Housing Needs

Speech by Robert Brown MSP on Thu 8th May 2008

I will devote my remarks, which I hope will be constructive, primarily to the thorny issue of Glasgow Housing Association. Other people, of course, did not support stock transfer from the beginning, and it is sometimes forgotten that the SNP organisations in Glasgow were split on the matter. 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.

GHA was always intended to be an interim body. I concur with Bill Aitken's comments in that regard and with his tribute to the work that is done by many housing professionals and people in the housing field in the area. I do not always agree with Bill Aitken, but he made a splendid speech that was a model of casting light on the issue.

As I said, GHA was 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. The suggestion that Communities Scotland should be the scrutiny body made my heart sink, because Communities Scotland was involved, took sides and backed GHA's view of the world and the valuation arrangements that it suggested. That has done much damage to the potential for Communities Scotland to be regarded as an independent player in this operation.

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. I do not pretend to understand the finer points of the calculations, but we have the Mazars report to help us, which lays out the detail in ways that even I can understand. 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.

For example, business case submissions have been made for 39 LHO areas totalling 27,243 housing units, which is about a third of the stock. However, almost 50 per cent of all the costs for those housing units is deemed to be retained by GHA. On the other hand, 100 per cent of costs is disaggregated if a house is sold under the right to buy or is demolished. GHA cannot have its cake and eat it on those calculations.

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.

There are two ways forward. The first is to accept GHA's own analysis, chuck community empowerment in the bin and accept that most social housing in Glasgow be run for the indefinite future by an unelected body that is not effectively accountable to ministers, councillors or tenants. That, with a few presentational glosses, appeared to be the position adopted hitherto by ministers. The second way forward is for ministers to tackle the valuation issue, commit unequivocally to second-stage transfer and do what is necessary to deliver. The minister has a huge advantage here. He comes to the issue fresh, with clean hands. He did not set up GHA or agree to the figures or the methodology. He is not committed to GHA's preconceptions on the matter. He will have the support of every member if he can cut the Gordian knot and realise the original vision.

I welcome the minister's commitment and his intention to engage with the valuation issue-that

is a big move forward. However, the process must be open, truly independent and pursued with conviction. I have serious reservations about the Communities Scotland situation. When knowledgeable people such as Bill Aitken, Johann Lamont, Patricia Ferguson and Alex Neil express reservations about it, the minister should also have reservations. There needs to be an independent scrutiny process. Alex Neil's suggestion of an independent scrutiny panel is useful and helpful, and could be taken forward. There could also be some advantage in the minister drawing together a number of those of us who represent Glasgow and have an interest in and modest knowledge of the issues, to establish whether there are other ways in which we can tackle the matter. It is important that we go forward collectively. 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.

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