Carrying the torch

Scottish housing systems and policies differ from the other countries and regions within the UK. These have reflected history and administrative decentralisation as well as quite different regional economic fortunes. However, there are also important cross regional/national commonalities in not only social and economic trends but in the ideas and instruments of housing policy. Indeed as the pressures for regional governance in Britain have grown, paradoxically, the key financial drivers of housing policy have become increasingly national rather than regional instruments, for example benefit and tax policies.

As the present government took office it was apparent that Conservative policies were running out of steam and that the key requirements for the future were:

• relatively stable and efficient housing market
  
• A non-market housing sector with efficient organisation, consistent pricing and the capacity to use private finance
  
• A coherent system of subsidising low income households, avoiding poverty traps

Clearly housing policy developments also had to link to new, wider objectives about social inclusion, empowerment, governance and fiscal prudence. What progress has been made?

Scotland has adapted quickly to the emphasis of promoting social inclusion through "joined-up" and community-led initiatives. Such approaches represented a continuity in Scottish Office thinking about regeneration and social inclusion partnerships are now being established. Past emphasis on multi-sectoral action, partnership and community-based housing action have facilitated this change though Scotland will have much to gain from examining the good practice discussions ongoing in England. In Scotland, as in England, the adaptive nature of interest rate policy has ensured relative housing market stability in the medium term. Arguably however, Scottish thinking on the housing market is now remiss in that, unlike England, there has been no vigorous debate on future housing demand and planning system effectiveness and the fast, but expensive, house sales system has escaped review (in contrast to England).

If Scotland and England have shared a new "tone" of policy and a sustained failure to develop housing market policies they have, over the last year, diverged sharply in policy thinking about the non-market sector. In England there are mixed, rather unclear signals about the rental sector; long-term rent restructuring issues have been barely addressed, housing benefit reform debates continue and the future role of the Housing Corporation becomes less and less clear. Reforming council housing is an activity in which Scotland typically, and expensively, lags behind England. However, for once, there is an early gleam in the north which may lead to more enlightened non-market provision, not just in Scotland but in England too. Re-engineering the government of Scotland and creating the Scottish Parliament has required Scotland to confront the fiscal cost and operational adequacy of its still vast council housing systems. This issue and opportunity now dominate policy discussion in Scotland. Although non-market rents in Scotland rose significantly after 1980, they did so less than in England and, at present, equivalent Scottish rents lie at about one-third below England. This has two important consequences; first, housing benefit per council tenant in Scotland is significantly less than in England; secondly, stock transfer values (largely and mistakenly, driven by existing rent levels) are lower in Scotland than England. At the same time, until 1995 there were weak restrictions on Scottish authorities" use of housing sales receipts and debt repayment was not a priority. In consequence, and with a different current account subsidy system for council housing, few Scottish councils manifested interest in pre-1997 LSVT proposals; stock transfer (Scottish Homes excepted) was seen as an "English" policy.

The Scottish Parliament will have both great aspirations and a limited Public Expenditure Survey budget. The future government of Scotland has, as one of few feasible alternatives, the option of reducing PES spending on housing. This option is attractive because following local authority stock transfer, present expenditure on public housing investment could be replaced by private spending and public debt redeemed. In fact, the low rents of Scottish public housing and the past non-repayment of debt mean that, in contrast to England, there is an estimated £3 billion of debt which will not be covered by LSVT receipts.

However, over a number of years (a five to seven year period) it makes sense to repay this net debt from the PES line. The Parliament will have to work to free itself from past debt, but assistance with net debt repayment will be a powerful incentive for councils to forego their municipal ownership role. But is Scotland, with all its "Old Labour" producer interests in owning housing, ready to embrace community-led housing ownership? But is Scotland, with all its "Old Labour" producer interests in owning housing, ready to embrace community-led housing ownership? The positive experience of community-based housing associations in Scotland indicates both appetite and aptitude for community ownership and, whilst recognising external financial constraints, there is no escaping the history of poor housing investment and management decisions in many Scottish councils.

The Scottish Office, in embracing stock transfer to promote community-based ownership, are, arguably, not simply preaching financial exigency but aiming for a model which could improve both housing provision and local government. And they are right to insist on complete rather than partial transfer of stock currently municipally owned.

Public debate on these issues has, perhaps unfortunately, focussed on the City of Glasgow's proposal to transfer its "core stock" of 70,000 units (the fate of the remaining 15,000 units is unclear) to a single housing company. There is a possibility of further onward transfer to "community vehicles". This rather Augustinian approach ... "Lord make our communities empowered, but not yet"...crucially depends on assisted debt write-off. According to the council its stock is worth £13 million (this figure alone constitutes a good argument as to why stock transfer is so desirable - how effective is a system which transforms billions of pounds in investment and 70,000 homes into an asset of £13 million!) but almost £1 billion of debt is outstanding.

The council's proposals fail to make clear the case for their "single owner" vehicle and there remains scepticism that the proposed shape of the transfer is more to protect politician and producer interests rather than empower communities. There seems to be no willingness to involve numerous successful associations in the transfer process and this makes little sense from a system perspective. More dispersed ownership would not only empower communities but offer more rather than less scope for local councillor involvement on committees. Glasgow needs to take this opportunity to create new, localised, purposive vehicles for change on its housing estates. If it does it will change the city for the better and, in turn, Scotland. If it does not aim for such change then the Parliament may be better to use scarce debt redemption funds in those other authorities which are committed to real change.

And why do Glasgow and Scotland matter in the UK context? If Scotland's old authorities sign-up for stock transfer it may help clarify the means and purpose of non-market housing policy for England. But is that not the benefit of re-engineering governance within Britain? Regional devolution may encourage innovation in policy with wider national significance. The gleam in the north has to become a real beacon for housing system change in Britain.