Robert Brown calls for GHA to hand over houses to community

12.00.00am BST (GMT +0100) Mon 12th May 2008

A call for Glasgow Housing Association (GHA) to be required to hand over housing to local Community Organisations has come from Glasgow Liberal Democrat MSP Robert Brown in a debate in the Scottish Parliament. He further called for Scottish Ministers to act to ensure a fair valuation of the houses when they were being offered to the community housing bodies, and welcomed a Report produced by housing consultants Mazars on the controversy.

The issue was the long-delayed move by the GHA to transfer housing stock in what is known as "second stage transfers" to local Housing Organisations.

Robert Brown said:

"When GHA was set up, it was always intended to be an interim body, pending the move to second-stage transfer. Unfortunately, it has since morphed into a body that clearly regards itself as a permanent feature of the housing landscape in Glasgow. It was, of course, given a poor report on its performance by Communities Scotland. However, above all, its progress towards second-stage transfers and genuine community empowerment has, in reality, been negligible.

I supported community empowerment and stock transfer from the beginning, because I believed it was right that tenants should be genuinely and effectively empowered with regard to their homes and environment. I did so also because of the scale of the failure of the large municipal model in Glasgow, the crippling effect of the accumulated debt and the genuine potential for a new beginning. Finally, I did so because I had seen the huge, life-changing success of community-based housing associations in transforming local communities.

The central issue is the fair value for which GHA will agree to convey houses to local housing bodies. This apparently technical question has caused huge uproar and anger across the sector. We have the Mazars report to help us, which lays out the detail. In a nutshell, the report states that if GHA conveyed every house to local housing bodies, the result would be an organisation with no houses, a large headquarters operation and staff, and many hundreds of millions of pounds of resource. Even in the mysterious world of stock transfer finance, that must be nuts.

Mazars has analysed the essence of the principle of financial neutrality, which is the basis of GHA's approach to valuation. The report states that the principle is not fair to tenants who transfer, and that GHA's price requirement is 6.4 times the security value that a lender would be prepared to consider, therefore there is a huge gap between GHA's valuation and what local housing organisations can afford to pay. Mazars states that GHA's valuation methodology fails to disaggregate entire cost categories, such as Glasgow gold and the tenant participation budget, and contingency, management and central overhead costs. It proceeds on the assumption that each stock transfer is treated as a first and only transaction, ignoring the fact that it is part of a process.

The report also highlights the amazing information that GHA's staff costs increased by 32 per cent from 2004 to 2007, whereas the number of houses went down by 14 per cent. The result is an increase in staff costs per unit of 53 per cent. The associated report by Housing Regeneration Consultants Ltd suggests that, even if GHA were to transfer all its stock, 83 per cent of central employee costs would remain.

Ministers must tackle the valuation issue, commit unequivocally to second-stage transfer and do what is necessary to deliver. He will have the support of every member if he can realise the original vision.

Glasgow's housing challenge is the most significant in Scotland. Successful stock transfer is in all our interests, but particularly those of hard-pressed tenants. We are at a crucial point that will determine the way forward for a generation. A lot depends on the minister getting the process right. If he does so, he will have the Liberal Democrats' support."