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January 28, 2009

Briefing from Community Housing Forum

Most affordable housing is built by our private sector – as planning gain in regeneration partnerships – but the recession has busted this model. Now that we need Housing Associations more than ever, their West of Scotland Forum claims that new government legislation will seriously curtail their development capacity


Briefing on the Scottish Government’s Proposals for Investing in Affordable Housing in Scotland

Executive Summary

1. Glasgow and West of Scotland Forum of Housing Associations (GWSF) has represented community‐based housing associations (CBHAs) in Glasgow and the West of Scotland for more than 30 years. This Briefing informs our members about the Scottish Government’s Consultation Document “Investing in Affordable Housing”, and the issues it raises for locally controlled housing associations in Scotland.

2. The Consultation Document makes some changes to the initial proposals for investment reform that were set out in “Firm Foundations” in 2007. But the essential features of the latest proposals are still that:

• Responsibility for delivering development programmes should be concentrated increasingly in the hands of a relatively few organisations (“Lead Developers”);

• Funding should be awarded through regional competitions.

3. The Lead Developer approach is the Government’s preferred option for the future. Single housing associations or housing associations working in development consortia would also be able to bid for funding – but with several catches in the small print:
• These alternatives may only be available until the Lead Developer approach becomes fully established;

• The share of available funding to housing associations not working as part of Lead Developer arrangements would be progressively reduced;

• Only Lead Developers would be eligible for longer‐term funding agreements.

4. These factors may prevent resources for new housing being directed to where they are needed most. They will limit the ability of other housing associations and/or development consortia to achieve the best value for public funds. And they will stand in the way of providing the longer‐term certainty that the construction industry needs.

5. We do not share the Government’s view that the current financial and economic climate justifies the particular approach it has proposed. Along with the flawed guidance on Housing Association Grant (HAG) financial appraisal issued in April 2008, the solutions now proposed will reduce rather than enhance the capacity of housing associations to accelerate the construction of new housing.

6. The Consultation Document is based on the speculative assumption that specialisation and competition are the key to greater efficiency. At the end of this Briefing, we have set out some practical measures that would help achieve better value for the use of HAG, in the unprecedented economic circumstances that currently prevail.

7. Scottish housing associations are already moving away from delivering their own individual development programmes in every case. Most associations – particularly those with smaller‐scale programmes or with limited in‐house resources or expertise ‐ recognise that partnership working with others can provide mutual benefits.

8. The Government’s proposals will not harness this potential, because they are based on a prescriptive and inflexible approach to partnerships. The proposals would reduce the control that non‐developing housing associations (i.e. the vast majority) can exercise over housing for which they will have long‐term responsibility. The proposals would also diminish accountability to local communities in a way that is odds with the Government’s approach in other policy areas. A more flexible and permissive approach to the forms that partnerships can take is essential, along with recognition that funding of individual housing associations should be also part of the Government’s longterm strategy, in a range of circumstances.

9. We have sent copies of this Briefing Paper to all Scottish housing associations, and to Scottish Ministers and other elected politicians. We encourage all of our members to respond individually to the Consultation Document, stressing the need for the Government to refocus its approach and to adopt the proposals GWSF has made in this Briefing Paper.

10. GWSF will be seeking early discussions with Ministers in the Scottish Government on the action that needs to be taken immediately. We hope that the Briefing Paper will help inform debates in the Scottish Parliament and questions to the Government.