Scottish Government

Review of Scotland's Cities - The Analysis

4.3.5 Housing Tenure: Changing Social Housing

Across the advanced economies cities typically have a higher share of rental housing than national averages. The share of rental housing also varies markedly across countries, usually with higher shares of rental housing in the more affluent countries of Western Europe. Scotland, for as long as statistics have been available, has had a lower rate of home ownership than England and also a higher share of its rental housing in the non-market sector. Indeed, more than any other cities outside of the former Eastern bloc, Scotland had a housing system, and urban landscape, dominated by public, large-scale landlordism. The way our cities look and feel, how they are laid out and where the rich and poor are located, has a great deal to do with essentially, state planning of housing between 1950 and 1975.

For much of the latter half of the twentieth century local authority housing was the dominant tenure in Scotland and particularly so in urban areas. There were variations within urban Scotland however, with Glasgow in 1981 having 63% of its stock owned by the Council and Dundee 62% compared to 33% in Edinburgh and 43% in Inverness. Aberdeen had close to the Scottish average of 53%. However since that period there has been a sea change in tenure arrangements within the cities. The changes in share are shown in Chart 4.2 and the tenure pattern for 1999 in Chart 4.3.

By the middle of the 1970's, indeed as the Labour government published their Green Paper for housing in Scotland in 1977, there was already a recognition that Scotland's cities had a potential over-provision of council housing, at least in Glasgow and Dundee. In the former it was already apparent that middle income households were being forced out of the city because of lack of home-ownership options, options that tax arrangements and then rising inflation favoured. This was apparent throughout the 1970's and 1980's, as many households with incomes living as council tenants could not purchase their homes but left the estates instead.

However the marked tenure changes depicted in Chart 4.2 always had strong ideological drivers and have had major implications for choice and flexibility in our cities. These tenures are different arrangements of property rights and they lead to quite different ways of choosing property, different ways of capturing the gains from price inflation and quite different ways to access funds for repairs and improvements. It is always essential to bear in mind that tenure change is system change.

There have been three different forces at work - spending and rules favouring not-for-profits; the Right To Buy; council demolition and debts.

4.3.6 Promoting Not-for-Profits

Right To Buy legislation and the allocation of spending permissions by governments since the early 1980's have meant that where social housing investment was required the not-for-profit housing association sector was favoured. This was most evident in Glasgow and least in Aberdeen, but in all instances laid the foundations for a more community-based approach to housing provision in the non-market sector. The Scottish cities, especially Glasgow, are the most intensively community oriented housing provision systems in the UK. This shift was reinforced, after the late 1980's, when some councils began to transfer the worst of their estates to associations for renewal and when Scottish Homes initiated the process of small transfers of some 45,000 homes to associations. By 2002 these shifts had also transferred nearly 84,000 council homes to associations in the cities. This process of partial stock transfer has continued in Dundee, for instance Ardler, and Edinburgh, for instance Craigmillar, but has not occurred in Aberdeen or Inverness.

Research evidence suggests that the general effect of transfers to social landlords in Scotland has been positive for homes, staff and tenants and has reduced pressures on the Scottish budget as borrowing for upgrading has been off the public balance sheet. The Glasgow whole stock transfer ballot has indicated the tenants' appetite, when given the choice, to make major changes to housing provision in our cities. The experience of the last twenty years in the social rental sector, has been to create a more diverse and community driven system instead of relying solely on municipal provision of housing. However, it is as yet unclear whether other cities in Scotland will adopt the same approach as Glasgow. Those decisions will ultimately impact strongly on Scottish housing policy more generally.

4.3.7 Right To Buy

Right To Buy has reduced local authority provision within the cities, and contributed to about half of the tenure change. In reviewing the evidence on Right To Buy in Scotland, prior to the significant reforms of Right To Buy in the 2000 Housing Act, the Executive argued that Right To Buy had impacted quite differently on local housing contexts and had been neither unambiguously good nor unambiguously bad for Scotland's cities. Tenant choice had been extended, in the short term, and estates remained more socially mixed than they would otherwise have become. But new waiting list entrants had narrower choices and, often, longer waits for decent homes. Some tenants made easy and disproportionate gains by selling homes purchased through Right To Buy. ³⁵

The Executive reformed the Right To Buy to reduce such large gains and raised the possibility of suspending Right To Buy in pressured areas. The net effect for our cities should be a slower attrition of the social housing stock in general and a particular reduction of stock losses in areas undergoing the pressures of expanding needs and demands. It can be argued there is evidence of significant demand pressures in all but the worst areas of Edinburgh's housing stock. We do not believe that to be true of the overall pattern of provision in Glasgow and Dundee, though there may be local areas with acute pressure. Both of these cities, and particularly the former, illustrate the third reason why tenure change has been pronounced.

4.3.8 Debt and Demolition

Most Scots are aware of how slum clearance radically altered the landscape of Scotland's cities into the early 1970's. ³⁶ And that involved the large scale demolition of older, private housing. Since the 1980's there have been demolitions of market based dwellings in Scotland's cities, but there has been a rising rate of demolitions of council housing, mainly that of post-war vintage with residual loan debt still to be repaid.

Scotland's cities have not generally manifested the 'low-demand' and abandonment of low value owner occupied homes so evident in Northern English cities over the last decade (though there are growing signs of deterioration in some poorer neighbourhoods comprised of older privately owned tenements close to the centre of Dundee). This has been for two reasons. First, the broad thrust of the 'market renewal' packages now being introduced in England are more or less what Communities Scotland and its predecessors have implemented for almost the last quarter century, especially in Glasgow and the other Scottish cities. That strategy involved buying-out the worst private tenements and concentrating grant-aid for rehabilitation into community-led housing associations. These improving neighbourhoods then acted as regeneration 'poles'. Existing home-owners significantly raised their utilisation of home improvement and repair grants, though local authorities have now almost curtailed such activity since previously ring-fenced grants have fallen by two thirds since they were made part of general capital. Private developers, witnessing the improvement of the existing stock, then showed renewed interest in vacant land in adjacent sites.

The second reason is that the abandonment of the poorest urban housing in Scotland has been in the council sector, not the market. Vacancies, abandonment and demolition of council housing were slow growing processes through the 1980's that then accelerated through the 1990's. The Scottish cities demolished 30,400 housing units in the decade 1991-2000 (a total similar to the current council housing stock of Aberdeen). The municipal bulldozers have been most active in Glasgow and Dundee (see Table 4.5) throughout the 1990's. These demolitions have not been balanced by new build in Dundee where the total housing stock has reduced. In Glasgow new build has exceeded demolitions by only 1,123 over the five-year period 1995-2000. There has also been a significant but smaller demolition programme in Edinburgh but this has been far outweighed by vigorous new build, giving a net stock increase of over 10,000. There has also been considerable new build in Aberdeen and very few demolitions, resulting in a net stock increase of over 5,000.

TABLE 4.5: Demolitions and new build 1995/6 to 1999/00

Source: Scottish Executive Housing Division

Demolitions have proceeded steadily, quietly and often non-strategically. They have not led, in the main, to the outrage of communities, for often demolition occurred when houses had lain vacant, because households, even in housing-short localities, had steadily refused to live in them. The extent of these demolitions is worrying and represents an organisational failure in our city housing systems.

Bad planning (providing the wrong types of units in the wrong places), poor management (with absence of coherent maintenance programmes until houses were already obsolete and only minor, peripatetic attempts at tenant involvement and management) and poor pricing (with half-abandoned homes commanding above average rents simply because housing benefit was usually paying the bills) all contributed to the premature demolition of stock.

Councils could claim that government financial policies also contributed to the difficulties. Limits on borrowing for housing constrained the scope of modernisation. Right To Buy sales policies, until 1995, meant that when homes were sold there was little pressure to repay outstanding debt from council housing provision. Unlike England, Scottish councils were encouraged to sell their housing assets and not repay their debts. The landscape of abandoned council homes and littered brownfield sites that we can see in most of Scotland cities, and larger towns too, is a bleak memorial of past policy failure. It illustrates all too well how some policy spending in our cities has exacerbated the problems of social and environmental justice rather than improved matters.

Too often physical housing decay has been followed by demolition and demolition by unpaid housing debt. Unpaid debt with capital and interest to be repaid, with fewer tenants left to pay, means either rising rents, with no service increase, or reduced services, that is curtailing management and maintenance. But reduced management and maintenance then means higher vacancy rates, more abandonment and more demolitions. The consequent demands on the Scottish housing budget, to stop this vicious spiral, are enormous and, if pursued by traditional on-budget means, could require a major expansion of the housing budget for at least the next decade, and probably two, to ensure a decent Scottish standard. The Glasgow stock-transfer solution which the Executive have supported strongly, offers the prospect of system change with more community ownership and involvement in decisions (reducing the prospect of future decay), Treasury write-off of 1 billion of overhanging debt (to leave room to pay for a 5 billion improvement programme) as well as a doubling of the housing association new investment programme in the city over the next decade. Debt write-off, only available for transfers, means improved homes for Scotland without having to reduce education, policing or health services.

Research evidence shows that securing adequate housing is not the problem that affects the greatest number of Scots, but for our poorest households, perhaps the poorest fifth, in all the cities it remains a critical shaper of household wellbeing and capabilities. The emerging arrangements in Glasgow illustrate the real possibilities when cities concentrate on what works for citizens. There may be Scottish councils where demolitions are minimal, debt per dwelling minimal (or even surplus values on units), stock well managed and maintained and tenants involved in decision taking. In these places where systems work well for tenants, transfer may not be the option preferred locally. However where providing adequate quality and quantity of social stock to meet policy requirements will place a disproportionate demand on Executive resources, or where management systems have manifestly failed and excluded tenant involvement and community ownership choices, then the Executive has a strong preference for tenants to be balloted to assess the demand for stock transfer.

At present, Glasgow excepted, the cities have not chosen the stock transfer option. Councils with high rents, high debts per house and significant investment needs are those which need to look to transfer if their stock is to be improved. Tables 4.6 and 4.7 below show respectively, rent levels and debt per unit for Scotland and the cities (individually). These figures make it quite apparent that in at least two of our major cities, Edinburgh and Dundee, the stock is declining even as rents are increased. Since its inception the Scottish Parliament has seen the introduction of a more coherent legislative framework for a diverse social housing sector in Scotland and the development of new financial and organisational models through stock transfer. But there is much to do to make the potential improvements a reality in the estates of our cities and the present policy either has to be accelerated or municipal spending significantly increased (probably trebled) if housing quality in the cities is to be improved and city populations stabilised.

TABLE 4.6: Average Council House Rents (per house per week)

TABLE 4.7: Housing Revenue Account: Average Debt per House

4.3.9 New Homes and New Systems

Right To Buy, government borrowing restrictions and the promotion of associations has meant that there has been little new construction by councils in our cities since 1980. Chart 4.4 shows new build for each of the Housing Market Area (HMA's) split into private housing for sale and social rented housing (largely housing association) from 1989 to 2000. The overwhelming emphasis has been on construction for owner occupation in all five HMAs, the highest proportion of new build for social housing being 27% in the Dundee HMA.

Demolitions, the Right To Buy, the transfer of large parts of the local authority stock into housing association ownership and the virtual disappearance of new council construction have all reduced the size and relative share of public sector housing in our cities. That share has fallen by a quarter or more in Aberdeen, Dundee and Glasgow and by a sixth in Edinburgh (where the public sector was smaller to begin with). The nature of the stock remaining in local authority hands has changed and it is now characterised by flats and is more concentrated in the unpopular schemes.

Local authority housing is no longer the dominant tenure in any of the five cities but is itself increasingly dominated by poorer households. Community voice has played a greater role in social housing but it is consumer choice that has been the fastest growing sector in our cities, and especially the growth of home-ownership. Owner occupation now makes up more than half of the stock in all the cities except Glasgow. To secure the best residential future in the cities it will be important not only to retain social housing to meet needs and to improve its quality but also to ensure that city housing markets work effectively.