Can we build a better Scotland?

by Ken Gibb

I was at the launch of ‘Building a Better Scotland’, the RICS Scottish Housing Commission report yesterday morning [1]. I should declare an interest: I am an advisor to Shelter Scotland’s parallel housing and well-being commission which reports next year [2]; I also gave evidence to the Commission last year when they kindly did the evidence session only walking distance from my front door.

The context for this renaissance in more strategic (and politically independent) policy thinking about housing in Scotland is multi-faceted. First, despite the devolution of key aspects of housing, the Referendum, as elsewhere, casts its shadow across housing questions and possible future directions, including of course welfare benefits. Second, austerity and funding pressure have recast what is possible in terms of housing investment and of course specific policies aimed at the market like Help to Buy have further shifted the scope for partnerships for affordable housing. Third, and not unconnected to the first two points, the Scottish Government since 2007 has espoused a separate policy direction one in tune with its Scottish approach to public policy, even if key indicators like social house building remain weak considered in a longer historical perspective.

What is the main diagnosis? Chapter 1 of the report argues that Scotland faces deteriorating housing outcomes, including:

  • Requiring more than 20 years (best case scenario) to build enough new homes to match projected increases in household formation.
  • High cost to income ratios historically for both private tenants and younger home owners.
  • The numbers in housing need and applying for social housing is rising sharply, ‘whilst social housing output has fallen in the midst of static vacancy turnover (p.9)’.
  • More are renting in the difficult segments of the rental market. 120,000 households in poverty rent privately.
  • The physical improvement of social housing and neighbourhood renewal is stalling .
  • In those area where the Scottish economy is recovering large real terms house price increases are once again evident.

After the evidence was heard and deliberated over, by the Commission, what were its main recommendations? There were 15 in total:

  1. Establish a Scottish housing observatory.
  2. The Scottish Parliament should debate an annual state of the housing market report.
  3. The post of housing minister should be elevated to that of cabinet secretary.
  4. There should be a new and continuing assessment of key housing indicators.
  5. The Scottish Government should continue to explore new methods of supporting the housing market to sustain demand.
  6. The private rented sector should be a key pillar of the future housing system in Scotland.
  7. The Scottish Government should shape a skills programme for planning.
  8. The Scottish planning system should deliver at least a 100% increase in effective land supply for development by 2018 and all local authorities should be able to demonstrate a 10 year effective land supply as standard.
  9. The SG along with planning authorities should undertake a review assessing the nature of existing planning consents.
  10. The SG should develop a new emphasis on consumer research to inform a local housing systems analysis approach to assessing housing needs and demand in Scotland.
  11. The SG should establish a Scottish Land Delivery Agency.
  12. The SG should endorse effective provision in growing areas by enabling the delivery of 6 to 8 major new communities.
  13. They call for a reduction in VAT to 5% on refurbishment and maintenance building works.
  14. The SG should put in place a ‘change fund’ for the social housing sector.
  15. The Scottish Housing Regulator should take a greater role in stimulating system performance knowledge and change in Scotland.

What are my immediate reflections without getting into the details of all the proposals? First, the supply-side policies are probably the most compelling aspects of the package: the national land delivery agency, the effective land supply targets and the 6 to 8 new planned communities. Some commentators have queried these policies on the grounds that there is plenty of brownfield in-fill sites remaining that can raise urban densities, that expanding effective land supply only works if there is effective demand and that the national agency (along with other proposals in the recommendations) require the creation of new institutions which makes the wider project a little vulnerable.

I am not convinced by the arguments against the new communities – the opportunity to master plan and to learn from the past and for England outweighs the negatives. Of course we should use brownfield and raise densities provided it makes sense but the opportunities afforded by new communities, assuming they are credible, do make sense to me – but they will take a long time to come to fruition. Equally, there is a groundswell for a national land delivery agency from several quarters in Scotland and lessons to learn from English Partnerships. However, I do have sympathy with the notion that setting up too many institutions at the one time – that there too many moving parts – which might impede implementation. It has to be done right and that again that might take time.

I do worry about our declining smaller urban settlements in places like Ayrshire, Lanarkshire and Fife. This is all the more reason to focus more on evidence and what works, to draw on housing system analysis locally feeding into housing strategies and drawing on the ideas contained in the observatory proposal (it would have been surprising if I had not supported this proposal). A much better sense of demand and why households make the decisions they do remains too little understood. A sector wide commitment to intelligence, knowledge exchange, monitoring and appropriate frameworks for evidence supporting needs analysis, investment decision making and land release – would be game-changing.

The social housing change fund is an attempt to set up new partnerships to promote innovation not just in funding but also in terms of organisational form and governance. It is a little high level and abstract in the report and it would have been valuable to be able to more closely examine this specific proposal. Otherwise there is surprisingly little discussion of finance and subsidy (and especially housing benefit). There is a proposal to cut VAT on refurbishment and maintenance to 5%. While I obviously support incentives to the greater investment in the existing stock, I do not really believe in varying tax rates and monkeying further with the tax base – I would rather all activities faced the same VAT rate (in the absence of strong economic argument to the contrary).

The Commission has produced a useful, coherent and timely contribution to the debate. There are lots of ideas here, if sometimes too briefly considered. The recommendations challenge governance and policy making both at the local and national level. For instance, the issue of allowing housing to sit at the top table in resource and strategic discussions may be more of an issue at local government and community planning partnership levels than in the Scottish Government?   How the Commission now takes the report on and engages with its constituents will be essential to determining whether it can succeed, promote action, reinforce new thinking and secure change.