 I welcome you to the 26th meeting in 2015 of the Infrastructure and Capital Investment Committee. Everyone present is reminded to switch off mobile phones as they affect the broadcasting system. As meeting papers are provided in digital format, you may see tablets being used during the meeting. Apologies for absence have been received from Siobhan McMahon. Agenda item number one is the Scottish Housing Regulator. The committee will take oral evidence on the Scottish Housing Regulator's annual report and accounts for 2014-15 from Kay Blair, chair and Michael Cameron, chief executive of the Scottish Housing Regulator. I welcome Kay and Michael and invite Kay Blair to make a short opening statement. Thank you very much, convener. Thank you committee for giving us this opportunity to present our annual report for 2014-15 and an update on our work since we last met in June. I'm pleased to report that, in the year under review, we achieved all of our objectives on time, to budget, with just over 50 dedicated members of staff and with good tenant outcomes as a result. Again, it was a very challenging but good year. Obviously, we will answer any questions that you have at the end of this short opening statement. I would like to start by talking about the engagement that we have with the customers of social housing and how it impacts on our regulations. In 2014-15, we used direct feedback from tenants to shape the focus of our work. In particular, we co-produced with tenants the landlord charter reports, which I hope many of you have seen. We used tenant feedback to direct the focus of our national analysis and we set out our programme of thematic work around the areas that customers of social housing told us matter most. It's very important for us as a regulator that we listen to all of our stakeholders. In August this year, we published the second year of information from landlords on their charter performance. We provided tenants, among others, with even better information on how their own particular landlord is performing, including two years of comparison information. Our analysis shows that in general landlords are delivering modest improvements across almost all of the indicators and, most encouragingly, it is those landlords with the most room for improvement that have actually improved the most. That is particularly what we wanted to see. We will publish our next full national analysis early in 2016. I hope that members of the committee will all be able to attend our launch event off that report in February. I believe that invitations have already gone out to you, so hopefully they are in your email box somewhere. I also hope that you have had the chance to use our comparison tool to look at the performance of particular landlords that you might be interested in. We receive very positive feedback on tenants and how empowering this is, and we are pleased that other organisations are also using the data that we publish to analyse and, most importantly, benchmark landlords' performance. Last month, and I hope that many of you will have seen this, we published the report on our national thematic inquiry into gypsy travellers. We presented this to your colleagues in the Equal Opportunities Committee, and we will be happy to tell you more about it later on in the session. After concluding our annual regulatory risk assessment in March, we published new regulation plans for 65 RSLs. We update those plans throughout the year to reflect our engagement. We also contributed to the local scrutiny plans published by Audit Scotland and set out our scrutiny in 23 councils. This June, we published information on how we assessed risk, and in November we published information on the risks, issues and challenges that we will consider in our next annual risk assessment of all social landlords. We have listened and responded to our stakeholders' feedback on where and how we can be even more transparent. I would like to highlight in particular our publication series, How We Work, explaining what we do, how we do it and using very plain English to help with clarity. We also highlighted our discussion paper approach to developing our appeals proposals. That was a new innovation for us to issue a discussion paper before the consultation. It was very helpful because we had huge and constructive engagement with all sorts of stakeholders, including tenants, landlords and funders. I would also like to highlight an important area of our work, which is our on-going dialogue with lenders throughout the UK to help to maintain confidence in the key sector. That is a key part of our work to ensure that lenders are on board, understand the sector and understand the risks. Streamlining is a regulatory requirement from landlords. That is something that we always said that we were keen to do. We appreciate that regulation has a cost and we are keen wherever possible to make it simpler, more effective and to streamline it. We have also hosted very productive round-table discussions on value for money in the sector and also risk issues and opportunities in the sector. We have continued our statutory action in two RSLs, Wellhouse and Muirhouse. I encourage you to read the recent published regulation plans for these organisations, which explain our current engagement. Good progress has been made by both landlords and yesterday we ended the statutory appointment of the special manager at Muirhouse. We will continue to support both landlords as they put right what had gone wrong in their organisations and make further improvements. We will go live with our new appeals process in April 2016. As I said, we worked with our stakeholders during September and October, and this early discussion with interested parties has allowed us to issue a consultation document that already captures many of our stakeholders' views. Formal consultation on our proposals will run until January. We remain committed to an appeals mechanism that is transparent, accessible, proportionate and cost effective and that is also balanced with the need for us to act swiftly where necessary to protect the interests of tenants and others. You may recall that we had a very interesting discussion in June about the interest savings that our vector regulation ensures. I explored this further with the lenders afterwards and reported back to you that lenders estimate our value in terms of savings and interest rate charges between £30 million to £80 million per year. If we use a conservative estimate of £40 million that would be 10 times our current annual budget and is the equivalent to 40 per cent of the sector's net surplus and provides sufficient equity to allow RSLs to build around 800 new homes each year. I will be very pleased to provide more information on any of those areas or others that you might wish to discuss today. Thank you very much, Ms Blair. Perhaps I can kick off our session and ask you to update the committee on how you have been improving communications with stakeholders. Communications is very dear to our heart and we have always said that we are listening organisation, that we want to take on board feedback and we want to help us improve our own standards. We have a continued and increased focus in our work on our language, on our tone, on our transparency and our effectiveness. We have published, as I said, an information guide on how we work and how we assess risk and more information about how we operate so that all understand what we do and how we do it. In July, we published an update on governance matters, which was a very positive document, again highlighting issues where things had gone wrong, but also highlighting how they had been addressed and how they were delivering better outcomes. I have to say personally that I get huge positive constructive feedback from the stakeholders that I meet about the value of those publications and how they use things like performance matters and governance matters to check how their own organisations are doing, what lessons they might learn from those case studies and what tools they might use to put things right in their own organisation. In terms of transparency, there has been a huge focus on communications and effective communications. We are getting much more positive feedback about tone, content, etc. You said in your reply that you have a particular focus on language and tone and that you have overall received positive feedback from stakeholders, but one of the stakeholders, the Scottish Federation of Housing Associations, has suggested that, in their view, there is still a negative tone in some of the regulator's publications, such as the governance matters publication that you mentioned, and that good practice should be highlighted more. Do you have any sympathy with that assessment, and is that something that you are continuing to work to improve? I am always keen to listen to feedback, and we will discuss that further with the SFHA. I am very disappointed by their comments, because we have put a huge focus behind our work. I think that the latest governance matters was a very positive publication. Personally, I say that I have had hugely constructive feedback about it, so I will take it on board, but I am disappointed. I think that an organisation such as SFHA could join us perhaps in doing more in sharing good practice across the sector, in encouraging good leadership across the sector, and, obviously, we discuss those issues with them and areas where we might both improve further. Do you have regular meetings with the SFHA at quite a high strategic level? Are you surprised that there still seems to be this gap in understanding between the two organisations? I am surprised, and it is something that I will raise with them. I think that it is disappointing, and perhaps I would point them to go back and look at our July publication again to see whether it accurately reflects their views. I do not want to add to your disappointment, but another stakeholder of the Glasgow and West of Scotland forum of housing associations has highlighted their concerns that they believe, and this is perhaps a more serious concern, that much harsher language is used to describe the charter performance of housing associations, even though, in their view, their performance is significantly better than that of local authorities. In fact, their evidence to the committee makes that point quite extensively. They say that the obvious consequence of such an approach is a sense that levels of genuine risk can be exaggerated in order to amass the desired number of regulation plans issued each year. There is a distinct feeling among many GWSF members that this is the case. Could you respond to those concerns? Yes, and again I will listen to that feedback and we will discuss it with the forum, but again I am disappointed by their response. I think that we are not less critical of councils, but the local authority approach is also a reflection of our shared risk assessment with our other scrutiny partners. I think that we still have the same exacting standards across the board as we seek continuous improvement in all RSLs and as we seek to raise standards further in the sector. I think that the forum clearly wants to promote the good achievements of many of its members, but we, as a regulator, are not in a competition between RSLs and local authorities. We are keen to ensure the impact of our work in improving outcomes and are particularly pleased that this year those with the most to improve on generally showed good results. Could I perhaps ask my colleague Michael to add to that? I think that to add to the issue of the potential differences in language, we reviewed the paper that the forum produced. I think that our analysis of that paper would be that it was relatively selective in what it looked at. It considered just two RSLs and a small number of councils by way of comparison. As Ke has indicated, there are differences in the final products that are produced. One is exclusively produced by the Scottish Housing Regulator and the other is a collaboration with other scrutiny bodies. We will continue to look at the language that we use to ensure that it is appropriate language and that it is consistent where it should be consistent. Do you think that the level playing field in which the regulator approaches the regulation of councils as against housing associations? Absolutely. We apply the exact same risk assessment methodology across councils and RSLs in relation to the Scottish social housing charter. That is clearly not the view of the Glasgow and West of Scotland forum of housing associations. As they say in their evidence to the committee, the evidence so far is that the SHR adopts fundamentally different approaches to the assessment of charter performance across the two sectors. The evidence is that we engage directly with only a third of all registered social landlords. At the moment, we are engaging directly with 23 out of the 32 local authorities. That reflects the reality of the nature of our risk assessment, and that is the evidence outcomes from that risk assessment. Do you think that, as a level playing field, there is consistency in your approach and in your assessment of charter performance across both sectors? There are no serious areas for improvement then? There are areas for improvement in terms of lab and lodge performance against the charter. We will have a consistent approach to our assessment of risk in relation to the charter this year. As we have done last year, in November, we published the basis on which we will undertake that risk assessment, the key areas that we will focus on. It sets out very clearly how we will go about that risk assessment in relation to both RSLs and local authorities. Moving on to the appeals process, Ms Blair, you said that the appeals process is on track to be launched in April 2016. Can you update the committee with the details of the work that you have been undertaking to develop this appeals mechanism and what are the main aspects of the process? As I said before, we took a novel approach for us in terms of having a discussion paper. We engaged with all our stakeholders, tenant organisations, SFHAs and the forum to make sure that we understood their perspective and that we could take their views into account. We are very keen in any appeals process to be transparent, to be accessible, to be proportionate and cost effective. We need to strike the right balance so that we ensure that we are still effective as a regulator. Appeals cannot compromise our ability to use evidence-based judgment to make regulatory decisions or hamper our ability to intervene should tenants' interests be compromised. We are also aware of how keen lenders are to make sure that we can act appropriately and effectively so that they can maintain their confidence. In terms of the discussion and consultation, we proposed a two-stage process. There will be an informal review process where anybody can approach us for an informal review. There will be a much more formal appeals process looking at how far we can possibly go within the current legislation. We have engaged extensively. We have issued the discussion paper and at the moment the consultation paper, which ends in January. I am sure that there will be different views, but we think that we have the right balance in the appeals process. We are being transparent. We are also very much looking at independent input into this and to see how we can do that, which is really important for an appeals process. Obviously, we are bound by the legislation in terms of what we can do. You say that you are looking to have independent input into the process, but the final decision of the appeal would be for the board members to make. Of course, the SFHA has said that for the appeal to be truly independent of the regulator, legislative change would be required. Do you have a view on that? That is something— Part from the statement of the obvious. Yes. It is not within our powers that we would have to go back to the legislation and it would be up to government. Do you have a view on whether the legislation should be changed in order to make the appeals process more independent of the regulator? I think that what we have proposed is a good balance and I think that it should be given time to work and we should evaluate its effectiveness, but I think that it will be a good process and it will have independent input. The SFHA and the GWSF have indicated that they feel that the scope of the appeals mechanism should be broadened to include regulation plans and some of the non-statutory recommendations made by the regulator to RSLs. Do you have a view on that? Yes, we do. Michael, would you like to comment on that? Yes. I think that what is important is that there is proportionality in the appeals process. It is important to remember that the regulation plans are a statement of our regulatory judgment and a statement of the engagement that we are going to have, where any of the engagement that we are going to have falls within the parameters of the appeal process. Obviously, that engagement would be appealable by the particular landlord. The regulation plans themselves will be subject to the review process that we have set out as the first stage in the appeal framework. We think that that is a reasonable balance and a proportionate approach to take. I want to move on and ask Mike MacKenzie to answer some questions. The area that I wanted to explore first was about concerning the model entitlements, payments and benefits policy. I know that, with pleasure, some progress has been made since our last meeting of the committee. I am absolutely welcome that, but I understand my concerns given that I represent the islands of the islands, there are continuing problems in rural areas. I wonder if you can see a way forward to ease the concerns of rural housing associations, members and employees. We were pleased to endorse the model policy that was produced by the SFHA. We think that it provides a good policy framework for those landlords to adopt, and it also includes a level of flexibility for individual landlords within that. We have been clear that we are a landlord who adopts the model policy and applies that model policy in practice. They should have confidence that they would be able to comply with regulatory standards. Of course, it is open to any landlord to adopt a policy with appropriate amendments or to adopt an entirely different policy that they feel is appropriate to their circumstances. We made this clear to all landlords, emphasising the flexibility that those landlords have. That lets them ensure that the policy is appropriate to their local circumstances. It is, of course, the responsibility of each RSL to ensure that whatever policy they adopt enables them to comply with regulatory standards. We will not routinely engage with landlords on their policy choices in that regard—that is a matter for them—and we will only engage with landlords in that area if we have concerns or become aware of actual improper or potentially improper conduct. That is all very reassuring. Do you accept the nature of the problem in rural areas? Can you offer any guidance for rural housing associations in terms of how they ought to deal with the problem? Do you understand the problem and can you offer any wisdom as to how they might best deal with it? We always have. From the outset, we were very clear that we felt that there was a need for flexibility, particularly in rural and island communities. We were keen to ensure that that was built in to any model policy that was developed. We have always been clear that to take a compliance and explain approach gives flexibility to individual landlords to take account of local circumstances. That is what we encourage landlords to do, to ensure that their approach to the policy and adoption of the policy is such that it gives them the necessary flexibilities to take account of their local circumstances and that they are therefore able to demonstrate that by applying the policy that they adopt, that enables them to achieve regulatory standards. Can I just paint a real-life scenario for you and ask how you would react to that? Assuming that I was a member or an employee of a housing association and you received a complaint, and the complaint centred about my use of a contractor to build an extension to my home and a contractor that also worked for the housing association, and let me say that just as any normal person would, I'd engaged an architect to design the extension and he'd got a 10 planning consent and a building warrant and then asked him to put it out to tender for me and three, let's say, three contractors tendered and the one that I chose happened to be £10,000 cheaper than the other two, but that contractor also worked for the housing association with which I was associated and a complaint was made here on the basis that I used that contractor. How would you deal with that scenario? In the first instance, we'd asked the association itself to look at the situation and to satisfy itself that there was no conflict of interest and that its own policies and procedures weren't compromised in terms of those circumstances, so that would be our first response and then depending on what came out of that we'd then determined whether there was any further need for us to engage with that association. Would you accept that the situation I've described is part and parcel of the nature of the problem and that as a regulator you might be expected to be in a position to give very clear guidance for housing associations faced with this kind of predicament and how they deal with that kind of situation? The objective of the model policy is to give associations a framework within which they can manage those very types of situations and I think that the framework gives a level of guidance in those circumstances. Very often the circumstances are very particular and individual and therefore it's difficult to be absolutely definitive in those circumstances that you've described. For example, it might depend very much on the level of seniority of the officer, how involved that officer may have been in the appointment of the contractor, the award of work to the contractor, so there are many factors that would have to be taken account in determining whether it presented a significant conflict of interest and therefore a conflict of interest that needed to be managed in a particular way by the landlord itself, but it's about ensuring that there is flexibility to deal with the individual circumstances in a way that still protects the reputation of the landlord. I understand the generality of your language but you'll forgive me, convener, if I say that I'm still as confused as I was at the start as to how housing associations should take the right decision with respect to the type of situation that I've described, so I'll move on to my next area of questioning. By matters for Mr Mackenzie. It's difficult looking at general scenarios. There can be a lot of complexity and subtlety in this and, as I say, depending on exactly who the individual is, their nature of engagement with the contractor through the association would go a long way to determining whether there was a substantial conflict of interest, but, as we've always said, we feel that there needs to be sufficient flexibility to enable landlords, particularly in rural and island areas where there may be a very limited market to access for staff and governing body members. There has to be a degree of flexibility in there, so it's about ensuring that flexibility while continuing to manage appropriately the conflicts of interest that can arise. Thank you, convener. I'm out with the committee. I think I'll engage further with Mr Cameron and Ms Blair to see if we can... Perhaps I could just add one thing in that the SFHA have agreed that they will let this model policy run per year and then they will look at it and review it and evaluate its effectiveness and look at areas or potential areas to strengthen, so they will be discussing that with us after this year's progress. Yes, and I accept that that's perfectly reasonable. I did note at the start that some progress has been made. What I'm putting to you is that there are remaining issues of which you're aware, and I would hope that, as a regulator, you'd be able to provide some clear guidance, even using some case study guidance, if you like, so that that would help housing associations to guide them in this admittedly tricky area. I'll move on, I think, to my next question. I don't want to take up a new time with that issue. How do you respond to the concerns raised by the GWSF around the high-cost housing associations that can face in dealing with the consequences of regulatory engagements? What steps in this, again, was an issue that came up at our previous meeting, are you taking to increase the pool of Scottish-based consultants? When I look at what it is that housing associations do, they build houses, they rent them out, it's hardly rocket science. I just cannot understand why there shouldn't be a reasonable pool of suitable consultants within Scotland to deal with the issues that you're asking them to deal with. I think that that's a very relevant question, and I think that it's something that we've been looking at. We're very aware that, when special managers go into an organisation, that it is a cost, but it is a cost because there is a need for expertise and there is a need for certain skills. We are very keen to see if we can widen the base of those that are used. We are just in the middle of setting up a selection panel, which we will make publicly available, which will show contractors how they work, how they charge and be open for others to use, but we're keen that we get the right skills and expertise to do quite complex jobs at times. I know that it's quite a simplistic business model, but there is increasing complexity in most housing associations. Michael, do you want to add anything on that? I think that, to say on the cost, we will obviously always work to minimise any cost impact of statutory intervention, but there is, as somebody involved in one of the two organisations concerned, a cost of putting things right. A key consideration when we're appointing a special manager is to ensure that we regain the confidence of lenders in those organisations. That goes a long way to help to prevent the imposition of potentially huge costs on the association that could arise from a lender deciding to reprice. Preventing repricing can often very quickly repay the costs of any intervention, and over the lifetime of a typical loan could save the organisation millions. That one-off investment in competent management and effective governance can avoid massive future costs, and that has to be borne in mind. I think that it's also worth bearing in mind that there is the potential for us to use other statutory powers that are perhaps more draconian but would come at less costs, such as a more immediate transfer of engagements to another housing association. Certainly, in terms of the work that we're doing in the two statutory interventions at the moment, we will do full lessons learned at the conclusion of those engagements. One of the things that we'll be looking at is whether there were more cost-effective ways for us to achieve the desired outcome of protecting the interests of tenants. I don't feel that you're quite addressing the nub of my question. The nub of my question is that surely we have the expertise of both the financial and the contracting, house building, house management expertise in Scotland. It beggars belief that we don't have that required expertise in Scotland, and therefore why we seem to have to go forth of Scotland in order to find people with that relevant expertise. I accept that there are always going to be costs involved. I accept that those interventions and the helpful assistance provided by consultants can help to save future costs. What I'm sterling to accept is that there is nobody or very few people in Scotland capable of providing the kind of consultancy guidance that you seek to provide for housing associations that need that help. Why on earth is it? The exercise that we will be doing around establishing a selection panel will be open to all potential special managers, regardless of their nationality or their base, so there is the potential that that will indeed increase the number of people who may be Scottish based. It's not our objective to target one particular nationality. I appreciate what we're doing as we're conducting this exercise to ensure that we have a panel of appropriately skilled and experienced people to draw on. Do you think that perhaps the expertise does exist in Scotland, but for some reason they're reluctant to get involved? Is that potentially the problem? We have used people who are Scottish based and there are people who do that. There are people who associations use in terms of improvements to governance, financial management that are Scottish based. In relation to special managers, I think that it's a particular skill set that needed to come into a troubled organisation, stabilise it and turn it around quickly. That's maybe a bit more of a narrow field at the moment. The selection panel, we hope, will ensure that we have a broader field of individuals with the right skills and experience that we can draw on. We are subject to the market here, but I would really hope that by publicising the selection panel and, hopefully, working with other representative bodies and taking on board their suggestions that we do widen the pool because that would make it more competitive if we have a wider pool. We'd be very keen to do that, but, at the same time, we still have to have confidence that we have the skills and expertise to deliver. I share your views about the potential benefits of widening the pool, given caveats around making sure that they're going to do a good job for tenants. I hope that, next time that we meet, we'll be able to report a good news story in some improvement. I want to ask a few questions about the information that you're getting. First, what did the first analysis of all charter data show you about landlord's achievements in relation to the charter, and how does it compare with the most recent charter returns? I think that we have very favourably satisfaction rates from tenants of 88 per cent, which I think is enormously good in terms of the services that are being delivered across Scotland. I think that we've done a huge piece of work from our staff, who are very expert on this now. We're finding that RSLs and local authorities find it easy to deal with us, find it easy to input the information. What's the biggest impact? What are we most pleased about? Tenants say that the fact that they're kept informed by their landlord much more so now than before, that they're engaged with, that the quality of homes is good, that it's very important to have safe, secure neighbourhoods, that it's very important to have warm, well-insulated homes. I think that good neighbourhood management has come out very clearly as something that tenants are satisfied with. I think that, again, there are other opportunities to participate for tenants. We're finding that tenants are very much using the information to go back to the landlord and say that they're doing well in this area, but maybe they could be doing better in another area. They're using it to check the information with their peers. Our comparison tool allows tenants to go in and choose other organisations and see how their landlord is performing and benchmarking. What we've seen is modest improvements this year across the board. Those that were the worst performing are making the best improvements, so that's really good. Mr Johnston, we will be doing an analysis, which we'll be publishing in January. That's the event that I've invited you all to talk about the charter and our latest analysis of what it's doing, but we think it's doing the job that the Government wanted it to do. There will be a review of it, I think it's 2017, to evaluate its effectiveness and to look at other areas that we might look at. We're keen to look at areas like value for money in terms of what does the charter tell us about value for money and are there any other indicators around that that would be helpful for the customers of social housing? I think that it's been a great piece of work. It's been a huge piece of work for our organisation, but it's really good in terms of the information and the power that it's given tenants and others. You said about the positive feedback from tenants, but particularly have you had any feedback from landlords, tenants or service users about the usefulness of the annual charter reports? Very much. We're keen to take on board all our stakeholders in terms of what's this giving you. We get landlords saying that it's really good because we're able to be consistent in our approach, we're able to benchmark the information and we're able to use it to drive standards up further, so that's really good. We've had very good feedback from the forum, from SFHA about what it's doing, very good feedback from tenant organisations in terms of how they use it, how they communicate now with their landlord, how emboldened they feel about asking their landlord some difficult questions, but with that information and evidence behind them, so I think that's really good. Have the reports informed you about any areas where you think there's further improvement needed? Yes, they do, and they highlight areas around quality standards, around fuel poverty, there are areas there that we can take on board. We also, in terms of looking at the information, we check it against the information that we get from the tenant panel, we have a superb tenant panel now with over 400 people on it, and they feedback in terms of what's important, very much highlighting quality repair service, the speed of maintenance, these areas. Each individual landlord is able to assess its own particular charter data and look at areas for improvement. The final thing that I wanted to ask is, how has the information in the charter reports been used to develop the risk assessment of RSLs in local authorities? Very much, it's a really key area of our business and our risk assessment. What we do basically is take financial health, which is absolutely critical, making sure that all RSLs are well run and actually are financially healthy. The second area that we look at is governance because it's so important in terms of having effective boards, effective governance in these organisations, but we use the charter as a really key input into that to make sure that the information that we're getting is aligned, to make sure that we're looking at risks, we're looking at how the sector is managing risk, mitigating risk, so it's a very key component. I think that it will grow. We've said in this year's corporate plan that we will look at how we can get more information from the charter because it's so important. It's fantastic data. Good morning. I've got a few different areas to ask on, but the first one is around the affordable rents. You have called for landlords to consider how to keep tenants' rents affordable. Can you comment on the response to that and how you think things might develop in the future? Yes. We're very conscious that for most tenants their incomes fell quite dramatically during the economic downturn, as was the case across the board. While there have been some indications of improvements in that regard, it's almost certainly the case that for most families it will take some time to get back to the kind of levels that incomes were at before the crash. Of course, we're only too aware of the challenges that are faced by those who depend on benefits. Rents being set in a way that helps tenants to keep paying their rent over the longer term is increasingly important. It's a hugely complex area. Many factors have to be taken into account in terms of determining rent levels and determining affordability of rent. Not all landlords are starting from the same position. Some will have a level of headroom in their rents that would enable them to increase and remain affordable. There's no national rent policy in Scotland. Of course, tenants could make decisions with their landlord that increase rents to ensure that there's appropriate investment in new homes and in their own homes and services. The majority of RSL's business plans show that they will continue to rely on rent increases above inflation, so real-term rent increases. We'll monitor that carefully. For two key reasons, the first being what will the impact of that be on tenants' continued ability to pay rent? Recognising that, if tenants aren't in a position to pay rent, that not only affects them as tenants but reduces their revenue stream into landlords. At a time of very low inflation, that can be a challenge for landlords, too. We're very conscious that there are challenges for landlords in balancing the competing demands of maintaining rents at a level that tenants can afford to pay, while having a financially healthy position that lets them deal with the risks that there are and continue to invest in services for their local communities. That's not an easy task. We're calling on landlords to place tenants' ability to pay at the heart of their decisions on rent settings. Alongside that, we need to ensure that they rigorously pursue cost control and the delivery and achievement of value for money. Those two things go hand in hand. You mentioned tenants who are reliant on benefits. Have you done any substantive work on how the welfare reform is going through Westminster at the moment? What might impact on housing associations in particular? We did a significant piece of work in the first year of the first set of major changes. We saw some changes in arrears levels that landlords were experiencing. To a large degree, those were then mitigated by the Scottish Government's approach to the use of discretionary housing payments. It is still quite early to see the potential impacts of some of the other changes. We are aware that some of the impacts of the sanctions regime is coming through from some landlords about the challenges that they are presenting for individual tenants. We are very conscious that the roll-out of universal credit will present a range of issues for landlords to manage. That point is probably too early to say that there has been a definite impact of the changes that have already been brought in. If I could move on to the area of significant performance failures in the report. There were six significant performance failures reported to you in 2014-15. I wonder if you could give us an indication of the outcomes of those reports and how the lessons learned and the process will be used to the benefit of tenants and service users in the future. Absolutely. During 2014-15, we had six reports made to us by tenants who had concerns that there were significant performance failures. The first thing that we do is assess whether they come into the category of a significant performance failure. Of those six, we found that two were indeed significant performance failures. During the course of this year, since April, we have had a further one report that we found to be a significant performance failure. For those situations where we were not able to determine that they were a significant performance failure, we worked with the tenants involved to assist them to take their case to the Scottish Public Service Ombudsman who would deal with them as a complaint in those circumstances. I should also say that last year, we reviewed our fact sheet for tenants to aid the clarity of what would constitute a significant performance failure and how they would bring that forward, and the difference between a significant performance failure and a complaint, which would be dealt with by the Ombudsman. We looked to get the lessons learned out of significant performance failures, disseminated as widely as we possibly can, and we published the outcomes of those. We looked to the individual landlord's concern to take forward the improvement actions that are necessary as a consequence of those, and, as I said, then communicate more broadly where there may be wider lessons to be learned. Thank you very much. If I could move on to the final area. It was something that you mentioned in your opening remarks about the thematic inquiries. I wonder if you could expand on the inquiry into gypsy travellers and just let us know how the findings of that are being taken forward? Absolutely. Thematic inquiries are a really key piece of our work where we are able to take a subject and actually drill down into it, so it is very important to feed into our risk assessment. It is very important that we make contact with gypsy travellers. I am pleased to say that, on our tenant panel, we have over 40 gypsy travellers, and they are quite difficult—I am sure that you know—client groups to get hold of sometimes, so we are really quite proud of that. Gypsy travellers thematic was really good in terms of highlighting where there were serious weaknesses in terms of the sites, in terms of repairs, and in terms of the standards. We have made various recommendations that have been endorsed by the housing minister, looking at structured rent policy setting, looking at good standards and understanding the particular needs of gypsy travellers. We reported, as I said, to one of your other committees on this very important piece of work and we will obviously make sure that the recommendations are going to be implemented, so keep an eye on that. Maybe I could just talk about some of the other thematics that we are looking at. Again, they are very much driven by tenant feedback in terms of where they would like us to concentrate. We are looking at one to look at how open and accessible landlords really are. Are they really engaging well with their tenants? Are they listening to them? We are looking at rent consultations. How do they do this? How involved are the tenants in this? We are looking at customer standards. How can these be improved? We are looking at complaints policies. How are they operated within the organisations? Are they delivering? We are looking at gas safety, again, an area that we are very keen to explore. Equalities, again, another one, and factoring because, obviously, factored owners are key in terms of service users. We are drilling down into all of these. I have to say that I am very proud of this programme because we do not have that many people and we do not have that big a budget. I think that we do quite a lot in terms of this added value work, which is incredibly important to our regulatory risk assessments. Thank you. That was very welcome and very interesting to hear about the gas safety in particular, given that we have just had carbon monoxide awareness week noted by the Parliament. If I could just go back to the gypsy travellers for a moment. In speaking to DWP staff during my other committee work in the welfare reform committee, the DWP has not included any gypsy travellers in the universal credit pilot roll-outs because they consider them to be homeless. I just wondered if that was something you would agree with in terms of their regard as being homeless in that respect. I have not heard them referred to in that way. It is certainly not a way that we would describe gypsy travellers. I am not aware of it as a way that they would be generally referred to by the providers of services to gypsy travellers. We are very clear that they have a lifestyle that is specific to them. I do not think that it fits the normal definitions of homelessness that are set out in statute, so it is not a term that we would use in that regard. I think that caveat by saying that that was in discussion with them as to what types of groups were actually included in the universal credit. That was what was told to me. It may not be the situation, but I would have been concerned if that had been the case that they were considered in that area. Thank you very much. Are there any other thematic inquiries that are planned by you? Not at the moment. We have quite a big programme already in terms of looking at the ones that I have just listed, so we will work through those. Obviously, if something comes up during the course of the year, we will look at that. We will use the annual risk assessment and the analysis of the charter to identify areas that might suit a thematic inquiry. We would also engage with our various stakeholders, particularly the different tenant groups that we engage with, to test with them whether that analysis would fit with their own priorities of areas that could benefit from the in-depth scrutiny that we are able to do. That programme will evolve over time in response to issues that emerge. Can I ask about regulation plans? The annual report notes that regulation plans were published for around 40 per cent of all RSLs, which seems to be a really high number, a relatively high proportion. Is that as a consequence of your intention to work your way around all RSLs? If not, why is the number so big? First, I am not necessarily sure. I share the assessment that it is a large number. We do not engage beyond normal routine regulatory submissions with about two-thirds of all RSLs, so we concentrate our regulatory attention where it is needed. The outcome of the annual risk assessment is what determines how many regulation plans we have, so it is not an exercise in a cycle of engagements with each RSL. That is not how we operate. We look at every year at the information and intelligence that we gather in to determine the risks that each landlord may face and engage with them in response to those risks. That is very much what drives the level of engagement and the number of regulation plans that we have. About 40 per cent is quite a high number in terms of the numbers of RSLs that you require to publish regulation plans for. Do you not accept that? There are a number of factors that need to be borne in mind when you look at the number in levels. The first one is that this is in response to risk. We all agree that the operating context for RSLs is probably more challenging than it has ever been. That necessitates us to get an appropriate level of assurance from a number of landlords because the risk environment has changed. Having a regulation plan is not an assessment of performance. For example, we will engage in a regulation plan with some of the best-performing organisations, but because they are systemically important, they have large development programmes, a significant level of borrowing or a number of other reasons that might necessitate them for us to run a wee bit closer to them so that we properly understand their business model and can understand the risks that might be there. That is another factor to bear in mind. Given all that, I would say that the level of engagement that we have is appropriate. Would you anticipate that the number of regulation plans to be reducing over time, given the fact that you are now much more knowledgeable about each individual RSL on their circumstances? I think that that will depend on the risks. We are a risk-based regulator, so we will assess the risks. If there are new or increasing risks, there is the potential that we will have to have higher levels of engagement with landlords. Equally, if the environment becomes less risky or more benign, I would expect to see a reduction in the level of regulation plans, which is very much driven by that risk assessment. What is your judgment or what is your forecast for the forthcoming year? I think that there are still a significant number of risks in the environment. We have set those out in a publication that we put into the public domain last month. The range of risks that we feel are still relevant. Some of those might increase, some might decrease over time. What we do through the course of the year is that, as we engage with landlords, we may very well change our engagement level in response to both changing risks and the assurance that we can get from individual landlords. It is not a static thing. At the moment, I do not see immediate prospects for a significant reduction in the risk levels in the RSL sector, so I would not necessarily anticipate any dramatic change in the annual risk assessment that we are now undertaking. However, we will do that in a very agile way to ensure that, should there be any significant changes in that risk environment, we can respond to that. I think that it is very difficult to put a number at this stage because, as Michael has said, it is very much to do with our very comprehensive risk analysis. There are lots of increasing risks around pension funding and technical issues such as FRS 102, so there are lots of issues that are coming. There is more complexity in the sector and we have to be absolutely on top of that to ensure that tenants' assets and interests are protected. That is our sole statutory objective. I would love to be able to sit here and say that next year we will only have 20 because the risks have subsided. I do not think that that will be the case. We are in a very difficult economic environment. We are very keen in the regulation plans to work with RSLs to be agile and to lower or heighten the criteria as we see fit at the time. We have heard some concerns expressed from housing associations that they are unduly risk averse. Particularly with regard to innovative practices that housing associations would like to take forward where they feel that there can be huge benefits gained but that their risk averse approach mitigates against that. How do you get that balance right? I think that that is quite disappointing again because I think that in every situation we look at the business case, we look at the innovation. There is good innovation and sometimes there is bad innovation, so you have got to make sure that what is being proposed is stable, is safe and is going to deliver good outcomes. I think that we look on every individual case on its own merits, but we would always welcome good innovation that delivers for tenants. I am keen again to speak to any RSL that has this view to discuss it with them, but I do not think that we are just keen to make sure that the sector remains financially healthy and that it remains stable and that it attracts good lending rates. I hope that that answers your question. Michael, anything? I have said it before, and perhaps at this committee I have said it before. I think that we can all agree that RSLs have been among some of the most innovative organisations operating in Scotland as social enterprises. They have been doing that in a context in which they have been regulated in one form or another for over 30 years. You will not be surprised that I do not buy the assertion that good regulation inhibits good innovation. I know that there are organisations out there who are doing incredibly innovative stuff while being effectively regulated. That is very much about us ensuring that the interests of tenants and other services users are protected and enhanced in terms of any innovation that comes forward. We will regularly engage with landlords who are bringing forward innovative proposals and then take those innovative proposals into practice. As regulator, you have had to use your statutory intervention powers in two RSLs in the last year, the Mure Housing Association and the Wellhouse Housing Association. Can you give us an update on outcomes from that process? It is probably worth saying or restating again that statutory intervention is always a last resort for us, and we will only intervene if we cannot get the necessary assurance or improvements in any other way. Both of those interventions began last December. They were on two different bases. One was in relation to governance concerns and the other was in relation to financial health concerns. You may be aware that—and Cary referenced that in her opening remarks—we published a revised regulation plan yesterday for Mure Housing Association. That indicates that we have been able to end the statutory appointment of the manager. We are keeping the statutory appointees to the board just for a bit longer to help the organisation to address a range of governance issues and improvements, but that is a good outcome. It reflects well on the governing body of Mure House, which has worked constructively with the statutory manager to address its shortcomings. I think that there is good news across both of the statutory interventions. They are successfully resolving the issues that were identified at the outset. We will continue with the statutory appointment for a period at Wellhouse Housing Association as there are a number of things still to work through there, but we will look to review that in the new year. I would absolutely encourage the committee to engage directly with the two associations to understand their experience of the intervention. We will also publish a full report on each of those two cases when the interventions have been concluded. Do you anticipate using those powers on a regular or frequent basis? We have only ever used those powers in those two organisations in the four years of our existence. It is difficult to anticipate the circumstances in which those powers arise. In terms of our current assessment of organisations, there is nothing that would immediately tell us that we have to intervene in this way in other organisations. It would very much be in response to specific risks and issues as they arose that we would make use of those powers. Obviously, the role of regulator is to safeguard and promote the interests of tenants. You said that on a number of occasions. Can you, in order to aid the committee's understanding of the statutory intervention powers that have been involved in the case of those two housing associations? What do you think the consequences would have been for tenants had you not intervened in this way? I think that the consequences would have been different in each of the individual organisations because, as I said, there were very different things. Ultimately, it was very clear to us that tenants' interests were at risk. In one of them, there was a very serious risk of insolvency, which would have immediately put tenants' security of tenure at risk. That is why we felt it appropriate to move quickly to intervene in that one with those very significant powers being used. In the other organisation, again, the concern was that the range of governance and management weaknesses were such that, if they were not addressed quickly, they would then very quickly start to impact on tenants' interests and on the broader reputation of the RSL sector. The final question is on the revised regulatory guidance that you have developed. Can you provide further details on that? In particular, could you comment on how it addresses the issue of proportionality, which had been a concern for stakeholders? Absolutely. Again, we took a great deal of time to engage with stakeholders around this to get feedback about what would be helpful, where we could clarify issues, where we could give greater understanding and information. At the end of this, in August, we produced revised regulatory guidance and it streamlined a lot of the information requirements. It has made it a lot clearer. We have had strong endorsement from the sector about how useful it is now. Clearly, what we are doing now is looking to see how implementation goes on that. As I said often, I am keen that wherever we can, we streamline what we do and make it easier for landlords to use and understand the information. It has been a good step forward. It has been welcomed by the sector, but, again, we will keep an eye on it to look if there are any further improvements, but I think that it has been a good initiative. Have you had feedback from stakeholders? Very much so and very positive feedback about how it is working. I think that is a reflection of how much we have engaged with people before we produced this to make sure that it was what was needed and required, but we met our requirements as well. I have a whole series of questions about finance. My general question is, how would you assess the financial health of RSLs? I think that the financial health is good. I think that there are healthy surpluses. I think that they are in a strong cash position. In terms of the lending community, the social housing sector is viewed very positively. I think that there is lots of input from the lending community. They are very keen to get involved. They are very keen to look at our regulatory judgments and guidance and use that as confidence and comfort. I talked about the work that we followed up in terms of looking at how much was saved in the sector because of good regulation, but it is not just about monetary value. It is about how the social housing sector is viewed in Scotland and how important it is. In terms of financial health, it is a good story to tell. Long may that remain? Can I raise the issue then of threats? Clearly, it is good to hear that there is a very positive story. Michael mentioned earlier that there is one case where there is a risk of insolvency. I do not know if you are able to talk about any of the details of that, or in general, if you cannot. In general, how would a housing association end up being in a position that it effectively could go bust? In our experience and we have had to manage a number of organisations that have got close to real financial difficulty, it tends not to be necessarily the wider environment that creates the problems. It tends to be decision making within the organisation itself. Poor decision making without the appropriate governance oversight has tended to take them to a place where it puts their finances in jeopardy. That has been a significant finding from a range of governance matters. Publications have put out that it tends to be specific to the organisation. It would be chronic poor management, weakness and boards, lack of leadership by chief executive. It can be all those factors or a lack of appreciation of what they might be getting into, a lack of experience in managing new ventures, new initiatives that mean that they put the organisation at risk, often without being aware that that is what they are doing. It tends to be the organisational specific issues that have resulted in financial challenges rather than more global ones. We are seeing more challenges coming from the area that came mentioned earlier, the introduction of financial reporting standard 102, which has the potential to significantly change the reported financial position of a number of landlords. Pension liabilities and deficits are something that we have been concerned about for a number of years, although we are starting to hear some encouraging noises in that regard. The type of challenges that will come to landlords through welfare reform and the changes that are coming there are more systemic challenges that are presenting all the landlords and that they need to have a very clear eye to managing their on-going financial health. Strongest organisations have problems with pensions. Many large organisations have massive pension deficits, and that is not necessarily because it has poorly managed us just the nature of the beast. That is often a legacy issue of a pension scheme that has been initiated a number of years previously. What is critical is how they then go on and manage that situation, manage the liabilities and look to limit future liabilities. In the private sector, there is always a concern about interest rates. Clearly, you would probably need to be the brand sear to work out what the interest rate is going to be next year. The Bank of England has talked about a rise for some time, and as you know, it has stayed fairly stable. Would a dramatic change in the interest rates be a shock to the sector in the emotional sense of the word but also in terms of the effect on the balance sheet? It would be. Landlords at the moment are enjoying historically low interest rates, and many of them guard those interest rates very dearly for obvious reasons. That is why it is critically important that landlords ensure that they have a good relationship with their lender, that they are managing their lending covenants effectively. A significant increase in interest rates would have a dramatic impact on the surplus position that Kay mentioned. That is something that we encourage landlords to look at in terms of their financial planning and their business planning, to run scenarios, to stress test their business plans to ensure that they understand what type of change in that environment would lead to difficulties for them and therefore that they can start to put in place actions to mitigate the impact of any such systemic shock. The other issue that I wanted to raise, and I was very interested to read about the new proposals that are going on with the Wheatley housing group, the 250 million ae rated public listed bond. That is very interesting, but it could just go through the various decision making chains on that. As you know, the Scottish Government itself only had marginal powers of finance until the Smith commission proposals, but that is a real change. First, I noticed that it said that your organisation approved that. Presumably, the Scottish Government itself had a decision making role as well. If that is the case, what potential is there for every housing association getting that type of bond? That is a fantastic opportunity to increase the supply of affordable housing. Wheatley housing issued a bond to the tune of 250 million. It then went fairly quickly for a further tap of 50 million quite quickly after that. Currently, it has a known name bond to the value of £300 million. The Scottish Government, as I understand it, supported Wheatley in its endeavour and part of the package that is related to the bond that also involved a level of grant funding from the Scottish Government. Our role in the bond is twofold. First, we met the relevant ratings agencies that are instrumental in ensuring that an organisation is in a position to go to the capital markets. We met them to help them to understand our approach to regulation and what that would mean in terms of confidence that investors can take in the role that we have with the Wheatley housing group and other social landlords in Scotland. The consent that we are involved in is the consent that is required to dispose of assets by standard security involved in any lending. That followed a full consideration of the business case that was presented to us by the Wheatley housing group. In terms of capacity to use this as a model more widely, I think that there are substantial costs and significant preparation involved in going to market for a known named bond, and that may mean that it could only be the larger organisations that are in a position to do that. It may not be practical for smaller organisations to take that particular road. In very crude terms, where would you say that the cut-off point is in terms of what would the minimum turnover or scale of a housing association be in order to be eligible effectively for this bond funding? I think that there is a particular number that you would put on that. It would depend on a number of things, and one of the things that I was going to say is that there are some other routes that landlords can take. For example, last year, Link Group had a private placement for £45 million, and that for them was a more appropriate and manageable approach to take. There are a number of bond aggregators operating in Scotland, the Housing Finance Corporation, GB, Social Housing, which enables smaller organisations to access capital markets through those aggregators. There are a number of different routes and options that are open, and it is also worth saying that we are continuing to see a relatively healthy market in the traditional lending arena. There are options that are open to social landlords. The other issue was raised. I started the questions about threats and risks. Are there any greater risks coming down this route? There may be different risks. One of the challenges is around treasurer management and a bond where you have multiple investors rather than you engaging directly with one lender and having a clear relationship. There can be treasurer management challenges, a bond also results in you getting that lump sum early on and you then need to manage that effectively. Traditional lending, you draw the money down when and as you need it. There are a number of different challenges and risks in this model, but are there necessarily greater risks? I suppose that it goes back to the earlier point about how strong your board is and how strong your chief exec is. If this is more complex and you have a weaker organisation, then that might impact on it. The other thing that I was going to say is that I do not have time, convener, to talk about the wider economic issues, because you were mentioning, of course, that it is double A rated. I was going to make the perhaps larger point that Lehman Brothers in America had triple A rated collateralised bond obligations, and that started the world of not economic crisis. It is like who guards the guards in terms of credit agency. I would make that general point to be a bit careful about how we treat triple A or double A rated bonds, but that is perhaps another point for another day. I just asked on the, you said that there was a significant level of cost attached to going down this route for the larger RIS cells. That is what you said, is that am I right in saying that? Do you have any indication of what the ratio of those costs to the amount being secured through loans would be? I do not have that information, but I can see if I can obtain that for the committee. That would be helpful. The convener makes a very useful point, so clearly you would need to be careful on the contingency funding that you had if you were going down this particular route. I am going to touch later on the ONS classifications, which I know is a bit techie, but I think that it is important to get this clear. The £250 million that you said raises to £350 million, does that technically count against Scottish Government capital spending? No. So it is entirely separate? Yes. Right, that is useful to know. The council of Margaret's Lenders has highlighted high levels of domestic compliance, sorry, confidence in the social housing sector, and its support for the level of regulation carried out by your organisation. Does that correspond with what you were seeing across the sector? Yes, I think that confidence levels of lenders are high, remain high in terms of Scottish landlords. Obviously, it will be interesting to see whether the Scottish context becomes a more attractive investment proposition than elsewhere in the UK, given some of the very significant changes that are happening. It could very well be that lenders would view Scotland as a more benign investment environment, notwithstanding that, obviously, there could be further changes in the Scottish context as well. I am highly concerned about the Office of National Statistics classifications of housing associations. We had it in Scotland, as you may know, on the harbours act that went through, where large harbours were going to be classified. That basically meant flights of Peterhead, any spending that it did, or Aberdeen and its massive investment in the economy, would count against Government spending, which is disastrous for the harbours. In England, it is likely to happen for housing associations, which would mean that any spending in housing associations would count as national debt. That would mean about a £60 billion, 4 per cent increase in national debt in England. That would be a massive problem if that applies to Scotland, so that is what, to my earlier point, bond spending could well count against national debt in Scotland. What is your view on that? Is it likely to happen? What we know is that, as you say, the Office of National Statistics has announced that housing associations in England are being reclassified as public corporations. That means that nearly £60 billion of debt that they have now features on the Government's books as public sector debt. The basis for that change that was set out by the ONS was that the UK Government, through the Housing and Communities Agency, the English Regulator, has control over associations through the regulatory powers that are invested in that agency, particularly around consents for disposals and directing the use of proceeds from disposals, voluntary winding up, dissolution, restructuring, appointment of managers. Those types of powers were seen as giving the Government control over those organisations and, therefore, merited the reclassification. The implications, as you say, beyond the understanding that that places that debt onto the public book remain quite vague in terms of the individual landlords and themselves, although there is a sense that any subsequent borrowing by those organisations may very well need to have some form of Government approval because it would count towards public debt. We are aware that the Westminster Government has vowed to take associations in England back out of that classification by changing the regulatory powers that are available to the HCA. To date, the ONS has given no indication of plans to do a similar review in Scotland, and there are no direct implications of that decision on Scottish RSLs at this time. It very much depends on what the ONS plans are, and I do not have any insight into what those plans are. It may be that this is something that the committee might want to pursue. I would have thought that if this was happening in England, it would have happened in Scotland. I cannot see that we have been excluded from that. As I said earlier, it applied to harbours until the Scottish Government changed legislation, and I understand that it applies to lots of colleges currently in Scotland. We are not going to be exempt from that. Clearly, if it was going to happen, there would be opportunities for government to be resumably to change some of the regulatory regime in Scotland, but I do not want to get ahead of myself. I think that it would be quite damaging if that happened in Scotland. It may affect Government spending on housing associations and how housing associations are managed as well, but that is something that we can flag up. I agree with you. It is quite worrying and concerning what is happening in England. We as a regulator are keeping a very close eye on that. We are also keeping a close eye on English companies and RSLs operating in Scotland and whether there is any impact on their activities. If I can give you assurance that we understand your concerns, we are keeping a very active eye on that. The SHR published its new corporate plan 2015 to 2018, in April of this year and its annual work plan in May of this year. Can you say a little bit about what the key features of the new corporate plan are? Again, I think that we are being very consistent in what we are looking at. We are looking at three priorities—financial health, which we have talked about, and good governance. Today, the conversation has quite often come back to the strengths and expertise and capability of boards and board decisions. Given the complexity of the sector and the increasing areas of diversity that they are getting into, we are keen to keep an eye on that. Obviously, the charter and service delivery and the information that that gives us is incredibly important. We want to help tenants to scrutinise performance. We want to give landlords comfort in terms of benchmarking their organisations. We are very much in our corporate plan stressing the more challenging environment that we think that we are in. We are looking at risk for us being proportionate in our approach and being effective in our approach. I am looking at issues such as rent affordability and the sustainability of the sector. It is a very important sector. I hope that that answers your question. Mr Cameron, do you have anything to add to that? The only other thing that I would perhaps add to that is that, in our corporate plan, we have set out a commitment to undertake a full review of the regulatory framework kicking off in 2017 and to take the approach that we took with appeals by initiating that with a discussion paper before moving into any kind of formal consultation. Opportunities to review the continued relevance and appropriateness of all our regulatory approaches are a commitment that we have made. Do members have any further questions? Are there any closing remarks that we would like to make? No, just to thank you very much for the scrutiny that you give us. It is very important that we are accountable. It is very important that we can answer your questions effectively, that we can give you confidence, that we are doing a good job as a regulator. I think that one of the challenges for us coming up will be, as for all public bodies, is the spending review. We are very keen that we are able to maintain the resources that we have, that we are able to deliver effective regulation. We think that we add huge value in terms of what we do. We await with some trepidation the results of the spending review, as I am sure a lot of other bodies do. You are not alone in that. I hope, convener, that we have given you assurance about our performance. Clearly, the Scottish Housing Regulator is in a almost unique position of being independent of Government and having its lines of accountability through this committee to the Parliament, so we are very conscious of the importance of holding the regulator to account and very much value your attendance this morning and the evidence that you have given the committee. Once again, I thank Kate Blair and Michael Cameron for their evidence this morning, and that concludes today's committee business. I now close this meeting of the committee.