Row over Scottish council housing sell-off
The first serious split in a Scottish Parliamentary committee has occurred over the issue of Housing Stock Transfer. On 21st June the SNP members of the committee walked out, and are threatening a minority report.
The Housing and Social Inclusion Committee of the parliament has been considering the issue of housing stock transfer since September 1999. Literally thousands of pages of evidence have been presented, most of it critical of the Executive's proposals to support the transfer of all council housing stock to Housing Associations, and to extend tenants' right to buy to Housing Associations.
The committee comprises Labour, SNP, Tory and Liberal MSPs, and a consensus report had been agreed at the previous meeting. A report has to be produced by July 3. But on June 19 the Labour chair of the committee presented over 70 amendments, which the SNP claim were designed to remove criticism of the executive and also distorted some of the evidence presented.
The Labour MSP John McAllion remained in the committee. However, he has previously publicly threatened to lead a revolt against extending the right to buy, and is vehemently critical of stock transfers which have directly led to good stock being demolished in his Dundee constituency. His stance will be critical over the coming weeks.
Massive debts
Glasgow council housing has debts of £800 million, the highest rents in the country and some of the poorest condition stock. It is estimated it will cost over £1000 million to bring the stock up to standard.
Due to Tory legislation, not yet repealed, the Council is unable to invest in the stock. Other councils such as Edinburgh, Dundee and Aberdeen are in similar, though less extreme, positions.
A campaign has run for years for the debt to be transferred to central government. Labour however, insisted after taking power at Westminster that this would breach Public Sector Borrowing Requirement guidelines, and undermine Gordon Brown's reputation for financial prudence.
The counter argument - that under ERDF rules as applied throughout Europe (as opposed to arbitrary PSBR rules) housing investment does not count against government borrowing - has never been acknowledged by the government or Scottish Executive.
Labour devised a plan before the Scottish elections to transfer the housing stock to a separately managed Glasgow Housing Association, in return for the debt being transferred to the Scottish Parliament. This would allow the Association to borrow the funds required.
Several million was spent on consultants' reports, which were in turn scrutinised by trade union-sponsored consultants. After much discussion most unions and the STUC came out in opposition to stock transfer. The SNP also adopted a critical position and in general has been critical of all PFI and PPP schemes.
Following the Scottish Elections, the minister for Communities appeared to endorse the plan, whilst introducing new complications. She wanted to bring the stock under control of Community Housing Associations and extending the right to buy. The issue of whether the debt would in fact be taken over has also been left open.
The campaign against
The scheme as currently proposed appears unviable. The proposal to fund £1,600 million investment over 10 years by borrowing against rents might just be attractive to investors over a 30 year period.
But it becomes too risky if right to buy is extended to new tenants, and still less if the stock is split over many housing associations.
Around 20,000 dwellings are multistories which would have no value at the end of 30 years and cannot justify investment, so they will be scheduled for demolition by private financiers.
The unions estimate that if the council retained the stock it would save £200 million in VAT on repairs and over £400 million in management and additional interest costs.
If the Scottish Executive paid the interest and service on the existing debt - around £100 million per annum - the stock could be brought up to standard within 10 years with no further borrowing.
With the proposed scheme, after 10 years debts of over a further £600 million would have arisen. This could only be paid by raised rents.
A vigorous correspondence in the Herald has effectively won the argument at an intellectual level. Most unions and even the UNISON Affiliated Political Fund now oppose the proposals. Briefings have been held for many MSPs and MPs as well as councillors.
Thousands of leaflets have been given out, and meetings held with tenants' associations, SSP and Labour Party meetings. A further study has been commissioned by UNISON into the full report of the Executive's consultants, to remove the final fig leaf from their arguments.
The Parliamentary committee are in possession of the same information as the unions. It was believed their report would be critical of the Executive's actions.
Indeed within the last two weeks the minister announced that her Housing Bill which was expected in February would now not be published till the Autumn. A climbdown could have been in prospect.
Unfortunately the minister has tied herself too closely to the proposals and has been lying about the amount of cash the government will supply, and about the long term intentions for the stock.
A vote in favour was passed by Glasgow council - based on a summary which misinformed councillors.
The story keeps changing. Having lost the argument, there is now a campaign of vilification of the opposition describing them as "a small group of stewards", "the usual suspects" - this to describe amongst others the STUC!
Ultimately the tenants have to vote on proposals. The danger is the government is feeding them a pack of lies and distortions. The stance of the committee thus becomes vital.
Heavy pressure has been brought on Labour members to fall in line. Clearly the chair has buckled to pressure.
The SNP will force a divide. The stance of Labour members like John McAllion is vital. If he stands firm, a repeat of the executive defeat on Warrant Sales is possible.
Whatever happens will be critical not only for stock transfers in Scotland, but throughout the UK and for the future of other PPP type deals.