments for housing currently sitting at around about 54 weeks now that's simply not acceptable we were talking with an SME just last week who has three housing sites in the pipeline at the moment in the planning pipeline and they have a number of sites that are coming to an end shortly with those forthcoming sites being subject to continual delays in the planning cycle they're now considering what they can do with their workforce and there's a risk of workforce having to be laid off to guarantee continual work streams so I think there's a number of things around the overall policy environment that is seen to be more supportive and recognising of housing as an economic and social contributor and again that's areas where Government can intervene and this has been touched on already not with necessarily requiring substantial investment at this point one final question on your submission you put the scale of the challenge in context including as you say that working through the economic change associated with Brexit can you expand on this and say a bit more about the impact of Brexit? Well I guess I'm thinking about work that's been done by construction industry academics about the initial impact on labour supply and on materials costs and actually the shortages of materials but Brexit is a contributory factor at least to our exchange rate and our external competitiveness so if we're importing supplies their negative impacts in that sense as well and I think there's a if you think through the entire supply chain that builds or invests in homes there's a lot of clearly labour supply shortages which are quite severe and I think we're all aware of that and whether we're attributes that solely to Brexit or not it's certainly a contributory factor Thank you Thanks very much we're now going to move on to theme 3 which is about the scope for different ways of financing and delivering affordable homes priorities of resources if capital funding is under pressure and I'm going to bring in Miles Briggs Thank you convener, good morning to the panel thank you for joining us today we've had quite a negative conversation really to this point in terms of where the market is and I wondered looking for solutions to this in ways of trying to make sure that we can achieve the targets we've signed up to I just wondered in terms of financing where the panel members thought there was new opportunities and specifically to leverage more money into the sector so I wondered looking at longer term investments for example pension funds investing in housing schemes where the panel thought there was maybe different models available to help to try to realise the potential we want to see in terms of housing and construction Fiona, I'll maybe bring you in to start I think it's undoubtedly that this is the time now where we do look to be being a little bit more innovative around I think there's definitely more opportunity for shared ownership and shared equity schemes to support people I think also things like the first home fund that was very successfully operated last year again helping towards the affordable end of the market I think what's particularly interesting with that type of loan funding is that it's generating income ultimately for government to allowing them to reinvest in it so I think that kind of approach and I think there's a lot more innovation a number of our members see coming from south of the border and I'm not an expert in this area but as I understand it it's to do with the way that RSLs north and south of the border can borrow now it's your other colleagues can advise on that but from what I'm hearing there's certainly a number of other more innovative approaches that they are able to do as a result of different borrowing structures I don't know whether anybody else can come in on that I'm happy to come in I think I'll try and be a bit more positive on this one but I think in terms of what else might be out there you do see in England and increasingly in some associations in Wales increased institutional investment so access in the bond market pension funds have been something that has been mentioned repeatedly during my time in housing that haven't quite got there I think there have been some examples of it but what it really needs to scale and what all of these models really need to scale so there needs to be collaboration and partnership within housing association sector to get there and I think it's a question of how government the regulator and others can help drive that I think probably where there's the greatest opportunity for innovation around finances probably in decarbonisation and I talked about some of the pressures earlier and where they would apply to housing association business plans and business models I think the interesting question is can we get some of the lending that would be required off balance sheet so is there a special purpose could we use for example the National Energy Agency as a facilitator of some of that funding I think Ken mentioned the Scottish National Investment Bank Scottish Futures Trust I think there's a role for some of those bodies in coming together and potentially providing a vehicle that lending doesn't sit on housing associations at balance sheet it doesn't affect our ability to build in the way that I've talked about I think there's definitely an opportunity there and that's worth exploring I think there are a few smaller innovations which can be useful in certain contexts and we could do more with them so I completely agree with what Fiona said earlier about risk pots and things like that remember talking about that in the last time we were well back in 2008-2009 we were talking about other things to help provide different forms of state support as it were a couple of other things another thing that we talked about then which still seems relevant now is buyers working together to try to use purchasing power in that way to try and get some again at scale trying to get benefits out of that in the supply chain I think something that I've been working on recently in England which is really interesting as a social investment finance where they working in partnership with the ministry in London are doing a series of follow on projects related to homeless people who were brought into hotels and such like doing the lockdown and they're working with a range of housing associations and other charities and they're putting that funding into purchase properties for that purpose sometimes for temporary accommodation but high quality temporary accommodation a lot of it's in second hand market and I know that the Simon community and University of Edinburgh are working on similar project in Scotland and I think it's a source of funding which has this considerable appetite out there for it and I think it's something that we should set, it's not panacea but it can be useful for certain things particularly in the bits in the middle if you're trying to rely on a finite amount of housing support to back housing first and other things like that then this might be another way that you actually help those kind of projects work so I think all of those things are relevant. The other thing I think is really interesting is that and it's difficult because financial transactions capital is to some extent demand led and it's difficult to plan, there's quite a lot of it in the capital budget but it's been really vital to shared equity and other things of that kind to the charitable bonds model and things like that and I think there is examples both through Scottish Futures Trust and places for people of affordable rent projects which work very effectively without using pension funds and using financial transactions capital and like we're seeing earlier it has the added advantage that it can be a revolving fund and you can use it again when you get your share back. That's helpful, thank you. Is anyone online wants to come in on that point? I wanted to also ask with regards to Homes of Scotland have suggested around Government support schemes and we know that we've seen the scrapping of help to buy in Scotland now. If we are heading into a period where people being able to find a deposit to buy a home is going to be more difficult where do you think Scottish Government need to move for example putting that scheme back in place to help people to get that deposit or is there a different model again for private buyers to maybe look at supporting to keep building private homes as well we've heard your concerns with regards to 30% of affordable homes being provided and socially rented homes being provided by actually a strong private build. I just wondered in terms of help to buy support schemes what the view was in terms of the future of those and different models we should look at as well. I think undoubtedly as we go into more turbulent times that I think something like help to buy and the first home fund could be useful again what differentiated the help to buy fund in Scotland than elsewhere was much more targeted in Scotland in terms of its threshold so I think therefore will have had much more positive impact so I think something that looks at that but undoubtedly the first home fund as I touched on earlier the whole interconnectedness of the market that if we can get the first home buyers starting to move they're the first part of a chain in terms of the private homes for sale so something that can help stimulate that first home fund. Something interesting that we have talked about previously with regards to LBTT and I know as as Ken said earlier stamp duty can be a little bit of a blunt instrument but I think there could be something around the use of LBTT and how we encourage that towards the purchase of greener homes and how we link LBTT to the purchase of more energy efficient homes the same potentially for council tax as well is there a way of linking potential reduction in council tax if you're buying more energy efficient homes so I appreciate there's bigger implications of all of those but I think there are things that we could definitely be looking at. Anyone else want to come in on that point and just finally in the interest of time I wanted to ask with regards to the UK government's levelling up and regeneration bill at what the panel's view was on that and specifically around some of the missions which relate to housing within that there is obviously the example of by 2030 the UK government want renters to have a secure pathway to ownership so just wonder if the panel had any views with regards to that bill and impact on devolved areas if not happy to hand back no one has picked up that levelling up fund business yet it's something that's coming towards us soon Willie wanted to come back with a supplementary on the pension fund bit and I think Aaron you were talking about the need for scale up but Willie Thanks very much convener there's just on the point that Miles raised about the use of things like pension funds or real estate investment funds to lever and money isn't there a risk as again my colleagues in East Asia have said when you begin to do that and then you start talking about guaranteed rates of return and perhaps indexing that isn't there a risk that translates across to the rent that might be demanded from tenants in that particular funding model and that rents might be required required to be indexed in future using that funding model Yeah there definitely is a risk of that I think ultimately that's one of the reasons that we haven't seen huge amounts of pension fund or that sort of institutional investment in the sector I think where we've seen I mean this is clearly changing given the economic circumstances where we've seen returns on investment at historically low rates recently actually that has raised the spectre of what social housing brings is certainty and whether that would become more attractive than higher rates of return and whether there's a trade off there I think ultimately both the scale and the fact that they haven't been huge returns have meant that hasn't gone there yet and that we could navigate some of that it would be a significant unintended consequence if we would see rent policy driven by investment rather than the other way round Thank you Okay thank you Well that concludes all our questions so thank you so much for being with us this morning I think certainly I've picked up quite a few things to go and look at Sorry what? Gary you wanted to come in on that pension fund question I think Yeah thanks just to highlight to the committee that in terms of local authorities under our current funding model our housing revenue accounts we can secure very quickly borrowing to fund investment from the public works loan board through treasury and those rates are rates based on guilt which support that whole fundamental issue of the affordability of rents and it would be probably challenging for the private sector pension funds looking for a return which is going to be higher than the cost of borrowing that we see through PWLB arrangements Thanks Great thanks and Ken you want to come in as well This is a slightly tangential point but I think it's very relevant to what Mr Coffey was talking about we are doing some work in rent control and that is the investment banks in Europe and how they behave in the presence of rent controls and we talked to a Swedish real estate business and they have properties they invest in and they are investing in behalf of pension funds and insurance companies they have properties in Sweden in Germany in Denmark, in Holland as well as in the UK and they are quite happy to operate in rent controlled systems where clearly rents may not be able to be indexed but they work it out and they work through it and they look at a series of risks and as part of a diversified portfolio it seems to work quite effectively and I think when there's so much you know again this is not really on point but when there's so much discussion made of supply withdrawal and investment problems attached to rent control models it's interesting to see how real estate businesses actually operate in the context and actually kind of export their model into countries with different kinds of rent control and do it quite successfully Thanks for bringing in that point actually and pointing us to there are other parts of the world that are doing things differently Shirina you want to come in as well Yeah so I suppose it's maybe just a bit of a caution around booking at all of these models and what does that mean for local authorities were expected to take a 20, 30 year lease on a block of flats we would probably be based on other models that we've seen expected to be responsible not just for the management maintenance but for the cyclical repairs as well and then where do those tenants go after 10, 20 years the blocks aren't going to be empty so again it then falls to the fact of having paid the rent whatever return the owner wants local authorities would then potentially buy the units or they would have to bring them back up to whatever then standard there is which I assume will have changed in 10 or 20 years so in terms of what the long-term investment in gain looks like for local authorities it's not always the most beneficial in contrast to us building our own homes and owning that asset outright thank you thanks very much for that point so as I was saying I think we've come to time exactly 11 o'clock and certainly have raised some really good points I think that I know I need to go and look at a little bit more detail so we're going to be taking evidence from on the same topic next week from the Cabinet Secretary for Social Justice on the 13th of September so I just want to say thank you to everyone who's contributed this morning to the discussion and colleagues we agreed at the start of the meeting to take the next two items in private so as there's no more public business today I now close the public part of the meeting