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November 5, 2008

Housing Investment Reform and Wider Action

No local agencies have as much potential for the real empowerment of communities as locally owned housing associations. But David Stewart of SFHA warns that Scottish Government’s proposed squeeze on ‘new build’ funding through the Investment Reform Project will limit HA`s capacity for Wider Action initiatives.

David Stewart (SFHA) Scotregen

Like many of the members we represent, the SFHA recognises the importance of regeneration and social enterprise in building sustainable, balanced and successful communities. Earlier this year we published Making Places Work, a piece of research that reviewed successes in the Housing Association sector to date while looking at opportunities for the sector to develop its role in community development and social enterprise. There are many excellent examples of social enterprise in the Housing Association sector, for example -Ore Valley are developing a community energy project in Cardenden, Cordale have developed amenities for their community in Renton and Cunninghame provide training and employment opportunities in North Ayrshire .At the same time the SFHA are involved in discussions with the Scottish Government with the aim of introducing flexibility in phasing and in funding on large scale regeneration projects -we are aware that the credit crunch could have a major impact on mark led regeneration and are seeking in the longer term to develop a solution to prevent the affected communities from suffering.

Firm Foundations

While the SFHA believes that social enterprise and community regeneration is a major role for associations both now and in the future, a key theme of the present Scottish Government has been to promote an Efficiencies Agenda. Through ‘Firm Foundations’, the revision of Housing Association Grant assumptions and now the Housing Investment Reform Project the message has been clear – the government wants to see more houses built to meet need and promote sustainable economic growth, but the current economic climate means that any increase will have to be delivered through the same amount of grant funding. While the SFHA has expressed concern regarding possible impacts of the revised grant assumptions and the efficiencies agenda promoted in Firm Foundations, it is clear that the Scottish Government is determined to move forward on this basis, with regional competition where consortia can bid for housing association grant over a 3 year programme.

Significant concerns

This begs the question, what effect might the efficiencies agenda have on Housing Associations involvement in social enterprise, and what can the SFHA and its members do to positively influence the direction of Investment Reform? An initial analysis of the likely impact of an efficiencies agenda seeking better value for the public purse suggests that there could be several significant concerns for the sector:
* Danger of rents rising to fund higher private loans, leading to tenants being caught in a benefits poverty trap
* Reductions in quality and energy efficiency to lower capital costs
* Housing Associations, with their resources squeezed to fund higher loans, focus on their “core business” of developing, managing and maintaining houses and partially withdraw from social inclusion and social enterprise agenda.

Positive signs

Were any of the above to come to pass it would be a huge set back, and that is why it is crucial that Housing Associations and other bodies involved in social enterprise and community regeneration work to influence the Scottish Government to ensure that the importance of sustainable communities is at the heart of the investment reform process. While it is early days, with a consultation paper on Investment Reform not expected until the end of November, the signs so far have been relatively positive. Having been criticised for its consultation on the new grant assumptions, where many responses registering concerns failed to change a single aspect of the proposals, the Government has been very willing to engage with associations, hear their views and listen to their concerns. Officials have also emphasised that they wish to avoid sharply increasing rents or drops in building standards.

The government agreed to the SFHA:s suggestion to run 6 regional seminars seeking association’s views on investment reform ahead of November’s consultation paper. The impression given at the seminars was that the government has an open mind on exactly how investment reform should take shape. Some of the key points made at the seminars were relevant to the social enterprise agenda, with a couple of associations suggesting that if the competitions contained the right criteria, there could be an opportunity to expand social enterprise by the sector -for example, points could be awarded for social enterprise proposals in bids or community benefits clauses could be included in construction contracts, in line with the pilot Community Benefits in Procurement schemes.

Clearly, the Investment Reform project represents a radical change in the way that housing association new builds are funded. It is vital that the Housing Association sector, and its colleagues involved in social enterprise and community regeneration, influence the shape of the reform to ensure that it furthers, rather than reduces, social enterprise in Scotland. To this end it is key that we become involved in, and help to shape, the debate.