Scottish Government

EXECUTIVE SUMMARY

Introduction

This report provides an analysis to the Scottish Government consultation "Investing in Affordable Housing". The consultation set out proposals for a more strategic approach to the allocation of subsidy through a network of Lead Developers across Scotland and sought views on the proposed mechanisms for introduction.

General overview

• There was broad support for a more strategic approach to the development of affordable housing in Scotland and respondents supported efforts to make housing investment more effective and efficient. However, most of the consultees (from across the range of respondent groups) raised significant concerns about the proposed Lead Developer approach.
• There was widespread opposition to the idea of Lead Developers as a mandatory approach for most of Scotland. Respondents felt that there are a range of models for partnership (including voluntary development consortia) that should be considered and should be encouraged to develop as appropriate to local context.

Background and economic situation

• Most respondents who offered a view broadly agreed with the economic assessment set out in the consultation. However, there were some concerns that the assessment underestimated the situation and that the situation has worsened since the publication of the consultation document.
• Overall, a majority of respondents who offered a view on this issue felt that the current economic climate weakens the case for investment reform, and in particular, weakens the case for the specific reforms proposed in the consultation document.

A more strategic approach

• A strong majority agreed with the principle that Strategic Housing Investment Plans (and related strategies) should form the basis of investment priorities for five years.
• Nearly three-quarters of respondents disagreed with the approach to geographic regions for investment. The size of the possible regions suggested in the consultation was the biggest concern.
• Most respondents commenting on the proposed treatment of Orkney, Shetland and the Western Isles agreed with the approach, assuming the proposed regional approach were to be taken forward. There were more mixed views on the proposed approach for Glasgow City and City of Edinburgh Councils.
• There was strong agreement amongst respondents that Councils, in collaboration with RSLs, should advise on the regions if the proposals go ahead.
• Overall, respondents broadly agreed with the content proposed for Prospectuses. Concerns related to issues of duplication and additional layers of bureaucracy.
• There were concerns that the move to a regionalised approach to development would marginalise specialist housing requirements due to costs and added complexity.
• Most respondents agreed that there would be a need to provide guidance on maximum rent levels.

Lead Developers

• Most responses were negative in relation to the benefits of Lead Developers. By far the most common concern was a perceived lack of evidence to support the benefits listed in the consultation document. Another significant concern was the increased level of risk that lead developers may be exposed to - and the lack of clear incentives for lead developers to balance these risks.
• A majority of respondents felt that there were issues for non-developing RSLs that had not been considered in the Lead Developer proposals. Several respondents raised concerns that non-developing RSLs would be marginalised in the proposed system.
• There were mixed views on the proposed routes for establishing Lead Developers. Many respondents said that there was a need for greater clarity on the process and calls for more detail on the pre-qualification criteria.

Development consortia

• In relation to development consortia, by far the most common area of concern was about the role of Lead Developers and the perceived inequality that will result. Respondents were concerned that Lead Developers will potentially dominate consortia with non-developing RSLs in a 'client' role.
• While some welcomed the flexibility that had been described in the consultation document, others felt the proposals were too prescriptive and describe a 'one type fits all' solution.
• Respondents said that they would like further guidance in relation to governance issues for consortia and Lead Developers.
• A majority of respondents felt that there were circumstances in which consortium members should include local authorities and other non- RSL bodies. It was felt that this could broaden efficiencies and increase skills and expertise in consortia. However, there were some concerns in relation to local authority involvement and potential conflicts of interest if they become members of consortia.
• A majority of respondents said that there are circumstances in which bodies other than RSLs might be eligible to become heads of consortia and Lead Developers. There was support for non- RSL delivery vehicles (including existing development consortia) to act as Lead Developer.

Proposed competitive mechanisms

• Most respondents agreed there was merit in introducing a pre-qualification process in any new arrangements. However, a number of local authorities suggested that they had a role in the assessment process as the strategic housing authority.
• Respondents were supportive of the criteria and information requirements set out in the document as a basis for the pre-qualification process.
• Respondents broadly agreed with the proposed approach to the development of an assessment framework. Local authorities generally welcomed the assessment framework being progressed jointly with COSLA and the SFHA although a number suggested that the role of local authorities required to be clarified.
• A majority of respondents disagreed with the proposed approach to the appointment and management of Lead Developers.
• Respondents suggested that grant arrangements could be improved through streamlining of the project assessment / appraisal process. Many proposed that longer term programmes were the priority.

Implementation

• A large majority of respondents raised concerns over the proposed implementation timescales. Phases such as "overly ambitious", "challenging" and "unrealistic" were common responses.