 Welcome to the sixth meeting of the Economy, Energy and Fair Work Committee for 2019. I may ask everyone to turn electrical devices to silent, if you have not already. We have received apologies from Gordon MacDonald, committee member, and Willie Coffey who is here as his substitute this morning. Item 1 is a decision by the committee to take items 4 and 5 in private. Are we agreed? Yes. Thank you. This morning, we turn to our inquiry into Scotland's construction and how that fits with Scotland's economy. We have today Nicola Barclay, chief executive of Homes for Scotland, Shona Glenn, head of policy and research for the Scottish Land Commission, Craig McLaren, director of Scotland and Ireland for the Royal Town Planning Institute and Nicola Woodward, and director Litchfield UK. Welcome to all four of you this morning. If I could just start before we move to other committee members with a question about housing supply, which in Scotland, as you will be aware, has not really kept up with demand, what are the reasons for that? Who would like to come in first, Nicola Barclay? I'm very happy to start with that. First of all, thank you very much for inviting me to come and speak today. I know that you're looking at the construction industry in this committee and it's really important to understand that house building is a quite distinct subset of the construction industry. It's got a very different business model. It's very much a retail business model as opposed to the rest of the construction industry. Why is housing land supply not kept up with demand? Well, pre-recession, we built very similar numbers per capita as we did in England, but since 2012 that figure has really split and in England we're now back to almost pre-recession levels, whereas in Scotland we're only about 68 per cent of where we were before the recession. The main difference is policy. It's not legislation, it's policy and it's planning policy. In England they brought out the national planning performance framework in 2012, and since then we have had a huge amount of growth in the numbers. We calculate that we have a shortfall of about 80,000 homes across Scotland now from pre-recession because of the shortfall every year is compounding, and so we need to do a lot about that. I think that the main thing is that the desire for more homes has to come from the top and it has to feed right the way through local authorities and through to local communities as well. We've seen that huge success in England with that method. What are the implications for that? We have more home builders who are home grown in Scotland now looking to invest more in England because they see that it's easier to build and get quicker and better returns on their investment. We've also seen that SMEs in Scotland have been unable to come back into the market. They were a huge, vibrant part of the market pre-recession. There are so many barriers now that they just can't come back in. In England you have organisations such as Homes England that are going to reimagine, reinvigorate at home and communities agencies. That is really invigorating and supporting home building for SMEs, for large-scale builders, right across the board, and that's something that's missing here. What are the specific planning policies and the barriers that you say exist in Scotland that do not exist in England to building of homes? It's the—there's no carrot or stick in the Scottish planning system. I keep referring to England because it is our closest neighbour and we are seeing huge growth there. I wouldn't normally speak about England a lot given that we're homes for Scotland, but there is such a stark contrast now. The MPPF in England, and I'm sure Nicola Woodward will give us more detail on that because she is conversant south of the border as well. It just sets out a very clear direction of travel that councils must allocate sufficient sites, which will come forward for homes. It's not enough just to have them allocated in a plan. They must be deliverable. I think that that's probably the key difference, Nicola. I don't know whether you— Well, perhaps you can ask Nicola, if she can provide clarity to that. Just to give you a bit of context, I am senior director at Litchfield to a national planning consultancy, but prior to that I was head of planning policy at Newcastle City Council. When the policy changed in England and it changed quite radically after localism, etc, etc, there were an awful lot more checks and balances put in place, which made the system more honest from both the public sector side and the private sector side. There is a policy requirement to plan for your objectively assessed need for housing. You need to identify how much is required. In England, they failed in terms of having a standard methodology for that, which is now put in place. They didn't have the Honda, the housing needs and demand assessment that we have in Scotland. They've basically rectified that now. Each local authority had to devise their own way of identifying and assessing what their housing need was. That's for private sector and public sector. They then had to plan for that. The difference between Scotland and England in the current systems and why is it working better in England, I would suggest, is that at least a third of the plans that were put forward early in the process in England were kicked back by the inspectors, reporters in Scotland, because they weren't planning sufficiently for their housing needs. There was a rigorous test of the sites that you were putting forward for development and suggesting that they would meet your five-year housing land supply. That's not happening in Scotland and hasn't happened in Scotland. A number of plans have come through—I think that it's four recently—where the housing numbers haven't been enough, but the reporters have let the plans go through to be adopted with the promise of further guidance to come. That wouldn't happen in England, it hasn't happened in England. There has been some early reviews, but mostly the plans were kicked back and local authorities were told to go and look again and prove that the land that they had was developable and deliverable. Delivery and viability tests are much stronger, so when you write your plan you must test all your policies against deliverability and viability, so you cannot have a policy in your plan that might render development unviable. That's everything from urban design policies to electric charging points or requirements for developer contributions or the mix and type of housing that you might be talking about. It's every policy in the plan that needs to be tested, and all your sites that you're putting forward for your five-year land review similarly have to be tested. If we adopted something similar with our housing land audits in Scotland, where there's a rigorous testing of your five-year land supply and you have to prove, or as far as is humanly possible because nothing is certain, that those sites will come forward. They've got a willing developer on board, they've got a planning permission coming through the system, there is a real chance that those sites are going to come forward, there's no constraints to them coming forward, then you would see that a lot of the sites that are legacy, ancient sites, difficult sites that are contained in our housing land audits at the moment, would be parked, if you like, and yes, they might be good sites for planning reasons, but they couldn't form part of your five-year supply because you couldn't prove that they could come forward. It's much more rigorous in that respect in England. The other thing that's much more rigorous, and it's been watered down a little bit since, was the presumption of favour of sustainable development. Now, we have a presumption in Scotland. It's a little bit more weak in terms of its wording in the SPP, but the carrot in the stick that Nicola talked about in the English system is the carrot is new home's bonus, so local authorities, it's in their interest to build houses because with budgetary cuts they can make up some of those cuts in terms of a new home's bonus, which is paid for every house that's built in the local authority. The stick is that their local plans will not get through the system if they don't plan properly and can prove that they're planned properly. If you can't get your plan through properly, then it's basically open season in terms of planning applications because of the presumption and favour of sustainable development. Unless you plan for it, you're going to get it anyway, so you might as well plan for it properly, so there's a carrot and stick element there as well. There's a lot more strength, perhaps, on the policy, and it's implemented much more vigorously by the planning inspectorate in England in terms of the examination of plans. Is that just policy, or does it also have to do with the planning system as a whole? For example, the planning bill going through this Parliament at the minute, does that bear any relationship to or is it relevant to the issues that you've raised? A lot of those things could actually be dealt with within the current legislation, I would think. Craig might have a better sort of handle on that, but most of those things are tweaks to our current system. A bit of strengthening in the wording of the SPP, perhaps, would give you the stronger presumption, the necessity to plan for your five-year land supply, as opposed to there's caveats in there at the moment that says that you should plan for your five-year supply unless there's a good reason why you can't. That gives a get-out-of-geel-freed car to a certain extent, so wording like that could be strengthened within the system that we currently have. I think that one of the things that the bill has tried to tackle is a perception of disillusionment with the planning system, a feeling that planning is done to people rather than with them, perhaps. Perhaps one of the things that, by no means the English planning system is not perfect and there's a lot of things that go on that are absolute nonsense so you wouldn't touch them with a barge pole and you wouldn't wish them on anyone. However, one of the things that might be worth thinking about is an examination in public. Every local plan in England has an examination in public. It takes no longer than the examination process in Scotland, in fact, it's quicker and a bit more efficient. What that means is that the local authority defends the plan that they have written that has been adopted. The development industry provides challenge to that, communities provide challenge to that and it's in a forum like this. It's a round-table discussion. Communities who have raised grievances against the plan have their time to talk about it with the inspector that's inspecting the plan. It may be that the inspector doesn't agree with them, but at least they've been able to put forward their views. There is then a discussion and they can understand at the end of the day why perhaps some of their points weren't taken on board but also why some of their points were taken on board. Who could move on to Craig McLean? Is there land available in Scotland anyway? Can I give a slightly different perspective? I don't think that planning is the main issue. If you look at the way in which we have planning and housing completions over the last five years, it's about 17,500 a year. If you look at the number of planning permissions that we have given for housing over the last two years in 2016 it was 37,000 and in 2017 it was 29,500. I think that planning is not perfect. I think that we have to fix bits of it, but it's not the key issue. For me, the key issue is getting from the planning permission to the shovel on the ground. There's been work done on that in England in the letter review, which has identified a number of key issues on that, which are things such as the lack of infrastructure that makes a site viable, the lack of utility companies joining things up to make sure that you've got the water, the electricity, and the different things that you need to build housing there as well. Issues with land remediation, because you can contaminate either vacant land or logistics of the site, and things such as limited capital to get things moving as well. Part of the issue is also a big part of the problem, but it's not the big problem in my mind. I think that one of the things that we need to do with that is trying to reposition planning as being part of the solution, and we need to do things to make that happen. If I'm being honest, just now, planning is something that is often seen as a regulatory service, something that stops things happening as a profession and as the professional body for town planners. We are always very keen to try and make sure that we see planning as a facilitator of an enabling force, which actually gets people on board to see what they want in an area and to work out a route map to make that happen, bearing in mind what the opportunities and constraints are for that particular area as well. There's a bit about trying to make sure that the planning system and the planning profession is seen as something that is actually a corporate service within local government, just now it's seen as something that is sidelined in many ways. You've got to try and make it something that is collaborative, worked with a range of different players, so we can actually deliver things, because if I'm being truthful, what happens is now, plan or plan, and most of the delivery comes from other organisations, so we need to join up that gap much more better than we can just now. And there's a bit about planning being something that is much more proactive. Just now we tend to be quite reactive, it responds to developers coming with ideas. My age, but when I started off in planning, planning was much more about providing the vision for an area, bringing people together to think about what they wanted in their area, looking at what the opportunities were, looking at who could do what, who was responsible for delivering what, and then developing a route map and creating a dialogue throughout that process to deliver things as well. So we need to look at planning in a different way and we need to fund it in a different way just now, because at the moment it's not being resourced. The amount of money that goes into the planning service in terms of development plans and development management of local authorities is estimated to be 0.38 per cent next year, which is a small amount for a service which actually can make a major difference. You mean 0.38 per cent of the local authority budgets? Yeah, the revenue budget. Can I just ask one thing that you touched on, the question of infrastructure? Of course, if there might be a plan, there might be a development to be built, but if there's no infrastructure in place, obviously houses can't be built. Is the lead-in time for provision of infrastructure for housing developments too long in terms of getting the plan having the funding in place and then trying to get it to happen? I think that the problem just now with infrastructure is all very ad hoc and unplanned. There are different providers doing different things. There's an issue with co-ordination. If you look at things even at a national level, we've got a national planning framework just now, which doesn't really talk to the infrastructure investment plan, which doesn't really talk to city region deals, which doesn't really talk to the regional transport partnerships. There's a disconnect there, and I think there's a need to better join up how we plan our infrastructure, because you can use infrastructure in a very creative way. If you use infrastructure, you can actually open up sites for housing, you can make them viable, you can make them attractive to people as well, so we need to think in that proactive and creative way with infrastructure. There's an issue generally with the fact that there's not an awful lot of money around for infrastructure, and there's a need to try and look at that, because when I talk to developers, councils, housing development comes in, and one of the first things that's asked is who's going to provide the school for this, because there's going to be school places created by this new housing development, and no one's got the money to actually cover it just now. So there's a need to try and see how we can break that log jam. You can look at that in terms of, is there a role for Scottish Government in taking a much more proactive and stronger role in that, and think about how it can do that, or are there other mechanisms that we can use to try and make sure that we can build that resource? Right. I'd like to move on to other members of the committee. Shona Glenn, no doubt you'll come in on some of the questions, but Jackie Baillie? Whilst I will agree with much of what Craig McLaren said, I'm going to return to planning with my questions and the housing land audit specifically. The Scottish Government did a piece of research looking across all local authorities, and they found, not surprisingly, weaknesses and inconsistencies so that they couldn't extrapolate a national picture. Can I get your views across the panel on HLAs and their importance for construction sector planning? Maybe I should start with Shona Glenn and see if she hasn't spoken yet. I'm going to press a button here. The piece of research that you're talking about, I'm not familiar with the detail, but what I do know about it is that one of the messages that seems to be coming out of it is about the consistency of how housing land audits and other planning policies are used. That is a theme that has emerged from a lot of the research that we've been doing about land value capture and the need for clear and consistent planning policies. If you have those clear and consistent planning policies, it can be very effective in helping to shape land values. What happens is that house builders, when they're buying land, can then take account of those policies when they're deciding what to pay for land. If those policies are very clear and consistent, they take those policies into account when they decide what to pay for land. It helps to drive down land values and leaves more of the value in the system to pay for things like infrastructure. I can't comment in the detail of the research, but the principle of clear and consistent policies is one that we would strongly support and has been borne out by the research that we've done in other areas. Housing land audits could be one of the most important tools for the planning system. If they were used successfully, they would be able to measure the continuous five-year effective land supply for each local authority, which we could then work out nationally whether we had enough housing. Unfortunately at the moment, and I must say that Homes of Scotland is one of the few organisations that has sight across pretty much the whole country in their housing land audits because most local authorities engage with us and our members to test the evidence that sits within their audits to see whether or not they are measuring the right sites, will they come forward in the timescale that they're suggesting. However, there is great discrepancy across the whole country about how well this is carried out. There's not one model, so every local authority has a different plan. A different looking housing land audit, some have different information in them. The definition of what is a constrained site is different in each. There's a lot of work that we could do, and I think that work has begun already on that with the Government review, which we really welcomed. It's really important that they're used to capture well what the constraints are and then see whether those can be overcome. If they can, that's fantastic, but if they can't, don't assume that that site will come forward. It needs to be parked, as Nicola said earlier, and more importantly, you need to find other land to substitute so that you're not doing that local community a disservice by not providing the houses that are needed. Can I perhaps move on to the Lichfield report and get you to comment on it? What you found, particularly across the seven cities, that land was reappearing in every audit, that it was kind of rolled over, and it seemed multiple times undeliverable. I wonder whether you could expand a bit on what you found and what the solution is. Okay, so we did this research a couple of years ago now, so it was based on 2014-2015 land audits, so just sort of caveat it slightly on that. But what we did was we looked at, we actually looked at for Scottish Government, we looked at all the local authorities across Scotland, as well as the city, and we did a report on the cities as well, and we looked at the market strength of where the housing land was identified. We very simply categorised that into five categories, from the strongest to the weakest. In discussions with the house building industry, it is absolutely clear that they cannot bring forward sites in the two weakest bands. There are a number of reasons for that. Incomes in the second weakest band, household incomes are around 30 k per annum, and in the weakest band are around 15 k per annum. Most people who are living within those constraints cannot access mortgage finance. The average house prices in those areas are similarly low as a result, so in the second weakest it is maybe 110,000, for an average house price and in the weakest it is maybe 76. In this day and age, a house builder cannot build a house for less than that price, therefore it is not economically viable for them to bring forward those sites. Those sites in those market areas will not come forward without subsidy, without some other assistance. That is not to say from a planning point of view that they are not good sites to bring forward housing on. It is just that the public sector, the PLCs, the house builders will not be able to bring them forward. If you want them in your five-year housing land supply, you need to find another mechanism to deliver them. That is quite stark across a number of the local authorities. When we did that research, in those two weakest bands, Glasgow City had 77 per cent of the yield, the number of houses that were identified. 77 per cent in 2014-15 were in those two weakest bands, so that suggests that 77 per cent of your five-year housing land supply will not come forward through normal house building means. Inverclyde 59 per cent, North Lanarkshire 57 per cent, Renfrewshire 59 per cent, Weston Barton 43 per cent, Dundee 61 per cent, East Ayrshire 80 per cent, North Ayrshire 61 per cent, Clickman 86 per cent. Those are big, big percentages. In the other local authorities, Aberdeenshire, we are absolutely fine, not a problem, Highland, we are not much of a problem either. Some of them sit at about a third, but that shows you that there is a huge proportion of land that has been identified as deliverable within five years that really would require significant help to be able to be realised. Hence the reason a lot roll forward potentially. In fairness, that is down to the demographics of the area, and you are not really going to change that unless perhaps you change the tenure mix of the housing that you are bringing forward. There is an element of that, yes, absolutely, but there is also an element of allocating the land in the right places in your district. If you have identified through your housing needs and demand assessment a demand for private sector housing, you need to be allocating the sites in the locations that can deliver that. You will also have identified a need for social sector housing, and those will be in potentially different market areas as well. The whole picture has to be looked at, but if you are saying that you have a five year housing land supply that is going to deliver that number of homes to meet your need and demand within that area, you need to be making sure that what you are promoting is deliverable, and that is not necessarily happening, and that will not happen without potentially another intervention. In some areas of Glasgow, there is another intervention happening, so the deal is being used to that effect, etc. It is not necessarily all doom and gloom, but your question is about rolling forward sites from one year to another, and that happens all over. There are some sites that have been through two economic cycles, and if they did not deliver in the peak of 2006-07, why there is still a notion that they will deliver in the next five years is difficult to reconcile. There is a slight watch in that some sites take time to come through, but that needs to be understood when you are doing your housing land audit. If you have a site of 500 houses, it will take two or three years to come through the system, but you need to build that in, so do not assume that that site is going to deliver on one of your five-year housing land audits, put it to the back end, and it is only going to deliver 30 units a year, and it is not going to deliver your 500. There needs to be more rigor in the housing land audits to make them fit for purpose. Craig McLean. I agree with what will always be said. For me, I think that HLAs are actually really useful too. They could be even more useful. There are three things for me, and they have already been mentioned, but what one is about consistency across Scotland and how we actually do it, so we can get them measuring across those different areas. The second thing is that they are a bit static. They will give you details of location, size, the capacity, the planning status and things of that as well, but as Nicola said, there is a bit for me about what happens next. It is about thinking about how does it impact on what your investment path must look like, and how does it impact on what your policy should be. You should be trying to do something different with that area as well. Moving away from being static, I think, would be really useful. Another key thing for me is that there needs to be a bit more transparent on how we apply them. That is from both sides, if I can use the term sides. It is about trying to make sure that there is a real rigor brought in to see the buildability, if that is a word, of the sites in which you are in. We have an honest discussion and debate about that, so we know where we stand. One of the criticisms that is often levelled at housing developers is the question of land banking. Can anyone define what that term is? To give you a view on whether it is an issue or not? Respond. I think that you are right to ask what does it mean? It means different things to different people. We quite often will hear reports from the city saying that a PLC house builder has a land bank of X number of units, and then you hear criticism of house builders' land banking. To my mind, they are two very different things. To have a land bank is to have a pipeline of your raw material that you need to run your business. Any business, regardless of what you are making, needs to know where your raw material is coming from, so you have to line that up over the next three to five years in terms of house building industry. The other use of land banking is the idea that somebody is sitting on a piece of land deliberately not bringing it to market waiting for the price to rise. I would say that the majority of house builders do not do that because they make their money by selling houses and getting a return on the investment that they have put in. It is not to say that some land owners do not do that and some people will own land as an investment. They may have a planning consent on it, but they might have absolutely no interest in bringing that to the market and putting houses on it. They hold it for a very different reason, and that is a problem. However, it is not one that house builders do because the house building model itself is all about returning your investment. The minute you have paid for your land, the only way to get your money back is to sell houses on it. You do that to your business model, to your business plan, and you have money from your investors. You have told them how quickly you are going to sell that site out, and that is what you do. The phrase, land banking, is confusing for people. I often encourage our members to use the word pipeline rather than land banking, but I am probably fighting a losing battle because it is one that is used by the city and people know what they mean by that. I know that Mr Whiteman may consider land banking to be in a slightly different place. In terms of housing developers, you would argue that they have a pipeline that they do not hold land banks for speculative purposes, but landowners do. There is a lot of land. I know in my region in Edinburgh that it has been sitting there for 10 years. Some of it is owned in the British Virgin Islands and I do not even know who owns it. That is a land bank. It is sitting there. It has had consents in the past. It is in the housing land supply audit, so that is a fair reflection of your position. Yes, I think so. Land such as that down at Leithodoxford example is an example of a land owner who historically was considering selling that land and it did have mass supply and consent on it, and developers lined up and started building it. However, changes in economic circumstances change ownership. Even the land owner changed hands as far as I am aware, and he no longer has the control as a house builder of getting your hands on that land. It is not that common. It may be in your particular area and it is a problem when it is brownfield land and it blights local communities, but when a house builder is looking for a site, they are looking to build houses on it. That is what they do. That is fair enough, but where a company or an owner owns land, they may not wish to for whatever reason. Does that beg the question that we need to explore new models? Nicola, you were talking about new models of bringing forward what you were calling the weakest sites. We need new models of procuring housing because, across the continent, self-procurement of housing is 60 to 70 per cent in the UK. It is about 10 per cent, so we rely a lot of on speculative volume house building, which has got a role. Is there a bigger role for the public sector and more interventions? You have done some research on the area, and might that begin to break the log jam that Craig McLean was talking about? Yes, I think that there is a role for greater public intervention definitely. I think that there is a risk of jumping to the solutions before you have really understood the problem though. I suppose to go back to what Nicola was saying. I think that Nicola was absolutely right to highlight the difference between what you might call the development pipeline. There is a developer's development pipeline, which is absolutely necessary. That is their raw material. If developers did not have a development pipeline of land, they would not be able to build houses. The issue of speculative holding of land is two very different issues. Just to add some context to what Nicola was saying, there is some work done a year or two back in England, based on England, which suggested that it looked at the development pipeline and how much land our developers or house builders might need to have in order to keep the development pipeline going at its current volume. In order to keep a steady state of production in the house-building industry, we would need about 1.25 million planning permissions. That modelling work found that there was a stock of about 0.8 million planning permissions, so I found a shortfall, which was quite interesting. We are in the process of trying to do similar exercise for Scotland at the moment. I would be surprised if I was showing something terribly different. The other interesting thing that came out of that piece of work was that when you looked at the planning permissions and who held the planning permissions—this is for England—what it showed was that 55 per cent of all planning permissions were actually not held by developers and 87 per cent of outlined planning permissions were not held by developers. I think that that starts to tell you something really interesting about who might be responsible for speculative land banking, if that is what you want to call it. I do not know what the picture looks like in Scotland, because research has not been done yet, but we have commissioned it, so we are looking at this issue. There are clearly important issues there. We are here anecdotally from local authorities, but Mr Wightman has just said stories about all the potential land that could be available for housing development being held by one developer. We are hearing those stories, but what we need to understand is why that is happening, who is holding the land and what could be done to help to bring it forward more quickly. Until we have answered those questions and understood what the issue is, I think that it is very difficult to jump to solutions. You said there as well. The letter review, which was undertaken in England last year, looked at the issue of land banking and other things and build-out rates and things like that. I thought that the interesting thing that came out from me was that it said that you could not rely on large-scale housing developers to solve the housing crisis, because they will have land, but they will not release it all at the same time. They will not build out at the same time, because that will have an impact on the prices that they can charge, because it could be an oversupply. We therefore need to look at different mechanisms and different models to do that, be it using smaller builders or social housing. A much more mixed economy is something that would help us to try to make sure that we can take forward approaches to try to solve the housing crisis that we have. It was interesting that I have a copy of the letter review, and it talked about the build-out rate of 6.5 per cent down to 3.2 per cent. That raises a little bit of a question here, because it is often argued that the solution to housing affordability—in Scotland housing affordability has been decreasing, whether it is in the private rented sector or the owner-occupied sector. We need to build more houses, but if houses are only built at a rate that ensures that the price is maintained at the local market, then prices are not going to come down. One of my questions is whether it would be good for the economy if the cost of housing—by which I mean the rent to people pay in the private rented sector or the costs that people incur in home ownership—would it be good for the economy if the price of housing came down? Were the economy committee interested in imparting the economy? Can I make a sort of side point to that, in that the cost of the housing is a factor of many other costs? A private home bought today will be on a site that the builder has bought from a landowner at a price that the landowner wants to sell it at. He has constructed a house that is dictated by the cost of the materials of building that house. There are also all the extra policy charges that are levied on house building that perhaps was not 20, 30 or 40 years ago. Significant developer contributions for every one of those units to pay for additional infrastructure, education contributions, etc. Ultimately, that has an impact on the price that one has to pay for the house at the end of the day. If we are looking at it, we have to look at it in the round in terms of the economy and what that means. Builders will only build houses that they can sell. It is not part of their building model to build houses that they cannot sell, so they will build in the areas where there is the market that they can turn their profit and they can afford to build there. There needs to be, as Craig said, more products within the system. The fact that the Scottish Government is bringing forward more council housing is very much welcomed. It is something that Scotland is way ahead of the English or Westminster Government on. That should help to rebalance. If you look at the build rates over past years, you will see that there is capacity within the private sector for building at a rate. It is fairly stable—it dropped a bit during the financial crisis—but it has been fairly stable. What has changed is the other actors in that system—the SMEs, the local authorities, the social sector. To bring those guys back into the mix is a very good thing, but there are all sorts of economic reasons that make it difficult for them to come into that mix. One of the things that has contributed to high cost—in the Office of National Statistics, it is now publishing data on that—is that the component of a new house value that is attributable to the land has increased much, much faster than the bricks and mortar, which has remained relatively stable, as have wages, etc. That is one of the reasons why, in countries such as Germany, France and Italy, house prices have been much more stable. Looking back to 1940, 1950 and 1960, land prices were 10 per cent, perhaps 20 per cent of the cost of a new house. Now, they are up to 50 or 60 per cent. Do we need to do something about the way the land market operates? That is coming back to previous questions about public intervention, or, as Shona mentioned, land value capture, etc., that would make sure that we can begin to try to cap some of those costs, because you talked to Nicola about how, at a price, the land owner is willing to sell at. That is the key point, yes. Some of those prices are astronomical, because they are the price that, in the market, with limited planning consents, way above the economic value of the land without that concern. We can do that through public intervention and tax. We can, and perhaps there is an element of a more robust approach to identifying land. If you are identifying in your land supply the supply that is deliverable within your local authority, rather than just a third of what is deliverable within your local authority, there will be less pressure on the third of the sites that are deliverable ones. I am curious about the deliverable. I know that there are physical constraints to deliverability, and sites should not be in the housing land audit that are not physically capable being brought forward because of drainage or whatever. You mentioned in your earlier remarks about housing land audit about land owners, and I have land owners here in Edinburgh who are in the Caribbean who are not selling. The obvious answer is to compulsory purchase. In fact, Edinburgh City Council has done some of that, but in terms of deliverability, is there a case for having auctions of land? I think that you are implying that it would be the existing volume house builders who would deliver, whereas in fact lots of people could potentially deliver. There is a potential for self-build SMEs and other players in the system to come forward. We have very small proportion, I would suggest, of the overall stock that would come forward in any one year. I think that there has been a lot said about encouraging more self-build and how that could be part of the solution. It sounds very attractive prospect, but given that people buy ready meals because they cannot be bothered by pasta and mints and tin of tomatoes to make lasagna, it seems inconceivable that there would be a massive volume of people who would be able to buy bricks and mortar and a site and build their own house. People have very busy lives and the building of a house is a particularly difficult process and long process. When we are talking about self-build, we are not really talking about people building their own house. We are talking about self-procurement. We are talking about the client driving the process rather than a speculative process where you build them and hope there is a buyer. People in Austria, 80 per cent of self-procurement, Italy is 63 per cent, France is 60 per cent, Ireland is 56 per cent, and Sweden is 63 per cent. Those people eat ready meals as well. I suspect that they do. I suspect that, in a lot of other countries, there is a different attitude towards home ownership in that it is seen as your house and your home and a place to live, whereas for a lot of people in this country it has become an investment and is seen as a speculation. I think that there are cultural issues potentially in some of that. In a way that all those things can contribute and if people want to self-procure and can self-procure and can be enabled to, then fantastic. Ability to access finance is probably one of the big constraints in that. However, I do not know how that potentially solves the problem of forcing landowners who have no interest in selling to sell other than through some sort of compulsory purchase scheme and how they go through the legal ramifications of making sure that that band or forcing that land to come to market. There are a lot of easy wins and there are a lot of things that are potentially more difficult to achieve. It does not mean that we should not try to go for the more difficult but we need to recognise that it is probably a package of measures that is going to help to solve some of that problem. It is just to make a point. If you look at the way in which we deal with the housing market in Scotland just now, Government, both at a national and a local level, are quite passive. There could be more done to make the market through thinking about things in terms of how you provide your infrastructure, as I have said already, and land assembly issues. To try and make sure that you can prepare sites and make them viable and attractive to different people as well. It happens in the continent and it happens in other places as well, but it is quite a culture change for us to do that. However, you can see things happening. I say that Homes England does this sort of work in the past. It prepares sites and it gets things moving. We do not tend to do that anymore. We used to do it in the past. The SDA, Community Scotland and other organisations did things like that. The idea of the public sector investing, and maybe taking some of the return out of that investment as well, could have a role to play in that process. I just wanted to pick up on one of the comments that Mr Whiteman made about the percentage of the purchase price, which was now the land value. I have to say that I disagree with that. The 60 per cent is not the case. The residual land valuations are the same model that they have been for 20, 30 years for housebuilders, and it tends to be that the land value paid will be between 20 and 40 per cent generally, but around 30 per cent of the purchase price. That is how they calculate it. There are small pockets in Scotland, probably around here, in the south-east, where it is incredibly competitive to get land, so they may push that up slightly, but in order to get your investor to give you the money, you have to be meeting certain hurdles, and that would never get you the investment that you need. The other point that I wanted to make is the role of the small builder. Pre-recession provided a huge proportion of the homes across Scotland, and they have really struggled to come back. Many of them have retired and have left the industry never to be seen again. We are working with the Scottish Government just now on a project on encouraging more small builders back into the industry. Some of the fundamental challenges that they have is that we are not seeing small sites being allocated anymore. It is easier to allocate larger sites, and then our larger members can go in and build them out, but we need to have a proportion of sites allocated for small builders so that they can get in, but the regulatory process is so much harder now than it was 10 years ago that it is incredibly difficult to get a planning consent, and the upfront cost of getting a planning consent is prohibitive for a small builder, especially if you are looking for finance, and that is their other big problem, is access to development finance of your small builder. I think that we have to do a lot, and we are, as I say, working with the Scottish Government, looking at that to see whether the Scottish National Investment Bank can help in that regard, and obviously the building Scotland fund in advance of that. I am going back to what Craig said about infrastructure, given that you are looking at the construction industry in the round. We often think about infrastructure as being the large-scale projects, the mega projects, the Queensbury crossing, the AWPR and what have you, but in order to facilitate more house building, it is the granular, local-level infrastructure that we need. It is the traffic lights at the bottom of the road, it is the extension to the primary school, and it is the GP practice. It is all those things that stop local communities wanting more housing, because at the moment they see a pressure on all those local bits of infrastructure, but we need to increase the capacity of all those things so that it does not impact on local communities. That is much harder to deliver, finding the money for that, procuring that because it is granular and fragmented and split across the country. It is not as easy to procure as one big, shiny infrastructure project that gets the press interested, gets politicians interested, but all those small bits make up communities. That is where you get the extension to the bus route or an extra train station or whatever it is that will then hopefully reduce the amount of local community backlash to any new building that might be happening. I will try to pick up on a few of the points that have been raised. I think that what you are saying about custom self-build is really interesting, but I also agree with Nicola that it is likely that there is going to need to be a package of solutions. There is no silver bullet here and there is no magic pill, and there are probably lots of different things that we need to do in order to fix that problem, one of which we will be custom self-build. Going back to the original question about land value and the proportion of land value—there are house prices that are accounted for by land value—we need to understand what is driving that land value and what is driving it usually is hope value. It is the difference between the value of land and its present use and the value of land and the use that you hope it will be put. An awful lot of what lies behind hope value depends on what you expect to have to pay for. If you were buying a house, for example, and you were looking at two identical houses on the same street, one house had been owned for the last 40 years by an old lady who died. If you were to move into that house, you might not need to replace the heating system, you need to redecorate your new carpets and all the rest of it. You have another house that has just been renovated completely. You are going to look at those houses and the price that you are going to off to pay for the one that the old lady is in is going to be much lower than the price that you would off to pay for the one that has been renovated. Unless, of course, you think that there is potential that somebody else might help you with the renovation costs, you have a rich auntie or something. If there is that uncertainty there, you are going to be less worried about what you pay for the house. That is a microcosm of what is going on in the development industry at the moment. If you are unsure about what it is that you might be expected to pay for in terms of the school or the infrastructure, that will encourage you to offer a much higher price for the land, which leaves much less value there to be captured in the system. That goes back to the original point that we made earlier about having clear and consistent planning policies that bring that clarity to the system that enables developers to take those planning policies into account when they are deciding on what price to offer for land. There is some discussion about the planning system in the Netherlands and Germany. A lot of people turn to the Netherlands and Germany and point to those countries as examples of how we should do things. There certainly is a lot that we can learn from those countries, but it is not a case of just being able to pick and choose bits of those systems and transplant them into Scotland, because those countries have very different planning systems to what we have here. The key difference is that they have much more zonal approaches to planning in which the public sector takes a much stronger role in determining exactly what should happen and where it should happen. This picks up Craig's point about the role of the public sector in planning. We have not drawn out yet the historical context of all this. In the 30 years or so after World War II, when the planning system first came into existence, the public sector took a really proactive approach to building and delivering large-scale infrastructure projects and large volumes of housing. In the late 70s and early 80s, change of political philosophy all changed and the public sector pulled out of that business. It has not really come back. If we want to deliver the large-scale ambition and housing that this country needs now, that probably needs to change and the public sector needs to take a much more proactive role in the delivery of housing and infrastructure. I am coming to an end. My final point is about skills. If we want a much more proactive approach to public sector or public interest-led delivery, as we have been calling it, skills are a big part of the problem. Over the past 30 years, you have had the public sector cuts. A lot of the skills base in local authority planning departments has been lost. It is just not there anymore. If we are going to have the shift to more public interest-led development, the skills and capacity need to be built up. That is not just planning skills. That is the skills that go all the way around planning. It is your accountants, your surveyors, people with finance skills, people with knowledge of transport systems and infrastructure. It is that whole package. The solution to this is much bigger than any individual policy. In a lot of those countries, you mentioned continental countries, there is a larger percentage of people who rent a home for life, as compared to Scotland or England. It is a very different setup. Many of those people do not eat ready meals, because there are cultural differences as well. John Mason. I think that building on some of the things that Jackie Baillie and Andy Wightman were asking, I am interested in the split between brownfield land and greenfield land. We have talked about infrastructure. I have got sites in my constituency in the east end of Glasgow, which are brownfield sites. They have got good bus services running by, they have probably got railway station nearby, and they have got good shops nearby. However, the house builders are pressurising to get the greenfield land on the edge of the city, to the extent that Glasgow and Coatbridge are running into each other. In those greenfield sites, there are no shops, no schools, probably not a train station nearby, and there are poor bus services. How can we force more housing into the brownfield sites and protect the greenfield sites? One thing that we have is the vacant and derelict land register, which is a useful tool to start analysing why those sites are not coming forward. We need to look at the register over a number of years and see whether sites are sitting there forever or whether they are coming in and then going out again. We did a bit of analysis in advance of this, and if we look at urban derelict land, because there are a lot of sites in there that are rural and have all sorts of different issues such as old opencast mines in very rural areas, but if we look at the urban vacant land, since 2011 to 2017, there has been a reduction in 19 per cent of that land in the register. In Glasgow, it has come down by 29 per cent, and in North Lanarkshire, it has come down by 43 per cent. We are seeing some of those sites now being developed. I think that that underestimates, because when we have mapped some of that register, we can actually see houses on the ground. One, we need to make sure that local authorities keep their registers up to date. I know that there is a vacant and derelict land task force that has been set up, which is a great thing to do. Let us use that task force to really analyse. Get down to the granular level and look at the sites in your area and work out why they are not coming forward. There must be a reason why those sites are not coming forward. Is it not partly just that there is a fashion that people want to live where there are big old trees nearby? I think that people want to live in all sorts of different places at different times in their lives, and different developers will want to build on different types of sites for different parts of the market. Should we, as the public sector, just reflect that, or should we be trying to change that? Given the shortfall on houses that we have, we are going to need brownfield and greenfield in order to meet the need in demand. We have to look at what are the factors that are stopping those sites coming forward. Is it that they are heavily contaminated and that the cost of remediating is so high that there is no land value at the end of it? Is there a willing seller or are they holding out for an aspirational figure that they are never going to get? There are all sorts of reasons. I accept that there is a balance in there. I was worried about your first answers to Mr Lindhurst, because it sounded to me that central government will impose on local government as they appear to be doing in England that they must have a certain number of houses built. As far as I understand, it would push Glasgow to allow a lot more building on greenfield and to just leave the brownfield sitting there. Is that what you are arguing for, that central government should force Glasgow to use up its greenfield land? No, I think that central government needs to ensure that local government does its bit in terms of providing the housing that is needed across the whole country. There will always be a mix of brownfield and greenfield release. Would you accept that it is likely in Glasgow that, if your model that you were arguing for at the beginning was imposed, Glasgow, if it was forced to provide the numbers, would switch more to greenfield and away from brownfield? We need to recognise that brownfield land is not always attractive to a housebuilder. If it is being marketed openly, a housebuilder is unlikely to be able to bid the highest value. It will be student residential that will get it, or it will be hotel use or commercial use. It is difficult to say to Glasgow, only allocate brownfield land for housing, because unless it can control the sale of that land, unless it is the owner of the land itself, it cannot decide who will eventually build on it, or unless it has a clear allocation that this must be a residential only site. Most brownfield sites are not allocated, they are windfall sites and it goes to the highest bidder for whatever use they think they can get planning consent. My beckon brings some others in at this point. Glasgow has had some success, but it has been with subsidy. For example, the Commonwealth Games village was heavily contaminated, but now we have good quality housing in there. That has changed perceptions that have a nice house in the east end of Glasgow. I think that that is a very fair point. Without the Commonwealth Games, the attractiveness of that part of Glasgow City would never have been considered by a lot of people who currently live there. That has shown what public sector intervention to bring forward some of these more difficult sites in locations where there is the council's desire or the public sector desire to have this development happen. A lot of the brownfield sites are very difficult to bring forward and they bring their own costs with them. In a city centre location, if you are having to go up higher in four stories, you need to build on the cost of lifts and all that sort of thing as well. The working of the site is difficult because it is within a working city. How you service it in terms of bins, all those things become difficult, but they are not insurmountable. I think that we have to think about product and what is built on those sites as well, what will make those sites attractive to a broader market. In Scotland, we are very lucky in that we have a culture of living in big flats in cities. Glasgow West End is very popular still with all sorts of segments of the community. Edinburgh is similarly so. In England, that is not the case. In England, there is no tradition of that. The tradition in England is that everybody wants a cottage with roses over the door. Everybody wants a detached house with a garage. That is not the case in Scotland. You are pushing against an open door in terms of urban living but you have to produce a product and you have to be able to build that product that people are going to want to invest in. If you are building small one-bedroom flats, then families are not going to move into them. If you want families to live in the east end of Glasgow, then it needs to be a product that families can actually live in. It needs to have access to schools and all that sort of thing. I would suggest that there needs to be intervention probably to enable that to happen. It won't happen on its own. Could one of the interventions be further restricting building on Greenfield land so that relatively speaking, Brownfield had an advantage? Can I give you an example from Newcastle? Newcastle city is fairly dense, fairly tight boundary round it. A number of local authorities down the Tyn Valley out towards the coast attractive suburban locations, if you like. Newcastle city had restrictive policy in terms of the building of houses for a number of years where we had a policy that for every house that you built up at the Great Park, which was a Greenfield site, a house had to be built within a regeneration area. Policy fuelled massively because what happened was it just constrained development on the edge of the city because the properties couldn't be built in the weaker market in more urban areas and be sold, so they just weren't. So what happened was the builders, the investors went to North Tynside, went down the Tyn Valley and built houses everywhere except in Newcastle. The problem that we then had in Newcastle when I took the job as head of planning policy was that we had a massive declining working age population. We had a huge legacy problem that had been brought about by that policy because basically just nobody was building there and with the scrapping of regeneration moneys, it made it even more difficult. It wasn't so difficult to travel into Newcastle from almost anywhere, therefore people were choosing to move out. We were losing a thousand people a year from the city and they were all working-age people. They were taking their disposable income with them. I recognise some of that with Glasgow as well, I mean that suggests that a council does not have the power itself to protect its green belt or green land. It would have to be a more national policy, so in Glasgow's case the Government would have to restrict East Renfrewshire, East Dunbartonshire and some of those as to how much building they could build in competition with Glasgow. I think that there is a very tricky balance to be struck in terms of policies like that. I think that you can probably change people's attitudes towards urban living in the east end of Glasgow over time or on a big scale like at the Commonwealth village, but I think that you would need to be very careful about very restrictive policies that meant that people just chose not to live in Glasgow. It is not just people choosing not to live in Glasgow, it is businesses choosing not to invest in Glasgow as a result. If you are bringing inward investment in, tech companies or whatever, they are coming in, they are looking at what your skills are within the area and they are looking at where their people are going to live. If you as a city cannot offer a full package, they will not invest in your city. They will go to somebody else's city who has been able to provide that whole package. So I think that there is a lot of unintended consequences that we need to be careful of when we are talking about strategic planning and we need to try and balance all of those things. Okay, that is fair. I mean, I get the point. Okay, right, thanks very much. Well, maybe briefly, Mr McLean. I think that we absolutely should prioritise brownfield land. It does not mean that everything we have built on brownfield land will still be needed for greenfield releases, absolutely. But if we want to do that, we need money, we need to invest in it. It is as simple as that. The vacant and direct land fund stands just now at something like £9.4 million, which will not make sure that many of the sites are going to be brought into productive use, so there is a need to try and think about how we do that. I think that the other thing that we need to remember is that there are different reasons why different bits of land are brownfield. It may be the cause of need remediation and accessibility issues. We need to look at them individually. It is not just a one-big-stick approach to it as well. We have also done the easiest ones just now, so it is going to get harder and harder as time goes on. We have picked easy ones off the low-hanging fruit for obvious reasons, so if we are serious about this, we need to think about how we invest in it as well. My reading of the stats is a bit different from Nicola's. The number of hectares of vacant and direct land in Scotland between 2011 and 2017 has been up by 2 per cent in my reading of the statistics as well. A big part of that is minerals out in the countryside, so that is in some ways a different issue. It is still an important issue, but it is a different issue. The other thing about those stats last year, we actually had over 200 hectares of new brownfield vacant and direct land come on as well, so there is a bit about trying to make sure that we do not get to that stage in the first instance and try to stop things from becoming vacant or direct. I think that we have had long enough, because my colleagues are wanting to come in with questions. I think that Sean O'Gren did want to come in perhaps briefly, and then we will come on to Colin Beattie. I think that the whole question of whether the public interest might be served by restricting development on greenfield sites is really interesting, because I can see why you might want to do it for public interest reasons, but Nicola is quite right in what she is saying. You would need to be very careful on how you did that, because the choice that developers might make might not be—I cannot develop on the greenfield site, therefore I will develop on the brownfield site. It might well be that I cannot develop on the greenfield site, therefore I will go away and look elsewhere. You need to be really careful with that. I am not saying that it is not part of the package, but you need to be careful. The issue about vacant and direct land is that we need to turn this whole issue on its head a bit. We have been looking a lot at vacant and direct land recently, and one of the issues that we are finding is that vacant and direct land is not this one package of land, it is not all the same, it is all sorts of different types of land in there. Some of it might be suitable for housing, but it will not all be, so there is a very real need to understand what is in that bucket called vacant and direct land, and that is part of the work that we are starting to do just now. The change in the mindset is really interesting, because we have focused a lot on sticks, but we need to think about the carrots and start changing the attitude to vacant brownfield land to make that more of an opportunity, so people want to go and develop there. The way you do that is that house builders are in it to make money. They are not going to go to places where they cannot make money. However, if the public sector were to take in a more interventionist approach and a more public interest-led approach to development and make those propositions attractive to the development industry, that might very well start to change the way that we look at brownfield sites. It is a very big opportunity for Scotland, I think, but it is one that needs to be grasped at the top level of government. Colin Beattie. Let me just follow on from what Shona Glyn was saying about intervention. How could the public sector intervene to improve the operation of the housing land market? Should it? It appears from what people are saying that they should, but maybe ask the question, should they? Do you want me to pick up there? It goes back to the issue of public interest-led development. We have done some work on this last year on public interest-led development. What I mean by that is that a public agency takes a proactive role in initiating and driving forward development. That is not something that happens very often in Scotland. How would you envisage that working? Dundee Waterfront is a good place to look at, because it is one place in Scotland where the approach has been delivered and has worked. There are a number of reasons why that has been successful. We probably need to understand more about why that is. A lot of it comes down to leadership. You have a couple of very high-profile individuals who have driven that process forward. You have political support that has not really changed over a number of decades. You have a planning authority where all the skills needed—it is not just planning skills, but all the skills needed to deliver a complicated major development are in the same place at the same time. It is accountants, finance skills, procurement skills, planning skills, economists, chartisfer, everybody—they are all there. That package of skills—it is very rare now, I think, for that package of skills to exist within planning authorities because of the kind of on-going cuts that have happened over a series of decades. If we want to make that move to a more interventionist approach—public interest-led development—which we have been advocating, then what we need to invest in are those skills. There are a number of ways of doing that. You might want to invest in local authorities themselves and in the planning departments. One suggestion that has been made by a number of agencies, which I think probably has a lot of merit, is either creating a new public agency or perhaps giving the remit to an existing agency to pull together all those skills so that those skills can be deployed to large sites around the country. Let me just follow on from that, because you have described the infrastructure that has to be in place across the public sector in order to support that. What actual intervention are you talking about? Other than beefing up their planning department and having given the proper support there, what did they intervene to do? What made the difference? They went in and assembled the sites. I think that a lot of the sites were already in public ownership, but where they were not, they used CPO powers to acquire the sites. They put the infrastructure in on the ground, so they cleared the sites and put the infrastructure into the sites to make them developable. They went out and marketed the sites and brought in private investment for people to build hotels or build housing or whatever kind of development it was. They took lead on that whole process right from assembling the site, right through to marketing it for development. Others may know more about the detail than I do. I take a moment of what you are saying there. This is a commercial site that is being developed. How would that interventionism work in what you have described as the retail housing market? It would be the same model. I think that there is always a temptation, and I understand it, for people to want the big bang solution. I do not think that it exists, but it sounds a bit dull in a way that the answer that we are proposing is public interest-led development and that it is everybody working together. History has demonstrated that that can be very effective, but it needs to be driven by leadership from the top and properly resourced. I think that we could look at Homes England at what they are doing. It is a fairly recent reincarnation, but they are seeing huge success. They are acting in various ways. They are financing small builders, they are financing medium-sized builders, they are developing themselves, they are procuring land, assembling it, master planning it, they are partnering with the private sector and they are acting as a facilitator and they are the go-to body. We do not have an equivalent in Scotland where you have somebody and their entire remit is measured on the number of homes actually delivered on the ground. That is fundamentally different than a local authority, which is to make sure that you have allocated enough houses in a plan, as we would call them paper houses, but they are not actually being measured on the number of keys handed over to a tenant or an owner at the end of the day. I think that that is what we need is something. I agree with Shona that we do need either local authorities to be invested in so that they can do that job themselves or we get one agency in Scotland to lead it. What is the best approach? That is not my call. You have an opinion. Is it best to have a centralised one or is it best to have it at local authority level? Given that we have the city regions, we might have one agency that is focusing on those but we have such a diverse country and the rural areas need a very different solution, so it might be a bit of both. The city regions are beefed up and doing more of that interventionist approach where you are going to get much more investment and you can collect it and use it better. The rural economy has a whole different set of challenges that probably need a slightly different approach. The other thing that is interesting about Homes England is that it is now asset rich in all the public sector land that was in different pots, whether it was former schools or former hospitals or old power stations or whatever. That land is now part of their portfolio and they have a remit to bring that forward and to work with the private sector to deliver those homes, as Nicola says. I am working on a site in Newcastle at the moment, which is a Homes England site, which was a gosh, an RDA site before that. It was an English estate site before that and it was originally an industry site. It did not come forward for industry, it is now being promoted for housing, we are master planning it, we are getting the planning consent for it and then it will go out to the private market, to the house builders, to bid for pockets of that land to bring forward for market housing. It is an agency that has assets and land and has a remit to drive that forward as well. I would like to ask a question just on something a bit different but connected. What are your views on the ability of the sector to meet Scotland's infrastructure needs and to drive the growth as per the investment standard of Scotland's economic strategy and carrying on from that deliver the 50,000 homes that we are aspiring to by 2021? I should say that a previous evidence session gave some comments on that, which were a little bit negative but I am interested to hear what you say. In terms of the house building industry or in terms of the construction industry? If you look into the construction industry, that is obviously a much broader piece. A lot of emphasis has been put on the house building industry, delivering quite a lot in terms of schools, road junctions, cemeteries, parks. The amount of contributions that are requested from house building are significantly more potentially than they are from the commercial sectors. Sometimes that is because of the locations that they are developing in and the perceived needs that are generated as part of that industry. If you are relying on the house building industry to provide new social infrastructure, it will fail because I do not think that there is enough money in the kitty to allow that to happen. It will drive up prices, it will make development unaffordable and it just will not happen. There needs to be a package of interventions that enables everybody in the district to be able to contribute to the infrastructure that is required in that district, not necessarily just trying to rely on big packets of money coming from house builders, where it will render the sites unviable. One factor that has not been talked about much is the availability of skilled labour. Is that going to have a significant impact? I think that there is a bit to differentiate between labour and almost professional and managerial stuff coming from the town planning profession. We have seen a big loss on planning staff in local authorities. In the past, since 2009-10, we have seen a 25 per cent loss on planning staff, for example, taking £40 million out of the planning budgets. It is the biggest effected planning local government service. It is not just about brickies, although they are important. We need to remember that if you do not have planning officers there to process planning applications to put in place development plans, you will not have housing permissions, you will not have houses built on the ground, your town centres will not be planned as good as they can. We need to bear in mind that there is that side to the staffing element. It is quite a difficult job sometimes to sell planning to people because it has a certain reputation, but it is a really important thing. I hope that I will try to demonstrate that this morning. For me, it is interesting that we have a lot of initiatives, for example on STEM, on teachers and how we need them to try to make sure that society and the economy works to best effect. For me, there is a way of thinking about planners on that route as well. We should not be having a campaign to make sure that we can get people into the profession as a career, which can help them to deliver things that include a better economy for people as well. We have seen a loss in staff in the planning profession, but we are going to listen to those graduates coming in. There are about 100 planning graduates a year in Scotland, and not all of them will stay in Scotland. I need to try to invest in planning and other professions that provide that glue or that journey to make sure that we can get construction delivered on the ground. Can I come back on your 50,000 homes point? You were asking whether we thought that it would be delivered. Obviously, it is the 50,000 affordable, 35,000 of which are social rents, so a lot of them rely on public funding, which the Scottish Government has put into it. I think that there is a fair chance that we will get close to that target. I know that a lot of RSLs and private households are working incredibly hard to get those houses built. It is not helped by planning committees at a local level rejecting sites at committee, even with officer recommendation and funding in place. The message from the Scottish Government of wanting to deliver those 50,000 affordable homes is not always filtering down to those local planning committees. There is still resistance at a local level to any housing, regardless of the tenure. If we do not reach the 50,000, it will not be for a lack of trying. I definitely think that there is a really strong push from the wider industry to get them built. It is interesting that you are focusing on the planning side. Previous panels have focused on the skills shortages in the construction industry in general. You have not touched on that at all. Houses are being built. Skills are a challenge, but they are not the most important challenge. If we can get planning consents through and we can see that there is a pipeline of work, that is when you encourage apprentices. That is when you can staff up. That is when you can bring people in. It is the lack of certainty that you have that pipeline of work ahead, which I think stops people coming into the industry and staying in the industry. You believe that there are resources available out there in the right circumstances to bring in. It is a challenge. I definitely would say that it is a challenge. I know that our members fight for brickies and squads will go from one developer to another. It is really hard. More and more of them are bringing them in-house and recruiting them as staff rather than having them as subcontractors. That is their way of protecting their labour resource. They will be creative and there is some use of off-site manufacturing to try to help with the skill shortage. That is not going to be the golden ticket, but it is one way of looking at whether we can alter the system to make it more efficient. Housebuilders are resilient and they will find solutions if they can see that they have an opportunity to deliver, but it is all about that certainty of pipeline, which will allow them to invest longer-term in training and upskilling. A lot of them do work with ex-armed forces to bring them in and retrain them. There are ways of getting people into the industry, not just the young apprentice, which is the obvious thought, but they need certainty of pipeline to put that investment in. My point for raising the issue about planning was just because we heard a lot about the construction side of things. That is why the spotlight tends to get shown on brickies and people like that. There is an issue that I need to do, but I often worry that the more professional side of things is overlooked and that it is important to that process. We need to put in place procedures, processes and support to make sure that we have those professionals, not just planners, but building control officers and others, because we need them to go through the process to make sure that we get things done as well. We should be looking at apprenticeship schemes for planners and building control officers. We should be looking at them in different professional settings. Good morning to the panel. I am going to cheer you all up by asking you your thoughts on Brexit and whether you have any concerns. Before I ask you specifically about any concerns that you may have, I am picking up on some earlier themes. I wondered whether the panel could comment on that, given that there is a generalised concern around uncertainty and Brexit, whether it was welcome that, across a range of initiatives, the Scottish Government has given certainty and continuity, for example, on funding around affordable housing, and Nicola Woodward mentioned earlier, that, in terms of perhead of the population, Scotland is outperforming England and Wales substantially on delivering affordable housing. I am also conscious that there is a help-to-buy scheme. There is a significant amount of money put into that, I think, around £100 million, very much taken across a 10-year approach. Given my West Lothian connections, I am aware of initiatives such as the Winshborough Development, which is a massive development of nearly 3,500 homes, but that requires Scottish Government and local Government developers to work closely together to overcome some of the infrastructure and blockages issues. In the context of the Brexit uncertainty, if the panel could talk about some of the initiatives that are at least attempting to provide some certainty of investment and for the industry, whether that is construction or house builders, I do not mind who starts. I have a brief point to make on that. We have got eight offices across the UK in Edinburgh here and then in London and across the rest of England and in Wales. As a practice, we are noticing a major difference in investor confidence in the south-east of England. The London market is quite twitchy and the willingness of investors to make decisions at this time is starting to bite. It probably has for the last six months to a year. We are seeing it less in our regional offices and we are not seeing it significantly in Scotland, and Nicola will probably back that up. However, it is a worry in terms of investment in the system, I would suggest, and finance coming into the system and the whole level of uncertainty, particularly when you have cities that rely on multinational companies. You are specifically talking about the uncertainty with respect to Brexit. I just want to be clear for the record there. Nicola, I am sure that you have welcomed help to buy, etc. On the impact of Brexit firstly, it is most likely to be felt through a lack of confidence. Consumer confidence will people feel secure enough in their job to go and get a mortgage? Interestingly, this January just passed has been one of the strongest starts to the year for house sales that we have seen in a long time. Certainly, in Scotland, we are not seeing that lack of confidence that we are expecting to see in a way. In a way, because we have such pent-up demand, interest rates are still low, people can still get mortgages, unemployment is historically low, people still need to move house by house if they are still getting married, having children and all the normal things that they are still buying houses. We are not seeing any issues at the purchase end of the pipeline of the process, as it were. I have no evidence to back this up, but I would assume that house builders will be looking at their land deals, which are coming up certainly over the next few weeks, and wondering whether or not to go ahead. Let's see what happens in March, because that is what is really beginning to get to crunch time. However, as I say, the market still remains strong, so we are still seeing, certainly in the strong market areas, people bidding hard for sites. Developers, obviously, the larger ones are preparing for Brexit, there is stockpiling going on of certain building materials that can be stockpiled, things like timber that you cannot really do. We may have some challenges with that, but talking about the interventions from the Scottish Government has helped by, obviously, has been very welcomed over the years. It has allowed, I cannot remember the number of top-of-my-head numbers of people who have been able to access home ownership through that. I do think that the scheme in Scotland is much better than the one in England, and it is interesting to see that the one in England is now being refined, bringing down the headline prices and targeting those who need it most. I think that the way that it has been targeted in Scotland has worked very well, and we just need to look and see what happens in the future with it. That is maybe a conversation for another day. The building Scotland fund that has been used at Winchborough has been, again, very welcomed. I have been monitoring very closely to see who is applying for the funding and how quickly they are getting results, and it seems to be working very well in advance of the Scottish National Investment Bank, which, again, we welcome. I think that the Government is writing the interventions to keep the market going. The outfall of Brexit could trump it all. None of us knows what is going to happen, unfortunately, but business is usual at the moment. I do not have an awful lot to add to that. The individual schemes are a bit outside my expertise, but, on the point about Brexit, I hope that business as normal will continue, as Nicholas described. If it does not, surely that is an even more of an opportunity for the public sector to step in with the proactive approach to leading development that we have been talking about. There are five things that we have set out, which are the uncertainties. We are still not quite sure what the outcomes will be, so the things that we are worried about. One is the whole idea of workforce, of people and talent, and if we are going to be able to attract planners from outwith the UK in the future and what impact that will have on that. In terms of student numbers, what if that will have an impact as well, and if that will have an impact on the viability of planning degree courses? A lot of our courses rely quite heavily on foreign students at the moment. There is a thing as well about standards and what the future, for example, environmental standards is going to be, and if there is going to be consistency across the UK on those as well, then could it be a competition? We are still going to see what happens with that. There is an issue with trade. Just selling planning services outside of the UK is a business like that. We can do it. We do stuff across the world, so what impact will be on that as well? The issue of investment, which has already been rehearsed around the table, but I also like that. We are not sure that there is going to be an issue of the cost of materials. We are hearing different work on that, which is saying that it could have an impact, which therefore could have an impact on viability, which goes back to the things that we have been talking about already as well. The fourth area that we have is about research. It sounds a wee bit peripheral, but it can be incredibly important because there is a lot of this research to help you to provide innovation. If we cannot do much of that pan-European research any more, that could create a big hole of ideas, of thinking, of new ways of doing things, which we would probably need. I wanted to pick up on some of the specific Brexit concerns around skilled labour and imports to give the rest of the panel an opportunity to talk specifically about those issues. The committee has been advised that the industry imports up to 62 per cent of its building materials and components to the tune of £5.7 billion from the EU. There are over 7,000 construction workers in Scotland coming from the EU. We have previously heard concerns about a drain on the workforce in Scotland. If EU nationals in London leave, there could be an effect there. I would also be interested to hear the panel's views on issues around freedom of movement and the UK Government's immigration bill and white paper, and specifically the extension of the tier 2 30,000 minimum salary threshold. Again, I do not know whether you would like to start on that. Cost of materials coming in is increasingly a concern. The fluctuations in the exchange rate are obviously brought on by Brexit uncertainty, so it is still a Brexit-related issue. We do rely heavily on imported materials. As I mentioned, timber is one of the few that you cannot stockpile. Unfortunately, the timber that we grow in Scotland is not suitable for timber kits. It grows too quickly, so you need finished or Siberian timber, which grows slower and denser, and it has the right properties that we need for the timber kits that we use predominantly in Scotland and less so in England. I know that our members will be keeping a close eye on skills in terms of the European labour force. Barrett did a nationwide survey of all their tradesmen, and, as he came up with the country, it was fewer and fewer. I think that there is maybe 80 per cent in the south-east of England and it is less than 10 per cent in the north of Scotland. Although we do not have a heavy reliance on them, we need every single person that we can get on site. If they leave and, as you say, if there is a bit of a drain down into the south-east—things like HS2—there may be concerns. Although we have to remember that construction employees who are building, for example, AWPR, are a different skill set to those building on house building sites, so it is not necessarily the same people. Those guys who built the Queensbury crossing will not be going to work for Barrett round the corner. They will be off doing another big construction project. Skills for me are the homegrown talent, keeping guys. We have an ageing workforce, and guys on site will retire probably earlier than 60 because it is tough on site. It is hard manual labour, so we have to make sure that we have younger people coming through. Craig is right—we have to look at the professional services as well. It is often forgotten about, but if we do not have the people in the offices, whether it is in the local planning office or building control, or sitting in a housebuilder's office doing the designs and the cost control, all of that, the whole system grounds to holes, we need to have skills coming into the entire industry. Selling the entire industry is a really good place to come and work, and on the diversity agenda it definitely is a really good place to work. There is a lot of women in the housebuilding now, which is great to see far more than when I started out. It is a very rewarding career. We are not very good at selling it, and that is something that is a task on my shoulders rather than yours. I am just noticing time. We have gone over our time quite a bit, so perhaps if we could try and be brief about Brexit, I am sure that Parole will do their best. I was only going to say that I do not think that I have anything to add on that specific lens of construction skills. I think that I would add just to echo what I said earlier on about that there is just the uncertainty still there, and we just need some certainty that is the key for us around those five issues that I have discussed. From our perspective as a company, we have a lot of European nationals who work for us in our offices. We have a couple of hundred employees, so you can imagine that there is quite a proportion that has come from outside the UK. Recruiting graduates, as Craig mentioned, is becoming more and more difficult, and I am sure that that will continue to be the case. We only work within the UK, so our business model does not get broken in terms of working abroad, but that is not to say that there will not be capacity issues to be able to support the development industry to bring forward projects. Thank you very much, convener. I wonder if I could go back to you back to the very beginning when some of your opening remarks were talking about the differences in planning policy between Scotland and England. I think that both Nicolaus and I were chatting about that, but I picked up viability, deliverability and no card and stick. It needs to be deliverable in the English model. I am thinking about a local example in East Ayrshire where, sadly, we recently turned down a major application, which had 1,000 houses as part of that plan. It was connected with a whole load of leisure elements, too, but the tests that were applied to that seemed to me to be incredibly rigorous. There was a viability test applied to that, and Scottish ministers ultimately turned it down. Can you just explain to me what you meant by the difference in the application of viability testing, perhaps? It seemed to me to be pretty well robust here. I was talking about applying viability testing initially at the policy making point to ensure that your policies are not overly onerous that would prevent development from happening. You have to test that, and you have to make sure that you are not putting in place any measures that would mean that the development would not come forward. You also have to test all the sites that you are allocating. I do not know the specifics of the one that you are talking about, but a large mixed-use scheme, if you were allocating that within your local plan, south of the border, you would need to test what the infrastructure capacity was in the local area and whether it was not affordable to increase that if that was a requirement, whether that was roads or bus services or whatever, local schools could they be extended, was there already capacity in the area, all those sorts of things. Infrastructure in terms of water resources and electricity, all those sorts of things. You would need to test the viability of that development so that you had certainty that when you were putting it in your plan that it had a chance of coming forward, particularly if you were relying on it to deliver your housing needs, your economic needs or any of those sorts of things. That then gets tested in England by the planning inspectorate, the equivalent of the reporters unit here, to make sure that what you are proposing is sound. Is it justified and is it evidenced in order to bring it forward? That is a fairly rigorous testing. The hope is that that will ensure that what has been promoted through the plans, there is certainty that it is going to come forward. If funding is required, then you would need to identify where that funding would come from and what the factors are that would need to bring that into play. If you do not have that rigorous level of testing, the uncertainty about those developments becomes much more apparent. You might have a lot of very interesting projects in your local plan. If none of them are delivering, you are really doing a disservice to your local community and the ability to deliver the economic ambitions of not just your local authority area but, in Scotland's case, the level of Scotland. Those rigorous tests were applied and the wider issues that Craig focused on, such as infrastructure, school, drainage and access, all of that, were all taken into account. Are you saying a little that the developers and their initial submissions should have to demonstrate that they can meet those criteria? Or is it ultimately for the reporter to say that he did not? Where sites are being promoted—big strategic sites are being promoted by a particular land owner or consortium of developers—is quite normal for substantial evidence to be prepared by the developer, the land owner, to ensure that their allocation is seen to be sound and evident and justified. That is entirely normal. I guess that the frustration with the system in England, and one that we would probably want to guard against in Scotland, is that as a developer, you spend a significant amount of money up front in order to justify your development, but it does not necessarily give you an easy ride through the planning process when you then put in your planning application. It is not unusual for some sites to then be refused at committee, which flies in the face of having to go through that process in the first place. It has been consulted on widely, it has been through an examination, it has been looked at by an independent reporter and inspector, and it has been deemed to be an acceptable location in terms of all the tests. As long as you are bringing forward a development in line with the policy, it would be reasonable to expect you to get a planning consent at the back of that. That does not always happen, and that is where significant frustration still exists, perhaps, within the system. Okay, that is very helpful. All right. Well, thank you very much to all of our guests for coming in to speak to the committee today. I will now move on to—well, I will suspend briefly to allow you to leave before we move on to the next item on our agenda, thank you very much. The electronic invoicing public contracts, et cetera, amendment Scotland regulations 2019. This is a Scottish statutory instrument. Does any member have any substantive issues they wish to raise or are they content that the instrument comes into force? We all agreed. Thank you. In that event, I will suspend the meeting and move to private session.