 Good morning and welcome to the 15th meeting in 2022 of the Local Government, Housing and Planning Committee. Mark Griffin is joining us remotely today and we've had apologies from Annie Wells. I would ask that all members and witnesses ensure their mobile phones are on silent and that all other notifications are turned off during the meeting. The first item on our agenda today is to decide whether to take item 4 in private. Are we all agreed? The next item on our agenda for today is to take evidence on affordable housing. We'll be discussing this topic with two separate panels of witnesses today and the first focusing on the rural context. We're joined for our first session by Donna Birrell, who's the chief executive officer of Rural Sterling Housing Association. Roslyn Clark, who's the director of Applecross Community Company and they're both joining us online. Mark Rogers is the chief executive officer of Housing and Property from Highland Council and Mike Staples is the chief executive of the South of Scotland community housing. I welcome our witnesses to the meeting. It would be helpful if members could direct their questions to a specific witness where possible, although I will be happy to bring in others who wish to contribute. If other witnesses do wish to comment, please indicate your desire to do so to me or the clerk. I'll bring you in at an appropriate point. I'd be grateful if, Donna Roslyn, you could indicate that you wish to come in by typing an R in the chat function in the blue jeans. I now open the session to questions from members. I'd like to begin by asking, probably for all four of you, what are the challenges to delivering affordable homes in your areas of operation and how are you addressing those challenges? Do you have any good examples to share of that? I'll begin with Donna and then I'll just go around everybody. Good morning. Thanks for inviting me to give evidence. Rural Stirling Housing Association has had a long track record of providing affordable homes and growing rural communities in areas that desperately need them. Unfortunately, when you talk about challenges, I'm sorry to say that this track record is seriously endowed. The biggest challenge that we are facing at the moment is increasing costs. Tender costs are coming back way in excess of our assumed budgeted figures, which renders projects unviable and unaffordable. We have typical costs per unit for financial appraisal functions of around £143,000 a unit. That assumption is used right at the very outset of a project when we're developing it, because it's what we use to establish the grants that would come in and also to establish our private finance. Just to put the challenge in context, we've got two projects at the moment where total development costs per unit are in excess of £200,000. One sits approximately around £252,000 a unit and the other £254,000. We can see that in excess of our standard assumption of about £148,000. To put it bluntly, we were embarking on both of those projects today, adding out our due diligence and our financial appraisals. We wouldn't be developing at all, either of those two projects. That's such a stark example. I wonder if you've got a sense of where you talked about the tender cost being way in excess. Where is that coming from? Do you have a sense of that? There are labour shortages and material shortages. Work costs are increasing. We also have, in addition to the standard cost per unit, additional quality measures that we have to introduce into new-build schemes to meet various standards. For example, fire suppression systems to meet new-building standards. Although there are allowances provided through the grant system to cover additional costs, in reality, they do not bear any resemblance to what it costs. For example, we have a requirement for automatic fire suppression systems. The assumption is about £3,000, but the actual costs are closer to £10,000. The Scottish Government and the More Homes division have been working closely with us and have been very supportive. However, I really do have a concern. I think that most developing organisations, and particularly in rural areas, the benchmarks are not keeping a pace with what is actually happening on the ground. To deliver much-needed affordable housing in rural areas comes with its own challenges, which we have seen over the past 30 years, but I do not think that I have ever seen it quite as difficult as that. In rural areas, there is always a premium in terms of the contractors' overheads and freedoms, just because of our location, some of it being quite remote. We also do not get the same level of competition from contractors. We have a fewer field, and some of the big-named contractors that operate in some more urban areas are not really interested in smaller developments of 10 to 12 units, which is typically what happens in rural areas. I wonder if the picture is similar in Highland Council. How is it going there for you? Yes, there are similar challenges. Tender costs are a particular challenge for us, as well as housing. I also have responsibility for the non-housing building, so we are seeing schools coming in at up to 50 per cent higher than the original price just within six months, so stuff that was priced at £40 million in September is now coming in at 60.62. That is true across housing as well, so that is a big challenge. Infrastructure is one of the big challenges for us. I give you two examples. I am building two houses on the Isle of Rhum at the present time. Building a house is building a house, but the challenge is that the electricity supply in Rhum is very fragile. We have only got a 40 amp supply to the school, for example, which is about a fifth of what you would have in a normal new house. In many respects, in a rural dimension, in addition to all the points that you have heard from the first witness, infrastructure is a massive challenge, and it is very difficult within the constraints of the money that we have available to be able to fund that. We are seeing, in some areas, unit costs in excess of a quarter of a million pounds to be able to build, as you have heard from the first witness on the islands. That can easily exceed £300,000, so that is a particular challenge. We also have a very limited contractor choice, so that is absolutely true. One of the other challenges that we have is that we have a lack of development partners, and one of the unintended consequences of the drive for greater energy efficiency in housing terms is, for example, that a lot of my stock is on average 60 years old. I have a choice to make about the money that I have available. Do I invest in retrofit to make sure that those properties are brought up to standard and maintain SHQS in each standard, or do I put high investment into much-needed new housing, particularly social rent, because there is an absolute crisis of supply and demand in the highlands? Those are some of the particular challenges. I do not want to dwell on some of the other points because they have been very well covered by the first witness. Thank you very much for that additional bit about the infrastructure and the difficult choices that are made. It is very helpful. Mike, how is it going in the community-led housing sphere? What are the challenges? We obviously come at this issue from a slightly different perspective as community-led housing enabler. We are definitely facing similar challenges for the portfolio of projects that we are supporting with communities. I have come to site since Covid. We are looking at an average of about 35 per cent cost increase. There are definitely challenges around the construction market and a lot of the projects that we are supporting in rural areas are low-scale but have a high impact for rural communities. That smaller-scale development is difficult to tender around issues of infrastructure when aligning to build costs through the rural housing fund can be quite challenging. It is a significant challenge for us in a housing environment that shifted massively in the south of Scotland post Covid, particularly around issues such as second home ownership, which has been a part of the narrative elsewhere in Scotland, and maybe not in the south before. There are more communities. We are engaged with far more communities now than we were at the outset of this. The challenge for us as an enabler is being able to meet that demand through the resource that we have as an organisation. That is a big issue for us and around how we are funded. The immediate comment that the rural housing enablers in Scotland were funded by the Scottish Government until March 2020 and are not at this point in time, although it is part of the Beat House agreement to revisit that position. For us, that could make a big difference, because there are models in the community-led approach that can help, particularly through driving partnership and driving powers within land reform that can assist with overall development costs. Thank you very much for bringing in that perspective. Roslyn, I know all about your achievement with the housing project that you have recently completed. I see that you are going to embark on some more housing. I am curious to hear what the challenges that you have faced and what you are going to be facing with the new project. Thank you for inviting me this morning to talk to everyone. As you have mentioned, we have recently completed three all-access houses for affordable rent for our community. Those are the first community-owned houses on the Apple Cross peninsula. Those are the first houses for affordable rent in the 18 years that have been built in Apple Cross. We are really pleased that we have been able to achieve that. We thank all the funders, the Rural Housing Fund and the SSA Sustainable Development Fund for being able to help us to achieve that. As you are aware, there is a housing crisis in Apple Cross. There is a long list on the Highland Council's housing need register. I think that there are 42 people on there, most of which are looking for one-bedroom houses. We have undertaken our own surveys and similar numbers are showing up. That lack of affordable housing is preventing young people from staying in our community, preventing people from coming back to our community and also causing knock-on effects to our economy, where our local businesses do not have enough staff. The challenges that we faced with our Antleban housing development, again, are similar to the previous comments. We had a lack of competition at the tender stage. We only received one tender for our project. The cost of that was higher than expected, and that is being advised that that is due to our rural location, just lack of contractors and lack of competition. That was a challenge for us. We had to finance that additional cost to the company. That puts financial pressure and risks to the company, where we are accessing loans that we then have to carry with the company. That puts pressure on the other aspects of our community company that provide vital services for the community, whether that is our community broadband or our petrol station or the various services that we provide. The access to land is a key issue for us. It took us over five years to access that piece of land, which was only 0.25 of an acre. We live in a 26,000 hectare peninsula, and that was the only piece of land that we were able to purchase through an asset transfer from the NHS Highland. That took time and effort and so much grant funding through the Development Office of funding from HIE to be able to even get to that point. It is that time and cost that is causing problems that we are not able to address this crisis quick enough. It is our community that is suffering for that, whether they are moving away or not moving back. One of the other things that we have been doing through a planning process is to be able to, we did a community land use plan recently, and we worked with the local land owner to be able to identify future and the piece of land for future development, which is really great. We recently purchased six acres for that future development, but that is one big concern for us is the rise in prices for materials and construction and how we will be able to finance future housing developments. Okay, thank you very much for that even more very useful full detail and quite astounding the issue of land there to hear that. Okay, I've got a few more questions to go and then I'll bring other members in, so who am I going to direct this to? I'll start with Mark and then if you want to come in on this one, please indicate. To what extent does the existing housing funding funding and planning system help to meet the specific challenges of developing affordable homes in rural areas and how successfully has the Scottish Government helped to address those challenges? In purely numerical terms, if we look at outputs that have been delivered, we can say that housing delivery has been fairly successful in affordable housing terms. For example, if I just take in Vanessa's example, the number of units delivered is against the local housing strategy target shows a slight overachievement of the original target, as determined by the housing needs and demand assessment methodology. However, the challenge is, are we actually building the right homes to the right size in the right place at the right time for the right people off to the right tenure? I would have to say to you that the answer is absolutely not. So I can be looking at situations where homeless individuals can have a way of up to three years in some circumstances in order to be able to successfully access permanent housing. So that is a massive challenge. To go back to the point that my colleague from Apple Cross mentioned, there is a significant challenge in relation to one bed need in particular, but I think that we need to be a bit more creative about how we deal with that. So I would not necessarily suggest that building one bed properties is the answer. The marginal cost of construction for that second bedroom is very small. Whilst the Parliament continues to mitigate the bedroom tax issue, then it makes sense to build two bed units and actually have them for one bed need. People form and break up from relationships all of the time. There is a need for people to have somewhere where a child can come and visit, as well as somewhere where they can meet someone and start a relationship and be able to expand their family without having the cost of moving. So I would suggest that we do need to look at that. We have had some success, but when we look at some of the cost challenges across the Highlands, average earnings to be able to purchase a property range from five and a half to nearly nine times average earnings. That is the big challenge that we have. If we are actually going to make a substantial difference to that, what we are going to have to do is significantly increase the amount of social rented housing that we actually are able to deliver. There is a huge supply-demand mismatch. If I think about that, in areas such as Inverness, Lechabur, Midros, Badenough and Stress-Based Sky and Lecalch, the total number of applicants for rented housing outweighs the number of total of lets that are available by a factor of at least twice and in some cases upwards of four times. Although we are successful in numerical terms, numbers have been its output. Is it the right stuff in the right place? I do not think it is, particularly in relation to social rent. I think that that is a big challenge. Should the challenge for us be is this solely about numbers, 50,000 houses over a period of time, or is it about the right stuff in the right place? Critically, there is a dichotomy in some senses. There is a big housing pressure challenge in Inverness, for example. However, if we think about the massive difference of building a couple of houses in a remote location, such as Apple Cross, such as rum, as I mentioned earlier on, how much of a difference does that make in terms of avoiding depopulation and allowing people to come back and stay in an area to create the opportunities for employment, for example, all of those things and yet the cost, as you have heard from everyone who has commented this morning, is so significant that although the grant rates are more generous than they have been in the past, it is not touching the sides when you are talking about upwards of £0.25 million per unit to deliver, so those are some of the key challenges. It has been good progress, but I think that it needs to refocus going forward into addressing some of these points that I have mentioned. Thank you. Thanks very much, Mark. That is really helpful. Obviously, the point is that we are getting increased housing in Inverness because people are having to leave rural areas to some degree. I really take your point that the right house is in the right places. What we need to be looking at seems like we need to drill down to another level of really taking that into account and seeing what that should look like. Mike, you wanted to come in. Thank you. I just wanted to make the point that the rural housing fund is vital. It is really important that it is there and that there is a long-term commitment to continuity around that funding. The renewal of the rural housing fund is really welcome. At the moment, there are always going to be challenges around deliverability at grant levels against development costs. We are looking at maybe 40 per cent of development costs coming from the rural housing fund. We feel that the models that can come through community-led housing that are based on partnership with RSLs or using mechanisms such as the land fund or asset transfer to acquire land and buildings can really help that deliverability and increase some scale around that. To touch on Mark's point, I think that the issue of houses obviously welcomes the 10 per cent commitment to numbers in rural Scotland. We know that consultation is taking place at the moment around the remote rural and islands action plan that will come forward. It is very important that the targets around that are also outcomes based around the social benefits of delivering small developments in the right places, impacts on repopulation and local economy. In the south of Scotland, we know that we need to repopulate to grow the economy. It is all demographic mix. All that stuff is as important as delivering numbers. I just want to say that Roslyn and Donna, you do not necessarily need to come in on this one, but I just want to make sure that you get your R in the chat when you do want to come in, because I know that sometimes when you are doing a hybrid meeting it can feel a bit difficult to come in on questions. I am going to ask two more questions. The reason why I am asking those questions is because I do represent the Highlands and Islands. I have a lot of rural and island aspects, and then colleagues will come in. It has been touched on a little bit, but the Scottish Government is committed to developing a remote rural and island housing plan. What do you think are the most important aspects to include in that plan? I probably expected that I would want to highlight the significance of the enabler support relative to the community-led aspects of the action plan. The point that I was touching on is outcomes that are based on social population and not simply numbers. The ability to build momentum and deliver more can be driven by community-led housing and forged by partnership. That partnership has been driven by the ability to work with RSLs and share risk, the ability to work with landowners, to work with the land reform agenda. The enabling organisations are certainly working at capacity and are facing financial challenges. That support is vital to ensuring that communities have that comfort in the long-term and support to go through complex project development and delivery. I want to unpack assumptions or something to go a little bit deeper there. You started to touch on it in terms of community enablers support the communities to do the delivery of their housing. Why is the model of community-led housing so important? It has been said, but it would be good to articulate it. It is important to understand and act upon very localised needs and demand. It is important that the opportunities that it opens up for alternative types of delivery, as I have said before, for enacting partnership, as an example of the work that we have done. The bulk of our projects are about to complete or are nearing completion relating to existing long-term vacant or derelict buildings. The community-led approach has the capacity to tackle housing in a slightly different way to look at delivering in places that are not being targeted by other providers. That is not in any way to be disparaging about other models, because the partnership approach is at the core of that. The community empowerment is really critical, particularly post Covid. We have a really supportive land reform agenda here that enables community ownership of land and buildings and a funding environment around the rural housing fund that can support development. There is an enormous capacity to upscale that, but the support to the communities to undertake projects, the long-term support and expertise to do that and to grow confidence is vital to upscaling delivery. You mentioned that community-led housing initiatives are able to provide different types of delivery. You described using derelict vacant buildings and or building new buildings, but would different types of delivery include different types of tenure? Yes, absolutely. It is another vital element of the mix around place making in particular, and the ability that this committee has spent a lot of time on MPF4, but looking at localised place planning and communities taking a lead around that. A lot of the projects that we work on—we know that our colleagues in Highlands work on—relate to the idea of creating new places and building a model that is not just housing. We certainly see the community-led housing agenda as being inherently about place making and supporting the development of other services alongside housing at the same time. Thank you very much for that. Roslyn, I think that you wanted to come in on this as well. Yes, thank you. I just wanted to agree with lots of the points raised there and just almost just touch on the idea of supply and demand. Obviously, the demand has been highlighted in that across ours and has been in many other rural areas in the Highlands. It is even identified in our Highlands Council local housing strategy 2017-22, and it is a long-term five-year priority. All those things have been identified, but it is that land access that is holding that back. Talking about community-led development for housing, we have the local understanding of the requirements and what we would need, but it is almost that capacity within our community company. We are a volunteer board with just one or two employees and taking on such a huge project that is a significant undertaking for our community company. I would like to highlight the importance of that support from the rural housing fund, from different grants and technical support. We are now experts in building housing developments, planning support and support from other partnerships such as the Highlands Council supporting us in our planning understandings and understanding that place-based development and how to tackle those and approach that. Also, the grant funding, having that sort of wrap-around approach where it is able to support our communities and not put undue pressure on our small community companies. It is very good to hear that right from the community's perspective that yes, you are a volunteer-led, so that can be challenging to hold that over time. Mark, you wanted to come in too. Thanks, chair. It's just a couple of brief observations. For me, the challenge really is in land acquisition. The Highlands is a massive council area. We often liken it to being broadly the size of Belgium in terms of its land footprint. It's an absolutely huge area, and yet land ownership is so heavily concentrated that one of the big challenges is actually being able to get available land. You heard the apple cross example earlier on about in a vast area such as that, the actual amount of available and developable land is tiny, and that's one of the biggest challenges. A number of us this morning have commented on the need for land ownership reform to be a key part of how we take this forward. It can't be looked at in isolation at absolutely the impacts on everything that we're trying to do here. Just in terms of some of the other points about technical support in terms of planning and the technical support to delivery side, I think that that's a point extremely well made. I don't know if local authorities were being entirely honest about this. Have we been as good about giving that direct support as we could have been? Perhaps not so much in the past, but I'm sort of reminded of my backgrounds in homelessness originally, and I never met a homeless person who really cared who built the house, frankly, what they expect is us to work together across sectors to provide that support. Sometimes we will lead on direct provision, other times we need to be there facilitating and supporting people in being able to deliver that. If a council is about anything, we have a huge range of technical experts and people who are able to provide that support, and I think it's for us to actually be getting better at engaging with people and understanding their support that they might need and being much more open about providing that support and actually thinking about the wider social benefit that can be derived from that rather than perhaps the approach in the past, while we are the technical experts, if you just wouldn't mind leaving it to us, because that's not always had the most successful outcome. I mean quite candid about that, and I think that it's worth a point worth making. I think that Mike made a good point there about acquiring existing properties on open markets and renovating empty properties. For example, we shouldn't just think about grant and other forms of funding being available only for the purposes of building new. Actually, in many circumstances, acquiring existing and renovating is not only greener in terms of the energy cost of providing that unit, but it's also substantially quicker and can demonstrably provide just as much value for money. So we need to be a little bit wider in our thinking, I think. Thank you for that, Mark. I mean just I wonder also, I've been quite interested in the whole empty homes issue as well, and bringing the work that's being done to bring those online, it seems like that's another opportunity in areas, and it seems to be quite high levels of vacant empty home property that we could be tapping into as well. Okay, I'm now going to move on to questions from Willie Coffey. Thanks very much, convener, and good morning to everybody. I think we've been straight in to the deep end there. I was going to lead off on questions about costs, but you got there well before me. So could I maybe just tease out with you the possible ways through this? I mean does the solution to this, does it lie in looking at the subsidy benchmarks? Do we have to increase them again? Is there anything being done to enhance the local supply chain network? Because you mentioned materials costs that are going through the roof, and I don't know whether most of the materials are being brought into the rural community or indeed into Scotland. Is there work going on in there? Is there a role for private developers' contributions to be changed to try and assist? I suppose it was done and it led off. Is there any evidence yet that some of the projects are at risk of not going ahead or being delayed because of these escalating unit costs? So a number of questions in and around that area, please. So maybe Mike, would you start us off with some of your own thoughts, please? At the moment, it's going to continue to be a tricky issue until things begin to level off. I mean, I think that we can only reflect on this from a southern Scottish perspective, and I think that in other parts of Scotland some of these issues around supply chain and costs related to materials are probably more extreme than we face. For us, it's an issue of looking at this from every possible angle. The increase in benchmarks is welcome and important, and any further work around that is important, but, as I've mentioned before, it's also by looking at what other angles can help delivery models, driving partnership, using existing buildings, using communities as an anchor to acquire land or working with landowners, to give you a very specific example for us. Dumfries and Galloway Council has been a very strong supporter of looking at alternative mechanisms to deliver, and I know that this happens in other councils, but in Dumfries and Galloway the income on council tax on second homes has been ring-fenced as a grant fund, a very flexible grant fund that can be accessed by communities and RSLs, and for projects that we've been delivering. That very forward thinking approach by the local authority is making the difference on the viability of some of the community-led projects. We're discussing this very closely with South of Scotland Enterprise, and they have an open ear and are keen to engage around supply chain, the localised construction market and off-site construction, which you'll hear more about today. A lot of those things will take a bit of time. We're also trying to work with South of Scotland Enterprise on skills development, which is an important issue. It's about a lot of things coming together in an innovative way to help projects to move forward. Mark, I appreciate the views from you. The challenge is in the cost to develop units in many of our locations. As well as the general rural dimension, we find significant infrastructure and abnormal costs—for example, in terms of land remediation, high decontamination costs, peak management in the highlands, removal of rocks, etc. There's a lot of land out there, even land that's not in our ownership, which is very difficult and challenging to be able to develop out. When you start to think about how capital grant is thought of by the Scottish Government, it is helpful to have that, but I don't know to what extent it accurately reflects some of the very high costs of developing in certain areas. You heard from my colleague at the start this morning from Rural Sterling who mentioned the challenges of scheme viability in relation to units coming in in excess of £1.25 million. That is a challenge for Highland Council, even though we can try to make the argument to justify it from a social value point of view. There are limits to how far we can stretch that funding in order to make sure that we are able to deliver the housing that we want to achieve. I think that the key point that I'd ask you to consider is that, without the discussion around additional subsidy, additional investment effectively can only be achieved through increased borrowing funded through increased tenant rents. That either has a direct impact in terms of the social security bill or it has a direct impact on the incomes of tenants, most of whom are not particularly wealthy, and so it has a direct impact on those that are least able to afford it to a certain extent. Trying to balance that investment need from capital grant, which I don't want to sound like I'm being ungrateful about it, but it is insufficient in some cases to be able to actually deliver the housing that we've talked about this morning that we all need. You heard from Mike about maximum use of council tax, so we continue to do that. We use the maximum allowable council tax in second and long-term empty homes to fund not only new council housing, but development loans, bridging finance and to provide funding for land and infrastructure, so that's something that we are very keen on doing. We look at a range of different ways in which we can try to increase the amount of social housing that is delivered through, for example, section 75 and other contributions from developers who are building homes for outright sale, but the challenges sometimes, the kind of properties that we need to meet, housing need, are not the ones that the developers frankly want to build, and so there is a challenge in the sense of how much you can have reliance on direct provision through developers being a helpful contribution it is, but not perhaps as much as some people might think. Don, I would like to come in. Reference that was made to, is there a danger that perhaps some of these projects might not go ahead? We've got a current programme of 145 units across eight different sites. 59 units are on site or have been completed and four are likely to progress, but we've got 82 units that are in doubt. To go back to the examples that I used in the opening remarks of the two projects where we've seen a huge cost increase, these are one of the projects, our Balmha project. Tender costs are still too high and we've gone through two separate value engineering exercises. The first savings exercise that we undertook by the time we actually got through to the end of it meant looking at different choices of materials, where that had an impact on planning, going back to planning, taking approval for some of the changes. That's a very time-consuming process. Time we got through that exercise, tender prices had increased again, so it's extremely frustrating for us. At the moment, that project was an exemplar project, and we've included different tenures within that small development. We've got housing for key workers. We can't find permanent accommodation to live in close to where they work. We've got housing for two self-build plots and some shared equity. We are trying to deliver sustainable communities, but at the moment, the other witness mentioned pressures on rents. If the subsidies aren't increased, the only other option is to look at increasing the private finances going in. That is pegged to rents and rent increases that are already being squeezed from all sides. Rents, fuel costs, food poverty, cost of living crisis—there's just so much pressure and so much that we can put in terms of our rents and our own ability to raise finance. I agree with lots of the comments here today. We would welcome any sort of benchmark increase with the rural housing fund. That would go a long way to support any future housing developments. For the project that we just completed and tolban, it was delivered on budget, which was excellent, and it was just prior to some of those increases coming in, so we were very lucky. However, in terms of our future development, we are very nervous for the price that we are expecting to get with that. We are also just touching on the infrastructure costs, so we are in a grid-constrained area. We are expecting that the infrastructure cost to be able to facilitate a larger development will be significant, so that is an additional cost, which perhaps is not reflected easily on the rural housing subsidy benchmarks. Any support to be able to enable that would be incredible. Thank you very much. I thank you for joining us this morning. I wanted to touch on something that Donna had said in her response. It was with regard to affordable homes helping to sustain local communities. In a rural context, certainly, what different models could be developed or have been developed to support key workers moving towards working in different communities? Is there any sort of new models that you have gone and highlighted already or want to see developed by government and supported? I will bring you in to that. Key worker housing is a massive challenge. I can give you two examples. We are in a situation where we are building two houses on run because that is the only way that the school can stay open, and if the school does not stay open because there is nowhere for the teachers to live, then the viability of that island as a place to live is seriously challenged. That is a challenge for us because of the very high unit cost and the infrastructure is heavily constrained in the way that you have mentioned just now. It is an absolute challenge. Elsewhere, Sky is a good example of that. There are regular conversations with NHS Highland saying, you know what, the challenge is not even necessarily being able to attract staff to apply for and be appointed into jobs. It is the fact that they have nowhere to live at all. There are a range of reasons why that is the case. Housing would have previously been available for let or would have come on to the market for purchase. It is now no longer coming on to the market and it is being used for a range of other short-term letting activities. The challenge then is made much more difficult by the absolute lack of affordable land. I think that there are two dimensions to this. Part of this is about how do we finance this and what different forms of models can we look at in terms of ways in which housing can be financed. I do have some thoughts on that and I am happy to share. I am afraid that at its most fundamental level the challenge is land as much as anything else, particularly in sky and infrastructure. You can talk about what forms of different types of tenure you might want to see and how you are going to pay for it. However, I am afraid that if you do not address the fact that there is in some cases absolutely no land at all in the first place to build on, you have to start with that and you have to fix that problem before you can start to move on to get underneath the bonnet of the issues that you were raising. I think that for most people who have lived in a rural area, I grew up in rural Perthshire and part of looking back at my childhood without having rose-tinted glasses at it, both our local nurse and local policeman had tied houses. Those were sold and have gone and there has obviously been restructuring of how we deliver those services. Is other public services like the NHS, for example, what sort of relationship do you have to develop different models with them so that those key workers can, especially in rural and remote communities, then to share that risk and potentially to get different funding models developed with the wider public service? That is a good point. There are two dimensions to that. The housing that we are building on ROM is going to be tied accommodation and with the employment. There are examples of us doing directly that. If we set aside the land challenge for a minute, the NHS angle is an interesting one, as are the other public services. You can look at this. Forgive the NHS example, you might want to make the argument that it would be useful for them to think about making a contribution in terms of capital for the provision of housing for specific types of staff. Indeed, you could widen that out further. There is a viability gap quite often when you are talking about specific housing for people with particular health challenges, particularly those who are long-term sick and bed-blocking. If we were a bit more constructive about how we used a mix of Scottish Government grant funding, local authority funding and NHS capital grant funding, you could do a lot to resolve bed-blocking issues as well as provide accommodation for key workers. That works in a number of different dimensions. There are a whole range of different ways in which housing can be funded. You could think about the role of pension funds, for example, in contributing towards the capital costs and providing these properties real estate investment trusts. There is another example of exactly that. There is a wide range of ways in which innovative private sector funding can be brought to the table here. If you look at the example of both, pension funds and REITs are quite well used on a very large scale by housing associations south of the border in England in particular. Perhaps there is a wider piece for us to consider across the sector as to how that might be much more widely introduced in a Scottish context. The challenge that we have now, and you were quite right to mention it, is that the stock that was available in the past for tied accommodation for key workers has been sold off and has not been replaced as yet. We are making good steps and have made good steps in terms of numbers of output. I mentioned that in my earlier comments, but it is going to take many years before we have plugged the gaps that were created by, effectively, 40 years worth of rights by. That is the truth of the issue. The second question is about the importance of place, which has been emphasised in the Scottish Government's 2040 policy document. In terms of sustainable places, one of the key things has been a rail link to look towards developing new communities. What works going on to look towards where potential reopening of railway stations are coming on stream and the potential to develop larger communities around them? Is that work taking place with yourselves to look towards new community building that way? If anyone wants to come in virtually, they can put an hour in the chat as well. Obviously, from the community-led perspective, the principle of place and connectivity and alignment to principles such as 20-minute neighbourhoods are really significant. Speaking from the experience of Dumfries and Galloway where the bulk of our projects have been, it is a big challenge. Being able to live and work in rural Dumfries and Galloway and not being a car user in a lot of places is very difficult to envisage. From that perspective, when we are looking at creating communities in place and making what we are looking at acutely, we are trying to create opportunities to live and work in the same place to address some of those issues. We know in the Scottish Borders who are opening up if the rail link has had a big positive impact on the communities there, something that we would like to welcome in certain parts of Dumfries and Galloway. That infrastructure question, where do you think this isn't going right? You mentioned the borders right away and we see how those communities have expanded and to some extent people are commuting into Edinburgh every day to work there. Maybe that has changed in the pandemic, but where is that not necessarily connecting up to be able to develop these communities? Is it the infrastructure first approach that we have been hearing a lot about? A lot of that is to do with public services as well. How do we make that more streamlined to make sure that those communities are in place and communities are going to have what they need? That is a big question. Working at the level of individual communities is perhaps difficult for them to influence some of those factors around connectivity and being joined up. A lot of the word that we do is most oriented about trying to sustain the communities that are there. You had asked there about new towns and new settlements, for example. That is something that can be very driven by communities such as housing and creating new sustainable communities. We are working on the support of a master plan on the edge of Dumfries, which is a much bigger housing development. It is extensively rural but does not fall within the parameters of rurality for the rural housing fund, for example. All of that has a big impact on the rural housing market and the conditions around key workers. How do we extend those links to the more rural communities is a bigger question. I will move to questions from Marie McNair. I direct my question to Mark Hughes on net zero homes. Can you tell us more about the approach that has been taken by Highland Council? What can investments be made in the proposal and how is progress? That is at the heart of everything that we do. We have a challenge with our existing stock, for example, which is very difficult to bring up to standard. We use wherever possible passive house principles for our housing developments. We want to make sure that, as best as we are able to do so, the running costs of living in housing are reduced as much as possible. The easiest way to do that is to embody the design principles in the new stock that we build and to make it as efficient as possible. Everything that we have been doing in relation to our new build has been absolutely targeted towards that. For those reasons, it is a key part of our design principles to make those properties as efficient as possible. The challenge sometimes is in encouraging tenants to use those properties in that way, particularly when it comes to things such as mechanical heat and ventilation systems. Sometimes there is a perception that they can be quite expensive or there is a perception that they are felt to be expensive because you can hear the motor running in actual fact like consumption overall or the costs of running that home are very much reduced. One of the particular challenges that we have in terms of energy efficiency is for our off-grid properties. A large chunk of our stock is not and never will be on the gas grid, simple as that. The issue is what alternatives are available in terms of ground or air source heating. Those alternatives are available, but there are issues around perception about running costs of those properties that are quite challenging. Part of it is about the physical building of the property itself, but part of it is about the perceptions of the cost of running that in terms of heating and ventilation, which can be challenging sometimes, but we are trying to address those in a coherent way and to bring tenants on board with us. In the medium to longer term, the benefits are absolutely clear. I am going to move on to questions from Paul McClellan. Mark, I would like to pick up on the point that you mentioned about funding, and, through pension funds and real estate investment trusts, I think that there is an opportunity to try and expand that. You might be asking the reasons why you think that we are not, as far as Vance and Scotland as we are and the rest of the UK in that particular matter, and I suppose that is kind of related to that as well, and I will open up. You mentioned about particular and about in Highland about the land being owned. Is there any opportunities to look at how we could work with landowners in that regard to try and make that more attractive, for example, for housing? In what barriers do you see in that regard? I think that starting with the second point, that is okay. The challenge for us as landowners is often got high expectations of land values and they are not necessarily understanding fully the impact of constraints. Some of the things that I mentioned earlier are on about abnormal costs and the impact of developer contributions on land values. Many landowners that we find do not need to sell, so we do get challenges sometimes where zone sites can lie dormant. I talked earlier on about the general issues around land ownership across much of Scotland and in particular in the Highland context, so those are well understood, but they do have a critical impact on housing delivery. I said earlier on that it is key, but land ownership reform is going to be essential in overcoming this. The four key things that we need to build somewhere are effectively land assembly, planning permission, money and infrastructure. One of the biggest breaks on that is that any land at all and or land that is developable is the biggest challenge in relation to that. As to the second question, it is a little bit more difficult for me to directly comment on because, for example, the pension trust and the real estate investment trust dimension is something that has been much more explored by housing associations in an English context. Having worked both in Scotland and England for approximately half of my career and half it has been local government in half in housing associations, I think that there is an inherent conservatism with a small c to the approach that is taken in Scotland. That is not necessarily a bad thing. In fact, in many respects, it has been a very good thing in avoiding some of the challenges that we have seen in the English context. However, I think that we need to be a bit more tuned to being open to using alternative sources of funding. The challenge sometimes, and I have experienced this from talking to pension funds myself in the past, is that they will want a certain right of return guaranteed over a period of time. That can become quite difficult when you are talking about being tied into contracts, for example, that expect an IPI or a CPI increase in their income over a period of time. You need to be very careful that one of the unintended consequences of that is not, among other things, that the rent increases that you need to then impose on tenants do not similarly have to go up at RPI or CPI+, when most people's wedges are not going up by RPI or CPI+, and you create an affordability or sustainability gap for the residents. You are solving the infrastructural problem because you have taken the funding and built the housing, but in terms of the challenge of being able to afford to keep it from an organisational point of view and from the point of view of actually being affordable in the medium to longer term for tenants, it is not without its challenges, but it should be explored for others in my view. Anybody else want to come in on that question? I think that this can be asked and just see if anybody else wants to add anything else. It is asking about RSLs and councils developing new homes more efficiently to reduce costs and ensure value for money. I think that it has kind of been touched on. I don't know if anybody else wants to add anything on that particular point. If not, then that would be my questions, but it's just to confirm that. It's just a really quick point. One of the things that we are finding is that our partner RSLs in Highlands are not developing either at all or at the scale they used to because they are diverting their money understandably and to making sure that their stock is compliant with decent homes on each. Again, if you're thinking of this strategic point of view, yes, we are talking about the need to grow the rate of housing delivery across a range of tenures, particularly the social rent sector, I would argue, but actually counterintuitively perhaps some of the things that we're trying to do to improve the existing stock are acting as a direct break on the ability to use that money to grow the total number of units that are available in the system. The investment decisions are obviously impacting on RSLs and councils' ability or, I suppose, desire to build new houses as against you said. They will do. If I tip my own stock base, it's 60 years old on average and I've got 14,000 units, so I have to get that balanced portfolio right between wanting to accelerate very definitely the rate of new build provision because I've got 10,000 people in the waiting list across the Highlands, but at the same time, if my stock becomes non-viable, the first thing I'll get is I'll get a telling off from the Scottish Housing Regulator quite correctly because my stock will not meet the standards and indeed quite correctly ethically because that is at the direct cost of the tents that live in that stock and it makes it more expensive for them to live in it, so these are all the sort of challenges that we need to think about. As we said earlier on, I remember we were saying that this is not just about numbers, it's also about land reform, at the same time it's also about addressing the investment requirements in the existing stock, you need to look at this as a whole system approach. Thanks, and Donna, you want to come in on that as well. Yeah, it was just really just to start with what March just said. I mean, we've just carried out an energy audit of our stock to get some kind of handle and understanding of what the investment needs are going to be for our existing stock to meet East 2, and we've just had a study confirming around about £10,000 a unit to meet those standards. The investment that we have to make to achieve the regulatory requirements also has an impact on the level of investment that we have available for new build, and it is a very, very difficult balancing act, and one that is extremely challenging. Thank you very much for that. Okay, we're going to move on to our final questions from Mark Griffin, who's joining us online. Thank you, Camilla. I just wanted to ask members on the panel to be about the sites that are currently in development and just to ask what role modern methods of construction currently play in those sites. I was thinking about how any modern construction methods are being employed to reduce unit costs or increase efficiency to reduce costs to the eventual tenant and just to ask what the fuel of the Scottish Government's role might be in pushing that innovation out to, like I said, reduce costs for the developer and the tenant. Is there anyone in particular that you'd like to start with, Mark? I'm not sure, just if anyone has any experience in their current sites as to the construction methods and using any innovation. Okay, anybody working with modern method of construction yet? So that's what we'll be doing on RUM. We will probably actually take an off-site prefabricated unit and ship it over probably in two or three parts on a boat, build a concrete pad, connect it up and deliver it, because for a range of reasons it makes more sense to do that than a traditional new-build solution, you know, breathe blocks and bricks for the sake of argument in that particular location. Prior to coming to the Highlands, I was in Dudley Council in the West Midlands for a period of time and we partnered with the local housing association there who actually had factory-built units, they had their own factory in the West Midlands that they used to construct those units. I do have some experience of that being delivered, we did deliver some units of that nature in that authority. So we're perfectly open to it, it makes sense where it makes economic sense to do that and particularly where you're looking to build out at a pace that we should be open to all forms of construction. One size doesn't necessarily fit all. The only challenge, I would say, from experience of many years of working with a range of different housing archetypes is you've got to be sure that they're actually going to be fit for purpose in the medium to longer term. Council housing in particular is littered with lots of examples of stuff that was considered to be innovative at the time but which sadly proved to be not particularly great in terms of its long-term costs or indeed viability and some of it had to be statutory declared unfit for purposes as a result. So we do have to be a little bit careful about that but where we can innovate and we can use that to deliver units more quickly or it's more appropriate for a particular geographical occasion and I do think that we should be open for that. Thanks very much and Donna wants to come in on this as well. Yeah, I would just like to say that it's something that we are looking at, we're actively looking at it for a scheme in one of our most northern line schemes in Tindrum at the moment but I think we are open to it and certainly can see where it would produce efficiencies but I think that the problem in our schemes tend to be small unit numbers, I think that there is a difficulty with scale but I think that if there was more support, Scottish Government support for that to help make it work then I think it's certainly something that we would be very interested in. Thanks for that. I've got a supplementary on that for Mark. Do you think that it would help if the Scottish Government looked at actually placing factory in the kind of highland area for scaling up with modern methods of construction? It would be very interesting to have that conversation absolutely. I'm aware that in Barra there's a company that's set up in the western isles that is doing modern methods of construction and they're going to be supplying the houses for six of the smart clackens in south US so I think that modern method of construction can be done on a small scale. There's quite a few companies that I've become aware of across the highlands that are delivering that kind of small scale and it's really working for them so hopefully more discussion around that would be great. Roslyn, you want to come in as well. Yes, thank you. Just to add that again, we are very supportive of innovative types of construction for housing and for our houses we just completed it was just a traditional style that they undertook and Barra for our future houses we hope to link this with our community on hydro station which is beside it and to be able to have almost like a district heating scheme to be able to provide renewable embedded energy to those homes which helps with the fuel poverty of our area and also supports the net zero agenda but again it's the cost which is the question mark for us and where we are able to access funding to be able to support that sort of initiative on that small scale. Thanks for that, Roslyn. Mark, do you have any more questions you want to come back on? Yes, just to move on to affordability of rent, if that's okay. I know it's been touched on already, I just wanted to ask whether investment programmes are essentially funded by rent rises and just as we see the cost of units far outstripping the grant allocation from government, whether it's unsustainable to fund those new builds through rent rises and what impact that's having on affordability levels for your tenants. Mark, first. That's a key challenge, so I'll give you just an example of the breakdown of previous and current grant rates. For the 2015-21 programme, say a unit cost of about £145,000, capitalised rent £70,000 of that, Scottish Government subsidy £60,000 and our own land bank subsidy £15,000. For the 2021 programme going forward the next five years, typical cost for a unit £175,000, with some exceptions that I've already touched on previously, so that's not for the most rural communities. Capitalised rent element £70,000, Scottish Government subsidy £90,000, so a very welcome increase in that significant increase. It's very helpful, again, land bank contribution to that, but the challenges and the identified itself marked that where you're starting to look at unit costs in excess of £250,000, and that's true for Donna as well in the rural stunning example that she gave at the start of her comments. The challenge is where is that gap met from, and the answers are whether you're talking about Donna going for private finance or me raising finance through council borrowing, secured against the assets to be able to deliver these units. Ultimately, that has to be paid for through rents, so you are going to find a challenge unless one of two things happens, either that grant element is further increased or we look at how that gap funding element burden can be shared, but if the answers to that are it's not coming from anywhere else, then it comes from tenant rents, and I think the point you're making is a very valid one, but what does that mean in terms of affordability, and it does become challenged even if you pull your rents across the totality of your stock and you have a large stock base to do it, nonetheless it will become challenging over time to be able to keep rents at the levels which deliver affordability in the proper sense to those who don't have a lot of money to start with. That is the dichotomy in the most fundamental level, and I think to give some credit to it that has been recognised by the Scottish Government in the increases in the subsidy element, but the question is, whilst that works in a number of settings, to what extent does that help us to address those challenges of developing in particularly isolated rural communities where that one or two houses has that big impact in terms of depopulation, in terms of repopulation actually to be positive about it, and in terms of employability. So that's the challenge, and I suspect, you know, how do we fund that gap is the conversation that all of us across the sector are going to have to have, and I think that the Scottish Government is going to have to play a key role in revising, I think, in particular for the isolated rural and island communities. You know, you might want to make an argument to say that there needs to be some consideration given to greater capital grant allowances to address those challenges, particularly in the remote and rural areas, islands, remote west and north coast settlements, particularly in the border zone, in Dumfries and Galloway as well. The argument is equally as applicable there, and I think it's for the Scottish Government to think about the social value element of that and how it wants to invest in that, but you also need to tie that energy set earlier on. It's not just about building the house, you know, building the house is building the house. Wherever you build the house, the challenge is actually getting contracted as it will do in the first place, and in many respects it's the infrastructural challenges. Can you get a road into where that development is going to be? Actually, will the electricity and water and sewerage supply at a most basic level stand that development happening, and so it's investment and infrastructure as well as the unit cost of delivering the physical bricks and mortar that's really key? Thank you. I don't know of Donna, you wanted to come in and talk about your balance between investment plans and how they're being funded and the affordability of rents. I'll just echo what Mark Salford has already said. Where the gap can't be plugged is from our rental income. Our rent increased this year was 3.9 per cent and that's a below inflationary increase, which in our business plan is modelled on above inflationary increases. The gap can't be funded from those who have their tenants have the least ability to shoulder that. The other point that I would like to make is that, before we commit to a project, we have to have our private funding in place. We have already, with the schemes that I've talked about, the two that are in danger of maybe not going ahead. We have already looked at increasing our private finance element by about 5,000 a unit just to see if we can help to bridge that gap, but I don't think that there's any scope to move that any further. Before we go on site, we have to have a commitment that we've got the private funding in place. The cost schemes are taking so much longer now to get approved and get the funding in place. If we commit to private finance too early and the scheme is further delayed, then we incur additional fees and non-utilisation costs because we're not drawing down the finance in accordance with the programme that the lender has agreed with us. We can incur fees, which then gets added already to the plot where it's already been squeezed. That's existing tenants paying for the finance difficulties of future developments. It is a very difficult environment at the moment in all fronts. Obviously, again, a different perspective here from the community-led side of things. I think that just an obvious point is that if communities are picking up the mantle of attempting to address issues of localised housing supply themselves, then the organisations that are supporting them want to minimise the risk. For community-led development, I think that the issue of access to finance and borrowing on projects is important. Something that Roslyn will have experienced in Apple Cross, but I think that it's important that community organisations are borrowing commercially. They're normally borrowing from ethical lenders, but it's not always tremendously affordable. I think that the relationship with finance and borrowing for community-led housing is an area that the Scottish Government could provide some support around. I know that there are some conversations with Scottish National Investment Bank around that issue. One point that hasn't come up in the conversation today is rural housing burdens as a mechanism around affordable sale. That's an area that supports the recognition of that product for delivery and for mortgages. We would certainly welcome some support from the Scottish Government. Thank you very much for bringing in that point about the rural housing burden. That is our question. Roslyn, you wanted to come in as well. If you want to respond to that question but also offer a little bit of time for anyone to bring in any critical points like rural housing burdens that you really want to mention to us, I'll go around and see if anyone wants to come in. Roslyn, if you've got anything else you need to add that you really want to make sure that we hear, please do. Yes, it was just to respond to say that accessing a private loan for the housing development we just completed was actually quite tricky. We had to supplement that with additional funding from the community company. We were right stretched at our limit to be able to achieve those three houses. We are not commercial developers, so we cannot have the same risks and risk on commercial loans that would normally happen. As we look to develop further, we are not sure how we would sit in terms of a future loan and how the company can carry that. It's really important that any support that's available to those small organisations, either in advice or in financial support, would be really appreciated. Thanks very much for that. Mike, do you have anything more you want to add? If you don't have to, but I just want to give the opportunity. I think that, from our perspective, it's useful to add that I had mentioned previously the significance of the rural housing fund and that being in the long term. I think that it's important that there's a recognition that there's now a really significant pipeline around rural community light housing in Scotland. We're working as you know very closely with communities housing trust between the organisations. We have a really significant forward programme and, as I've mentioned several times today, that the ability for the enablers to support that and bring that to fruition and the resource within those organisations is really critical to that. From the perspective of community confidence and pipeline, we're in a really strong position to be able to upscale the sector. Thanks very much. Mark, have you got anything you also want to make sure we're here? Yeah, I think to me it's about increasing very much so the element of social rented stock that's actually available. When I think about some of the housing markets that we have in the Highlands, there's very little supply of private rented property at all and what there is is quite expensive. Owner occupation is out of reach for many people when you're talking about averages multiples of income of being anywhere between five and eight times average earnings to be able to buy something. That's a challenge even if you've got two people in employment and the nature of employment in the Highlands and particularly the rural areas is often seasonal and relatively low earnings potential, which is difficult to get a mortgage around. I talked earlier on about part of the challenges that that provides but also when you look at the challenges through the prism of housing need in particular. We have some real challenge so only 25 per cent of those on our list that have a need of accessible housing are currently being successfully housed. Extreme overcrowding is only 2 per cent of wallop applications but only 6 per cent of applicants with that cumulative need are actually becoming successful. The challenge for me in particular is that I have 10,000 people in need across a range of categories and that's not going anywhere any time quickly and building our way out of that is going to be challenging. Just as a final point I think the housing needs and demand assessment methodology at the present time does not help rural organisations at all. I won't go into the detail of that but our argument would be that whilst that methodology works pretty well in a central Scotland context, it's not delivering the outcomes in terms of identifying what stock needs to be built and delivered across the highlands and so we need to have a much better link in with what our own waiting list assessments of requirements particularly for those in need of affordable and social rented housing is telling us and perhaps not be so tightly bound by either the HND as it currently exists or at least be prepared to have a discussion round whether or not there needs to be a different method of assessing that need and output requirement for the rural parts of Scotland. Thank you very much for that insight, actually it's really useful. Donna, do you have anything that you want to make sure we hear or we heard it all? Nothing for that to ask. Okay, thank you very much. I mean clearly this has been a very very useful conversation and I think we've gone from the kind of high level kind of highlights of things like land being a key issue and the infrastructure piece that's not just about building the housing there's the aspect of placemaking as well because I think that's what we're looking to in rural and islands is that it can't just be about sticking out a whole lot of houses and that's it so there's that aspect that you touched on around the needs for placemaking and obviously there's kind of how do you fund those aspects too right if you've got this money for the housing but not for the kind of shared common spaces, live work type settings and things like that but and then also really fantastic to get that kind of drill mark from you the drilling down of these figures and the reality of how do we actually fund the fund housing when it starts to get over you know get up towards 250,000 for a unit and then also the challenges on places like rum so I think this has been a very useful conversation I think it's we've had and I think actually really grateful for the four of you with these very different perspectives from Roslyn with your apple cross community and you know right there the enabling aspects and then both Donna and Mark yourselves with your perspective on a slightly larger scale so thank you so much for for coming today I was going to say coming in but some of us are not zooming in teamsing in and very much appreciate that so I now suspend the meeting to allow a changeover of the witnesses thank you we're now joined by our second panel on affordable housing and I welcome to the meeting Stephen Henderson who's the group director of finance and Frank McCafferty who is the group director of assets and repairs from the weekly group Pam Humphries who is head of planning and regeneration of north Lanarkshire council Tom Norris who is the managing director of places for people Scotland Colin Proctor who is the director of construction industry and delivery and Neil Rutherford who's the senior associate director of housing and economic investment at the Scottish futures trust and Elaine Scott who's the heading head of housing strategy and development from the city of Edinburgh council both the weekly group and the Scottish futures trust are represented by two witnesses with different areas of expertise and in the interest of time I'd be grateful if a single witness from each organisation could respond to any given question and again it would be helpful if members could direct their questions to a specific witness where possible although I will be happy to bring in others who wish to contribute and if other witnesses do wish to comment please indicate your desire to do so to me or the clerk and I'll bring you in at a appropriate moment so I'm now going to ask the opening question and actually will address it to all of you except from futures trust and the weekly group if just one of you can respond to that it's got a more of an opening general question so you'll have to divvy it up from across the room so what are the challenges to delivering affordable homes in your area of operation and how are you addressing these challenges do you have any good examples to share and I will begin with maybe I will begin with Pam thank you morning everyone so for us that the at the moment we've got a commitment to deliver in 5000 new homes by 2035 and we're just about to complete our thousandth new build home and a big part of our programme is also purchasing ex-council houses and the furbishing them so in terms of the current challenges we've always had challenges in North Lanarkshire I'm sure as with others in terms of our sites and our ground conditions we particularly focus on developing brownfield sites a number of the sites are being within town centres or within small existing communities that were previously developed so we've got challenges around ground conditions infrastructure and Scottish water and being able to connect you know to get connections so all of those challenges we've I suppose always had and we've had to work through those in terms of make sure we've got good lead in times make sure we've got the design and planning work in advance to make sure we've got as much preparation done before we get on site or get the contractor appointed obviously the current challenges as I'm sure everybody will talk about is the increases in terms of the cost increases and the impact of that in terms of our future projections for the delivery of the programme and as others have also commented on balancing that against existing needs for stock we've got an aging stock as well we've got over 36,000 homes that need various levels of investment and we're committed obviously to making sure that they're brought up to the best quality as well so it's the challenges of funding making sure that we continue to deliver the programme even in the current climate so some of the rural authorities we're talking about they're current prices our tender prices aren't much below that we're well over now 200,000 pound a unit and that includes on some of our larger sites where we have been able to get over 100 units on site so it's not just because you know some of the sites are quite small in terms of I suppose how we're addressing that we've been looking at different ways of different methods of procurement as well making sure we use the frameworks trying to make sure as I say we get the economies of scale from looking at some of the larger sites joining some of the sites together in town centres so looking at all of those opportunities it's probably at the moment not really impacting in terms of the cost the coster I think outwith everybody's control in terms of the challenges one of the for us as I mentioned earlier the buyback programme is particularly important for us it always has been and is increasingly so because it not only is good value for money there we've been able to acquire and refurbish units under 100,000 pound a unit quite significantly under in some cases but also assists us in terms of getting full ownership of mixed tenure blocks that then enables us to progress work in those blocks where we've not been able to do so before so it ticks a number of boxes it brings empty homes back into use it also addresses sometimes where homes have been in ownership of private landlords and maybe not been particularly well managed so for us you know it's trying to get that balance between the new build which helps address particular needs and particularly if people have disabilities or need larger homes but getting the balance light between new build but also using the buyback scheme as well. Thanks very much for that. Maybe somebody from the weekly group. Thank you. I'd echo much of what Pam just said there in terms of the challenges that we have as much the same as the first group of witnesses that you had as well across the board from the identifying land at the very start of the process all the way through there are now pressures all the way through this system in terms of how we we delivered new homes we have a significant programme we've built over over 5000 houses in the last 10 years and to continue that delivery will be a challenge we're working across the sector we're partners both in terms of local authority and partners within the construction industry as well I think we've discussed that you'll hear that a lot more in terms of costs echo what Pam's saying and I'm sure sure other members will say the same sort of thing we're experiencing costs now up to 200,000 pounds per unit as well and that's not insignificant developments developments of 30 plus units and that's for a number of reasons and the other thing the other real challenge we're having just now is trying to tie down prices so where we think we've got a fixed cost I can give an example of a project that that we had a tender received last july and we've had two increases since then we've still not managed to get that on site a substantial project but we're up over 13% of an increase from the original winning tender price and we're still not over the line in that project yet so the time taken to to address some of the the challenges as well is significant and can exacerbate those challenges I think from the previous witnesses you'd heard that in terms of whilst you try to solve one problem the time taken to do that the prices have increased and for various reasons and we see the you know all across various measures BCIS Office of National Statistics are talking about you know price increases in construction between 8 and 10 percent over the course of this year and that will continue into next year so those are the main challenges we're doing some similar things as Pam said we're trying to make sure that we're discussing these issues with the contractors that we use looking at other forms of procurement as well to try and mitigate some of the the price increases but that's been sympathetic to the two contractors and the supply chain as well because there are real pressures upon them I've had experience recently of for example in steelwork costs only being held by supply chain for 24 hours so the difficulty in terms of timing in that as well as a significant pressure I think we also experienced some some challenges around planning and resources within local authority partners in the planning system there are there there's much more emphasis on incorrectly in some of the issues around consultation with planners but that does put pressure on the planning system itself to enable us to get projects through timeously so that's one of one of the other issues again we're working with our local authority partners across the the authorities that we are active in to try and take some pressure off that by doing some consultation by herself by looking at funding proposals as well through through the planning system and we'll continue to do that so it's echoing much of what Pam has said and and some of the other issues that were addressed this morning I think the challenges are the same on the same themes but slightly different in different areas thanks very much for that Frank Elaine how's it going in Edinburgh in Edinburgh as committee will be aware we do face significant challenges in terms of the housing market we operate in so private sector rents in the city for a two bed will be around £1,100 per calendar month house prices can be six times average salary we have a lower than average supply of social rented housing in comparison to the Scottish average so that means the pressure on the social rented housing stock is absolutely enormous every home that becomes available for rent for social rent we will have around 150 households seeking to bid for that property in terms of council homes that become available in light of the significant homelessness pressures we have in the city around 70 percent of our lets will go to homeless households with the remainder then really largely going to people who have priority for accessible housing in order to maybe get out of hospital or to in order to remain at home so that's the overall context in which we are seeking to deliver affordable housing within the city we've a very ambitious programme to deliver 20,000 affordable homes in partnership with housing associations by 2027 and up until the pandemic we were making very very strong progress with that and in 2019-20 we approved as a city 2000 affordable homes for site start a mix of homes through the programme but also housing for mid rent as well so looking at other options as well as through the grant funded programme however like as you've been hearing from witnesses today we're facing very similar challenges in the city in terms of rising costs so between 2021 and 2021 and 2021-22 we've seen an increase of 30,000 per unit in terms of the affordable housing supply programme unit cost which is bringing it up to around 190,000 last year but we are also anticipating pretty much every project coming in well above benchmark and you know as we move forward as the cost position remains challenging I think the additional challenge for us I would highlight is as a council we're developing sites which we have purchased onto the HRA from our general fund but our RSL programme in the city is completely dependent on sites being brought forward by the private sector through the affordable housing planning policy so a big concern for us of course is in the current context if affordable developers and private developers are not able to bring if we cannot reach a viable project through working with developers and private sites there is a risk of course that they just simply won't proceed or be significant or are face significant delay so big challenges and just as others have said we're also seeking an Edinburgh as a council to drive forward investment in our existing homes we have 19,000 homes in the city and council rent around half of those are in mixed tenure blocks so a big challenge for us is we need to work with owners in order to invest both in the private housing alongside council homes to deliver those improvements we need and we also have around 15 percent of our stock in multi-story blocks so in terms of that challenge of bringing existing homes up to the entry efficiency standard for social housing and net zero carbon significant challenges there which we obviously require to fund through rental income we're seeking to deliver a very large and ambitious affordable new supply programme but also deliver a very ambitious investment in terms of our existing estate and all of which is much required in the city. Thanks very much Elaine and maybe somebody from the Scottish Futures Trust. Neil, thanks. So I would agree with a lot of the comments that have been made about the challenges so rather than going over them I mean I guess adding to it there are a couple of resources and capability that was touched on earlier on the kind of role that we play we want to help people deliver some of these sites looking at strategic sites and other things so some of that capacity resource and people on the ground to help deliver is a big challenge in just making the system work sometimes there's complexity across the funding system there are lots and lots of different pots of funding out there and maybe using Granton as an example we're working with Elaine and colleagues large-scale redevelopment number of strands there regeneration net zero housing transport all all these kinds of things how do we bring some of those funds together to give a holistic approach to that and that's quite common across Scotland in terms of some of those larger sites and as Elaine was talking about again you know that primary link to section 75 access to land bringing that forward that's a big challenge and I guess in terms of some of the questions maybe some of the approaches we're looking at might help unlock some of that private sector land by using some different funding and financing tools so very much keen to look at those kinds of things. Thank you for that yes I am aware of the complexity of that funding landscape I can't keep track of all these different pots of money and it's not just in housing it's in it seems to be everywhere Tom. Thank you and good morning everybody I think for places for people we I mean I'd echo everything that's been said on the cost point I think that we're seeing increases but not to the point that it's affecting our pipeline at the moment so I think we're expecting to develop around 1200 new homes over the next three years that's about 200 million pound of investment I don't think that we're in a place that it's going to stop that programme at the moment so I think there's positivity as well in terms of how things have been managed you know collaboration working with other partners on on on how we deal with things our our goal and what what we're trying to do is all about place place making communities so not just you know numbers and hitting figures so I think that the access to land question is really really critical for us it's becoming harder to to get land and it's becoming more expensive and there's more competition I'm sure some of us around the table will compete on on land acquisition so so that for us as a RSL I think is really really key as we move forward on top of that there's the investing in our current stock so as much as we're developing more and we feel as though we've got capacity to to do even more in Scotland and we're investing more in our current stock we've got each two and we've got zero net and we've got shqs and all the requirements that require us to fund for our existing customers and that's one of the nuances here that we've got this stretch that's saying we need more social rent properties and we also need houses which are homes which are more energy efficient and cheaper to live in and there's this this mix for us and this this stretch which is challenging for us to achieve having said that we year on year we're upping investment in all of these areas I think just a final point probably for me in terms of different financing we're part of a larger group place of people Scotland and we have pfp capital who are a fund manager and actually have a fund in Scotland and are bringing in institutional investors into a mid-market rent in Edinburgh and Glasgow so we do have some interesting examples of other ways of bringing investment in to mid-market and that's been successful the fund is 182 million in terms of scale so there are other ways we can do things I think on that question of if we look you know our core is about you know affordable housing and social rent and we have we do have a challenge in terms of continuing to keep the development and the numbers flowing through and I think that's that's probably pretty consistent for the sector not just in Scotland but are UK businesses seeing that at the same time great thank you very much for for all those responses to the challenges and kind of moving into other other areas there as well I'm now going to bring in willy coffee with questions thanks very much again can read out good morning everybody the cost this year I was going to ask her local authority colleagues if they're experienced in the same kind of cost overruns that have been mentioned in your peer to be are those unit prices that you're talking about that are significantly higher than we had are they coming about because of new material costs is it purely about sourcing new materials or materials to to service the industry and I'm glad Colin is here so hopefully he could help us understand why these costs are going through the roof and are those costing models based on existing methods of delivery we've heard about offsite we've heard about prefabrication we've heard about sourcing alternative materials and so on and so forth so are we changing the model of construction or is it too early to tell that whether that's going to be a success maybe we could start recalling please you know that I think there's a really interesting dynamic on the cost situation because really there is already increased costs in the system because of all the new requirements that are being required so that's already there and obviously what we're experiencing in the market at the moment is quite high volatility as you've said and and the challenge is we can't let the latter overcome the former in that you know we still I would suggest still want to build these new requirements because they're good to do and so there's a there's probably a short term thing and a long term thing there and you've alluded to it in your question there in relation to what can we do now but think about for the longer term and so so new methods and so we've heard this morning that a lot of people willing to think about innovation and doing things in a different way so different ways of of delivering different procurement methods different ways of doing that but but also thinking you know are there other bigger changes that could happen in the system that could be more long term in terms of what's happening in the markets if you're right there are almost being said there are there are labour issues and materials issues and but also I think what we're observing is that housing has its own particular market issues and there are some geographic issues around that as well and and we've heard already this morning around a big lack of competition in the market which has an impact as well and when there's a higher demand unless unless supply chain available to deliver you get increased costs so so so there's interesting dynamics going on so there's different sources of increased costs at the moment and the common issues across construction at the moment are around particularly around materials a lot of a lot of materials are imported so again the longer term play is could be do something more in Scotland and for components as well and as already been said it's more and there are some you know labour issues as well so there is an interesting cocktail just going on at the moment and it is a challenge but you know so I think that there is an issue there forming around prioritisation and we have heard comments this morning around you know decisions being taken so whether you stop a scheme or or how do you prioritise but if we're if we're going to continue to move forward the programme which is obviously the desire and as Mark was saying this morning the right house is in the right places so doing the right thing isn't really important but I've been able to prioritise so the task is to try not to stop developing think of ways to fund that in the short term and support that in the short term but think of more longer term things to bring into practice. Just on the issue about the local supply chain can we begin to solve this or are we completely reliant on imported timber for example to help us with house frame construction that can be solved? Well on the work that the Scottish Government on ourselves have been exploring around off-site construction and increasing that. We have been discussing a lot with Forest Scotland around the potential for being able to use local timber resource and so there is that potential and so that work is still underway to be able to do some further analysis on that. A lot of timber is imported at the moment but certainly there is potential there to be able to be using local timber sources which I don't from what I hear I don't think are being as used well as they could be. The other potential is on looking at other materials but also other components so manufacturing also the the next zero opportunity that's bringing along that is the potential for new components so if you're looking at you know new window assemblies door assemblies other types of things we should be looking to improve the manufacturing capability in Scotland to be able to do that. As a more medium and longer term play but certainly with the scale of a programme of 110,000 that's the opportunity that should be explored. Is Emdils coming in in that area or can I ask another? I suppose just to highlight a project that we do have underway as a demonstrator just now which I think is quite significant in relation to to what Colin was raising which is the Edinburgh and South of Scotland demonstrator project so it's a partnership of Offsite Scotland which is offsite manufacturers within Scotland and Scotch Futures Trust, Scotch Government, City of Edinburgh Council and our regional partners. So what we're really seeking to do there is look at a whole new method of procurement linked into offsite construction to deliver net zero carbon homes and we're well into the pilot we've got one project under construction just now another site identified and we're looking to build that pipeline up to really be able to do that and demonstrate that this can make a difference if we can do it at scale and it'll give the industry the confidence then to invest as well in the transformation that's really needed in how we do things. Again what we're seeing though is the costs for those initial pipeline projects are very are very high in comparison to you know what you know what we can really look to afford in the long term so we need to look at ways that we can I think support the pilot in that pipeline programme so that it can become sustainable and deliver in the medium term. Thank you for that. Thank you. Another question if I could please convener probably again to my local authority colleagues and we heard from Mark earlier on in the first session but I'm reminded of what Audit Scotland told us two years ago when they looked at the affordable housing issue and they said it just wasn't clear to them how the national targets linked with local housing needs and I think Mark referred to that in his contribution so I was kind of hoping to get North Lanarkshire and Edinburgh's view of that whether they share that view or is it different in the urban setting do we think we have the numbers right or does the model itself need to also change? Pam, have you stuck with you? Thanks that's an easy one in terms of trying to get the balance between the overall target and the overall needs and the housing need and demand assessment and then translate that into what can be very localised needs so for example I suppose in North Lanarkshire quite a diverse area if you look at it overall if you were only looking at the housing pressure and the supply and demand you could say that in some areas there's not a huge gap between the supply and demand we've got a good turnover of existing stock but the issue is obviously is it the right type of stock is it in the right areas people don't necessarily want to move from one part of the authority to the complete opposite there's also issues about accessibility and transport so it's a much more complex picture I suppose than just looking at you know the figures themselves but even on that basis I think we would say that it's probably very light in terms of the assessment of the absolute needs and it's it doesn't reflect really the needs of the area and you've got a whole lot of hidden housing needs as well often within households so I think it's a very complex picture and I think it's pretty difficult I would suggest to get one methodology that can accurately assess and predict and put targets on this is the absolute figure this is the absolute amount of land that you need but we do work as certainly in the central belt we obviously work collaboratively through the Glasgow and Clyde valley and so you know we work together around our housing need and demand assessment so overall I think you know it's it's as good as it can be but I think it's a more complex picture than you can ever really do with them you know the methodology that we use at the moment. Elaine is the model working for Edinburgh? I think as Pam says the housing needs demand assessment tools it is a complex area we're looking at that on a regional basis and we have just carried out our housing needs and demand assessment three for submission to government I think overall it continues really to demonstrate very high levels of need for affordable housing which I think is an important point. I think the other area though we've recognised that it's not as strong on as it needs to be is really helping us to understand what the overall need is for accessible housing and across on a cross tenure basis as well so we recently commissioned some additional work in terms of an accessible housing study to assist with identifying what the need and demand is in terms of wheelchair accessible and other forms of accessible housing and that is really even more difficult in some ways because of the range of different data sources that potentially need to be able to come together to be able to give that information but what we have sought to do through that study is to hear real life experience as well in terms of people who are seeking to find accessible housing and how we can look at that to try and improve access to the accessible housing stock that we have. And on the issue I think it was also mentioned earlier I think by Roslyn I think and maybe it could by mark about are we providing enough access to housing for for example young single professional people who are a single wager and are obviously in their ability to access these different housing models are we doing enough there or do we need to do a little bit more to reach out Neil? I mean I guess a lot of the work that we've been doing over the last few years around mid-market and reflecting that there are different needs within the housing system and how people are entering that and how they work and all these kinds of things so a number of those approaches grew from national housing trust others on the panel as well have been in that space but I guess it's the future aspirations of people about renting and owning and other things so maybe shared ownership type models shared equity type models fallen out of favour a little bit actually do they have a role to play again and how they might come back so again I guess a lot of the work that's been going on is almost additionality so we have the grant programme and then we have a series of other tools that can help us deliver and use different levers in terms of that because grant can come in different forms effectively come through land we've had experience around financial transactions so money that's lent effectively so something like law or housing trust again mid-market type approach is a good example of here's a different way that potentially we can help to live are but I think there is a recognition that the system you know is providing some address to that could it go further yes it could so it's really just understanding how some of these models fit for people which brings you back to the ondas and other things about demand and need and where that is different economic circumstances you know what kind of housing is needed where so it's understanding that we're gathering that sort of data both palm and the lane locality to pinpoint or understand the groups of people that are not accessing the housing market in the way that they wish to we could be looking at that and feeding that into Scottish Government and others so that we can adopt these models in the future quite difficult at times because a lot of our analysis or in terms of housing need is based on the waiting list data and which is not you know it's clearly imperfect as well and quite often you know the people that you're maybe the fair and too maybe would not think of you know council housing or social rented housing or they would maybe be advised that you know that the level of need would be such that for the areas that they're looking at they would be maybe not high authority so they maybe think well what's the point of putting my name on the list because we know we do try and give people good advice and house and options advice so you know I suppose part of the impact of that is that people will maybe make a choice or decide well actually you know it's unlikely I'm going to get a particular house in the area I'm looking for so you know I'll need to try and meet my needs elsewhere but yeah we do use whatever date is available particularly around the private you know the entity we're going to try and monitor that quite closely what's happening in the private rented sector you know where's the you know you can see where the the higher pressure is and we have obviously been looking at with SFT and others you know the mid-market rent models as the different kind of models we could bring in that would help meet that particular need we haven't been able to make that work in our area particularly because the private rent or the local housing allowance is so it's quite low so the gap is too large basically we would need to somehow find a way of meeting that and our authority is focused on on our social rented programme so I suppose a long answer to say it's we are trying to provide or to look at ways that we can identify that need and meet that need but our main focus is on the the most acute need and delivery of the social rented programme. But what I hear around is that you know as some folks saying that you know there is an opportunity to have a look at the existing models and methodologies and but also to be able to take that step back and look more strategically across Scotland and so it's it's good to hear that so Edinburgh and partners are looking at a regional approach and is that different from looking at a more local approach and and how you tie that in with economic planning as well and the relationship and so so I think that's a different dimension but it's what I hear that's worth looking at. Thanks very much everybody. Now I'm going to bring in Miles Briggs. Thank you, convener. Good morning to the panel. I wanted to develop further some of the questions we just had from my colleague Lee Coffey with specific regards to Edinburgh. As an Edinburgh MSP I've probably put that interest out there as well and the pressured areas we have across Scotland certainly Aberdeen used to have that but Edinburgh is acutely overheated many people keep telling me when I'm having these conversations. Now how do you think that is being understood within government especially given higher land costs and is that becoming a key problem as well of meeting the challenges in areas which are highly pressured as well. As I've mentioned Edinburgh, I think that we're bringing in Elaine Star. Yes absolutely, I mean the pressured housing market in Edinburgh is having an enormous impact. I think we hear anecdotally as opposed from businesses as well that some of the challenges around being able to recruit and retain staff and certainly health and social care workforce as well. The ability for people to access affordable housing is having a wider kind of economic impact as well. For us, I think our approach as a city has always been to work in partnership with RSLs, with developers, with other partners such as Scottish Futures Trust really to explore every option, every innovation we can possibly do. Midmarket rent has had a big impact in the city. We were the largest participant in the national housing trust and delivered around 800 homes for mid-market rent through that initiative. The learning from that allowed us then to proceed to set up our own Edinburgh living, which is a limited liability partnership, which we're in partnership with SFT as a council in, to deliver mid-rent and market rent housing. We've already got a few hundred homes in ownership and a pipeline of homes we're delivering for Edinburgh living through our own house building programme and obviously came to try and work with, to bring private sector sites into development potentially for Edinburgh living and others to purchase homes. So it is very much for us, I think, with the scale of challenge we face. It is really looking across the board on a strategic basis, a whole range of kind of opportunities mechanisms we can do to be able to support delivery of affordable housing, regeneration and place making across the city. Most of the land is in private ownership and I think as mentioned earlier we are really keen to explore what else we can do really to get more private sector sites into development to meet affordable need in the city. So affordable home ownership, affordable rent, social rent being a huge priority for us in light of the homelessness pressures we have. Thank you. Does anyone else want to come in on that, Tom? Yeah, thanks. I think I'd echo what Elaine said and I think with, in the Edinburgh context, MMR and the mid-market rent products have been successful. If you look at the engine yard as a good example of a collaboration of multiple organisations where you've got affordable rent, you've got over 55s, you've got mid-market rent that's been development for sale there as well and it's tenure blind when you go to the engine yard at the top of Leith Walk. I think that we're finding, we've got around 2,000 mid-market rent properties in Scotland and they're ever so popular. So that point about the younger working people, it's absolutely key that we have that product available I think. The other point is if you take the average Edinburgh private rented sector rent, the MMR is about half. So it's quite a significant reduction in rent and it works as a model and I think that's the thing for us in an environment where we've developed at the engine yard, which is in the city with, you know, it's brownfield, it's an old tram, you know, deponic, with all the challenges that you get there, it's a model that's worked very well. So I think we're very keen to see that, that tenure blind approach to development where you've got that mix of everything that caters for lots of people and somewhere like Edinburgh where, you know, you've got those higher rents is a good example, I recognise it in other areas, you know, the model may not stack up but we've got, you know, experience with that in both Edinburgh and in Glasgow as well through the fund I talked about earlier. That's helpful, thank you. One of the things which I think all committee members are being, you know, made aware of is supply of land issues. I think one of the, we've heard earlier about that challenge in the rural context but in an urban one very much I'm concerned how, you know, some of the only brownfield site developments which we're seeing within local plans which aren't necessarily going to come on stream and I just wondered with regards to the national planning framework where you felt that's not necessarily in the right place at the minute to meet this demand around supply of land and where, you know, planning departments are also looking at that and maybe in terms of the financial question where we're hearing that need to have that supply of land coming forward isn't necessarily there at the minute? Anyone want to? Yes, I mean, I think in terms of land supply there's probably two parts to it, it's kind of overall supply of land but for us I think the challenge is affordable developers is really getting control of that land and, you know, for affordable developers to be able to go out and purchase land we simply can't compete with volume builders and others to do so and so we are really reliant on, as a council as I said, we've been purchasing land from our general fund on to the HRA and then seeking to take forward regeneration and build affordable housing as part of that and that's a land cost for the HRA to bear. In terms of the RSL programme it's really seeking to secure the affordable housing policy 25% development as part of any development but it is dependent on private developers bringing forward the sites for planning consent so we're tied into their timeframes around when they want to to sell on market homes so yes I think land, getting sufficient control over land to drive forward the affordable housing programmes at the scale and pace that we want to deliver at is a significant challenge. Pam? Add to that in terms of our area, as I mentioned, I mean I think it is important that we do look at and I'm assuming your question was wider than just the social and affordable housing but in terms of overall allocation of land for housing I think it is important we've still got large areas of previous industrial land that's owned for housing that meets the requirements of NPF4 in terms of 20-minute neighbourhoods it's well located quite often close to public services and to public transport so I think it is important that there's a focus on how do we develop that land whether that's a mix of private and affordable or just for private but obviously major challenges around the the ground conditions and all the issues we've talked about before the infrastructure and the connections but I think in terms of the benefits I think that there should be more emphasis put on how do we make these sites work because before we start necessarily opening up more greenfield sites which don't have the benefits in terms of location and accessibility so for us it's definitely about trying to focus on how we can remediate and bring back into use in some of our brownfield sites but we've got major major challenges as you can imagine. Can I just come in there in terms of the pressures though of decontamination and additional costs and things like that where is that unlikely to happen and developers will therefore not bring forward these such schemes do you know that regularly told that brownfield sites are sometimes more expensive to then you know come online so just wondered where that was being factored in given all the cost pressures where we're hearing. Exactly so that's why a lot of these sites even prior to the kind of current challenges around cost pressures these sites have not been brought forward unless we're able to bring a public sub you know basically that this public subsidy to do it's not so much contamination a lot of the contamination has been addressed so they're safe in that point of view but environmental standards quite rightly improve all the time and there's green condition issues as well so it's there's a range of challenges but I think you know putting the infrastructure in putting more investment into you know bringing the sites back into use but bearing in mind that most of these sites if not all of these sites are not in public ownership and private ownership there can also be unrealistic expectations about land value in terms of the you know what the landowners expect to get so I think it's about working in partnership to see what can the public sector bring if anything and how can we work together to make these sites work because as I said that's where we've got the land so why would we start to open up in other green greenfield sites if we can develop those sites first thanks Neil did you want to come in on that one I was going to make a very similar point to Pam it's almost that place-based approach to some of this land in terms of by dealing with it I'm dealing with a whole load of other issues and potentially giving them good outcomes so it was very similar to what Pam was going to say I'll maybe just add what's been very helpful for us if I take the example of Glasgow city is as a larger builder of social and affordable housing having a long-term partnership agreement with that local authority particularly where there's no section 75 planning regime for affordable housing there which has given us certainty of land supply and sites coming forward over a multi-year period and to your point about the finance side of that allows us then to go out and raise private finance at scale knowing we're going to have the throughput of sites and we can look to do larger scale arrangements with contractors and so on so that closeness of working with local authority partners is actually key for us as an RSL improvements just finally in terms of delivery agencies then you know obviously local authorities are playing that role but in other parts of the country especially around regeneration projects we've seen different types of delivery agencies and is that something you think could help drive this so that especially bringing additional private investment in bench and funds have been raised a couple of times where that could be really sort of turbo charged to get this moving forward from our experience the arrangements working with local authority partners has been very effective actually in recent years and continuing to support them in their role as strategic housing authorities granted there are circumstances we're doing things on a regional basis are important in that wider strategic planning framework I wouldn't see a strong argument at this time for adding another agency or body to the landscape around regeneration we've had iterations of that in the past community Scotland and so on Homes England performs a slightly different function down south where it's funding elements and land elements we're smaller and can work closer I would say as delivery bodies with local authority so I wouldn't see a strong irrational at this time for a regeneration agency nationally thanks anyone else thanks Miles I'm going to now bring in Marie McNair thanks convener a good morning panel and thank you for your time this morning I'd like to go back to the previous point regarding zero net zero homes we've heard obviously from edinburgh council regards to the edinburgh home demonstrator partnership I'd like to hear how other authorities approach in this and I'd like to go to Pam Humphreys now can you tell us more about the approach that will be taken by a north lancer council and what can investments we made in this proposal and how is the progress going so our standard specification in terms of the homes has increased over the the years in terms of improving on the the energy efficiency and proving we as standard we're bringing the the homes up to the this sustainability silver aspect one and two standards and we were we then start to increase look at additional pv panels for example to to go above that standard more recently and clearly with the we won't be able to fit gas boilers in the future so it's a necessity we start to look at alternative net zero heating sources so we've got a number of pilot houses on site at the moment that are they're not it's not passive house but it is net zero that our contractor ccg are building and we want to in effect assess with the impact of those so that that's air source heat pumps increased pv again but also battery storage which is quite expensive I think that the total extra cost for these units is about 20,000 pound so we really want to be able to assess the different component parts of that before I suppose we make larger scale decisions and certainly the battery storage is probably the kind of more expensive element of that so it's again trying to look at what is the most efficient way to deliver the net zero and also a point something made earlier around making sure tenants know how to get the best use of the homes as well because there's so much going on I think sometimes when tenants move into a new home and being able to understand how to operate some of these the new technology effectively doesn't doesn't always happen and we've got then issues sometimes with condensation so there's lots of I think other challenges around that as well but that's you know some of the areas that we're looking at at the moment in terms of net zero thank you there's a suggestion by the UK Government they're thinking of introducing the right to buy to housing association homes you have to tenants to that renting them and I think shelter have quite correctly condemned this if this policy was ever reintroduced in scotland what impact would that have on the ability to meet the needs of affordable homes and I'll just pop that out to everyone anyone that could answer that I want to make a comment on it in terms of ability to to take forward net zero carbon one of the things that we're doing in Edinburgh and I know other RSLs and local authorities are doing is seeking to consolidate our ownership within blocks and and that is when homes become available in the market purchasing those homes in order to do that has become really really important and we need in the context of net zero carbon really to find ways to support owners and social landlords within common blocks to be able to jointly bring the homes up to the net zero carbon standard we're finding because most of our half half of our stock is in mixed tenure blocks and we're finding that for owners the bills of just bringing homes up to the in a fabric standard appropriate fabric standard you know is costly already but net zero carbon will bring additional costs to that so ways of jointly supporting owners and landlords to bring homes up in terms of extensions of right to buy I think in terms of the very big challenges we're facing to be able to house homeless people in temporary accommodation and others in priority need and that would further exacerbate an already very challenging position. As you'd expect I would say we would certainly not be supportive of any the introduction of the right to buying just as I mentioned earlier and as Elaine said a big focus of our programme is actually buying council houses that were purchased and bringing them up to standard and we also now have extended that where we're trying to target particular blocks and to bring them up to standard where we will if it's the last if it's only one owner in the block we will allow the owner to stay as a tenant because the big majority of the inquiries we get are from people who want to sell their house back to us but they mean as a tenant so maybe people have bought us and the right to buy can't afford to maintain it so we are looking at that now in limited circumstances as well so we're it's the opposite I think. Thank you, thanks Givina. Just came to come back to your point on net zero and some really good points have been made here in the previous session and we're seeing some really innovative work right across the country on net zero and being able to progress that and as Pam says and as Elaine says you know moving on with that fabric first approach and getting the fabric of the bill on rate but the heat source is a really important bit and so again looking at those different ways of looking at that in terms of our source and it's really interesting we're here on Apple Cross looking at a heat network solution but being able to look at these things with a different lens and maybe taking a place-based approach to this because it allows you then to think about what you're building new and also the existing stock and to look at heat in a much more strategic way and I think even widening the lens beyond that I think it brings in the point around supply chain so we've got a big opportunity here with a large investment programme in new build and in terms of upgrading existing properties to look at how we can look at local supply chains for heat pumps and all sorts of things so that's the exciting opportunity that's ahead and I'm just building the blocks for that. Thank you, thanks for that and I'm just going to stay with the future housing trust and again I'm not sure who to direct this to so you can decide among yourself so we are curious to know how your work is enabling the development of strategic housing sites and any lessons that can be learned. I guess there are different aspects to that so some of it is about funding, financing innovation, some of it is about collaboration, some it's about place so maybe a good example of a place-based approach is our draw-son so old school site and effectively how that site connects us housing to the wider town another investment that's going on so it's effectively it's all planned together so that you have access to services, there's the reuse of land, the reuse of surplus estate maybe within the public sector so taking that place-based approach around our draw-son Granton I mentioned earlier on which is probably now more about funding started as a place-based and understanding the role of Granton in the city and elements around the learning journey and the partners who stood around that but it's now coming right down to funding at that point I made earlier on that how do you corral all the different funding sources to sit around that project to deliver something at scale and then maybe using Winchborough as an example again around that funding type of innovation so effectively a challenge with unlocking some of that upfront infrastructure and effectively helping the local authority manage the bumps and peaks and troughs in section 75 so that there's effectively a standby facility that's come through government that can be drawn upon if the profile of build doesn't follow that as planned so there's various ways that that support can manifest itself if you like. Thanks very much for your response on that it's very helpful with those examples I've made notes to go and learn more about those places and it also makes me think we had a visit to Govan recently and I think there's something going on similar there and I'm going to bring Paul in with some questions. I'm going to ask the same question I asked to the first panel around about private investment how can new forms of private investment be levered into provision of affordable homes are there new models that can be used more widely I want to try and expand a little bit more on talking about the build to rent sector which is grown in Scotland and also talking about the role of equity share as well so maybe if you can wrap the answers into that. Tom I know you touched on that in your opening statement I don't know if you want to just talk a little bit more in about bringing in private investment and then open up to the panel whoever wants to come in. Yeah of course I mean I think the experience we've had is that there's real appetite out there if the vehicles are right for investment into property housing in Scotland and our MMR fund is a good example of that because it's still you know we talked about the rents earlier so you know it's effectively still you know lower rents and people are interested in investing in so our development programme through places for people capital was initially around a thousand properties with scale to grow 182 million invested in and it's something that we're continuing to focus on and continue to do so I think it's an example of a success story and it was learnings that our group had in England that we you know developed the work in Scotland and the investment generally has come in from pension funds as a general rule so I think that it's it's an area of absolute growth and it's something that that we're keen to do and of course you know with some of the challenges that we're all seeing it's so important that those numbers continue to work but it's something that our organisation is committed to. I think on the purely affordable social rent side of it I think it's harder for obvious reasons when you've got the return so how we can find a way to do more in that area of bringing in additional capital is another question. I think that you'll also see that there is if you look down south in what's been happening there there are examples of for-profit providers coming into the space of affordable housing we're a non-profit of course but I think that there is more moves into this area by people who are there to create profit which shows that there's opportunity there I think is my point. I'll open up just on that is there enough coordination in your opinion at the moment across the sector and I'm talking about housing providers not just across obviously the pension providers you know so is there a need for more coordination but across the sector are there any opportunities around about private investment from your opinion and is there enough coordination from the pension providers to try and look at you know what are the barriers how can we open up where are the opportunities? I think that my view is that the larger organisations are the ones that have the ability more often to bring in you know big amounts of capital just purely because of scale so from that point of view our approach is to use our vehicle but that is in collaboration with the Scottish Government and others so I think there's more to be done in this space around collaboration engagement from my view but it still feels quite early you know in the journey on this so you know there's more to be done. I don't know if you want to send anyone on the bill to rent or equity share and I'll open up to anybody else who wants to come in on that. I mean just around again like Tom we have experience of some of that institutional investment coming in so I mentioned lower housing trust earlier on there's finance that's come from institutions and alongside other tools that the public sector had we're also looking at models we have the housing delivery partnership model which is a mid-market provision through local authorities East Lothian have used an institutional investment and are looking at more so I guess for us as the public sector that there is the potential around some of these approaches where we are at the moment is again through that collaboration thinking about what do we want to get out of those models and how do they then fit so at the moment it can be quite piecemeal people will come to you with deals and suggestions and that's okay because it helps grow knowledge but actually what do we want more holistically from that sector I think is a big part of it so so we are looking at that along with some others around the end of the table at the moment. Neil, thanks for that. At least I was a councillor and he saw the number until last week for 15 years and obviously we're at the scheme and obviously the constituency MSP as well so yeah well aware of it hence part of the reason because you see the opportunities around about that and I've met Lara as well so that's interesting to to know if anybody else wants to come in on that point. Maybe come in yeah and I'll draw a big distinction between social rented housing which must be owned and led by a local authority or a housing association and other forms of intermediate tenure, mid-market shared equity etc. So for the social rented housing there's a good history of institutional investment in Scottish housing associations in particular our first public listed bond in the stock exchange of 2014 lots of insurance companies pension funds etc there and been followed by lots of other housing associations doing private debt placements for example it's always a battle I would say to keep the awareness of Scotland up on the investor radar and agenda because it tends to be a UK wide debate around social housing and you can get caught up in these issues that predominantly relate to England such as right to buy and cladding and so on and we have a different position on these issues in Scotland so there's been a lot of good work done by people like SFT and a shout out as well to Scottish housing regulator who've been very good at making the awareness amongst the investor community of the differences in Scotland come through. Yeah we've had lots of individual discussions about ad hoc deals on build to rent and mid-market rent and coming in and we've got some of those on going which are good positive tend to be focused on areas where the local housing allowance supports it though because for mid-market in particular the starting rent is the local housing allowance which it caps it so in Edinburgh you can do something in Aberdeen you can do something in North Lanarkshire it's very difficult and Renfrewshire and Enver Clyde it's very difficult and that goes to the structural nature of the way the local housing allowance levels are set because the question I was going to then follow up was what can the Scottish Government do what can the Scottish Parliament do in that regard to try and mitigate the barriers that you just mentioned in there. Yeah I think you know the things that have been to events here in the evening where investor community and so on are invited and more of that sort of thing is very positive because I think we have a good story to tell actually in Scottish social and affordable housing around the positive differences that we have we don't have the right to buy we don't have we have a very good and supportive grant regime actually that's the envy of our colleagues in England and the more we can do to tell that story and sell the positives of that amongst investors I think the better and you know we have our we get our credit rating by standard and poor's we're due to get our result in the next couple of days and you'll see in that report lots of these things played through but I'm not always sure the awareness is there down south of that. No it looks so great. Okay so now I'm going to move on to questions from Mark Griffin. Thank you. Similar to the question that I asked the last panel just wanted to ask if witnesses had any comments about how their investment decisions, how their new build programs are impacting on rent levels, whether the new build programs are essentially predicated on rent rises and whether that's causing any concerns about the affordability of rent. I wonder whether I could put that to Elaine Pam and Steven. Elaine yep. In terms of rent increases obviously what we do is plan over a 30-year period in terms of our HRA business plan and we had assumed rent increases moving forward but in light of the cost of living crisis that we've experienced our decision was made to freeze our council rents both this financial year and last financial year in response to that but the ambition remains to deliver our affordable housing commitment and to deliver the investment in terms of existing homes so moving forward from there we need to then look at how we can do that, how we can find ways to bring in the grant funding and other types of funding that could support that so that all of that pressure does not fall on rents moving forward. It is absolutely the case that we can't deliver new build at the expense of investment in existing stock or the other way round so we need I think in the Edinburgh context at least we need to find a way forward to be able to deliver both those commitments for the city and I think for us that's really about I think working with both more homes division, better homes division, looking strategically across the support there is for investment in housing across the board whether that be new homes or existing homes. Thanks. Anybody else want to come in on that Pam? We have looked at we have increased the rents in the last few years to support the investment programmes both in terms of the existing stock and we're also re-provisioning our multi-story flats so there's a large-scale demolition programme in terms of the flats and obviously they replace those flats with new homes so the rent increase has supported that investment but as Elaine said I mean we've also got the 30-year business plan we've made various assumptions around costs and we're having to constantly you know the view and update that and assess what you know we can afford in terms of the going forward and recognising all the other cost pressures that tenants are facing at the moment so it's certainly a balancing act we also had made a decision when we started the new build programme that we put a 20 per cent premium on the new build rents but again our rents are still below the Scottish average but when you add the 20 per cent rent premium they're now just under 100 pound on average so we are having to start looking at particularly when we go forward in terms of some of the change in the heating types that maybe means that it won't be as tense might have to spend more than maybe they did currently so we are having to look at the options there and whether the rent premium is something that we you know really would want to continue with and the impact of that on the overall programme. Thanks for that. Mark, do you have another question? I don't know if Steven has any. Sorry about that. We wouldn't increase rent specifically for the purpose of subsidising new build that's quite an important principle for us so grant has to be the balancing figure because if it's not what you're doing is taking money from existing tenants and investment in their homes and using that to plug a gap in new build scheme and we don't think that's right particularly given the context of cost of living crisis and pressures on our cost base as well as an organisation we have these things like utilities and inflation across our cost base so you know we welcomed the change to the benchmark grant rates last November we thought that was a positive step and we've just about been able to make things keep working with those although we're now bumping up already against some challenges with those that's been reflected earlier we also welcomed the fact in the revised subsidy regime that there'll be an annual review we understand of those benchmark grant rates and we think that's really important one year on from that resetting last November that that happens and we would hope it will respond to the inflationary pressures but no way in our business plan we wouldn't see ourselves increasing rents to plug that gap that's an important principle thanks very much mark any more questions no thanks okay i'm just going to ask the question about i don't know if it got covered but i wanted to ask if it's my my kind of new favorite thing this modern methods of construction if anybody is working with that colon and then frank i'll allow frank to come and see what's happening on the crown's egg and maybe talk about what's going on right yeah frank so yes we are using and exploring the different methods modern methods of construction as the term has now been coined so we used things like closed panel and timber frame but but these the methods tend to be similar and we're all kind of fishing in the same market place for that so it's it's generally speaking in terms of the the regulations and and especially by the fabric first approach the then the there is a drive down towards timber frame and i think it's i think it's important that we look at other modern methods of construction especially modular because that that will that will take a pressure off of the sector through trades for example lots of the you know modular for example is a good example where if it's factory built it's not tradesmen you're using then it's actually skilled technicians that you're using to put that together so all of the aspects of construction are valid and good but to spread that across means that you can take pressure off the market hopefully it takes the a degree of the overheating out of the market that we're in at this moment in time because there is a pressure right across from as we talked about land supply but also through material supply right across the board in terms of the all of industry i mean if anybody trying to buy a new car recently they'll know that but that translates for example semiconductors translates into air source pumps for which is difficult then which puts pressure pressure on programmes which increases costs so we've been using and looking at modern methods of construction will continue to do so but i think it's important maybe support through government and we've been accessing the innovation centre in Glasgow as well for advice on the types of construction that can be used the important part in terms of modern methods of construction is scale so it really is about scale if individual projects are bespoke then you lose the you lose some of the benefits of that anyway in terms of the efficiencies that can be driven through a production line for example so it's really important i think and there's an opportunity i think given where we are in the market at this moment time to take that leap into you know developing that scale within the modern methods of construction that are out there thanks very much for that seem like a very enthusiastic response and Colin you want to come in it's a really good enthusiastic response and i think i think also it's it's representative of what we've been hearing this morning and what we've also heard around from different stakeholders around the country and the work that we've been supporting the Scottish government over the last 12 months or so and i think it's important to to understand that modern methods of construction or really what we're calling it sort of moving towards manufacturing offsite construction it's not new and so scotland is well ahead of the rest of the UK in delivering houses through offsite construction so something like 80 percent of the homes built are through some form of timber frame so it's a really good starting point and also so even from some of the examples that we're hearing this morning there's a lot of momentum a lot of interest you know rsls and local authorities willing to actually push the edges we're seeing some really innovative stuff happening in rural areas around modular construction so the opportunity as frank is saying is to say right how can we take this to another level and and what what has come through from from the work that we've been doing is that it is quite clear that it will require some element of structural change sort of grammar but it it means that something new must happen at a local level or at project level new things should happen at a national level and there is also a requirement for something in between some form of delivery mechanism to be able to move this forward across an appropriate geography and that's what we're we're trialling on the on the southeast of scotland with Edinburgh showing great leadership in this and i'm working across all of the local authorities there several housing associations to say right is there a new business model to be able to move that along and so that's what's been trialled we've heard about different approaches to procurement entering into longer term partnerships what's really important as frank is saying there is around and it was mentioned earlier we do need to look at common approaches across the housing providers so there will be a need to be living at an element of common typologies of house types and that sort of thing and that is required by industry but also and a really key point is that this it needs to be what we say demand led so we need to be able to structure the pipeline of work going forward industry needs a much more certain pipeline of work to be able to look for investment so if we have as we do 110 000 houses to build we need a bit more granularity in that certainly in the short to medium term to be able to to map that out so we can and then look at different business models to be able to do that so what we see is there is a new procurement model emerging to be able to interface with industry in a very different way industry are very keen on that our work with the construction leadership form is saying we need to enter into new relationships with industry there is a new business model across a cross partners we we terming it sort of horizontal collaboration across housing providers so there's a new way of doing that in terms of aggregating demand shaping the products that we want to deliver and providing some sort of certainty and then I said what I what I call it there's a new economic model something that needs to be led at a national level so it brings in the supply chain opportunities and trying to look for consistency across the whole of the market so to be able to to step this up to the scale that's required and deliver the momentum that's required there needs to be a look at how we make those changes the work that's coming through with Edinburgh is really exciting it's building a foundation for that but we also need to scale it up to a national level. Scottish Government have committed to this in 2040 and I believe it's the right thing to do to be able to deliver the programme and move it forward and to do it in an efficient way and it's not a white night it won't solve everything but to meet some of the challenges we're talking about to get into a programme approach and dealing with some of the issues we have around supply chains and competitiveness it's really important to move ahead with that pace. Thanks very much Colin, I think that that's great to hear the articulation of the new procurement model, business model and a new economic model going forward and I think also but what we've heard both on this panel and on previous panel is the land issue which underpins everything we need to be tackling tackling that so I have to leave it there for now but I think it's been a really again another very useful conversation around affordable housing and it's something that the committee is keen to keep pursuing and hearing about so thanks so much for joining us this morning and sharing your perspectives and I now suspend the meeting to allow for a change over witnesses. The next item on our agenda for today is to take evidence for on the building Scotland amendment regulations 2022 from Patrick Harvie, minister for zero carbon buildings, active travel and tenants rights, David Blair who's the programme director on cladding remediation, Steven Scott who's the head of technical the technical unit of building standards and Dr Steven Garvin who is the head of building standards at the Scottish Government. I welcome the minister and his supporting officials to the meeting. We had an interesting discussion of the regulations with stakeholders at last week's meeting which also touched on a number of issues relating to fire safety in buildings more generally along with some challenges in respect to access of insurance and members will also be aware that the cabinet secretary for social justice housing and local government made a ministerial statement on Thursday providing an update on the single building assessment programme. Before I open up to questions from the committee I now invite the minister to make a short opening statement. Thank you very much convener and good afternoon everyone. I'm very happy to have the chance to address the committee today to update you on the progress of the Scottish Government's work on fire safety and energy regulations. I'll touch on fire safety first and then come to energy. A fire safety review panel was convened in late 2020 to examine how to ban the highest risk cladding materials from taller buildings and the role of BS8414. Last week the committee heard from Peter Drummond of the RIAS who was the chair of the review panel and I'm very grateful for the valuable contribution that was made by all members of the review panel. That review process is rigorous and lengthy and the panel needs to consider a range of issues thoroughly before we undertake a public consultation. The outcome of the review was that regulations have been made to ban the highest risk metal composite materials from any further use as cladding or internal linings in all buildings and they also ban combustible cladding from residential and other high risk buildings over 11 metres in height. We've also brought forward regulation to ensure that all replacement cladding should meet the new standards. These changes are the latest in a series of changes that have been introduced since the tragedy at Grenfell Tower including introducing sprinklers in all new flats, social housing and certain shared multi-occupancy residential buildings last year. We had previous set requirements for two staircases as well as effective floor signage and far service activated evacuation sounders in buildings over 18 metres. We're also taking action, as the convener mentioned, on unsafe cladding on existing buildings and the Cabinet Secretary for Social Justice, Housing and Local Government made a statement to Parliament last week. I don't intend to cover that in my opening remarks. Obviously, if the committee wants to ask questions, I'll try to deal with some aspects but others may be for the Cabinet Secretary to deal with. The energy improvements that we're introducing in October deliver another step toward improved energy and emissions performance in our buildings and new homes in particular. With a strong focus on the fabric first approach and on practical ways to reduce energy demand, we'll be going further on this with more significant changes in 2024 requiring new buildings to use zero emission heating systems. These current changes support that intent—future proofing installed heating systems in advance of those further regulations. I'm also keen that we continue to understand how we can achieve outcomes equivalent to recognise very low-energy standards such as Passive House. Again, I'd like to recognise the contribution of the review panel on energy standards, which was chaired by Stephen Goode of the Construction Scotland Innovation Centre. We had over 170 responses to the energy consultation, and while there were some concerns expressed over the pace of change, there was no doubt of the overwhelming agreement that change is needed. I'm happy to take questions from the committee at that point. Thanks very much for your opening statement. I now open up the session to questions from members, and I would like to begin by asking a few questions myself. Can the minister assure the committee that fire safety will be a key consideration in any Scottish Government programme to retrofit existing homes with installation, and for what practical steps are the Scottish Government taking to ensure that new-fired hazards are not being introduced into existing homes? Clearly, the current standards are the result of a specific review into the type of claring materials that have been giving most significant concerns since Grenfawr. The specific changes in this set of regulations will address those issues. Very clearly, the wider transformation of the energy performance of our homes needs to be done in a way that is safe, not just in terms of fire risk but also contributes to healthy air quality within buildings, as well as addressing the direct energy issues. I don't know if Stephen or Stephen, from the energy and the fire perspective, want to add anything. So we've made changes to the requirements so that any replacement cladding needs to meet the current standards as from 1 June, and that would include, obviously, building over 11 metres of requirement for the non-combustible materials to be used in the cladding system. However, in terms of the safety of the cladding system itself, and that would include any overcladding system that would need to go through a building warrant process, but if existing cladding has been replaced, perhaps a more efficient system, then it's got to meet the current standards. I think that that's probably the key thing from the current changes that would affect the existing buildings and their safety. What are the practical implications of new building regulation 3.28, requiring buildings to be designed to reduce the risks to occupants' health from overheating for developers, and what impact might it have on the homeowner's use of their property? The standard does introduce a requirement to mitigate the risk of some overheating in new homes and new residential buildings that are used in a similar way. We're aware, of course, that this is a lower risk in Scotland than it is in other parts of the UK, but it's important that we establish that overheating can be a risk, considered in our new build, and examine how to mitigate the likely impacts of our future climate. The initial provisions take a very simple approach, focusing on the issues of heat gain through windows and removal of heat build-up through effective ventilation. There's also an option to model the risk for more unusual or highly glazed building types. Designers will address that by limiting excessive heat gain through the location and specification of windows, and by improving the ventilation of buildings. Those measures will provide occupiers with more assurance that their homes are warm and easy to heat, but also comfortable in the summer months. What practical impact might the requirement to design and construct buildings with direct emissions heating systems to be capable of reducing the energy demands of the buildings have on the design and use of new homes? The new build heat standard in 2024, when we bring that forward, our proposal is that direct emissions heating systems will no longer be permitted in new buildings. A further consultation this summer will set out details of plans to remove gas, oil and biofu boilers as options from 2024. The 22 regulations still permit the construction of new homes with those heating systems, but they set out more challenging overall emissions and energy performance targets. The 22 standards will ask for any building with a direct emissions heating system to be designed for simple future retrofit, an installation of a zero direct emissions source and information on that option to be provided to the owner as well. From this year, wet heating systems in all new buildings should be designed to operate at lower temperatures to optimise the efficient operation of zero direct emissions systems such as heat pumps in the future. The regulations that have been laid have set the height at 11 metres, where non-combustible cladden materials will have to be used. I welcome that, that seems like a very robust approach to take. I do welcome that, but I just wonder what the rationale was for that 11 metre height to be chosen and whether that decision will be kept on the reviewer. The building regs that we are proposing are broadly in line with the proposition that was consulted on and the response of that consultation was supportive of the general approach that we are taking. I am not sure if Dr Gavin wants to add something about the origin of why 11 was considered as part of the development of the proposal that we bring forward. 11 metres came in from October 2019, in the work of the review panel over the period 2018-19. The rationale behind it was to align with firefighting from the ground. Put simply, fire service could get a jet of water on to the side of a building up to a height of 11 metres comfortably in the vast majority of situations. That is the rationale behind that. That is a trigger height. What we have done now is to make a further change to the regulation itself to require non-combustible materials above 11 metres, which is obviously going to come in on the first of June as a requirement. However, the 11 metre rationale is about firefighting from the ground. There is further consideration of UK Government and the counterparts in Wales and Northern Ireland sit around about 18 metres before the regulations kick in. We are all looking at the trigger heights and what is the right thing to do and exchanging information on that. If we have further evidence or research coming forward around the right trigger height, we will come back to that in the future. We monitor, with local authority building standards Scotland and others, the introduction of the new standard and how effective that is being in practice. I reinforce the point that the 11 metre height does not apply to the most highly combustible cladding materials, which are banned from all new build, rather than the types that are permitted up to 11 metres. Mark, do you have more questions? I wonder whether you could outline why the ban on using highly combustible metal composite material is limited to material with a thickness of up to 10 millimetres or with the gross calorific value of 35 megajoles per kilogram of more, whether you could set out again why those values were chosen? Again, on a highly technical matter, I am going to rely on officials on this occasion. I think that the fire safety review panel considered this matter in some detail. The intention was to address the metal composite materials that were used at Grenfell tower and clearly have been used on other buildings as well. We have seen the evidence from that event and also from subsequent testing that has been carried out of the extent of fire spread that can happen. We looked into the market for that type of material and we think that the overall thickness is generally thinner than 10 millimetres, so it covers the range of products that we have. I think that the important thing to note here is that, obviously, if manufacturers begin to try to game that system, we will bring forward further change. What we didn't want to do with this was to capture a wider set of products that are used in the right location and the right purpose are perfectly acceptable materials. It was just to close off if people are still using this material or if we get into a future situation where perhaps some of the corporate memory begins to fade around it that we regulate to keep it out of the market. However, if there is evidence that things are not being done properly, we will bring that back to minister for further consideration. A similar approach is being taken to the definition of the materials that we are talking about between the Scottish Government, UK, Welsh and Northern Ireland. There seems to be a degree of consensus that has emerged throughout this period of each administration taking forward reviews since Grenfell, and there seems to be a general agreement on the definition being used. That is helpful to know, and we are sure as well, since we heard from witnesses last week about concerns that manufacturers may try to gain in the system, so it is helpful to know that that will be kept under review. Finally, can we just ask a question about BS8414? We have heard concerns about the application and the use of that as a route to compliance for cladding on building. I know that that has changed now that any application to use BS8414 must be notified to the building standards division in Government, but I wonder whether that is robust enough, given the concerns around that, and whether the minister has concerns about BS8414 being used as a route to compliance going forward. Following the work of the review panel, we are satisfied that the approach that we are taking will give adequate safety. I think that the European Commission, if I recall rightly, is working with colleagues to look at alternative approaches to large-scale testing. It is an area where I suspect that it will continue to be developing practice about how fire safety tests can be used, but until that work bears fruit, the approach that we are taking on implementing a ban is the one that will give confidence to building occupiers and to the construction sector that we are taking an approach that guarantees safety. I think that the regulations now would prevent the use of BS8414 above 11 metres for housing, blocks and other relevant buildings. An applicant could come forward with an BS8414 test to support building warrant application below 11 metres, however, even that would be notified to ourselves. One thing to perhaps note as well is that, through the Building Standards Futures Board, we are developing a compliance plan approach for higher-risk buildings, and that would include the role of a compliance plan manager who is actively monitoring compliance and gathering the information during the design construction process. We are looking to improve that process and reduce the opportunity for non-compliance so that, in this case, the system that is being tested and is intended for use in the building is actually the one that ends up there. We are now going to move into wider issues, and I am going to bring in Marie McNair. Thank you. Good morning, minister. From the evidence that we took last week from a range of experts, there was a strong support obviously for the Scottish Government's single building assessment. Can you provide an update on the single building assessment pilot, please? Yes. Obviously, some of the issues were dealt with by the cabinet secretary in the statement last week. The single building assessment is intended to overcome a difference in the UK tenure systems, where Scotland does not have a single building owner. The committee will be aware that the single building assessment is about the safety of buildings and the people in them, and it includes a generic fire risk assessment, as well as the external wall appraisal. It needs to be carried out in a professional and rigorous manner, and it is only by undertaking this work that we can identify where changes to existing systems may need to be made. There is a fairly high degree of confidence that the majority of buildings will be found to be safe, so that merely conducting an assessment should not give people severe cause for anxiety. However, it is the work that needs to be undertaken in order to identify where those changes have to happen. Training of surveyors to undertake the external wall appraisals is under way, and we expect that that will improve the capacity of the sector to deliver the assessments that are necessary. Reducing the level of confidence of those who are undertaking the work is not an option, so we have to work with the sector to increase the supply of competent professionals who can undertake the work. I think that the committee will probably understand the need to work with the sector to increase capacity and to make sure that those assessments are conducted to the standard that is required. It is an important principle that the Government has ensured that those are at zero cost to home owners as well. Good morning, minister. Good morning to your officials as well. Good afternoon. We are all behind. It has been a long meeting. How many buildings in Scotland have had combustible clanding removed or remediated since the Grenfell tragedy of 2017? The committee, as I said in the last answer, will be aware that the single building assessment process is the work that needs to be undertaken to identify where we believe changes need to be made. I do not know if David wants to come in with any further assessment about numbers that have been there. I will just build off the fact of what the minister said. We do not collect data on the entire country's stock for that purpose. What we do is focus on the most high-risk buildings. We have the high-rise inventory, which is a published dataset that identifies buildings of all tenure, above 18 metres, and we continue to work to refine that. In terms of the number of buildings assessed, we are kicking off with our pilot programme. We have 26 under active consideration just now. As the cabinet secretary said last week, we are looking to expand that rapidly. In the course of the next few weeks and months, we will be writing to the balance of the expression of interest group that applied last year. That will take the number of buildings in the pilot—the most high-risk buildings, if you like—from 26 to over 100. From April next year, we will be expanding that by approximately another 100. It is a methodical approach to trying to find and work with and assess the most high-risk buildings, but we do not collect data on the whole housing stock. That is part of the work that we have under ways to try to improve the quality of the dataset, particularly the mid-rise buildings, which is where there are more unknowns. Of those 26 buildings that have been identified in the single building assessment pilot, how many have received payments to enable those assessments to then take place? Sure, I'll help you. In terms of the status of the SBA, to be consistent with what the cabinet secretary said last week, we have 26 in the pilot, we have about 16 in the review phase, and we have about 10 in a state of active survey work or completion. I think that the number of payments that we have made—I do not have the data exactly, but it is about single digits. We published our spend data last week, so we can refer you to that offline if that is helpful. Thank you. The budget of £97 million, which the UK Government has passed on to ministers, why have we seen more progress made by the department for levelling up housing communities to get that money out there then, compared to what is happening in Scotland? Throughout this, there has been, as I am afraid there quite often, a difficulty in getting clarity from the UK Government in a timely way, either about the consequentials that are available or, indeed, about other aspects of how we might have been able to work together more closely in a more collaborative way to address that entire issue. Miles Briggs will recall the frustration that the cabinet secretary expressed during the statement about the inability of not just the Scottish Government but the Welsh Government as well to successfully make the case for the UK to work constructively with us around the same table to produce a shared and coherent response to that. Some of the approaches that the UK Government is taking for England only also make use of the availability of UK-level reserved powers. There is a great deal about this entire situation, which I would say could have been a very strong case for collaborative working between the Governments within the UK. It is not for the want of trying. In terms of the work that needs to happen now, we clearly have to continue with the single building assessment in order to identify where specific changes need to be made, and not only with home owners and building owners, but with the developer community as well to ensure that that work can be funded. Is there something to add? If that is all right, one thing that is worth bearing in mind is that the English tenure system is obviously structurally fundamentally different. There is a particular inbuilt advantage to having a legal owner of the skin of a building that has made designing a programme of intervention based on a funding model a degree easier than in Scotland, where we have to transact with home owners collectively and in the existence of factors that accelerates the process of developing things a bit, but up to a point. That is not a comprehensive solution, obviously, for many, many blocks in Scotland, where there is no factor. I think that it is one of the reasons why it has been somewhat easier, but not easier, to start work in England. I heard what the cabinet secretary had to say, and the ministers repeated that today. A lot of progress has been made in Wales, which we have not seen work really begin on, specifically around what the Welsh Government is now proposing about buying out owners. There seems to be slower progress in Scotland compared to Wales, with the same devolved powers available. Finally, I wanted to ask specifically with regard to underwriting professional indemnity insurance for surveyors and fire safety assessors. Is that something that the Scottish Government would consider taking forward as well? I think that it is fair to say that there is nothing off the table at this point. One of the lessons that we have learned from working very closely as far as possible with our colleagues across the UK is that there is no one-size-fits-all and there is no perfect solution to any of those issues. There are many issues overlapping. From the UK Government's perspective, its primary intervention is in the form of a state-backed PI scheme, which we understand to continue to face some delays and difficulties. However, it is nevertheless welcomed by the sector, and we will consider it in light of what is eventually delivered. From our perspective, we must use the tools that we have as an organisation, as a body, as a devolved administration. There is nothing off the table. We have a number of options that all bear different risk profiles. That includes, for example, hiring our own fire engineers or self-insuring providers. We will evaluate all of those very rapidly, as we have moved to a new delivery model for the SBA, which is more about direct commissioning. It brings those choices to bear a bit more clearly for us. We will be thinking that through over the next few months. One of the things that we had last week from the panel last week was talking about people who were trapped in zero-value tomes and issues particularly about accessing affordable buildings insurance. Is a practical help that the Scottish Government could offer in that regard? The impact that the presence of potentially unsafe—I stress potentially unsafe, because, as I said earlier, we are confident that the assessments will find that the majority of buildings are safe, but the presence of potentially unsafe cladding has had a significant impact on people. I have met people within my own region who are in that situation, and I am sure that other members will have had that experience as well. We have, within the Government, had regular correspondence from people who are unable to move. However, I would come back to the point that that is fundamentally the reason why we need to conduct the single building assessments. The reason for this approach and the progress on that was reported in the cabinet secretary's statement. We are taking action to roll that approach out faster to more buildings. We fully expect that most buildings will be found to be safe, but where there is a risk found, then it should be remediated. The Government has always been clear that developers fundamentally have to play their part and step up to remedy buildings with unsafe cladding. Even some of the people that I have spoken to who are in this extremely difficult situation are not making the case, not to me anyway, that the taxpayer should effectively bail out a cost that they believe that the developers ought to bear. There is a general acceptance that the developer community needs to play its part in ensuring that that work takes place. I can understand the point that is made there. I suppose that if we then have developers who do not comply, what are the next steps beyond that? I think that you have probably seen us, but not probably more developers who are more compliant and quicker to move on things than others. In between that time until developers do that, is there anything that the Scottish Government can do in terms of legislation or any other matter to push that forward? Well, some of the relevant powers here are reserved to the UK Government, particularly around insurance. The regulation of insurance is not something that we are able to intervene in with devolved powers. Obviously, insurance premiums are a matter for individual insurers. We are working with the Association of British Insurers through the cladding stakeholder group, and through that forum we are very much seeking fair treatment for homeowners by the insurance industry. The answer to all of the issues is through working together to reach solutions that are going to work for people, and that is going to include insurers and lenders as well. What we believe would help people most is that where developers or others step up to carry out remediation work, insurers should trust the single building assessment process to deliver a safe building and return the market to acceptable premium levels. I was pleased to hear last week that the committee at the ABI and many of their member companies welcomed the single building assessment approach and what it could deliver. One of the things that we heard last week was calls for the single building assessment form to form the basis of a building MOT system in the creation of a central repository on information and buildings as they are constructed. Is that something that the Scottish Government would support or has views on at the moment? I will ask Stephen Gavin whether that is something that has been explored in precisely those terms. I think that the idea in MOT has been considered. What we are looking at is to create a register of safe buildings. I suppose that harnessing the data that is gathered in the single building assessments and presenting that in a format that is usable by the building owners, the factors, insurers, lenders and so on. That is certainly a development that we want to see and will develop further from the current high-rise inventory. Willie, you wanted to come in on a supplementary on the zero-valued homes. Thank you very much, convener. Patrick, it was a supplementary on Paul's question. It is about the zero valuation that we discussed last week. We think that it was based on the EWS1 standard, which we then discovered does not have any legal basis in Scotland. We think that it is not a statutory process. We were left wondering how people in Scotland can have a zero value attached to their property from a scheme that is not a regulatory standard in Scotland and potentially legally does not apply. Is there any clarification that you could offer the committee on that issue? The cladding stakeholder group meets regularly to discuss issues like that and to engage with the RICS, UK Finance, Law Society and others to explore those issues. The responsibility for the buying and selling of property needs to take a proportionate approach and only require EWS1 for blocks that fall within the guidance from the RICS. The system was put in place by the lending industry. We understand why that approach was taken. We believe that it must be applied proportionately. In Scotland, it is being applied flat by flat rather than in relation to whole blocks. Again, as a result of what David was describing earlier, the common ownership model that we have here. However, we are working with the stakeholders to try to ensure that they will accept a whole building EWS1 as an output from the single building assessment process. Thank you for that. What would happen in the circumstances where a homeowner disagrees with that zero-value assessment of their property and chooses to challenge that? As I have said, our understanding is that it does not form any legal basis in Scotland. I have had a number of conversations along those lines with UK Finance and I think that they are always at pains to try to educate us on that. I will try to convey what my understanding is. The EWS1 does not provide evaluation itself. It is a simplistic way of answering a complicated question about the risk of a building for lending purposes. At least one lender takes a nuanced view of it. Whatever the rating is, they have a process that may zero value if you get, for example, a B rating that suggests that there is combustible cladding. However, that means that it is a trigger for the lender to refer it to their specialist team to then think about and gather more information about the suitability of that block. In Scotland, for example, it will be an EWS1 based on a flat rather than the whole block, so it requires them to be a bit more responsible and to think through to gather evidence about the rest of the block. What can happen is that they can then revisit their valuations. In practical terms, no property that is classed as zero valuation is truly worth nothing. What it means is that it is just very difficult to get a standard mortgage on standard terms. It means that it is much more difficult because the risk is perceived to be much higher. The problem is that the level of risk is very difficult to price, and that is where you get compounded issues with the building's insurance industry, who have had difficulty pricing the risk for blocks. Where that feeds into it, you get some really difficult dynamics. That is where the single building assessment process where it will consider, including an EWS1, on the whole block will give you a more solid answer and then a plan can be agreed for the whole block. That is where the start of the assurance journey for UK finance and other stakeholders begins from our perspective. That is the start of getting a green light for that block, whether it is green light to start with or green light after a process of remediation. Nevertheless, are people not in the position that, at this moment, their houses and properties are valued at £0 until remediation can be carried out? We were hearing some examples of that last week that people are being told that their properties are valued at £0. As we have continued to say, the work that needs to happen in order to address the situation that people are in as the SBA process and the subsequent actions where the assessments determine that it is necessary. I have three more questions. The next one is about house builders and the Scottish Safer building Accord. What commitments have house builders made to fund remediation and mitigation works under the Scottish Safer building Accord? And what happens if a developer chooses not to sign up to the Accord? Once again, I am going to turn to officials for support and a rather deep answer to this. It is a fast-moving agenda. We have met a number of the high-level. Our approach to the Scottish Safer building Accord is to partly borrow from what the UK Government has been able to achieve with large-scale developers, but it is to draw the net wider in terms of the types of developers and the types of stakeholders. We want homeowners and UK finance and others to be part of that. That is about responding to a very powerful message by all stakeholders that they would like a more collaborative approach to solving the problem. In terms of progress that we have made, we have met around seven or eight of the leading developers. Those are the developers who have prioritised meeting the developers who have signed the UK pledge. The reason for that is to try and determine the appetite for extending their responsibilities in England to Scotland on a common basis. We felt that that was a reasonable expectation, and I think that the cabinet secretary was quite clear about that in her statement. I will keep this at a general level, but the feedback so far has been more or less universally positive about the appetite to remediate buildings on a common basis. To be clear, that is—I will borrow from the wording of the UK pledge—to remediate buildings to current building standards back 30 years. That is the standard that has been set already at an England level, and we are asking the same thing. That is our progress so far. We are working with Homes for Scotland on the mechanism for engaging not just the Homes for Scotland members, which are the 60 biggest members, but the much broader sector of smaller and medium-sized developers. We will develop a process and bring that forward in the next few months as we go. The next question is about staff in the single building assessment programme. What is the Scottish Government doing to support the training of surveyors and fire safety assessors to ensure that there is a sufficient pool of qualified staff to deliver the single building assessment programme within a reasonable timescale? As I mentioned in my opening remarks, we are working with industry to ensure that that capacity does grow to meet the demand for the assessments as they come through. I am not sure whether we have any more recent updates on the work that has been undertaken to ensure that the skills and capacity are grown to meet the demand. I do not have anything more on the RICS funding or training, Stephen. Just to say that we meet the RICS and the institution of fire engineers on a regular basis around that, and we are working with them so that the RICS has a course around the assessment of the appraisal of the external wall systems in buildings to train surveyors around that. That will help us with capacity. We know that there are quite a number of people out there who do not have up-to-date numbers, but we are already progressing through that. What we are working with the RICS on is a little bit of a bolt on to that training so that the single building assessment process is added to it so that they are aware of the expectation of how to deal with building owners and the outputs that are required and the standard that is required for the single building assessment. That is what we have in progress. We can come back to the committee with an update on that training and how it is progressing. The final question is that the committee heard at the last session for a greater day-to-day independent monitoring and assessment of building work through the use of clerk of works, something that the committee's predecessor called for. What is the Scottish Government doing to require or facilitate the use of clerks of works? I am going to turn to Stephen on that one. Perhaps Dancer, there is not so much from the point of view of clerk of works but to reiterate through the building standards system the work that we are doing through the building standards futures board. That builds on the earlier review of post-Ember schools and post-Grenffill of compliance and enforcement. The review panel was chaired by Professor John Cole. One of the key recommendations was around a compliance plan that would begin for higher-risk buildings at a pre-application stage. What we have recently consulted on is bringing into that the role of a compliance plan manager. That would be someone who would have an oversight view of compliance throughout the process. We are still working through the detail of that. What we want to do is look into trial it through some of the cladden remediation programmes. We are also working on a pilot with local authority at the moment around a new-build school campus project. That is under way, and that will give us more robustness around the compliance plan. I think that other than that in terms of clerk of works, generally in the public side of things, social housing side, clerk of works would be the norm in any case. However, the compliance plan manager role would apply for any higher-risk building regardless of its public or private ownership. Willie, you want to come in? I thank you very much. It is on that point about who ultimately will certify that a new build is compliant with all of those standards. Will it be that compliance manager or will it be the old clerk of works? Will it be the person that issues a building warrant? Who is going to look at the construction and the fabric and what is in the construction and the new build to say that it meets all the standards for fire safety and any other regulations that may apply to the construction process as well? Who will sign on the dotted line that it is compliant? The compliance plan manager would have responsibility for all aspects of compliance, not only in relation to the fire safety issues that we have talked about here but the wider compliance with building regulations. It might be worthwhile if we were to write to the committee with an update on the pilot that Stephen mentioned to let committee members know how that is developing and when we expect to be able to evaluate it more fully. Just on that point, I wondered what assessment had been made by the Government very much prompted by Dame Judith Hackett's review in England. I know that that applied to England, but it was quite substantial pointing towards building regulations not being fit for purpose. I just wondered where the Scottish Government had looked at that, whether or not we would likely see a review in Scotland and whether or not that could form a building safety bill or something like that coming forward as well. I am not aware of the suggestion that we need an entire bill on that matter, but the changes that we are bringing forward, committee members will be aware, are only the latest in a series of changes that we have brought through since Grenfill relating to the fire safety issues and further changes that we are planning on the energy side. It is more a case of continuous development in relation to existing concerns and future challenges that the building stock is going to face rather than a single big bang approach. I do not know if Stephen wants to add anything on that. I referred to the earlier review of compliance and enforcement, and the review panel concluded that the system in Scotland was not broken in the same way that Dame Judith concluded for England, but it could be improved. Our approach to that was to create the future board and the work streams within it with a focus around compliance and enforcement. A number of aspects that all contribute to that, in particular, are a workforce strategy for building standards, verifiers, digital transformation and other things. The same concerns that I had in England point towards potentially Scottish building standards needing that wider review. Would you accept that, given that is what cited to now happen in England with the Westminster bill? In terms of review, it is pretty clear that building standards are continuously under review and are continuously evolving. Ever since I have been a member of the Scottish Parliament, there have been regular updates and continuous incremental improvements to building standards. As Stephen was indicating, there are differences in the context in Scotland and England. We need to ensure that we are hearing from the widest range of stakeholders in relation to the Scottish situation and continue to develop and improve based on what the challenges and the requirements are here, rather than thinking that we need to echo actions that are being taken in England for an English context. As we agreed at the start of the meeting, we will take the next item in private, and I will now close the public part of the meeting.