Kieran Findlay

Hello and welcome to the Scottish Housing News podcast with me, Kieran Findlay, the editor of Scottish Housing News and former Dundee housing convener, Jimmy Black. From rent controls to tenants’ rights through to homelessness and domestic abuse, we have used the previous three episodes of this podcast to take a look at the Scottish Government’s new Housing Bill. And today, we conclude that series with an interview with the minister responsible for bringing the legislation through Parliament, housing minister Paul McLennan.

Minister, thanks for joining us and congratulations on retaining your position as housing minister under our new First Minister. Let’s start with the introduction of rent controls in the private rented sector. Patrick Harvie and the Scottish Greens were huge supporters of this but they’ve gone and so has the Bute House Agreement. Is the Scottish Government still committed to rent controls?

Paul McLennan

Kieran, first of all thanks for your kind comments. It’s good to see you again. I think we last met up when at the conference at Cairngorms National Park. So good to see you. In terms of the rent controls, there’s a review going on at the moment with stakeholders. You’re right Mr Harvie did have the responsibility for that area previously, I now have full responsibility for all the Bill. So we’re actually reviewing particularly in the rent controls and engaging with stakeholders on that particular point.

So obviously it impacts on the rent controls themselves, so it’s looking how do we protect the most vulnerable as against trying to get investment into the sector. So that’s not just in terms of institutional investors but also the private sector itself. So we’re re-engaging with stakeholders to discussing that and we’ll obviously continue that engagement. And I think it’s safe to say, you know, the PRS sector itself or institutional investors aren’t against rent controls per se, it’s more what are the details behind that. So we’re in the details with them just now. So we remain committed to rent controls but it has to be a balance where we make sure we get investment into the sector to make sure there are more houses being built and generate more capacity further down the line.

Kieran Findlay

First Minister John Swinney has declared that his new government is firmly pro-business and Deputy First Minister Kate Forbes wants to refocus the administration’s priorities on growing the economy and creating jobs. But we’ve been told that rent control policy is driving landlords out with the market and that 3 billion of private investment has been lost.

This is leading to fears from tenants that the policy will be watered down. Is that a fair assumption?

Paul McLennan

No, I think it’s all about trying to strike the right balance. We have to protect people who are in the most vulnerable position. Obviously through the cost of living crisis we’ve seen that issue and we’ve seen rent increases that were far, far too high in pushing people into homelessness.

I think there’s a wider discussion around the supply in terms of, for example, because rent control is obviously currently to mid-market rent, so I think that’s a vital component in terms of that. I just met with the Scottish Federation of Housing Associations and they raised their issues around that. And obviously with the broader discussions about PRS, where you’ve got individual investors, if you like, who maybe have a portfolio of one, two, three, four, five, ten kind of houses, to it as well as the probably more the BTR side of the market and I think it’s all about getting that balance. So we are speaking to the sector around about that, you know, for rent controls.

There are rent controls in different parts of Europe where it works and we have seen, you know, investment into the areas and we have seen more houses being built but it’s got to have that right balance, you know, and so we’re reviewing that at the moment at pace in terms of that and we’ve got to ensure we get the right balance, as I said. So it is between protecting the most vulnerable who, you know, need to move away from obviously the evictions that may come if that was the case because rent controls aren’t sufficient enough as against you know getting investment and we’re building more houses for example in MMR and built a rent. So we’re continuing engagement with stakeholders as we did previously and as we will right the way through the build process.

Jimmy Black

Minister, there’s a bureaucratic aspect to the rent controls as proposed it requires local authorities to gather data and local rent levels, assess rent conditions to make a judgment on whether it’s necessary in their area, then make a case to the Scottish Government and then implement and enforce the legislation. If that’s a fair summary, have local authorities reacted well to these new duties? And do you think the government is going to be able to fund that extra work they’re going to have to do?

Paul McLennan

We’ve had discussions with a number of local authorities on that, particularly the larger ones, you know, your Edinburgh and Glasgow and so on. And of course, part of that is the duties are outlined in what their role is. They have, it’s safe to say, raised some issues regarding that and about how onerous that work would be, how long it would take in terms of that. And I think that’s something that we’re working with them on. And if we’re reviewing the bill, that’s obviously something we’re discussing. So the local authorities are stakeholders as well.

And it’s like any bill, I think. In terms of it coming forward, obviously, there’s the bill process, when we speak to the stakeholders themselves and if there are amendments or if there’s ways that we can try and work with them because it’s one thing having legislation, the second thing is making sure it’s implemented as efficiently as possible. So we’re having discussions with local authorities on that particular point, how would that actually begin to work. So as the bill process goes through the parliamentary process, there’ll be ongoing discussions on that particular point. The committees will be taking evidence and I’m sure they’ll be speaking, that’s up to the committees themselves who they speak to, but I’m sure that we’ll be speaking to local authorities on that particular point and the evidence sessions have begun to start with officials, so that’ll be up before committee, probably towards the end of the summer and the beginning of autumn, but that’s an issue that’s been raised, but we are still in discussions with local authorities about that particular point.

Kieran Findlay

Moving on to homelessness, we spoke to Ewan Aitken of the Cyrenians about the bill’s plans to introduce a duty on social landlords and other bodies to ask about a person’s housing situation and then act to prevent them becoming homeless wherever possible. I know he’s welcomed the measures and he shared with you two main takeaways from the proposals. Firstly, he’s asked for those involved in preventing homelessness to be involved and thinking about the secondary legislation and the guidance that follows, both of which he sees as very important.

And secondly, if given the chance, Ewan is very much willing to help argue the case to whoever needed to be pulled into his way of thinking because to work effectively, he reckons it will take time, it will take resources and it should be something more akin to a five and 10 year plan. Is that how you see it?

Paul McLennan

First of all, to say it, I have known Ewan for a long period of time, even before I was minister, in respect to work he’s done, obviously as a politician on the council, like myself, the work obviously in the ministry, the church, but also the work he’s done with Cyrenians and the work that Cyrenians do is absolutely fantastic. So my thanks to Ewan on that. I’ve met with Ewan on a number of occasions about projects that Cyrenians have done in terms of homelessness and I have to say they lead the way in Scotland along with other organisations in terms of doing that. And when we first brought out the legislation, Ewan and Matt from Crisis, were there as part of the launch and spoke to themselves.

So, you know, I suppose there’s a few things. One is the legislation. Two, how is that implemented? And three, what are the costs behind that? So I think there’s work already going on, including meetings with Ewan about what do we need to do now that doesn’t need legislation? And I think that’s important. We’re obviously in a situation when we’re talking about the housing emergency and pressures on local authorities and organisations just now. It’s trying to get that balance between dealing with that issue and obviously the homelessness prevention and how do we embed homelessness prevention into the services that are there without overloading them. You know, so it’s one of the key things we will be discussing with stakeholders throughout the bill around the actual implementation and to be fair to Ewan, and he’s mentioned that before, we need the legislation to help us to do that in terms of the prevention but it’s got to be implemented in such a way that it doesn’t put too much pressure on that.

So Ewan’s made that point. We’re obviously open to discussing that particular point in terms of that. We do need the prevention duties, but obviously we’re dealing with a situation we’re in at the moment as well. So that’s part of it. I think once we go through the bill process, that’ll be something that we’ll continue to discuss with stakeholders with. And Ewan, I would imagine, and again, it’s up to the committee, will no doubt give committee evidence when we’re talking about this at some stage. But yeah, he’s got a valid point. But we’re working very closely hand in hand with the likes of Ewan and Crisis, for example, to see what we do in that particular regard.

Kieran Findlay

The CIH Scotland, in its response to the call for views on the Housing Bill, said they welcomed these measures again, but added that the lack of detail on how the Ask and Act duty might work in practice is concerning. They added that there’s also a danger that this simply becomes a referral route to local authority homelessness services that are already, I mean there’s six or seven housing emergencies across Scotland. So these services are already underfunded. Could you allay any of those concerns?

Paul McLennan

I think first and foremost in terms of the bill being brought forward there was a financial memorandum that came with that. It is attached to talking about homelessness prevention so there’s already work that had been carried out on that so that part of that will be scrutinised by one of the committees as well to see if the financial memorandum is robust enough and I believe it is. I think one of the key things that we have to look at as well is that the obligations are there but it’s different for each local authority. For example, the pressures in Edinburgh and Glasgow and so on will be different from other smaller authorities. So again, I think it’s going down to that level of detail, that granular detail to say, okay, how do we embed the services? What are these going to cost? It’s not putting additional pressure on, as I mentioned before, which I think is really important.

I think as the bill process goes through and we get to like the stage two process and whatever and the bill gets its, I suppose, scrutiny by the committee. So that will be raised and picked up. But you know, that’s the bill process. There is lots of work going on in the background in terms of what are we doing and just now, the memorandum lays it out. But there’s a lot of work obviously still continuing to go on to see how, you know, how to make sure that the specific discussions with Edinburgh, Glasgow, others are getting down to that level of granularity, which I think is really important in terms of that.

I said, what I don’t want to do is bring in prevention duties and it puts more pressure on homelessness services. We’ve got to strike that balance. And it comes back to the point, I think, that Ewan probably made is what’s the best way to implement that over a longer period of time. So we’ll be listening to Ewan and we’ll be listening to Crisis and other obviously stakeholders in that through the build process, but also just through normal discussions we have with them anyway.

And as you know, Crisis and Cyrenians are very complementary of the prevention duties. But we’ve got to make sure it’s embedded to make sure there’s not additional pressure. And it’s there, and it’s doing what it’s there to do. I met with the Edinburgh Council this morning, for example, and we talked around about, one, prevention duties, but two, it was almost trying to predict further down the line about where people are entering into homelessness, through issues, for example, you know, is it issues of domestic abuse, is it through mental health issues, is it through substance abuse? And trying to work closer with these organisations.

I’ve got the Ministerial Oversight Group that I set up, which includes nine other ministers, where we’re trying to get that deeper dive into what’s the causes of homelessness and where can other departments play their part in that. So again, it’s coming back to trying to protect where that’s coming and even going further back in the six months that the bill is proposing. So it’s a complex issue as we all know and it’s different in every local authority area.

Jimmy Black

We heard in a recent podcast about some fantastic work that’s being done in the Borders on domestic abuse. Has there been any reaction from landlords to the requirement in the bill that they should have a policy on dealing with domestic abuse?

Paul McLennan

Yeah, and I would agree. I went down to the Borders probably about six months ago and met the housing associations down there and the work they were doing was fantastic, absolutely fantastic and I think a real way to lead in Scotland in terms of that and the work, as I said, was great to see. We actually had somebody who had suffered domestic abuse. So it was a real live example of how the approach actually worked. And I think that was really good to see. I met with SFHA just a couple of days ago. And they recognised the work they need to do on that. And they obviously see the Borders approach of it, like as an exemplar as well. So they’re aware of what they need to do. We’ll continue discussions with Women’s Aid, for example, in terms of that as well. So yeah, the Borders project was fantastic.

We also had the Fund to Leave pilot, which was for five local authorities and certainly the feedback we’ve got and received, and there’s still a formal process to go through, again, has been very well received. And that’s part of the coming, this was funded by the housing homelessness team, if you like, and part of the Scottish Government, but again, that impacts on all parts of government. So there’s opportunities, I think, to look at cross-portfolio funding. How can we make that, how can we grow that? Because the feedback we’ve had from people who have had help from that has been absolutely fantastic as well. So again, there’s lessons to learn in that. But the Borders project, happy to say, is an exemplar in Scotland and has been very well received.

Jimmy Black

The bill tries to address the problem of women who can’t get out of a joint tenancy without the agreement of their partners. That means if they leave they may end up being responsible for their violent partner’s arrears. Our guests in the podcast generally welcomed that proposal but pointed out that legislation which would allow landlords to evict abusers has not yet been implemented and I’m talking about section 22 of the Domestic Abuse Protection Scotland Act 2021. Is there a reason why this hasn’t happened?

Paul McLennan

No, again I think that that’s something historically that you know that it should have been implemented. I think obviously there was legislation, you know, there shouldn’t have been, and to be honest, I don’t know how that would actually work. So I think that was identified in the bill process as it needed tighter legislation around that. Again, we’ve been speaking to stakeholders about that particular point, the Scottish Association of Landlords have raised that, and again, it’s working with them. I’ve got a meeting with them coming up very shortly around that particular issue. And then it comes back. And it’s not just in domestic abuse cases, that might be something. And sometimes it’s just a general, the people split up, you know, that happens. How do we make that process so that nobody’s trapped into that? So again, it’s a discussion with stakeholders. I think the legislation that’s been introduced in the bill is just trying to tighten up on that.

Because in my previous time as a councillor, I came across cases like this on a number of occasions and it can be really difficult for people that are trapped in that situation that don’t want to be in that situation. So that can make it more difficult. I’ve actually seen how difficult that could be with the number of people I spoke to when I was in the councillor. And I think the legislation will tighten that up. Again, we’re speaking to stakeholders about exactly how we tighten that up and make that work as best as we possibly can.

Kieran Findlay

Away from the Housing Bill, many issues in housing inevitably come down to finance. You recently chaired the first meeting of the Housing Investment Task Force. Can you tell us about that and what it aims to achieve?

Paul McLennan

Yeah, I mean, I think there’s a number of things. One, the Housing Investment Taskforce is all about additionality. It’s not to replace the grant funding. So I’ll maybe address that and then come on to that. The grant funding part, I think there are two elements of it. One is the funding each year. I mean, there’s an element, obviously, of the capital funding. But there’s also an element of the financial transactions.

So many people at one podcast will know how important financial transactions can be to government and others in terms of that now. So obviously we re-instored £40 million this year and £40 million next year. To look at acquisitions, for example, in terms of the budget, the biggest cut we suffered this year was 62%, about £120 million in financial transactions. So that in itself has been the biggest element in that regard. And financial transactions give you more flexibility than normal capital can. It’s loan funding as you know, so it allows us to do things a little bit more flexibly. So that’s been the biggest element and for me, I mean, the UK government elections coming up and more likely to have a new government, one of the key things we’d be asking is give us back the additional, the financial transactions ability that we had before, but also to restore the 9% capital budget cut to the Scottish Government.

We also will be asking for additional borrowing powers. I don’t have that at the moment. I know Welsh Government colleagues will be doing the same. So again, it’s looking at different ways we can try and get capital back into the system. But coming back to the Housing and Investment Taskforce, it’s really looking at the additionality around that. So the first meeting is kind of looking at the barriers and challenges about bringing additional funding into that. We’ve got a second meeting next week. So we’ll identify what these barriers or challenges. So we’ve got people from RSLs, from local authorities, from the banks. We’ve got Ken Gibb who’s involved in that as well, institutional investors as well as part of that. So we’re trying to look right across the scope around about getting more investment in, whether that’s mid-market rent, whether that’s built-tor-rent. There’s a focus on the Housing and Investment Taskforce being looked at ways around about trying to get more money in for affordable housing. So how can we look at that?

So we’ve got SFT, Hubco and SNIB also part of these discussions. So they will come with a report probably towards the end of the year making recommendations that we’re looking to try and bring forward at that particular time. So it’s the sector itself that’s driving forward that. And we’re looking at different ways around, for example, around HRA rules. We’re looking at different things in terms of how do we get additional funds, for example, for local authorities. Local authorities at the moment can borrow more than the Scottish Government. So how can we maximise opportunities around that? So there’s lots of work going on around the housing investment task force. But there’s lots of energy, I think, that the right stakeholders are in the room and we’ve got another meeting next week so I hope to see the progress being made pretty quickly on that particular area.

Kieran Findlay

In terms of the affordable housing programme budget itself, what are the government spending projections at the moment? Are there further cuts to this budget expected for the remainder of the Parliament?

Paul McLennan

No, I think there’s a number of things. We talked about the deliverability, the review, the 2032 target. So one of the key things we were talking about was looking at the deliverability review in about 2032. The target stays the same, but what things are impacting on, for example, on the costs. So there’s a piece of work being done on the costs and that’s how can we make that £600 million a year go as far as it possibly can. The use of guarantees is also something that we’re looking at. So in terms of can the use of guarantees provide that clarity and reassurance to projects that might just be struggling on the edge of viability, but if we can come in with some guarantees can we look at that.

I think one of the key challenges is we have a year-on-year funding and it wasn’t until the autumn statement last year, about September, that we started to get worried around about what that impact would be. And as we know, the IFS have indicated that any new incoming government is probably looking at £20 billion worth of cuts that it will need to make in this financial year. So again, I think Rachel Reeves, who’s likely to be the new Chancellor, had said it would probably take her around about three months to pick up the finance of the UK and give us a position. I would imagine again around about September, October, what that would look like for the Scottish Government. So again, I think we’ve bated breath in terms of what comes out of that.

And I think that’s why it’s important to get back to additional borrowing powers, which would allow us to negate that and mitigate that. And looking at the other challenges is trying to free up some of the finance issues we’re talking about through the Housing Investment Taskforce. So we’re not just relying on what we get from the UK government and I think that’s important. The Housing Investment Taskforce and other issues that we’re looking at in terms of that I think is really important to try and protect us. Kind of going ahead because I don’t want to be in the position that the Scottish Budget is cut again in September, October and we have to deal with that right across the budget. And I know the Welsh government share that specific issue in terms of that as well. It’s given a little bit more clarity and allow us that little bit more flexibility within the devolved administrations to try and protect us from decisions that are made around the UK government. And we know the challenges. IFS have set that out, £20 billion worth of cuts. It’s going to impact on Scotland if that comes to fruition.

Jimmy Black

Could you maybe argue with your colleagues in the cycle lane department and the Scottish National Investment Bank and the roads budget, could you maybe get some of their capital and build some houses with it?

Paul McLennan

Yeah, I think I mentioned about the £80 million, £40 million obviously this year and £40 million next year. You mentioned the Scottish National Investment Bank and one of the key things for example, where the Scottish National Investment Bank is actually funded is through financial transactions as is a lot of capital funding for health in terms of that. So if the financial transactions budget is cut it also impacts on the ability of SNIB. It also impacts on the ability, as you’ve seen, to build health facilities in terms of that.

And we’ve got to remember that financial transactions is loan funding for us. We’ve got to pay that back to the UK government. But it gives us a lot more flexibility than we’d had before. So financial transactions has not just impacted us, it’s impacted health. And it also impacts SNIB. If SNIB didn’t have that funding, it couldn’t operate. From the financial transactions, it couldn’t operate.

So one of the important elements for us is not just restoring the 9% capital budget cut, but also the financial transactions. And that’s funds that we have to pay back anyway. But give us the ability to do that because if we do, it goes back into housing. And the First Minister said that, the previous Deputy First Minister also said that. If these funds were made available, it would go straight back into housing. And again, we’re looking at any flexibilities within capital programmes as we are at the moment. We have to kind of wait to see what the financial outcome will be in probably September, October from an incoming government before making any longer term decisions. But we’re still looking at capital flexibilities in terms of doing that.

Again, it comes back, I think, to the point about additional borrowing powers would allow us to build to the capacity we need to be building as soon as. So again, we’re working with those colleagues on that and we’ll be making the case to the UK government on that point.

Jimmy Black

There’s another question which is relevant to your ability to meet the target. Are you still thinking about having all new houses built, social rented houses built to the Passivhaus standard or something equivalent, because that makes them potentially much more expensive?

Paul McLennan

Yeah, I mean, obviously, at the moment there’s discussions around about how we implement that, you know, is it Passivhaus equivalent? Is it the Scottish Passivhaus equivalent? There’s obviously, we’re continuing to look at that at the moment. The problem would be more clarity around about the legislative programme, if it was through the Programme for Government. Now, unfortunately, because of the UK election, we can’t make any announcements about a Programme for Government or on the medium term financial strategy because we’re not allowed through the election rules to do that. So there will be some announcements, I think probably towards the September time when we come back into Parliament. But there will be some indication around that moving forward.

There’s been various requests to review the legislation that’s going forward. How do we sequence that? How do we do that? And recognise where we are just now. So again, I think there will be more clarity given in terms of that, but we couldn’t because of the rules, unfortunately, around the election, we can’t make any announcements, particularly the programme for government. But again, we’ve been having discussions with stakeholders on that particular point and that’s came across pretty loudly. And again, the Passivhaus movement, I think we have a very strong case for what they’re doing, but we’ve got to make sure it fits into where we are just now, recognising the financial circumstances of where we are and I think that’s got to be in. That will become clearer when the programme for government comes out and where we’re going with some of the reviews of the legislation that we’ve got at the moment.

Kieran Findlay

Since the declaration of a national housing emergency, what steps has the Scottish Government taken to tackle that?

Paul McLennan

I think there’s a number of things on that, and certainly what the Scottish Government’s doing. There was a request for a statement, I think, a week or two ago. We had the Housing 2040 Strategy Group meeting just on Friday, so I think it was important to listen to stakeholders around about that before making a statement without speaking to the major stakeholders. So we kind of agreed some principles broadly around about, you know, how can you build more homes? How can we make the most out of homes that we already have? So that’s dealing with empty homes and voids and issues such as that. And what can we do in terms of tackling homelessness?

So we’ll be making a statement next week on that particular issue. I think one of the key things as well, and again, commending probably Edinburgh and Fife. The local authorities have declared a housing emergency. Edinburgh and Fife have been very quickly moving towards a housing emergency action plan within their own local authority.

So it’s working alongside Fife, Edinburgh, Glasgow, other local authorities with that housing emergency action plan. Because we know the circumstances might be nationally or similar, but locally they can be different and have different contexts. So it’s really important in terms of working with them closely as well. So any local authority, we’re kind of saying, look, by all means declare housing emergency. But having a housing emergency action plan behind that allows us to work very closely with them. And again, it comes back to the asks of UK government.

So it’s a combination of stakeholders, Scottish Government and local authorities and UK Government and one of the biggest issues around about you know for example around about homelessness and you’ll be aware of the Crisis report that came out that was produced by Heriot-Watt University. The two biggest impacts and factors they mentioned was first of all the local housing allowance rate being far too low, it’s been frozen for a number of years and it’s only 30 percentile it should be at least 50 and it should be getting that commitment going forward and the level of universal credits as well as being poverty driven. So that’s the asks for example the UK government as well as additional borrowing powers as well as financial transactions and so on. So it has to be an approach with all stakeholders but I’ll be making a statement next week on that around about the strategy we will be doing and how we plan to implement that as well. But it’s very much a partnership. The Scottish Government can’t do it on its own. It needs the help of local authorities, stakeholders, UK government to try and make progress on that.

Kieran Findlay

Final question. Scottish Housing News has dipped its toe into the events world, we’ve partnered with Horizon Housing to host the Housing and Social Care Accessibility Summit. Minister, you’ve kindly agreed to attend and speak at the summit. In the past, you’ve said that if you invest in housing, it’s build to save. So my question is, could creating more accessible housing create the substantial savings in the health and social care sectors?

Paul McLennan

Absolutely, absolutely. And I think there was consultations recently carried out in that particular point. And so we’ve been working again, if it’s housing with varying needs or adaptations, we’ve been working very closely with the likes of MND, for example, around about what do we need to do to prioritise people with illnesses in terms of that. So it might be MND, it could be cancer and so on. So we’re working very, very closely on that. But in terms of the broader, there’s two things, I think, for me. One, there should be more work around local housing strategies, around about making sure that there’s sufficient capacity within that and if there’s not, how do they plan to roll that out over a period of time? And that comes back to investment into the SHIP program if you like, how does that make sure that’s kind of picked up?

And it is spend to save, because if not, there’s adaptations, if not people will end up in hospital and create problems and might have to be in hospital for a longer period of time than need to be and that creates, obviously, a delayed discharge and so on as well. So very much is spend to save. But it needs to start a local housing strategy through the SHIP programme, and obviously that needs to be supported by local authorities and the Scottish Government. So I’m looking forward to attending the conference and discussing and debating that. So thank you very much for the invite.

Well, thank you for your time today, minister. If you’d like to listen to any other episodes of our podcast on the Housing Bill, we discuss PRS and tenants’ rights, domestic abuse, and homelessness then please visit our website or the show notes for this episode. For more on the accessible housing summit I mentioned set to take place in September please also visit our website. My thanks to my co-host Jimmy Black, thanks to housing minister Paul McLennan. I’m Kieran Findlay and we’ll be back with a new episode in a couple of weeks.