Reflections on ‘Housing in Scotland’ by Audit Scotland

by Ken Gibb

While I was away Audit Scotland published its sector study on Scottish housing. I should declare an interest: I was a member of its advisory board. The focus of Audit Scotland is on the effectiveness of public money and hence they emphasise public and social housing sectors but also private finance going to that part of the housing system. (and, to a lesser extent, housing benefit and its on-going reform). There is correspondingly less emphasis on private housing where often (though not always), the funding streams are either reserved or not of the public sector. In that sense this is not a truly holistic study of the Scottish housing system; nevertheless, it is a useful and welcome analysis.

While aspects of the work were widely welcomed by housing policy and practice in Scotland, it was rightly pointed out (e.g. by SFHA) that some things, inevitably, have moved on since it went to print e.g. the Scottish cross-sector working group on affordable supply concurred with aspects of what they recommended. For that reason I want to concentrate on their longer-term structural or key messages.

They make several recommendations to both the Scottish Government and to councils. I focus below on four aimed at the Government (paraphrased below) but would note the importance of the comments they rightly make about long term asset management of council stock:

  • Demonstrate how its long-term vision for housing underpins national policies and informs local planning and practice.

As I have indicated in previous posts, I do think government should articulate such a vision and do so consensually. This is so in order that subsequent policy means can be consistent with a shared set of ends. I do however also think that we as commentators, academics and interested parties must actively contribute to what that vision should be and the policies required to move the housing system feasibly in that direction.

  • Improve its reporting of housing budgets, spend and outcomes.

When acting as an advisor last year to the Infrastructure and Capital investment Committee of the Scottish Parliament, much time was spent trying to make spending on affordable housing more transparent and connect local plans and approvals to budget spending and on to buildings started and completed. This was non-trivial headache generating stuff, made worse by also having to track in-year revisions as a result of Barnett consequentials.  The point is that we should not have to rely on SPICE (the Parliament’s excellent information unit) to get to the bottom of it. The Government is accountable for the success of its new supply policy and must make it absolutely clear what is going on in open and simple terms. This is admittedly difficult (though far from impossible) because the process spreads over several financial years.

While I do think progress is being made there are further problems. It is arguably the case (or anecdotally so) that fewer developing housing associations are actually taking funding and building than councils originally assumed when they put their plans in. We need more evidence on the gap that is alleged to be growing between approvals and actual starts. More broadly, it is hard to plan across years when (welcome) Barnett consequentials and other in-year revisions take place and make such a substantive difference to totals, as they have in recent years.

  • Improve the detail and reliability of national information about housing, including an assessment of current and future need.

Of course few people would disagree with the expectation that national (and local) housing need estimates should be consistently and comprehensively calculated and measured. However, this requires both an analytical consensus on how it should be measured and calculated, and, it must be implemented though equally consistent application of data capture, measurement and interpretation both nationally and locally. These are challenging but I would argue necessary conditions in this tine of austerity and backroom cuts but, I would stress, there were plenty of problems securing consistent local needs analyses across Scotland well before the financial crisis. This needs to be a priority.

  • Review the financial pressure on the sector including financial capacity to develop and fund new social and affordable housing.

The recent working group also established the need for updating and understanding financial capacity. Since the controversial study in 2010, developing housing associations have reduced financial capacity, and increasing numbers have actively chosen not to develop. Both associations and councils have had to come to terms with arrears, voids and other revenue-damaging impacts to their business plans as a result of the benefit reforms. Objectively, these changes reduce capacity but more important, we must distinguish between the notional demand that financial capacity measures and the actual effective demand for finance that social providers are actually willing to express given the conditions they face. The gap may well be widening  between notional and effective demand, at the same time that notional demand (capacity) is falling. We need to understand financial capacity but also effective demand.

The Audit Scotland report is a valuable resource and should be widely used. My comments above are reflections that arise thinking in response to these ‘key messages’ as they appear now in July 2013. There is good source material here and I will certainly be using several of their exhibits and analysis in my teaching and other work.