Attendees and apologies
- James Ayling, NHS Borders
- Mike Cantlay, Scottish Funding Council
- Elizabeth Corcoran, Skills Development Scotland
- Jenni Craig, Scottish Borders Council
- Michael Crawford, Rural Renaissance Ltd
- Rob Dickson, VisitScotland
- Archie Dryburgh, Dumfries and Galloway Council
- John Evans, VCB
- Alan Glasgow, Wheatley Homes South
- Professor Russel Griggs, South of Scotland Enterprise
- Scott Hamilton, Scottish Borders Council
- Mark Hunter, Scottish Water
- Euan Jardine, Scottish Borders Council
- Mary McAllan, Scottish Government
- Ray McCowan, Borders College
- Mark McMullen, Scottish Enterprise
- Jane Morrison-Ross , South of Scotland Enterprise
- Elizabeth Passey, University of Glasgow
- Bruce Pritchard, HWU
- Shona Robison, Scottish Government
- Mike Staples, South of Scotland Community Housing
- Caroline Stuart, Dumfries and Galloway College
- John Swinney, Scottish Government
- Stephen Thompson, Dumfries and Galloway Council
Items and actions
- 10:00 – 10:10 Welcome and Review of Previous Outcomes
- 10:10 – 10:25 Update from Regional Economic Partnership
- 10:25 – 13:05 Housing and Economy: sectoral approaches
- 10:25 – 10:35 Introduction and context setting (including video)
- 10:35 – 11:45 Session One – Developing Housing in the SoS
- 11:45 – 11:55 Comfort Break
- 11:55 – 13:05 Session Two – Affordable Housing - Registered Social Landlords and Community Led Housing
- 13:05 – 13:35 Lunch
- 13:35 – 14:05 Session Three – Private Rental Sector
- 14:05 – 14:15 Housing and Economy: drawing discussion together
- 14:15 – 14:25 Refreshment Break
- 14:25 – 14:35 Outcomes
- 14:35 – 14:40 Forward look and Close
Start of Transcript
Good morning, everyone. Welcome to the Convention of the South of Scotland. I'm John Swinney, Deputy First Minister. It's my pleasure once again to convene the Convention of the South of Scotland. Thank you to Councillor Stephen Thompson, the Leader of Dumfries and Galloway Council, for the hospitality of the council in hosting this meeting today. We gather twice a year to look at issues of joint endeavour and of importance to the South of Scotland, drawing together all the various interested parties around the table today, the local authorities principally in Dumfries and Galloway and the Scottish Borders, the local enterprise company, South of Scotland Enterprise, the colleges and various - I'm just looking round to see I'm not insulting anybody - NHS Borders, Scottish Enterprise as well, Skills Development Scotland along with the government, to try to create common purpose.
I'm delighted at the way in which the agenda's been constructed today because, at our last session, we aired the importance of the issues around housing and housing supply, the interconnectedness of those issues with the economic agenda. The way in which the agenda has been structured today I think gives us a whole-day opportunity to try to wrestle with, well, how do some of these issues come together? How can they be resolved? What are the obstacles and barriers and questions that need to be considered in that respect? I'm very grateful to everyone who's contributed to putting together that agenda.
Unfortunately due to some domestic challenges I've got today, I'll have to leave at lunchtime. But Shona Robison - the Cabinet Secretary for Social Justice, Housing and Local Government - is with me all day and will convene the session to its conclusion later on today. I'll be here to just the break that we have for lunch, but Shona will be able to steer us to conclusions. Of course, the issues of housing are absolutely fundamental to Shona's responsibilities within government.
A welcome to everybody. To those of you who haven't participated in the Convention of the South of Scotland before, this is an open and courteous forum, so please just indicate if you want to speak. Those who are facilitating the sessions will invite you in to contribute. There is a public record obviously taken of this meeting. Know that the fact that there's cameras in front of me means that somehow this is being broadcast to people. It is. I'm getting a nod of the head. I suppose that's a warning for me to be careful what I say as much as a warning to anybody else in the room.
In terms of the day's structure, there will be live tweeting - the hashtag will be in your papers - @SpringCoSS2023. There's no fire alarm planned today. Catering for the refreshment break will be provided in the same area as lunch, which is a room to the right, which I presume is over there. I think that's all the housekeeping points I need to do just now.
In relation to the previous outcomes paper, that's there for everyone to note. Part of what we do at these discussions is take forward the agenda items to make sure that we've got accountability in building on those particular points. We'll continue that monitoring in the light of this meeting.
The first item of substance on our agenda today is in relation to an update from the Regional Economic Partnership. Let me just say a few words before I invite Councillor Stephen Thompson to speak on behalf of the Regional Economic Partnership. This is a really important body. Looking at the government's National Strategy for Economic Transformation, one of the key themes in that strategy is the importance of strong regional economies, so having a sense of common purpose in the regions of Scotland to ensure that we are maximising the economic potential and capability of all areas is fundamental to the overall performance of the Scottish economy.
The themes in the national strategy are mutually supportive, but one point that I would want to stress at the outset and in making the introduction to this item is the importance we attach to ensuring that we have distinctive economic approaches in each part of the country. By that, I mean that we have to satisfy ourselves in government that we are focused on what needs to be done in all different localities to generate the maximum economic impact possible.
It's not good enough for us to content ourselves that economic growth over the whole of Scotland might be at an acceptable level, but it's deficient in, for example, the South of Scotland or the North East of Scotland or the West of Scotland. We've got to work actively - and that's the core purpose of the South of Scotland Enterprise - to engage different organisations and bodies to make sure that we have the right economic plans in place in localities to ensure that we can deliver investments, that we can take the necessary steps to boost growth, that we can remove impediments and obstacles to development where they arise. The Regional Economic Partnership is the intervention that enables us to do that.
We have an update paper from the partnership. I'll invite Councillor Stephen Thompson to speak to that and then I'll take any other contributions and comments from people before we move on to the substance of the agenda on housing issues. I think for the purposes of today - and I'm looking for the sound people over here - I take it we're just pressing the button in front of you. I suspect it's probably one microphone on at the one time, so if we could just be attentive to that - so Stephen, over to you.
Thank you, Deputy First Minister and members of the convention. I suppose maybe a bit after the fact now, but I'd like to extend a warm welcome on behalf of Dumfries and Galloway Council to this seventh meeting of the convention. It's great to see everybody in person. I think we've made considerable progress since the convention was established, setting shared ambitions for economic and social prosperity for the south and developing our partnership, working to ensure these are achieved. It's good to have this focus on housing and economy at the convention today, but I'll just go on to introducing the paper in terms of the REP which I think is item or papers 3 in your set.
As the update paper suggests, we've made good progress over the last few months, sustaining momentum on the delivery of our regional strategy, considering a wide range of issues and opportunities to support the economy in the South of Scotland and conducting our planned refresh of the membership of the partnership. Building on the momentum created by the partnership, engaging new members is a focus for us at the moment. I'm pleased to say that the drive and focus to work together for the South of Scotland remains central to our ethos. The partnership has also agreed there's an opportunity to build greater awareness of the role of the REP and how it's delivering for the region, so we intend to raise the profile of the partnership and demonstrate what it does, making our engagement and delivery even more valued and responsive to regional issues.
I think, Deputy First Minister, our paper makes specific asks of the convention today, which is to welcome the continued progress on the delivery of the RES or Regional Economic Strategy during 2022, acknowledge the refresh of the REP membership as part of the planned review and recruitment programme, endorse the work of the REP in its consideration of a wide range of issues and opportunities to support the economy in the South of Scotland and support the South of Scotland REP partners in their planned further engagement with local communities and business. I look forward to the convention's reaction and reflection. Thank you.
Thanks very much, Stephen. I'll take any contributions that anyone wants to make to this item before we make any more progress. Any points anyone wants to raise?
I think from my perspective, what I would simply encourage the Regional Economic Partnership to do is to actively challenge itself in relation to meeting the terms of the national strategy, because I think in a number of different respects, whether - the big themes of the national strategy are around the creation of an entrepreneurial culture through entrepreneurial people. Obviously right across the South of Scotland, there's a huge amount of enterprise delivered and deployed. There is the emphasis on the development of skills and skilled personnel and meeting the skills needs, which is a joint endeavour with Skills Development Scotland, our colleges and the universities and particularly around the Crichton Campus with all the strength that is embodied here. Then there is that focus on the development of strong regional economies into the bargain.
I think the point of guidance I would give to the partnership is constantly be challenging about what needs to be done to practically live up to the challenges set out by the national strategy, so I'm keen to make sure that sense is underpinning all the conversations within the Regional Economic Partnership. I'll take Russel Griggs.
Thank you, Deputy First Minister. I think you know that our RES is about - it probably is as close to the national NSET as it can be. We've had interesting discussions over the last six months about who followed whom, so we are very much aligned in terms of what we want to do.
I think the point that Councillor Thompson made in terms of refreshing the membership of this will feed into the point that you want, because we've added the two health boards now, the Regional Economic Partnership, Historic Environment Scotland, the South of Scotland Destination Alliance. It's a much broader kirk than it was before, but that we need to take into the wide challenges that NSET [sells] us all, which we'll address with RES. Indeed I think in terms of the two health boards and the subject we're going to talk about today - which is housing - they've brought an even more different perspective, because NHS staff have different requirements from housing than some of the general staff in Scotland because of the particular criteria that they are putting about what housing a junior doctor will have, et cetera. You have a different layer of complexity if I can put it that way. But no, in terms of the NSET, we are on the same page.
Okay. Thanks, Russel. Any other observations? [Pause] Okay, we'll leave it at that. We'll agree the points that Stephen put to us, which are contained in item 1.2 of the paper. We welcome the continued progress and delivery of the Regional Economic Strategy, acknowledge the refresh of the REP membership as part of the planned review and recruitment programme. We'll endorse the work of the Regional Economic Partnership in its consideration of a wide range of issues and opportunities to support the economy in the South of Scotland. We'll support the South of Scotland REP partners in their planned further engagement with local communities and business.
Let's move on now then to the first of two sessions that we'll run before lunchtime. These are on housing and the economy and the [sectoral] issues involved. The first session is on developing housing in the South of Scotland. No, we're not - I'm sorry. I'm a step ahead of myself. I'm going to actually invite you, Shona, to open this session, sorry. I was a wee bit further ahead of myself. I'll invite Shona to say a few words about this session. We'll then hear from Euan Jardine, the Leader of the Scottish Borders Council, who will introduce a video on this point. Over to you, Shona.
Thanks, DFM. Good morning, everyone. It's good to be here. I recognise some faces but not all, so I hope to get to know the rest of you through the course of today.
I attended on Friday a rural housing conference near your own patch in Birnam, yes. It was a very good conference and very much making the linkages between the local economy, housing, keyworker housing in particular, and the need for innovation and the ability to retain young people living within the communities they were brought up but also to attract new people to come and live and work within communities. Some of that will be around long-term settled housing. Some of it may be more around the needs of seasonal workers and temporary accommodation. There's not one size fits all here, but certainly I am very keen - as is the government - to help you to find solutions to the housing needs within the South of Scotland so recognising really the important role that housing plays promoting economic growth and as a key enabler to making the change that we need to see in our local economies.
Housing, of course, needs to be the right type in the right place to meet those identified local needs and can have a very powerful and generational impact, supporting people to access the housing they need, as I say enabling young people to stay in the communities in which they grew up and importantly supporting local businesses to retain and attract employees. That's, of course, why we have our ambitious target of 110,000 affordable homes by 2032. But we've also said that at least - and this is a minimum - of these needs to be in our remote, rural and island communities. That was really to try and drive innovation within rural Scotland.
Today's paper titled Housing and the Economy is I think the mark of strong collaborative working between South of Scotland Enterprise, Dumfries and Galloway Council, Scottish Borders Council as well as registered social landlords and rural housing enablers. I want to thank the South of Scotland Enterprise for the approach that it's taken in driving this collaborative effort forward locally and for engaging with a wide range of local partners as well as my officials to seek views and importantly to consider potential solutions to address the challenges of delivering more homes in the South of Scotland area.
As you'll be aware - I hope you're aware - we are developing a Remote, Rural and Islands Housing Action Plan that I'm aiming to publish in the spring. My officials are progressing the development of a range of priority work strands to inform the content of the action plan. Among these we will seek to strengthen alignment between housing and the economy, to provide continued support to enable rural and island communities to bring forward their housing projects to meet the needs of local communities and also better align the activity of partners in rural and island areas so that there's a stronger sense of shared outcomes.
I'm hoping this plan will help to address some of the barriers and try to tackle some of the time that it sometimes takes to get projects from conception through to delivery. Some of those are understandable, complex issues around land ownership for example. But I think there's more we can do to try to make it easier, particularly for community-led solutions and helping those communities to build the capacity to help them deliver some housing solutions. Every organisation here today has an important role to play in informing and achieving this. Through strong collaboration and joint working, I'm confident that those collective ambitions can be achieved. I'd like to pass over to Councillor Jardine.
Thank you, Cabinet Secretary. Thank you, Deputy First Minister. I'm pleased to introduce this film that highlights the significant housing issues and opportunities which are fundamental to the successful economic and social development of the South of Scotland. The film highlights the very real challenges faced by our businesses and communities caused by lack of housing and also the positive developments that have been enabled with investment from the Scottish Government, local authorities, SOSE and RSLs. It sets the scene for our discussion today, demonstrating the need and the opportunity for us to work together to enable the development of more housing of all types and tenures across the South of Scotland to drive inclusive economic growth. Thank you.
Right. Thank you very much for that. It's a very interesting piece of work and a very helpful piece of work. I think a couple of observations that leap out at me right away, first was the observation about there being limited housebuilders active in the area and what that throws up as a challenge in terms of economic opportunity and economic contribution.
The second point, which was made by [Stacey Bradley] in relation to the development at Langholm and also made by Vicky Davidson in relation to the steading's [purpose]. It's a point which I'm habitually obsessed about, which is the repurposing of existing buildings. My constituency, in large measure, is pretty similar to the Scottish Borders, a collection of small towns. All of those towns face challenges as a consequence of the changes in the way in which we all live our lives, the retail environment and all the rest of it. Some of these towns, there's a lot of really fabulous existing buildings, but they're complex projects to try to repurpose those. But I think the concept of using some of our existing built environment but repurposing it and rejuvenating communities is a really important consideration for us to reflect on. I think that film helps to set the scene for some of the challenging issues that we've got to wrestle with today.
Let's move on then to the first of the substantive discussions. I'm going to invite Diarmaid Lawlor of the Scottish Futures Trust to open up the discussion and facilitate our discussion. I'll keep things pushing along. But Diarmaid, can I invite you to open up the discussion? We'll take it from there.
Thank you very much, Deputy First Minister and Cabinet Secretary, Councillor Thompson and Jardine. Delighted to be here, fantastic, in the South of Scotland and really pleased to be able to facilitate this session. The purpose of this session is to bring developers and infrastructure providers together to explore the barriers to development for national developers and also some of the barriers for the small and medium enterprises. We'll then look at how we can work together to realise the significant opportunities for development in the region.
If I may just before we get into the discussion and introduce the panel, just to take the opportunity to thank everybody for the context setting but also to offer a small number of reflections on what's happened thus far so we can enter into the discussion. A couple of things just to pick out on the film and the presentations from colleagues. Really interested in the idea of distinctiveness of this region. I suppose one of the bits that we really want to get in in the discussion, there are general housing issues and infrastructure issues, but it's the specific issues about where Scotland starts, that distinctiveness of here and within that - to build on your opening statement, Cabinet Secretary or Deputy First Minister - around different economic approaches. If we're talking about the distinctiveness of here, the different economic approaches of here and the foundations of that are around working actively and engaging differently. Distinctiveness of here, working actively and engaging differently.
The other two bits, just to pick up on, are around rural innovation and adaptation so your last point exactly on retrofit but also the innovation that's already here in this region as you've quite ably demonstrated and, to Professor Griggs' point, around some of the specific housing needs of this area. Just to take that opportunity to reflect on some of the opening statements.
I'd like to introduce the panel this morning and welcome interventions. Unfortunately my eyesight is not as well as Specsavers say it is, so if anyone wants to make an intervention around - if you take my apologies, I probably can't read the name, so if you just put your hand up, I'll take the submission.
But just to take the opportunity to welcome our fantastic panel here first, so just on the end, I'd like to introduce Liz Hamilton who's the Director of Planning for Homes for Scotland. We also have Neil Martin, Senior Land Manager of Persimmon East of Scotland. We've got Andrew Roberts, Strategic Land Director on Taylor Wimpey. Welcome. Mark Hunter, the General Manager, Development Services on Scottish Water. Thank you. Dave Bisset, Development Planner of Scottish Water. Really great to have all the infrastructure providers. Fergus Tickell, Head of System Transformation in SGN. We also have Ken Bowie, District General Manager for Dumfries and Galloway in SPEN, and Craig Arthur, Operational Director for SPD in SPEN as well. Thank you very much to all the panel.
If I could, just to build on the discussion that you've quite helpfully laid out this morning around distinctiveness, I'd like maybe to invite our private sector partners just to give us a little sense - no doubt we'll get into the challenges and priorities in a little while, but I'm really particularly interested in how we can build on the context that's been laid out in the films about the distinctiveness of here as a housing opportunity area. If we could maybe go to Neil first if that's okay, just from your point of view - and I understand there's issues and challenges, but in terms of this region and its unique selling point for housing and some of the attractions, just to give us a sense of some of that if you would. Then I'll take some other submissions as well. Neil.
Thank you. Thanks for inviting us here today.
I think the video certainly shows why we want to be building houses down here in the South of Scotland, the quality of life, the job opportunities that are there. I think that's an important factor to bear in mind. There is always a but to everything we say. It's how that translates into an economic appraisal of the opportunity when we're looking at it in terms of selling houses and delivering the new homes at a rate that suits our particular hurdle rates. But there's no getting away from the positives that exist here from a quality-of-life perspective. I think that's something we need to keep bearing in mind and reminding ourselves. I think the other aspect to it is that, I suppose selfishly, nobody's down here, so there's an opportunity for us to do something if it works for us from a balance-sheet perspective sort of thing. The opportunity's there. The quality-of-life aspect is certainly there. There is a big but beyond that, though, that we need to also bear in mind.
Thank you very much.
Diarmaid, could I come in?
I'm interested, Neil, in the point about the absence of players down here if I put it like that. I'm going to be necessarily superficial in what I say here, but if I assume that Persimmon are essentially a newbuild property type company, is it the case that that business model of newbuild is really - that would be the only option you would contemplate or are you into the concept of repurposing other properties that may well be here? Secondly does it strike you that you would have to construct a business model that relied upon the importation of labour from other parts of Scotland or England to do that in the absence of substantive footprint in the necessary skills and trades within the South of Scotland given the fact that - I don't have in front of me the regional employment data, but I'd be pretty confident that unemployment will be very low here and employment will be very high. It'll be a tight labour market.
I think what Persimmon does and what it does very well is build volume houses to meet a broad sector of the market. What we don't like doing and what we don't do, certainly from a business model perspective, is the refurbishment side of things. That's not part of what we do, because it doesn't fit our business model. We don't even like building flats to be honest, because again it's where our market focus is. The people that we want to sell houses to, the people that want to buy our houses are not looking for a flat. They're looking for a front door, back door type scenario. That's the first point is that we're looking for big sites that we can sell, build and sell at volume. That's where our business model is focused in on. They exist. One of the earlier points, they do exist here in Dumfries and Galloway and the Scottish Borders, so it's not as if there isn't an opportunity for us from that perspective.
In terms of the labour market, it is a fundamental problem quite honestly. Bringing joiners, electrician, bricklayers, it's a - I'm maybe characterising them wrongly, but they don't want to come down to the Borders, because there's plenty for them to do in the Central Belt where that main core business is focused. It gets to the point that, to actually build the houses, we're looking at our North of England business units and seeing what subcontractors they have who are more willing sometimes to come up into the Borders to build the houses sort of thing. There aren't the trades at the level that we need available in the central - sorry, in the South of Scotland. We either bring them down from the Central Belt or try and convince the North of England contractors to come up from there.
Sorry, could I just - it was just a quick question as a follow-up. Is that okay?
Yeah. Yeah, please.
One of our challenges here I think, in Dumfries and Galloway certainly, is how we supply our development programme if you like. We've got a number of small contractors. You touched on it there in terms of how there's maybe not the strength of a framework of contractors, particularly in Dumfries and Galloway from our perspective, but it's not to say there aren't those people in those trades in the area. It's just they're maybe not organised or available through such a framework that might partly incentivise bigger players to come down and actually deliver. I'm just wondering how that piece of work could get done in a way to strengthen that, because that would serve a number of aims, not just in the housing market. Maybe that's one just to throw open to the convention itself. But that's certainly a priority we'd like to pursue, because it affects all our local economy in a range of different ways. That kind of framework approach in a rural area, is that something that can be developed I ask the convention, I suppose? Thank you.
Thank you very much, Councillor Thompson. Maybe just to develop the thought with Andrew if that's okay to respond and then we'll follow it through.
Thanks, Diarmaid. Thanks, everyone. I'm Andrew Roberts from Taylor Wimpey. We build on average about 1,500 homes a year across our East and West Scotland businesses. We've got two divisions in Scotland. We have built in both Borders and Dumfries and Galloway in the past. We're not represented in either local authority area at all at the moment.
I think just building on from what Neil said about labour, all of our subcontractor base is in the Central Belt. At tender stage, we have to pay probably - or we did have to pay when we were down here - contractors an extra five, 10 per cent to attract them to come down to what we perceive as a more rural location. The travel time involved puts them off coming down. If they can go to a site and work on a site in Central Belt which is only a 20, 30-minute commute as opposed to a couple of hours, they will do that all the time.
When we were down in the Scottish Borders - it's about seven years ago now in Peebles - we had a site large enough that we could develop partnerships with local contractors. They're smaller companies, but we did bring them onto the site. I think the issue was, when our site came to an end, our presence in Scottish Borders came to an end, because we didn't have a follow-on site. The relationships we'd built up came to an end as well. I think that's maybe the difficulty that we need to - it's having and ensuring that if we come down to Borders and Dumfries and Galloway, we have a pipeline of sites to continue on to so that those relationships that we do build up during the duration of the site's build can be continued. Potentially what you're talking about is exactly what we need to develop.
Thank you. Brilliant. Just by way of a couple of reflections, there's something coming out around the opportunities that are here. Welcome, Michael, Michael Crawford from JS Crawford. Welcome. Good to have you here as well.
There's a discussion that there's the opportunity here, but we've talked about the distinctiveness around the volume approach. Then the Deputy First Minister has introduced the discussion around the adaptation and retrofit and also the framework. There's an architecture, if you like, around the structure of how it works, different participants, different opportunities. But I suppose within that, there is the discussion of organising differently and also pipeline management so, if we're bringing things together, that the opportunity and the next and the next and the next is visible to you, which makes that attractive, so back to your point around the framework and organising differently to have more visibility on it, to see more potential in it and to leverage those relationships that you've talked about. Thanks very much for that.
If I could just turn on to the infrastructure side as well, just to pick up a sense of all of this, so we've got different models, frameworks organising differently on that. If I could go to Fergus just to pick up on the distinctiveness of here and some development of the discussion, Fergus.
Thanks very much for the invitation and the introduction, DFM and Cabinet Secretary. Yeah, just to contextualise my role in SGN, I work for our Future of Energy Directorate. We're looking strategically at how we can decarbonise our gas networks. We know that there's going to be restrictions on the use of gas boilers in newbuilds coming forward, but we're also looking at some significant policy developments that are required to be put in place, particularly decision of the UK government in 2026 on the role of hydrogen in domestic heating.
We are looking at transforming our whole gas network to hydrogen for multiple uses actually to support the decarbonisation of multisector so industry, domestic heating, transport and so on. We don't expect that to be the only solution incidentally for domestic heating. We very much take a whole-system approach with colleagues in Scottish Power and SSE in the north. It's very important that we use every tool in our box to get to net zero. But fundamentally domestic heat is going to be a really important part of that story in meeting Scottish targets for, well, a million homes in low-carbon heat by 2030. Profoundly challenging, but we're up for the task of trying to achieve that. That, of course, is going to be a major steppingstone to net zero in 2045.
Something that particularly interests me from a strategic point of view - I come from a renewable energy background. I'm not a gas engineer, so I don't know much about the pipes themselves. But I've got a fairly good idea of the strategy that we need to follow here. What's really fascinating about the South West of Scotland is the huge renewable energy potential that there is in this part of the world. There's very, very significant deployment already of onshore wind. There's plans for a very strong pipeline of new onshore wind, much of it which is very profoundly challenged by expensive grid connection costs.
We're looking in a lot of detail. We've got a significant piece of work which we're talking to the Scottish Government about, looking at the opportunity for curtailed or constrained onshore wind and what that could mean for large-scale Indigenous production of green hydrogen in the future. It's not for now. This is going to be something that is going to be really important that housebuilders and the wider economy of the Scottish Borders and actually particularly the South West of Scotland need to be thinking about in terms of future-proofing strategy for the provision of hopefully low-cost Indigenous energy into existing housing stock and the new housing stock in this part of the world. Really important that we are thinking strategically about energy, because my view is that this is a really important selling point for the economy and subsequently the development of housing in this part of Scotland.
Thank you very much. Brilliant. Yes, please.
Thanks very much for that. Just coming back on that particular point there - and obviously the infrastructure's going to be really important for any newbuild coming in. Within those discussions, are you looking at direct feed? Are you looking at battery storage? Are you looking at all the potential for renewable and also capabilities within the maintenance side of that for the local population?
Yeah, I think we have to take this in quite a stepwise way. This first piece of work that we are carrying out is to try and identify the scale of the opportunity for green hydrogen production. This will go hand in hand with batteries and with effective direct feed private wires in some circumstances, particularly for industrial decarbonisation. We're taking this stepwise. My vision for this, if you like, is to understand the volumes of potential hydrogen production. Now in terms of back-of-envelope calculations, not to pre-empt the outcome of the study, but we are talking about potentially hundreds of thousands of homes' worth of green hydrogen potentially could be produced from curtailed onshore wind right now. It's a huge amount, paid for incidentally by consumers through curtailment payments to the operators of windfarms that are told to constrain when the grid can't take it.
We want to understand the quantum of what's here. Once we've got that information, we'll start thinking about how we can develop a new pipe network to give a route to market for that hydrogen. We're doing this actually across much of the rest of Scotland as well, from Aberdeen down the East Coast and across the Central Belt. Into the South East Borders incidentally, we're doing pre-feed work to look at a 100-per-cent hydrogen local transmission system in Scotland as part of this process of transitioning.
But I think the critical - you're right. There's a whole lot of steps and issues here that we need to understand before we get to the point of thinking about the detail of and the implications of this. But at the moment, it's having a concept for the opportunity that's here for large-scale Indigenous low-carbon energy production that could benefit the local economy right across the South of Scotland.
Can I just follow that point up, Fergus, with a similar question about skills? Because I think the same point that I put to Neil is one that troubles me, just about the availability of people and the necessary skills and perhaps to flag up, for the benefit of our college partners who are here today, just what type of - all of this feels like it's got at least a 10, 20-year development phase which in a sense, going back to the point Andrew made about pipeline, is important. If we can corral a few things together - skills pipeline, housing pipeline, energy supply pipeline - there is the possibility of a greater degree of viability of projects beginning to emerge. But I'm interested in what you feel about that transition that is required to get us to where we need to be, because we won't have these skills just now.
Yeah, I think it's a really good question actually, that. We've found down the East Coast - where, as I say, we're doing some preparatory work now around the development of the hydrogen economy there - it's very clear to see a pathway of transitioning oil and gas jobs and the educational infrastructure, the training infrastructure into a future low-carbon hydrogen economy. I think it's much more challenging once you get out into areas where there is not that longstanding tradition of oil and gas skills. Yeah, we really do have to start right now to develop particularly engineering skills and apprenticeships. SGN are kicking off a very large programme of new apprentice appointments as well as enhancing our connections with the key university and college institutions across the country.
Yeah, it is getting that engineering, apprentice-level skills programmes through the colleges and universities happening right now. There is a real shortage. There's a labour shortage across the board, isn't there, in so many sectors? We have to demonstrate that young people have a long-term future in the energy sector right now. We certainly think that the work we're doing in the low-carbon economy, the commitment that there is to turn the business into a low-carbon business - through hydrogen heat networks, biomethane and so on - is a really important way of attracting young people into the business, which - business as usual but could be just seen as sticking some natural gas through pipes. Very important. Very important for society, but in terms of getting new people into the sector, we need to demonstrate a commitment to low carbon. That's exactly what we're doing.
Thanks, Fergus. Russel, [you wanted to come in].
Yeah, just to build on Archie's point - Archie always makes good points - that this is - I think what we have to be careful about here is that there's not a one-size-fits-all solution to this problem. We were talking about this last week or I think it was on Friday, talking about green skills. It goes across a whole wide range of things. If there was one way of retrofitting a house, it would be quite easy, but there's not. If we're looking for one type of house to build new, it would be easy, but there's not. I think some of the challenges - and I'm not criticising at all any of the developers - is outside of Dumfries and probably the bigger towns in the Borders, we need 10 houses here, 12 houses there, six houses there. It's getting those type of things.
In terms of the good point that Archie raises about maintenance and where we're going forward, as we do develop different types of renewable technology, there will be different solutions. We don't need to just make more bricklayers, more joiners, more electricians. We need something that says, what is it that we mean by retrofitting? There may even be a different skill in retrofitting than there is in newbuild. I think we just have to be careful in this discussion that (a) we have no time to do this, because we're running out of time in some of the stuff that we have. But there is no one size fits all to this.
The point you make, Deputy First Minister, about skills being at the heart of this is absolutely critical, but we won't get the skills unless we have the local customers. That's why it's very important that through the RSLs or through a consortium of the private sector that we have something that the supply chain businesses can see to move them forward. I think once they see that, we'll start to get the commitment to carry on and build it more widely. But there isn't a one size fits all to this. I'll be quiet now.
Could I just agree with that?
Sorry, I just - that is such a fundamental point that we're going to have a much more complex set of solutions in the future, because we've got a very complex set of problems that we're trying to solve. We need to have the right skills to fit heat pumps into people's homes where that is the most appropriate way of delivering a low-carbon solution. We need a further set of skills if it's going to be a different type of electrification or if it's heat networks or if it's a hydrogen future. It's going to be much more complicated and we need to set up our skills base to recognise that level of complexity.
What I would just want to lay down here is a point for us to reflect on is just what steps perhaps need to be taken to aggregate demand and activity, because it strikes me that we could end up having a right competition between the chicken and the egg about all of this for a long time. But drawing out of the conversation so far, our colleagues in the housebuilding sector are saying we need to have a good, clear, firm pipeline of activity. Some of that is not just housebuilders. It's RSLs. It's the government. It's all of the players that can be involved in that. There might be heritage trusts as well who've got historic buildings that might be able to be repurposed. But there's a cumulative aggregation of demand that is required to try to focus activity which is necessary to attract the population, generate the skills and then to provide a line of sight for developers, energy providers, et cetera, about how that - so it strikes me aggregation of demand is perhaps a key issue we need to - I'll bring in Shona and then Stephen.
I think all of that is hugely important. We also have to think, though, beyond some of the traditional methods of construction. A lot of work is going on around offsite construction, modern methods of construction. Obviously we've been doing a lot of that already in terms of the delivery of predominantly timber frame homes within Scotland. That technology has developed to the point of essentially fully kitted-out units coming off of a factory production line and then being installed onsite. Now for those small numbers of homes in rural communities, it can be a very, very good solution. As a government, we're working around a commercial assurance exercise involving Grant Thornton to look at I guess the benefits and risks analysis of doing this at scale, but some of the registered social landlords across Scotland have already been beating a path to some of the providers of these fully kitted-out homes. When I say fully kitted out, they literally come with kitchens, bathrooms, electrics, plumbing already in situ.
For areas with a skill shortage of those trades, it can indeed be a solution. My question to put in for some of the discussion of the day is how engaged is our South of Scotland partners in looking at some of that? What potential does it have for not just the use of the existing output of the factories that exist mainly in the Central Belt, but is there the potential to develop something in the South of Scotland in terms of the production? I just ask that question. There'll always be traditional housebuilding dominance, I suspect. But particularly for the affordable housing sector, it could potentially be a good solution and, for rural areas, a particularly good solution.
Deputy First Minister, if I may, you...
No, it was just to say you asked for some numbers. It took me some time to find them. We've just had some work done on what decarbonisation does in terms of housing and the numbers over the next - between 2030 and 2045. The investment required between now and 2030 just to retrofit for decarbonisation [where we are is] about 260 million. That creates just over 2,000 jobs between now and 2030. It creates, for the economy, about 112 million in direct GVA to the South of Scotland. If you start to look at the numbers, they are substantive. Seven-hundred-and-eighty million by the time we get to 2045. That's just in terms of decarbonising. That's not about newbuild or anything else. That's just about decarbonising.
This work was done by CLES as part of the work we're doing with the RSLs and looking at how we get houses suitable for the conditions that they'll have to do in 2030. The numbers are big which is good, which then to us means that there's a real opportunity for our supply chain in the South of Scotland now to go into that, because there is a measurable opportunity for them to go in. But in terms of the numbers for decarbonisation around 257 million by 2030 and about 2,300 jobs by 2030.
Thanks, Russel. Stephen, then I'll come to Archie.
Yeah. Thanks, Deputy First Minister. It was just a quick point. Maybe it's one that, Russel, you might be able to assist with. But it's actually Education and Skills Strategic Coordination Group which I think we spoke - workforce and skills has been another theme at previous conventions, but it ties into how we go forward with housing as well. I think there's something about even watching that video earlier where Heriot-Watt are saying, we could be developing certain skills and getting the expertise in to deliver that, but we don't have the houses for them. I'm just wondering if, through that group, there's maybe an opportunity there so that our institutions, while maybe narrowly focused on skills and skills development, still have sight of the housing issues that by consequence come as a result of trying to deliver those very courses that would achieve that. There's maybe a synergy there that could be built on.
Yes, Stephen, exactly. We had a meeting about that on Friday, specifically about the housing issues and green skills, as part of that group, so it's very much on our agenda. We have a programme of work in place to start to look at that. But it is a kind of chicken and egg in this is that you need the demand to create the impetus for our supply chain to want to do that.
But we do now know, we think, what the - and Helen, excuse me for wandering into your area, but I think if we just add up the housing maintenance costs for all the seven RSLs in the South of Scotland, that comes to about £65 million a year. There is a huge opportunity there if we can start to put it together around that, but to do that, we need to be - and I think it was - and I can't remember which college it was he was talking about. You might need to have a retrofit programme rather than just train chippies and electricians, because when you go in to retrofit somebody, you're taking walls down. You're having to do it. There's a type of different skill base around retrofitting as there is to building a new house, Stephen. But yes, we were discussing that on Friday, so we're on the case.
Archie, and then I'll come back to you, Diarmaid, to get us back on track.
Thanks, Deputy First Minister. Then Cabinet Minister, the opportunity's already here for a place in the South of Scotland in the Chapelcross project. As Russel quite rightly says, it's not about one size fits all. It's not about one organisation. It's about other organisations coming together to see where the opportunities lie with that. The Chapelcross, I think, project is the ideal place because of the links it has to the A74(M) and across to the Borders and the rest of Dumfries and Galloway and the South of Scotland.
There are a lot of organisations looking at this up and down the country, of course. You look at the Swansea Standard housing down in Swansea, which is run by Swansea City Council. The opportunities there are huge where they actually build themselves. It's the local production that brings in the supply for that build. I think there's an opportunity here to even talk to our private investors to see if there's an opportunity to talk about how we can build those kit houses in the South of Scotland with the links that we've actually got, not just for around here but perhaps we could sell to the Central Belt as well.
Okay. Thanks, Archie. Right, Diarmaid.
Thank you, Deputy First Minister. Okay, so just some reflections. A very, very helpful discussion there. If we take a 10-year horizon, there's phenomenal opportunity in this region. To realise that, there's the scales of investment and opportunity around the renewables, which then translates into the scale of opportunity around volume, [flats] and adaptation. Scale's important. Horizon's important, so we're able to look at the steps now and then lead that to the 10 years. But within that, your point, Deputy First Minister, around aggregation of demand but also making that visibility. If we aggregate it, we need to be able to see it. If we see it, then we can leverage the partnerships, leverage the opportunities and see the pipeline coming forward.
To Professor Griggs's point of view, within that, we need different models and then we need to look at the skills. There's an investment opportunity which is attractive to the nationals and also to grow at that SME level. Bringing that down on to the steps now, I suppose, bringing that in - I feel it's important, given that the context here is around housing and the economy, we have touched on exactly those interfaces. Now to bring it in to the steps of now. Now what? It feels to me, on that now what, we've talked about the importance of coordination, to your point, Cabinet Secretary, also around the innovation around different types of production but also around the adaptation and how that might work.
What I'd like to invite the panel to do if I may - and I know that Michael has come in - just to bring that in, around some of the priorities now, based on what we've talked about in this region now, to increase the pace and level of development. Just within this region, picking up on some of the opportunities we've laid out but just also on some of the specific contexts. If I could turn to you, Michael, just to get a sense from your point of view as a [unclear] business operating in the region, some of the priorities to increase the pace and level now.
Thank you very much. I'm probably one of the older people here. I started work back in 1989 in the Borders and I've been based there ever since. We used to be able to build in every single settlement in the Borders and sell private housing. Unfortunately over time we can no longer do that. Prices have not kept up with the increase in building costs. While you can't do much about the regulatory costs with increase in building control standards to improve installation and bring in heat pumps and all the rest of it, where I think you can save costs and therefore free up and allow more settlements to be able to be commercially viable for developers is to reduce some of the burdens caused through the planning system.
The massive risk in the planning system is going for planning consent. If you're on a big site of 1000 houses or so or even 100 houses, these costs are spread over a vast number of units. We go for development sites of six to 12 houses. The fixed costs are the same. The risk is often greater, because [they] tend to be in smaller communities with stronger community representation and more objectors. It's a simple thing to do. But if you can do that, then you'll speed up and free up more housing demand and probably reduce the need for the expenditure on social rented housing, because more people will be able to get onto the housing ladder. For example, we're asked to do flood risk assessments when a building site's halfway up a hill. You're asked to do environmental surveys when there's been no previous development on the site. It's not a fault of the officials at the council, because they're just following what they see as good practice elsewhere in the country. But I noticed in the new - is it [PAN4]? The new one that's out that came round.
NP4. It does make a statement that planning obligations have to be relevant to purpose. I think de minimis needs to come into things. If you can speed up the planning process, if you can reduce the conditions and maybe put a little bit more responsibility back to the officer so he can make a decision. Trust his professionalism. These guys are well trained. They're experienced. Allow them to take a decision and back it up, that they don't need to do as many surveys. Then I think you'll free up and you'll speed up the planning process.
Okay. Thank you, Michael. Just around proportionate expectations in the different areas but also around building on your expertise and delivering small-scale development at the right cost across the bit so around proportionate kind of bits. Could I just if it's okay, Liz, just to build on that around some of the opportunities around coordination and some of the experience from other parts of Scotland, how we might build on that experience?
Yeah. Thanks, Diarmaid. Just to start by saying Homes for Scotland represent the majority of newbuild companies in the country. Actually Dumfries and Galloway is one of four local authorities where we don't represent anybody. Just to put that out there now, there is clearly a challenge. I think the Scottish Borders and Dumfries and Galloway are actually two quite different propositions as well. I think one of the things that we've touched on is that opportunity for the pipeline management of sites. It's clearly something that's come through NPF4. A big positive of NPF4 is the deliverability of sites, so I think actually if you take a step back - and don't get me wrong. I'm not saying that development in the Central Belt - I don't think any of us are saying that development in the Central Belt is easy. It's just the challenges are more pronounced down here. I think there's a real opportunity for the South of Scotland to develop a blueprint in its approach to how actually you assess, review a land pipeline.
There's two different types of builders, which we've got represented here today. We've got the larger builders, the PLCs who look for that pipeline so they can come down and have the confidence to stay here. Then there's the JS Crawfords and the likes in the SME market. Actually where I'm getting to is thinking we need to - as has been said, it's not a one size fits all. We're going to have to work harder in the South of Scotland. It's going to take some financial intervention. There's no doubt about it. It's going to take compromise. It's almost going to have to be a granular approach, site by site.
For each council area, where are the next sites? Who's the builder? What are the constraints? How are they overcome? Get community onboard, elected member onboard. Fast track planning. It's got to take a lot of proactivity to get things moving. Actually could that be some sort of - I don't know - regional delivery agency where they bring together all the players early doors, identify the blockers and actually how do you overcome them? Because if we're not allocating the right sites and the right places for the right types of homes, then what's the point? I think there's an opportunity. I think there's a positive to build on. Actually it could be a blueprint for the rest of Scotland, because it's not going to get any easier to build houses anywhere. It's just more pronounced down here and it's more obvious at this point in time.
Okay. I guess just on that, there's - in those two exchanges around perhaps some structural model or some partnership model - a programme perhaps, looking at three key bits. One is around building and maintaining the pipeline. If we don't have the pipeline, we can't build it. There's some structural bit around that. Second, around the product so the specifics around the retrofit skills, the adaptation skills, the different ways that the product's going to work. Then the third one around coordination around the plan bit. Something around a regional structure that allows us to go down to the small levels to look at the pipeline, the product and the plan. I suppose what I'm interested in, bridging back to the Deputy First Minister, is the steps. That's the what. I guess now to kind of challenge ourselves on the how, so how would we do that? Maybe perhaps if I could invite - going from infrastructure first and then take [unclear].
Can I come in? Just to add, I think that's a very helpful distillation of where we've got to, Diarmaid. But I think there's one other element that needs to be aired, which is about the concept of shared interest. As I was listening to Liz, I was thinking, well, actually this is the perspective from a private development perspective, but it's exactly the same perspective as - you want to build homes. The council wants to see homes built. South of Scotland Enterprise needs to see homes built to address the challenges that we have about availability of housing. What we need to recognise is that there has to be a spirit of shared interest in what we're trying to achieve here, so I think that will hopefully help us to get a bit of impetus behind this by recognising the fact that we're all actually trying to get the same objective.
There is a possibility we get derailed on the way. Michael raised issues about the planning process. I completely understand these issues so totally legitimate issues. We need to avoid being waylaid by these things and keep the sense of the shared interest to try to get a programme - well, the arrangements for a programme that can be driven by that approach. Right, Diarmaid. Sorry, I'm interrupting you again.
Thank you very much, Deputy First Minister. Excellent. On that shared interest - because I guess that absolutely builds on the distinctiveness of here. It's not the responsibility of any one partner. Because of the scale and the complexity that Professor Griggs brought out in the bits, it is about a shared interest which then drives into shared partnerships, shared risk and reward. Maybe just to build on that around the steps we can take now so on the scale of the renewables, on the opportunity of the pipeline, on the challenges of the scales, just taking that shared interest bit around the opportunity of the renewables and how that might interface with the development interests, how that might interface with the regulatory interest. If we could go to you, Kenny, just to build on some of the steps we can take now to build towards that wider programme...
Okay. Thanks, Good morning, DFM and Cabinet Secretary. Thanks for allowing us to come along today. I think if I speak on behalf of all the utility colleagues here, for us it's all about planning and it's being able to see what is effectively going to come off in either the medium to the short term. Having that sight allows us to then plan where we want to go and how we can then work with developers. We've heard from the large developers today and we've heard from the medium size, but a sizable proportion of work within this area is also self-build as well. We talked about the retrofits and we talked about some of the smaller developments.
In each of our organisations, we go into long-term development statements to try and look where is population growth going to be? Where's our network going to need extended? We plan within that, especially if we're doing some infrastructure as part of our - whether it's our ongoing maintenance or security of supply. We try and work all that in so that, when it comes along, we have it. In Dumfries and Galloway, [I would say] operating the patch and it is the same for my colleague in the Scottish Borders, when it comes to the social landlords, I actually quite think that we work together pretty well, looking at the development of where their new sites are going to be and even trying to look at how you then retrofit existing properties. That gives us a huge workload, taking something that's only ever had coal central heating, fuel poverty and making that effectively fit for the future.
For us it's always a challenging time. It's also a little bit crystal ball in how we do it. One thing I would say as well is we take our opportunities. We were fortunate last year with the Green Recovery Fund where we've managed to - somewhere in the region of about 800 houses we'll facilitate through - and that's a mixture of private and RSLs of facilitating that infrastructure. The network behind that - where I think we've been fortunate in the last few years with the reduction in demand also coupled with, as we’ve already acknowledged, the increase in renewables in Dumfries and Galloway and Scottish Borders. We have a capacity there that is effectively ready for the immediate to medium term in terms of that load growth. Obviously going beyond that, when far more heat pumps, far more EV chargers become employed in the networks and more so in the local [and housing then], that's going to give us subsequent issues.
I think for just now it's these types of forums, looking at what's happening in the planning world and working together. But for us it's the three areas of the self, the small builders and also the large builders, who are all sizable just in different ways.
Could I just bring in that - and just want to build on that, the steps we take and the shared interest bit. If I may, I'm just going to challenge a number along the way and I may open it back for discussion. On the shared interest bit, we're saying that the distinctiveness of this region requires all the partners to work together in a different way to build the pipeline, to build the visibility, to create the opportunity for investment. Absolutely hear what you're saying, Kenny. Really helpful. What more could we do and you do around building that pipeline and that visibility to build that shared interest? I suppose it's equal for the public sector, the private sector, the infrastructure, because to Liz's point around if we were to build a regional programme, it won't work if we don't share programmes, we don't share visibility and we don't disclose some of [unclear]. I'm just interested what more could we do and what's in the way? If you don't mind, just to build on that please, Kenny...
Looking forward about how do you grow your business, it's all about understanding where people effectively want to live between Dumfries and Galloway and Scottish Borders. [We've been taking] some of the work that we've done up to date and understanding where effectively future employment is required. Is it in the main cities? Is it rural networks? There's a whole link in with what we were saying earlier on about the development for the area and the long term there, so it's joined up to where people are going to be. There's also this joined up to where there's - working with developers. I think we are quite fortunate that we do understand where a development is going to undertake quite far in advance, because we do get engaged earlier.
But it's just understanding what that whole combined approach is, because we do talk to individual developers about their area. There's not one body that looks across the whole area and starts to piece all that together. I think from there it's a matter of understanding from the other way is what areas are actually crying out for this type of development, that are looking to grow with it? Because I think there a number of areas, certainly through the work that South of Scotland Enterprise will do where you're trying to bring that growth into a specific area to offset other needs. It's understanding from the two approaches, what's in the pipeline is going to happen and what needs to happen to grow this [whole] and being round the table with that?
Brilliant, yeah. Not to put words in your mouth, but there seems to be a need for a body that looks across the whole region and within that to build that pipeline to allow us to look at two priorities, priorities of areas that need to grow and priorities where interest is already there and we coordinate it better. Brilliant. Thanks. Yourself.
Thanks, Diarmaid. Just to offer a suggestion that we've used elsewhere, so from the Scottish Water perspective, we're more than a utility provider. We're a utilities provider. We provide clean drinking water, we provide sewerage services and we also have to deal with the rainwater of houses. One of the challenges that we've come up with in the past is it might be okay for water. It might be okay for rainwater. But the sewerages is a problem. Therefore one of the things that we developed a number of years ago within Scottish Water was a tool called a readiness indicator where we looked at a number of development sites. We simply red, amber, greened them in terms of their readiness to go and the timeframe to actually allow them to go.
We've then worked in the Glasgow city region with partners, likes of Craig at Scottish Power and with SGN through the mechanism of the Clyde Plan to actually then look at the city region and all of the sites in the local development plan and take that readiness indicator idea wider in terms of - so it might be okay for water, it might be okay for power but not for gas or vice versa. Clyde Plan was the vehicle within Glasgow that facilitated that to happen so that a developer then can come with the certainty to say, that's the site that I know that actually it can be serviced. We need to look at infrastructure in its biggest sense in that, because it's fine for us, but what about the schools? What about the healthcare and everything else that goes along with it? Just as a suggestion, an agency to try and bring all of that together has worked well in other parts of the country, because it's the same challenges, just more pronounced in the South of Scotland region.
Okay. We can borrow, rob and adapt tools from elsewhere to build up more understanding of what's ready when and then what's needed to get it? We can also start to look more at integrated utilities so in the preparation so we're not just one provider in and then go away, come back. Those require a body to start coordinating and structuring and then sharing the visibility to build it up, which allows us - [something] we can do in the first one year, three year and up on to 10 year of that horizon. [Unclear].
Just to build on that a little bit, I think in this space less is more. One of the challenges that we've got as an infrastructure provider is, by the definition of infrastructure, it takes a long time to deliver infrastructure. In the video, it used the term, the right infrastructure. It takes a little bit more time to think to make sure it is right and fit for purpose for the future.
Just to give an example because I think they can be quite helpful in these discussions, about 20 miles' east of here is the settlement of Canonbie. We've been working with the local authority on that for a while to bring forward 100 housing units. Now 100 housing units in Canonbie is about a 60 to 70 per cent increase in the size of that settlement. Therefore we've got a small sewerage treatment works and effectively it needs to be doubled in size. We've had to go and effectively re-site that sewerage treatment works, replumb the whole of Canonbie at a cost of £4.5 million. That's taken us seven years to do that. Now if you take that and then take it across the South of Scotland, that will be replicated right across lots of other settlements where we're going to have to go and put significant investment in all of them. We can't afford to do all of them, so it comes down to prioritisation and certainty.
There's something for me, when it comes to planning, that less is more. Let's pick the winners to some degree, but actually what's the catalyst that picks the winners? Because that's not our job as utility providers. If we take the development [unclear], generally it's developer led, so we work with them on it. Something to take this vast number of sites and bring it down to much smaller and say that's where our priorities are in this area would be really helpful to allow us to invest in the right areas going forward.
Just to build on the shared interest, we're saying that to make that happen, we would be willing to share information, data, insights and what not. There's a will to make it work and a recognition that some kind of coordinating structure would be useful. Yeah?
In the Glasgow example, absolutely, that information was all shared. I think there was a challenge around some of the telecoms sharing, because there's quite a lot of competition that happens in there. But for the rest of the utilities, sharing that information was not a problem at all.
Okay, brilliant. Andrew.
Can I just come in there, Diarmaid? Because I think what that helpfully does is begin to give a bit of focus to the point I'm talking about about shared interest. But there's obviously a very important local authority dimension here in terms of housing supply planning and decision making, which needs to be aligned. It's not impossible, but I think the example, Mark, that you've given of the Glasgow experience is quite instructive about how you need to draw all this together. We know what the problem is. I think what this conversation's helpfully drawing out is some of the ways in which we have to give a sharpness of focus to put in place solutions that might actually have tangible benefits.
Deputy First Minister, if I may, the point you make is a really excellent one. The difference between Glasgow and Vicky who was on earlier, talking about the steading, is Vicky's got a very small voice. Glasgow has a bigger voice, because it does this all the time. Kenny knows I'm not getting at him at all, but that was held up for six months because we needed to get an electricity cable across a field. In Glasgow, that probably would have been solved better. I'm criticising myself as much as anybody else. One of South of Scotland Enterprise's roles has to be to be that loud voice, to say that in these situations that's not acceptable.
You can either have this conversation about structures or about ways of working. I suppose you could have a combination of both, but I come at these conversations largely not wanting to create more structures. I'm much more interested in finding ways through it all. But I think if we can align that interest - I'm not so sure, Russel, I'd be so confident that the field cable problem would be easily solved in Glasgow. I see some noddings of heads from our utility colleagues. But the moral of the story is correct. We've got to overcome these issues so that they're not a barrier. To go to Michael's point, if you've got problems like that, six months of a delay is a lot of money in a development plan for any concept of that type. Right, okay. Am I missing anyone else that wanted to come in? No. Right, Diarmaid, back to you.
Thanks, Deputy First Minister. I know Andrew wants to come in.
It feels this shared interest point is of critical importance, so just to reflect, we're committing to the idea of the shared interest. Within that, we've talked about aggregation of demand, but we also need to aggregate voice so to Professor Griggs' point around how the Regional Economic Partnership and SOSE and others assert the voice to build and bridge and partner with. We need to look at different ways of working, but the ways of working probably need some structures around it so somebody who knows who to talk to, when to talk to, what to do. There's a way of working, not a new body necessarily. But on that ways of working, we're talking about to manage the kind of visibility. There's a regional play on that across the whole of the South of Scotland. There's also a local and regional set of priorities. It might be that a small area is a really important priority for population retention, but also another large site might be a priority for coordination development. There are some key bits, if you like, in architecture of structure.
Andrew, you had wanted to come in please.
Hi there. Thanks. It was just a quick point that we're talking about a delivery vehicle. The delivery vehicle of collaborative working is really the local authority and the local development plan, so we've already got that structure in place. The local development plan sets out an evidence-based spatial strategy for the local authority area through allocating a pipeline of sites, which it does and is required to do in the next local development plan from NPF4. It gives advance warning, foresight to utility providers to engage at that stage. I think that's the critical - you're talking about the cost of new wastewater treatment works for smaller communities, for smaller allocations. Just on that point alone, that cost - if we're looking at entering the market and particularly for smaller and medium housebuilders - I know that Scottish Water was bearing the cost, but it's just looking at - that's one element of infrastructure. I think we potentially should go on to talk about infrastructure that's not just utilities.
Yeah, absolutely, but I suppose just to build on that point, the LDP, obviously hugely important at the local authority levels. But I think one of the things that's coming out here as well is around coordination on the implementation bit. It's the identification and foresight on the plans, but then it's the ways of working about how we do that. Within that, there are still different priorities. There are still different partnerships. There are still different ways of working to move through. To be fair to planning colleagues, not all of that can be done just by the planning system. That's about the partnership. That's about the shared interest. That's about the coordination of the bodies. Then yourself.
Can I maybe just come in here before you come in, [Mark], just to check whether - because what I think we're talking about here - there's some statutory functions that local authorities have to undertake, which have just been put on the record. I think what we're talking about here is basically who's facilitating the shared interest? I suppose that's where I begin to turn and point my finger at the South of Scotland Enterprise to check, are you up for the task? We're not talking here that anyone's got to depart from their normal role, but we've got to make more happen. That's got to be facilitated somewhere. I think it feels to me that that may well be coming your way. Russel.
I've no objection to that in many ways, Deputy First - but I think it has to be part of a partnership. Yes, it is. The thing is we might have to push the local authority or push our housebuilders more as we do that. I'm not [against it] at all. Jane can add to that, but I suspect it's what we were always here to do.
Thanks, Russel. I think there is work underway already that positions that quite positively. There's been a lot of work going on, back to the Cab Secretary's question earlier, with the RSLs for quite a long time, looking at the aggregated model and how some of that can be tackled. We've been working really closely with both local authorities, much more so since the end of last year in how we tackle some of the housing issues. There's huge willingness for collaboration there. I think the work that SOSE was a catalyst for back two years ago...
Three years ago.
...three years ago now around [powering] change built the foundations that could be picked up. Some of that work has gone into the net-zero carbon reduction commissions that we run, but the relationships are there that could be applied equally to the housing challenges. I think looking at how we engage with the REP as a really key body in this, we would be happy to look at how we can facilitate going forward.
Shona and then I'll come back to you, Diarmaid, and we're five minutes to close. Shona.
Yeah, I think that would make a lot of sense, not least that as well as the critical role of the strategic housing plan that obviously the local authority will be statutory responsible for developing, there's also the need to engage with businesses around the keyworker shortages that they have. Now I think that that leadership of the partnership would be best coming from yourselves in order to do that, because businesses will have to be part of the solution here in terms of what they can bring to the table as well as the identification of need and solutions to that. I guess that's why I started off earlier on saying there's not one solution here, because you've got a multiple of housing needs from the long-term needs of the settled communities to the needs of keyworkers who will need to come into those communities and will need housing, some on a short, medium and long-term basis. Looking at all of that, I think that wider perspective across all of those partners is going to be really important.
Yes. If I can just make one point [unclear] but I don't disagree with you. I think, though, [if I may DFM] this fits right into the middle of public sector reform where all of this - to give communities the same type of power through partnerships, et cetera, that cities have in many ways - is where we need to drive. That just means we all need to work a bit harder at working together, but it may well mean that - not changing powers, but we just have to flex a bit sometimes about what we do.
Certainly. Scott, and then I'll come to you, Diarmaid, to wind up.
Thank you very much, Deputy First Minister. I want to highlight a project that's going on in the Scottish Borders. That's the Tweedbank expansion and development there. I know Chapelcross was mentioned earlier in discussions and it's very much along that same line. We are the landowner there now and we're also going to be the customer. We know that there's interest in development of that site and we know there is demand. It's bringing all those partners together, which has I think been challenging. I'm looking at my officers there. We recognise that. But I think the key message I want to share there is it is possible. Where there is opportunity, we can overcome these challenges which have been discussed here this morning.
One part that I would quite like to just mention that I don't think really has popped up in discussion is that we are a low-wage area. When we talk about housing, housing has to reflect that. I know that might not be a popular thing to developers. But when we talk about one of the lowest paid weekly take-home pay packets, that does affect your household income and then that affords what you can have in life. Now if we're going to go forward with this, I think we need to be very clear that that low-wage economy that we have here will not change overnight, but it will get better if we work together on this. That working together part, which has been discussed, I think is really important here.
In the Scottish Borders, we have a business called the Borders Machinery Ring. It's almost like a cooperative between agriculture partners. That's what I'm thinking is something that could work in the building sector of some degree here to provide that continuity, to work together. One comment is that we do have a number of skilled individuals. I can only speak here for the Borders. I'm sure you have skilled people in Dumfries as well. But we do have a number of them. The capacity is the problem there. They're normally self-employed. They're normally working on their own. Whilst it gives you a tapestry of different individuals that can be tapped into, it's that coordination between them which I think is very difficult.
I think just on some of those comments which have been made, I fully support where the conversation's gone, but I do think it needs that coordination to take it to the next step. I think the benefit of skilling individuals but also making sure that they're transferrable skills will help that low-wage economy, which again will help the housing industry in the longer term.
Thanks very much, Scott. Okay. Diarmaid, over to you to wind up please.
Deputy First Minister and colleagues, thanks so much. I'm mindful that we've got a few minutes left, so if I may, just to try and give a small summary of where we've got to. I think we started off by articulating the opportunity in this region so looking at that 10-year horizon, the opportunities around the renewables, the infrastructure, the coordination of bits. Inside that opportunity, we asserted that it needs a variety of solutions, not one size fits all. But the dimensions of it are (1) to tap into the scale of the renewables and the opportunities there but also to be mindful of the scales and the different scales of the opportunities, (2) to aggregate demand and visualise that so that we can see it, what, when, who and how. We build and adapt to some of the different models of implementation and we invest in the skills. On the horizons landscape, a complex of different approaches but, in a 10-year bit, exciting opportunities.
Bringing that forward then, the key discussion has been around how to facilitate the shared interest. I think, within the discussion, there's a commitment to the shared interest. The discussion is around how that's facilitated at the regional level through the REP and SOSE but also then how that moves through local prioritisation to the statutory functions and the business partners. To deliver of the facilitated shared interest, we need clarity on ways of working within the implementation of infrastructure. But we probably need a little bit of work around the coordinating, not to set up new structures but so that there's clarity of the entry points, who does what when and how does it work.
I suppose also then just to pick up on a really important dimension that we didn't articulate so much that, within that, there are infrastructures. It's not just a utility. It's a variety of infrastructures. The coordination of those infrastructures, the pipeline of those infrastructures and the skills around those infrastructures are key to delivering the opportunity of those horizons, are key to making manifest the facilitation of the shared interest is actually making a difference on the ground, are key to the communities that Professor Griggs rightly talks about so that we can see change happening on the street, in the old houses, in the communities moving forward.
Just to finish it out, four bits, horizons, facilitating the shared interest, ways of working on coordination and infrastructure beyond utilities. Thanks to colleagues and thanks to yourselves for all the input and richness. Thank you.
Thanks very much, Diarmaid. I think that's a very helpful summary of a really valuable discussion. I'm immensely grateful to all of our different partners who've contributed to that discussion today. I think the crucial point about these discussions, the purpose of this convention is to bring together different perspectives and different interests and try to coalesce a bit around about a shared agenda. I think we've aired that quite helpfully. There's a facilitation role that South of Scotland Enterprise can take forward for us, working with obviously our public authorities, statutory agencies but also crucially our private sector providers in advancing this agenda. Thank you to everyone for your contributions. Diarmaid, thank you for facilitating that conversation. We'll take a short break for 10 minutes and we'll reconvene at five to 12. Thanks very much.
Okay, folks, if I could ask people to take their seats please.
Okay. Thanks, everyone. That was a very helpful start to our conversation today. Our second session is going to focus on the theme of affordable housing. In the same spirit of our earlier conversation, we're going to move to have the discussion facilitated by one of our colleagues. Helen Forsyth, who is the Vice Chair of the South of Scotland Enterprise board and the Chair of the Scottish Federation of Housing Associations, is going to lead us through the discussion on affordable houses. Helen, over to you. Thank you.
Thank you, Deputy First Minister and Cabinet Secretary and both Council Leaders. Very nice to be here. This is a subject extremely dear to my heart. A lot of the issues have already really become apparent in the conversations we've just been having in the first session. However, I think there's still more to be said. I could feel my colleagues - who are way across the room, so I'm hoping I can see - would love to have an opportunity to explain where they are, what the opportunities they think are there and where they want things to happen but to give you some of the things that are going well as well, because we are working very closely together. I think they've got things to say.
I am just going to introduce them. I'm going to ask you just to put your hand up briefly so people see. Julia Mulloy is the Chief Executive of Scottish Borders Housing Association. You are also a member of the REP, I believe. Yes. Nile Istephan is Chief Executive of Eildon Housing. Next to him is Alan Glasgow who is the Managing Director of Wheatley Homes South in Dumfries and Galloway. Gary Alison is the Director of Property and Development in Loreburn. Next to him is Mike Staples who is the South of Scotland Community Housing and works on those wonderful small developments which are so important for the little villages. I think it's really important to remember that the voice is needed as Russel said. Next to him is Aaron Bell from Broatch Construction, so absolutely fantastic to have somebody who works in the Borders in construction. Aaron has worked closely with Mike on particular projects, Whithorn being one - which I'm delighted to have visited - and Glentrool being another, just to give you a sense of the kinds of work they're doing.
I'm not going to say a lot more except that I think we've already said that we also face challenges, but we think there are opportunities. But we do have some macroeconomic pressures. The issues facing the construction sector, which have been very clearly outlined in the first session, are very much ones that we also experience, but we've had some approaches. I'm going to ask my colleagues to talk. Clearly if people wish to ask questions of them individually - but I'll try and make sure that everybody gets a chance to say a little bit about the issues they're facing and some of the joint work they're doing. Because I have to start somewhere, I'm...
Just before you start, Helen, can I just say I think part of the benefit of this forum is really to have an open exchange of views and ideas? I'm sorry that we didn't hear from our colleagues in the affordable housing section in the earlier discussion, so I'd be interested in any reflections you have of - because we talked very much about the perspective of how we get to a point of shared interest with our private sector colleagues. I'm really interested to understand, are there any reflections from that conversation that we've just had that are particularly apposite in relation to those involved in affordable housing and particularly because of the fact that obviously the government takes a very active role in the issue of affordable houses so that we can understand if there's any things that - not wishing in any way to suggest that my ministerial colleague is not perfect, as to whether there are other areas where we need to improve what we're doing. Thanks, Helen.
No, that's really helpful. Thank you. I'll ask Julia to begin. Obviously if people want to ask questions, please feel free to engage. Thank you.
Thank you, Helen. I think the reflections from the discussion earlier is how much we have in common with our colleagues in terms of the challenges but also how much we see the opportunities as well and maybe our role in terms of bringing additional opportunities because of the nature of who we are and what we do. Perhaps a fundamental issue for us is how we're defined, because we feel that we're working in multiple markets. In terms of housing and grants, we're defined as mainly urban areas, as not rural. In terms of procurement, the construction industry sees us as an urban area. As a rural area, the market is hard to access as we've heard. Also in terms of volume, we just don't offer the same volume as larger areas.
Then in terms of the rental markets, we operate in several markets. We believe that we could offer a really broad range of opportunities, not just for social rent but in midmarket rent and partnerships to deliver a range of options for the needs of our economy, particularly things like keyworker housing and more housing opportunities to attract and retain young people into the area. We have strong offers in terms of facilitating connections on skills as well.
I think we would say we are all pointing in the same direction in terms of the opportunity. There are opportunities to collaborate and work together to address that. But where we sit within those economies, what we'd really welcome is more flexibilities and maybe testing out new ways of working with procurement and rental models in the south that could really make a difference and show the rest of Scotland what we have to offer.
Thanks, Julia, so some clear pointers about some of the opportunities but also some of the challenges there. Nile, do you want to come in now?
Yeah. Thank you. Just building on that, reflections from earlier, there are lots of things we do quite well in partnership across a range of organisations. I think one of the challenges is we are starting from a position of deficit, so there is an absolute [crude] shortage of housing of many types, including affordable housing in most of our communities. That's been built up historically and that's decidedly difficult to erode over time. We do some really good things. But we know, for example, when we build new homes and we let them - we have a choice-based letting system - it is not uncommon for us to have in excess of 100 bids for each and every property. That, as an expression of unmet demand, is pretty significant. We're used to hearing those types of figures in inner-city Edinburgh, but it may come as a surprise not operating in the South of Scotland that that level of outstanding housing need exists.
We're doing quite well in working with Scottish Government colleagues, local authorities and collaborating across our local partners to deliver. But as I say, we're starting off from a position of deficit. Eating into that deficit is difficult. I think as the point's been made before, the long-term nature is really, really important here. Short-term blips - a few more one year, a few less the next year - isn't going to cut it. It is a long-term issue.
If we're going to get the infrastructure and the utilities correct, then clearly that level of upfront investment has to happen in a clear and planned way. As I say, there are really good examples. We're onsite in Earlston at the moment because of investment that Scottish Water have put in. That wouldn't have been possible to get those 60-odd new homes under construction in that location on a former school site without that investment, so it does work. It does happen. Unfortunately we need it to happen more often in more places all of the time. That's clearly got its challenges in terms of the overall quantum of resource that we've got to work with, but it's not just the money. It's about the collaboration. It's about the expertise. It's about the joining up of those issues as well.
I think there was an interesting point made about whether it is about newbuild or repurposing buildings. We are going to be opening the former Kelso High School, a Grade II listed Art Deco building as an extra-care housing development later this year, a fabulous scheme. I'd take the opportunity to invite everyone to come and have a look at it when it is open. But undoubtedly that scheme was more expensive using an existing listed building than it would have been building that development from scratch. However, we've saved an important part of the built heritage of Kelso as part of that deal. It was something that was deemed appropriate. Yeah, I think...
What do you think the cost difference is between - is it a factor of - is it 20 per cent, 50 per cent?
Somewhere between the two. I think we'll know when it's finally completed. But there's certain elements that are just the nature of the building and that it has listed elements and certain elements that - you're stuck with the layout of the building that you've got, so that's extra-care housing. We've got flats within that, but obviously with it being a former school building, there's a hell of a lot of corridors. You can't generate the same rental income from that amount of communal space than you would if you were building something that was more suited to that need from scratch. But yeah, certainly in excess of 20 per cent more expensive.
But there's an interesting point in there about what is the purpose of development?
Because you're absolutely right. That building, if not turned into affordable housing, what would have happened to it? It potentially could have - Shona's fed up with me going on about an Art Deco furniture factory in Dundee that burnt to the ground. Beautiful building, quite close to the city centre, but burnt to the ground. You kind of think, well - it happens all too frequently.
Mm. There's maybe some VAT issues as well [unclear]...
...that need to be resolved [unclear].
Sorry, I'm interrupting.
No, I guess that was - in terms of some opening reflections on the previous session, I think that was where I was coming from.
To reinforce Julia's points from before, there is a level of expertise and a willingness to collaborate and be creative about new development models. The core affordable housing development model or the housing association grant works well. It works brilliantly. It works in perpetuity. But there are opportunities to use that type of thinking and that type of modelling for different parts of the housing market, whether it's intermediate rents or elsewhere. Again there are very particular rural dimensions to that in terms of benchmarking against the Local Housing Allowance that make applying those models in the South of Scotland tricky as things currently stand. But we know if we can target them, then they have a place within our communities and to provide a greater range and choice of housing, including for keyworkers as has come up a few times already, in the future. There's an opportunity for us to use that existing expertise and be a bit more creative going forwards.
Thank you, Nile. I think there's some really important points there. I'm hearing a lot about a willingness to work together but a need for flexibility from both of you, which felt important. But I did feel that the original discussion about shared interest, shared risk and shared reward was something that we all wish to be part of. Stephen.
The other thing that strikes me may be shared is the - I suppose we talked earlier about the pipeline where there was a bit of a discussion about a specialised retrofit qualification, for example, which seems quite interesting. But the pipeline and the framework for local contractors, it's the same pool of local contractors presumably that serves RSLs and private developers potentially, so is there something about the pipeline that means that RSLs and PLCs would have to have that sight of how that would be staged and phased, if you like, in order to make sure that there was a maximum benefit for all the partners involved? It might actually assist, especially where there's maybe that risk of market failure within the pipeline, where all partners can maybe help develop and recruit that framework of local contractors. It's just maybe again a point to working together. Thank you.
I don't know who wants to answer that, because I'm sure any of you could say something. Julia, you're nodding.
Yeah, I wonder if myself and Aaron might be - Aaron will give a different perspective. Yeah, we certainly find where we're starting locally to share longer-term plans and have those discussions with local suppliers, there's more understanding. They can plan for it.
I think one of the biggest challenges is the volume Russel mentioned earlier, the figures in terms of both our annual maintenance of 65 million and the net-zero challenges that we face and for both development and existing homes. The existing home is that 65 million. The challenge is that at the moment the construction sector in the South of Scotland just does not have the strength and the capacity. We've heard that earlier. However, the opportunity is that we know what we need to do and we can line people up to do it. The whole community wealth-building agenda that we're focusing on through the REP at the moment is about how we develop the skills for that pipeline.
I think it's very hard for SMEs to grow rapidly if they don't know what they're entitled to. Some of the frameworks that are available at the moment that are maybe taking broader regions are less attractive to local suppliers, because just like sometimes contractors don't want to come to the South of Scotland, our contractors will not have - many won't have the capacity to go further north to do the work.
Yeah. Speaking from an SME point of view in construction locally, yeah, we build passive houses. We've built some passive houses. There's a few ways you can build a passive house, a few different technologies. We picked and chose one. It might be that we have chosen the wrong one. We don't know. We won't find out for a few years. We've trained. We've upskilled. We've bought the equipment. We're not building a passive house at the minute, so that equipment's currently sat in the warehouse. It might be that if Loreburn come along and build passive houses that they choose a different route. We have to then retrain. That continuity of work at the minute doesn't exist. The collaboration isn't there at the minute where it's like, right, let's move the whole community forward. Let's train the whole community. Let's train the market, the subcontractors into a new way of thinking to benefit the whole community. It's very disjointed at the minute. Us in the private sector, we have to make our own calls.
Can I just ask, Aaron, about your workflow? Have you got a good workflow in terms of your outlook on business?
Yeah. Yeah, to be honest, we're - oh, if we were to start a job now, we'd be looking at a start in August or September. We are pretty much, yeah, fully booked. We're at the point where we can pick and choose the projects that we take on. That's probably the same for most of construction in the South of Scotland.
Yeah. I'm not sure how much of the conversation you were in earlier on or present for earlier on. I think what's coming out to me very clearly from this conversation today is that an absolutely fundamental issue we have to address, if we want to tackle this issue, is the capacity of the construction sector in the South of Scotland. You and your peers are probably flat out. This is all terribly academic, me banging out about we need to do more when we've got an issue of preparation for that opportunity which has to be recognised.
Now obviously if your company doubled in size, then you can do - before you double in size, you've got to be confident you've got a pipeline and security to enable you to take on that risk, which is back to the point you were making, Helen. Again we come back to the question of shared interest. Before you can make a contribution to addressing our shared interest to expand housing, we've got to reassure you that you're not going to have to have uncomfortable and awful conversations with staff in two years' time because the pipeline's dried up. Who wants to do that? Right. Sorry. Thanks [for that].
Stephen, you wanted to come in.
Yeah, I got trumped there. It was just really to maybe lay down a marker about SMEs, because I think - it always strikes me that in the South of Scotland SME actually covers just about every single business in the South of Scotland. Really we're talking, I suppose, about microbusinesses which is often 10 or less employees. I think SME's maybe too crude a measure now if we're dealing with the South of Scotland area. I don't know about yourself, but the company size of contractors is often a small number of people. It's well within the 250 people an SME covers. That's maybe just something about how we're going to target more effectively how we're addressing the skills and the pipeline readiness, so it's just maybe to suggest that. Thank you.
That has been my experience in the whole time I worked - most of my contractors were two or three individuals. When I was at Berwickshire, I had 27 contractors delivering our planned maintenance and repairs programme, so I was very aware of that. Most of the companies we worked with were very small. Unless that's changed radically in the last three years, no, they're - that certainly - and that's where the granular issues come and the complexity of this, because there's so many individuals with different views. That's why the coordination, the openness and the facilitation are so important, because it goes back to Aaron. If he knows this work, he can employ people, although they do need to be trained, of course. Aaron, do you want to come back in?
Yeah. Yeah, I suppose the training is the key thing. We've grown massively over the past few years. We would have grown twice the size that we currently are if there were the operatives available. We've tried taking on as many people as we can and we do take on as many people as we can. We put through apprentices, but locally there's not the places available to put through enough apprentices. There'll be more people leave construction locally than get put through an apprenticeship every year, so the actual size of the market, the size of the workforce will be shrinking locally. That's my experience.
Can I just ask, Aaron, the people you did recruit, where were they from? Were they mostly outwith the area? I'm interested about this point around the pipeline of apprentices is curtailed because of the limited training opportunities. It's a Catch-22, isn't it? What can we do about that? What's the perception, first of all, in the schools among young school leavers about working in construction? Because I know that sometimes that can be a bit of a difficulty in terms of their perception. There's also potentially other opportunities. We've got a big piece of work around parental employability, for example, and trying to remove some of the barriers to parents getting back into work, so what are the opportunities there? But how do we solve this bit about the training and make sure that the apprentices coming forward, if we're going to expand them, are going to be able to - so you've probably thought this through a few times. If only we had a - so what would be the key things?
Real experience this year, our apprentice joiner, at the end of his first week at college, three of the apprentices were taken out of the class and told that all of the funding was allocated already and those three wouldn't be trained this year. They ended up getting brought back in. They did find the funding from somewhere else. But I'm going to guess that the funding is a national pool and it's allocated across the whole country, and the firms in Glasgow and Edinburgh took the funding before locally it was available down here. It might be that funding - funding for colleges, funding for apprenticeships - needs to be localised, done on a regional basis.
Where did you get the people that you did get?
Yeah, they're all local, all from other - well, SMEs, all from companies smaller than our own.
If I could please, Deputy First Minister, I think the other challenge is I think the Borders Construction Forum have a list of 650 companies that are involved in the supply chain. There's one woman, so it's a very nondiverse market as well. I think that's something we have to think hard about is how we can get it much more universally accepted that anybody can - [we] can do this. I think that's one of the challenges.
On the colleges side that Aaron was mentioning, I think there are challenges around, but hopefully James [Withers] will come back and give us all some advice on [what that happens].
I don't know if Ray or Caroline want to come in from the college perspective about just where we...
Yeah. Thank you very much, Deputy First Minister. I was just waiting on the right opportunity to pitch in and this would appear to be it. I think there's two or three items that come to mind for me. I think you said earlier on in the conversation this morning that it was a potentially 10 or 20-year problem. I don't really see it as that. I think that the issue has been - and I think it's been covered quite well this morning already - that the shared interest and the shared planning is really the key.
There's always been a natural tension between demand and supply, that we can flex relatively easily and relatively quickly to create more space or capacity in construction or create more capacity or space in engineering. But there's often been a bit of a tension that, as and when we do that, we're making an investment in capital equipment and repurposing our estate for the medium to longer term. The issue is, as often the case, that there is that natural tension between demand and supply, that you have the gaps and shortages right now. Then two or three years from now, the market contracts or flexes in a slightly different way. We've repurposed our facilities in the way that we've been asked to do and then we've got a surplus of places that we can't - jobs that we can't put people into or, sorry, people we can't put into jobs. I think there's some issues there.
But the conversation this morning is giving me a lot of hope, because I'm picking up that there is a medium to long-term sustainable demand that enables me to go back to the college and challenge the college about repurposing our construction capacity and repurposing our engineering capacity in a way that would enable us to meet that long-term demand if it truly is sustainable. I think that's really good.
I think the second thing - and this is a wider conversation, Deputy First Minister, but one that's worth raising here - is that I think we - we're currently doing a review, as you know, of the tertiary education system across FE and HE. I think that's welcome. But I do think, as part of that, we actually need to look at our qualifications framework as an integral part of that, because I think one of the things that could happen is that - colleagues over there were saying that we're going to need almost like micro-qualifications rather than whole awards that they're going to take years and years and years to do.
I think one of the things we've got to look at through our qualifications framework is smaller bite-sized chunks of learning that equip people to do a very specific job that colleagues are saying that they're needed rather than necessarily tie them into a three-year programme or a four-year programme that takes an awful lot longer to do. Once people are employed, they're only going to use 10, 15, 20 per cent of what they've learned in the very narrow job that they're being asked to do.
I've heard some good things this morning that, as I said, will enable me to go back to the college and direct people to have a much more sustained look at greater capacity for engineering, greater capacity for construction over the next little while.
That's very helpful, Ray. I think the point that you make about the adaptability of college provision to meet particular needs. To try to do that with as much fleet of foot as is possible I think is the critical issue around about here. Again that fits into trying to create a shared interest amongst us all as to what can we all contribute towards trying to resolve some of these particular challenging issues? As I say - I'm repeating something I said earlier on - it's so clear that the capacity of the sector is a critical factor in how we resolve this particular challenge. Helen, back to you.
Yes. Thank you. I think there's also some other issues that we probably want to pull out. I was wondering if Alan and Gary would like to come in - so Alan first - and just say some of the key issues that are facing you in Dumfries and Galloway.
Thank you. Yeah, I think one of the key challenges is obviously, as we've said, we've got limited supply chain down here as well, but what's really impacting on the RSLs at the minute is obviously the cost of borrowing as well is becoming difficult. We're having to look at alternative funding models as well to be able to deliver newbuild housing. We've held some initial discussions with that as well, so we might need to look at how does that ownership sit between the RSL and potentially looking at asset firms as well to help us with those building programmes.
I think there was a comment made about what are we looking at in terms of offsite construction? From discussions with partners, there is willingness to come into this region and I think again we’d echo the point about we would be happy to collectively work together as an RSL group to satisfy that pipeline and demand. I think for me our biggest challenge is combining newbuild development and the retrofit programme that we've got within our financial model that we've got at the minute. It's requiring us to look at that in an innovative way before that in some regards might be a bit difficult for the sector to wrap their head around. But there's definitely options out there that we're looking at exploring in terms of being able to deliver this at scale to satisfy those businesses that it's going to guarantee that pipeline.
Thank you. Alan?
Thanks, Helen. I think one of the things for myself and my colleagues here was about creating positive life chances so more than just bricks and mortar. The Regional Economic Strategy had social inclusion at the heart of it, in some of the objectives, but with no one being left behind. I think one of the key challenges for us was that financial inclusion, [unclear] employability and a potential to do something significant. We've seen the challenges with the cost of living. Overall our properties, and for our customers, what that really means and trying to be really innovative with measures to address some of the poverty and the disengaged and vulnerable people we have within our communities. It's really that short-term funding results in a higher turnover within roles, within what’s our skills experience. [I've] spoke about that this morning in terms of the jobs and security but more importantly what it means for the customer and how we build that. We know there's been some real challenges in that sector.
Can I come in here, Helen? I think, Alan, you raise a really important dimension here. Going back to what I said earlier on about we're in a tight labour market - low unemployment, high employment - there are, however, still about 21 per cent of the population is economically inactive. Now some of that grouping will always be economically inactive, but there are some people who face challenges and issues. They could be economically active with the right support.
Organisations like your own are very well placed to try to provide the opportunities for people here. But there's also a wider dimension for our public authorities, because in some of the very good work that's been done in the Pathfinder work that we're doing on our programmes on tackling child poverty, particularly in the city of Dundee that Shona represents, public authorities are coming together in identifying and addressing the complex needs of economically inactive people. For some people, there might be a bit of early learning and childcare. There might be a bit of mental wellbeing support. There may be some physical wellbeing support. But crucially the lesson we're learning is that getting people who are currently economically inactive to be economically active is complex. It needs everything to be lined up.
But your organisations and RSLs can create - obviously have work opportunities. It's the same in construction companies where if we could put the right support around people, we might get them economically active. My plea, I suppose, again around this table is - we have local authorities here who are very much involved in the employability agenda. We've got colleges here. Health boards are represented here. There's an element of all of this that can't just resign ourselves to the fact that the labour market is tight. We've got to be doing everything we can to expand the size of the labour market.
I could sit here and bang on about the lack of migration, which is my endless frustration at the present moment. That's one aspect of the labour market tightness. Another is we've got to try to motivate and support people to enter the labour market and recognise the complexity of that journey. That might be something for the wider public sector partnership to reflect on here as to what more we could do in learning the lessons from some of the programmes that have been undertaken, as I say particularly in the city of Dundee where we're undertaking some really good learning about how we get people into employment.
It's a very important point. I know Alan wants to come in and say something about it, but the people element of this is crucial. But I suppose I also wanted to say that one of the challenges for the RSLs is I think we've all, certainly during the period that I've worked here, been involved in employability and employability training. But it's a skill, because the individuals each have their own complex challenges as you said, Deputy First Minister.
One of the challenges I know in the eastern part of the Borders was that we didn't have any professional services. We had well-meaning local groups who tried to create employability. But we didn't have anyone who actually knew how to support individuals with quite complex needs back into the labour market, because it's time consuming and it's expensive. I think that's a whole other area, but you're right. It is actually one - and I know Russel - it's very dear to Russel's heart. We've talked a lot about trying to set up employability services as part of our mission and our work. I think we're trying to address that. Again it's got to be part of this facilitated, coordinated approach.
I'm keen to make sure that we enlist the activities of all relevant partners, so you've got our local authorities. Skills Development Scotland as well must be part of that conversation too - but some of these issues are not just about employability. They're about the steps before you get anywhere near employability conversations. That's where other public authorities will have to be heavily involved. But again it's back to that concept of shared interest.
Thank you. I'm going to ask Alan to come in now.
Thanks. It was basically just to follow up from that point. It has been a challenge in terms of we've got a - for Wheatley Homes South, we have an employability - [called] Changing Lives. We had the training. A lot of the housing offices engaged at a very early point. But it was trying to create those opportunities. We were fortunate enough to do that programme when we changed the environmental service in the summertime, which created about 55 jobs, which was different for us. Again we didn't have the infrastructure at the start to do that and the training, but using the resources across the group helped support some of that. But that was something that was very valuable. We're currently working with the council to try and make sure we create more opportunities with that as well.
Julia, did you want to come in?
Yeah, I think another great illustration of that was the [Bean] project which was funded up until earlier this year. It was a partnership between the four Borders RSLs and the Wise Group. The whole purpose of it was just to get people work ready. In fact, in the short space of time that we all seconded people into it, we worked with people who were really hard to reach, very far away from the labour market. As a consequence, 53 people obtained employment, which wasn't an objective of the project. It maybe illustrates our ability, in terms of our connections with people on other issues in housing services, to really start the conversations and support people into that. Thanks.
You see, Julia, you alight on some of my obsessions. One of them is compartmentalisation, because why on earth should you think that you're just housing providers? I know you don't, but why should you? The point you've just made is absolutely on the money, because you've got a connection with people through your engagement with them about housing provision and all the rest of it. You will find circumstances where people need to make progress in life. There are other ways in which you can help establish the arrangement. Those 53 taxpayers - to sound like the mercenary Acting Finance Minister that I am - are very, very important to have them contributing to our society. They wouldn't have contributed had you not established those links. You're almost a - I don't know - a kind of pathway for people to come along when they're needing that particular support. It resonates very strongly with the approach that we're trying to take on the wider reform of public services, which Mary McAllan leads for us.
Yes, I do understand your obsession with it, because it is certainly one of mine. The people who live in the houses, that's what it's all about. That's why we build the houses, for the people. However, one of the things in this discussion is how do we work together to build the houses so that people have the space to improve the quality of their life to feel happy, healthy, safety and employable? It's that holistic approach which I think we're trying to address.
But today there's a lot of issues here around - I hear an ask from the RSLs about having a range of tenures in the rented sector. Maybe I shouldn't comment on this, but I know Susan and I had a discussion, Susan Aktemel who will be talking later, that we didn't manage to get the private sector to come to this. There's a whole issue about having a range of tenures for rented accommodation in the Borders, because we're a low-waged economy as you said. Actually therefore we need a range of different rents. One of the obstacles has always been the level of the housing allowance, so these are things that, if we're all going to work together, we need to have a little think about. Shona.
Yeah. We share the frustration of the Local Housing Allowance, the fact it's not been uprated for three years I think now. We have made those representations to the UK government, because it's important. Otherwise it creates areas that are unaffordable for renters. That's not what we want to see.
I agree about the range of tenures. Midmarket rent, obviously important, social rent. The private rented sector as well has an important continuing, an important role to play. I'm just wondering whether one area that we have not explored and what more could we do in this is around empty homes. For example, in my city apparently, I'm told there are 800 empty homes in the city of Dundee. Therefore there must be scope - and we need to play our part in government - to have the levers to, I guess, carrots and sticks, incentivise those homes coming back into use. Now we understand all of the reasons behind. It could be bereavement. It could be someone going into a care home. It could be that the property has fallen into substandard quality. Therefore what could we do to incentivise bringing some of that back?
Now that would sit alongside obviously all of the work that's going on around newbuild and refurbishment, but I think there's more we can do there. But we need to just get the right incentives for people to either sell to RSL, a local authority or potentially to find other routes for those properties to be rented out. Also I think we need to work to support local authorities and RSLs to bring their own voids back into use more quickly. Obviously there was a COVID impact there, but again what more can we do to support that so that we're making best use of the assets that are already there? Keen to hear any views.
Okay. Well, of course, all the housing in the Borders and Dumfries and Galloway is in the ownership of the people over there rather than in the local authority. I don't know about your voids. Mine were pretty good, but that may be - and I know there was - we've always talked about it constantly to improve that. I don't know if you want to make any comments about the empty homes ideas and the challenges and the opportunities. Susan's going to come in, even though it's not her session yet. But go on, Susan.
Never lose an opportunity. We have an empty homes programme in Glasgow funded by the Scottish Government and Shelter. It's the first one that was funded outwith local authorities. I think you're absolutely right. Empty homes are the secret weapon here for me, listening to everything that I can hear now, because the stats from Shelter are saying that the average cost of bringing an empty home back into use is £12,000. Our experience is probably closer to about 20,000, but it's a lot less than 150,000 for a newbuild. We've talked about how much more economic activity can we create out of the folks that are not economically active? That's an untapped resource, combined with empty homes being an untapped resource. You have thousands in the South of Scotland. That certainly, in terms of what we're going to talk about later, would be one of the key areas that we want to focus on. If Homes for Good is able to come to the South of Scotland, empty homes are a key quick win, I think.
Thank you. Euan, you were...
Yeah. Thank you. It's just at the Scottish Borders, we just put through our Executive Committee report on our Empty Homes Grant Scheme. We've got 16 applications through the period '22 to '23. It's up to £25,000 for those grants, so you're right. It's that sort of figure that's hitting. But that's in places like Galashiels, Eyemouth, Hawick, Selkirk, Duns, so it's across the Borders. It's not just one specific location. But I think it is - bringing those empty homes back is the priority. In the way out of Galashiels, there's a huge, old, abandoned mill that's been there for a long, long time. How can that be utilised? I know there was a plan come in a long time ago where they were wanting to put a swimming pool below [a] private house. It just never took off. I don't think that might be the right purpose for it.
But actually how do we work all in partnership to make something like that work? Because I think neighbourhoods and communities are great, but there's always that blight of an empty building, an abandoned building, a vacant building that we go past. I think it's really important. Even when you're walking through here, you'll see there's a building. I think if you came through the long-way car park that we did - [we] walked up the top-hand corner. There's a building that looks like it's out of commission. How could that be turned into homes or something for the ground? We've got the area. We've got the space. But it's working together again, I think, with the Scottish Government's help, councils' help and just get it right. People want to get into houses and homes.
There was a stat. About a third of people between 20 and 30 are now living at home with their parents or their - it's actually how can that change? They call it a boomerang. They leave for university, then they're going back. But how do we create the opportunity for them so they can get out and then they can get into the workforce, start delivering in communities and have that positive impact?
We talked there again about the positivity in getting to work, but for a lot of areas, especially affordable housing areas - and I've talked about this before, at the council, is there's a stigma of people who live in areas of affordable housing. There's a place, Melrose Gait in Galashiels that Eildon are part of, Persimmon's are a part of as well, so it's a mix between private and social housing. There was a bit of issues, bit of teething issues where benches were damaged or other things. I stood in the square. We had the police there. We had the youth workers there. We had all types of people there to try and assist. It worked out once I set up a residents' association with both residential, [the private land] people and people who are affordable housing. Everybody has to realise we have more in common than we do apart. I think that's the secret there. It’s, is it that blend of housing?
The only thing with that area I would say is there's 600 houses just about, which is like a village. However, there's only one shop. There's no community centre, et cetera. How can we get communities if we're not putting in the facilities to create communities in these little areas? I'll leave it there, but I think it's that empty homes and that communities and giving people that positive impact and outlook in life will create the future. Thanks.
Can I follow up Euan's point, the earlier point about - because I think there's an issue the government needs to take away from this conversation, which is about the profile of our affordable housing expenditure and the nature of it, because I'm struck by some of the points that were made. Susan made the point about it might - let's, for argument's sake, say it's £20,000 to bring an empty house back into use and Euan's point about the redundant mill. I just wonder if the profile of our expenditure and the programmes are sufficiently broadly based to take into account all of these different options or whether we are - [I know], in some circumstances, it'll suit housing associations. We're on a newbuild trajectory.
Have we got enough diversity in our funding profile and funding streams to make sure we can make the most of all of these possible opportunities? Because again back to the way I think about most things, if we can spend £100,000 on one property or £100,000 on getting five properties into use, [laughs] you'll not be surprised where my mind goes.
Yeah. There is the ability for purchase off market of homes. That happens, but it tends to be homes that are already on market.
The prices have obviously been quite challenging around second-hand home acquisition. There is some of that. I guess where my head's going, though, is it's about those homes that are not on the market that are sitting there...
...for a variety of reasons. If we were able to - whether it's through a national campaign along with local input to encourage people to come forward with their empty home pre-market to perhaps have almost like an acquisition plan. I guess that's where my head is. I think we're missing an opportunity to really be reaching out and saying, look, if you've got a property, come and speak to us. Here is a person who will speak to you. If it's in the right place and meets the right criteria, then there's perhaps a deal to be done. I'm thinking about being a bit more proactive in that space. That's something I think we could speak to with local partners around.
That's helpful, Shona. Helen, I'm going to come to you. We need to begin to think about coming to some conclusions.
Thank you. I do need to let Lorna say something and then I want Mike to come in from South of Scotland Community Housing. Then I'll draw it to a close. Lorna.
Just a reflection on the work in Scottish Borders. The Dumfries and Galloway Council has the Town Centre Living Fund which we've operated for a number of years. We make allocations from our council tax and second homes income to support bringing empty properties back into use, quite focused on 47 settlements across the region but particularly within our town centres. We make grants of up to £20,000, up to 50 per cent of the costs available to second - sorry, empty property owners to bring them back into use and to support affordable housing supply in the region. We've got a model there that we've been working on for some time. It's successful. We've made a number of allocations. But again that focus on bringing buildings back into use is very much at the heart of that.
Thank you, Lorna. Mike, do you want to say a few words?
Thanks, Helen. I'd like to just make some general comments about community-led housing and the role there. As has been referenced by the RSLs, I think we see this as being a really tremendous moment of opportunity for the community-led housing sector. There's a momentum built. There's an increased confidence in communities because of delivered projects.
Part of the challenge we face is that we're working on a lot of small projects around the issue of getting programme to site. It's very difficult to procure the types of development where we're working on two, three, four, five units. But there's a large pipeline. Our work is oriented towards the principle of getting the right home in the right place. Small projects, big impact. We have a very supportive policy framework for this at the moment through the Rural Housing Fund and its continuity, the Land Fund, and the incoming action plan which is going to be really important to securing this area of work. As the Cabinet Secretary is aware, our challenge is really around resource and the scale of the pipeline at the moment. That's something we're working with the Scottish Government around.
To touch upon the previous point, I think that community-led housing is an area where we can intervene really strongly around empty homes and empty buildings. It's somewhere that we've built up a pipeline of projects, delivered projects in the south, like the Langholm Police Station project, Wigtown, Whithorn, here in Dumfries and Galloway benefiting from the Town Centre Living Fund. The Cabinet Secretary was talking there about flexibility of funding. This is an area that the Rural Housing Fund is really flexible around. We're seeing communities intervene in this way. Yeah, empty homes - also the type of funding Susan mentioned, we've also just received the same pot of funding from the Scottish Empty Homes Partnership to place a member of staff into the Scottish Borders, so we're looking actively how community led can intervene there.
Around that challenge of getting these projects to site and working with the SME guys and more with people like Aaron, I think we see partnership as being critical to everything. It's all about collaborative working. These small projects, how do we grasp that scale around them collectively? How do we work more effectively with the RSLs, with the councils and SOSE moving forward?
Thank you. Now I will draw it to a close as you asked. I think the key messages - and I'm not going to get them all, because there was so much said. But there's a real will and wish to have facilitation to collaborate well and to be open and share information to enable us to do that planning. I would go back to the first session where it was very pertinent that Scottish Water and the utilities talked about their challenges, because without them we can't do all the things we need to do.
Then I move on to the issue about without the capacity and the skills, we can't do any of this. What I heard was there are some real wonderful models of doing things to improve that, including employability training, but we need to make it bigger and wider. We need to be working to look at that. I really welcome the college's perspective and the fact that you felt there were things to take back about the promise of a longer line of work opportunities which would then give the college some confidence that they could deliver.
The other thing I heard was looking at models from elsewhere. Really even though some of those are urban, there is still some value in picking some of that up.
There was a message about that we need support on a wider range of rented tenures. I heard the Cabinet Secretary say, trust me, I've been banging that drum for some time and we'll keep saying it. That's really good to hear.
Then we've had quite an interesting debate about empty homes, because I think we all want the empty homes that, as Susan said, we can develop at 20,000. I heard both councils say that was possible. But it's the big old mill which might actually be considerably more. That's the challenge. That's where South of Scotland Community Housing has done some cracking work on some buildings that would not have survived. I think it goes back to the value of the heritage. I know that's a debate we have internally in SOSE, but I also heard Nile talking about the value of Kelso High School and why you have to balance cost with the community and the community needs. It goes back to Euan's point about you can't just build the houses. You've got to have the other bits that are happening.
Finally offsite housing I think we feel is a way forward, but I did take Aaron's point about one set of training and then you find that everybody's gone down a different route. That's why the facilitation is crucial.
A reminder that in order for the housing associations in the South of Scotland to make it to net zero, it's going to be £65 million, so just need to acknowledge the costs involved in all of this.
But thank you very much. I hope it's been helpful. I think we've got some ideas about how we might move forward.
Okay. Thanks very much, Helen, for drawing that to a conclusion. Thank you to our colleagues from the RSL and from the SME sector who've helped inform that conversation so helpfully.
I think the points and themes that we drew out of there have a link to our first session this morning, which is about shared interest and the need to draw together the respective interests that we have. But there's a distinctive element which I think - I'm struck by listening to the conversation that - a lot of good stuff is happening. Don't get me wrong. I very much appreciate what is happening. But I think there may be some more tangible propositions that could be generated if we look perhaps at those routes to expanding the labour market, the financial routes to how we might refurbish properties and get them back into use and how we might make some of the more strategic developments happen, which obviously the Community Housing Trust have been able to take forward into the bargain. I think if we can weave those points together for a later session, that will be helpful.
Okay, thanks everyone for your contributions. Thank you, Helen, for facilitating that. We're now going to break for lunch. As I said, I've got to leave just during the lunchbreak, so Shona will stay to conclude proceedings. But thank you all very much for your participation, your engagement today. I'll look forward to hearing the upshot of the conversations later on. Thank you very much.
Shall we just gather back round please? If there's anybody lingering and having coffee, if we could get them back through, that would be great. Thank you.
Okay, so let's make a start on the next session which, although it's focusing on the private rental sector, I suspect will probably touch on some of the issues that have already been touched on. I think it was emerging earlier in this morning's sessions that the solutions are really multi-tenure solutions here. There's not one solution. But the role of the private rental sector is obviously an important part of that. To kick off this part of the session, we have Jane Morrison-Ross from South of Scotland Enterprise who's going to facilitate this session. Without further ado, Jane, I'll hand over to you.
Thank you, Cabinet Secretary, for the introduction. This is going to be an interesting session, I think. We all recognise that the private rented sector plays a significant part in providing homes for people across the South of Scotland with over 10,000 registered landlords and 17,500 properties right across the south. The sector's a really important part of that diverse housing offer, another part of the jigsaw in helping us tackle this problem, particularly with the shortage, as we've heard, of houses to buy from affordable housing right through all of the different parts of the market. The sector can work in partnership with our RSLs and we've had some very positive conversations there. It can also offer solutions for all demographics from young people, short-term/long-term lets, keyworkers, elderly people and accessible housing.
This session is to discuss the challenges being faced by the sector, the opportunities the sector can bring to the South of Scotland, the work that we've been doing collaboratively with both local authorities to bring the Homes for Good social enterprise model to the South of Scotland and the role of the private rented sector in bringing empty property back into use and in town-centre regeneration. We should have some good points to cover. I'm delighted to introduce our key panellist, Susan Aktemel, the Founder and Executive Director of Homes for Good. Susan's joined by Naomi Johnson who's been working with Susan and with SOSE, carrying out analysis across the South of Scotland as well. Susan, if I could start the conversation going by asking you a little bit about the role the private rental sector can serve locally and why this is such an important part of the overall solution and model for the South of Scotland.
Thanks, Jane. I think, first of all, you touched on or you introduced the diverse range of people who live in the private rented sector. I think you were absolutely right. Had you looked at the private rented sector 10 years ago maybe, it would have been a different picture.
What we've seen in the scoping work that we've been doing - where we've really been benchmarking what goes on in the private rented sector from a rural perspective against what we know which is more of a national and urban perspective - is that although there are some key differences around the rural nature of properties and transport [and actually] the low-wage issue is actually the issue for affordability from what we've seen so far. There are lots and lots of similarities about what's going on nationally. Almost everything that we've seen, even the number of landlords, the number of - sorry, the number of properties per landlord, it's quite similar patterns that we're seeing. I think the challenges that we're seeing in the private rented sector in the South of Scotland are what we're seeing at a national level.
The role that the private rented sector has is - for me there's two roles that it has. It provides an alternative where there isn't another choice. This is really, really important. This is why I'm so deeply concerned about the trends that I'm now seeing in the private rented sector due to the market forces and legislation that's come through in the last year. I think somebody mentioned people that can't afford, think midmarket rent is an optimum tenure for people who can't afford to get a mortgage or are unable to get a mortgage. The private rented sector is absolutely a home there. I think it was Nile that said, for every one property that goes on the choice-based lettings, there's 100 applications. That is the indication of the demand. The waiting lists in social housing are of - the people need to live somewhere. If they can't buy a property and the RSL waiting lists are of the extent that they are in a particular area, the private rented sector has to be there to provide an element of housing.
Yeah, I think - I was really struck by the video actually where what we had were three very different types of employers. They were all saying that their ability to do business - whether that be salmon, whether that be the leisure industry or whether that be higher education - was directly impacted on the lack of housing supply.
The other thing about the private rented sector, which I'm sure everybody in here knows, is that it does provide a flexibility and a choice geographically that may not be available elsewhere. My understanding of housing associations - it may be different for maybe some of the ones here - is that the tenancy turnover is quite low. I think in the ones I've looked at, it's maybe been about eight per cent a year of tenancies turn over, maybe a little higher. Whereas in the private rented sector, it's typically probably more than 25 per cent, maybe 30 per cent. What that does is it creates opportunity for people to be able to move.
There are a number of different reasons that the private rented sector needs to be there to fill in the gaps for what else is going on in the other tenures.
Thanks, Susan. I think with Homes for Good you're obviously a social enterprise and you have a model that looks at an ethical and sustainable approach to the people who live in your houses. As Helen said earlier, it's all about the people. What challenges are you seeing just now? You mentioned some of the statistics that you're seeing now. What challenges are facing you and that broader private rented sector now?
Sorry. What we're seeing coming out from industry reports and academic studies - and the local authority data is starting to come out and reflect this as well - is that the PRS is going into decline in terms of absolute numbers of properties and landlords. That is seen very clearly. It's very easy to see that in the deregistration or the changing numbers in the Landlord Registration Unit. It's gone into particular decline this year. I started to look at what the challenges are. Actually all of the challenges I'm about to mention impact on Homes for Good directly as well as individual landlords. The thing that I would say about the private rented sector is that there are so many moving parts that no one either government body or local authority body or agency can necessarily always fully see all the moving parts.
If we look at 2022, Section 24 - which is where landlords are no longer able to offset their cost of finance, their interest costs against their rental income - that came into full force last year. It was at that point that landlords realised or some landlords, many landlords would realise that it was actually costing them money to rent out properties because of the way that tax changes have evolved. I think also the Housing to 2040 consultation, which Homes for Good welcomed and responded positively to, did show a clear direction of travel around increasing demands being put on private rented sector landlords, some which would be happy with and some which maybe decide this is maybe not for me anymore.
I think the challenge we should also remember is this statistic where I think it's something like - was it 71 per cent of your landlords in the South of Scotland own less than two properties? There's hundreds of thousands of individual people that are actually responsible for providing a home for somebody, so there's no doubt that there's a challenge around standards and around everybody operating in the same way.
I think the environmental targets that have been set for 2025, which are completely legitimate and right, are going to - if you look at where private landlords maybe operate, they're not necessarily operating in newbuild properties. It'll generally be the older, traditional properties perhaps. There will be significant cost to becoming compliant. This year alone, there has been extremely sharp increases in mortgage rates and cost of capital. It's impacting anyone. It's impacting housing associations, anyone that's borrowing money for assets. I know of a landlord whose costs went up from 3.5 per cent to nine per cent when they got their renewal letter for their mortgages. That's the economy. That's something that's completely outwith our control.
The housing market is so buoyant and I think the Cabinet Minister referred to that. What I see happening is that there's a sort of perfect storm of ingredients. Landlords are facing challenges, are maybe coming to a retiral age, were maybe accidental landlords. Because of the buoyancy in the housing market, they've maybe chosen to sell when the property becomes available when the tenant leaves. The legislation that came in on 6 September that has I think been extended now was a shock to the sector. I don't think there's any doubt about that. I think that there's a tightening of these conditions around landlords and the economic model. I think all of these different things contribute to the fact that landlords are voting with their feet.
The question that we've got and the opportunity we've got is, well, the properties aren't going anywhere. We've been - I've been quite vocal about my concerns about the legislation and the consequences that we're now seeing as a result of that. Quite often the response is, well, the properties aren't going anywhere. The opportunity for me is how do we make sure that those properties are used well for - that they don't disappear into maybe under-the-radar Airbnb or they go to a landlord who's potentially less scrupulous than the one who sold it. But that's where the opportunity is in this, I think.
Well, into my next question which I will come to after Stephen.
Thank you. I'm just actually wondering, just looking at the evidence paper that was circulated with the pack, there's a variation within the story a little bit in terms of Scottish Borders and Dumfries and Galloway. I am noticing that there's a clear downward trend in terms of number of registrations and properties in the Borders, but the picture's slightly different in Dumfries and Galloway. There's maybe reasons for that that are peculiar to the region itself. There's actually more registrations now than there were in March 2020, but it did peak last year, for example. Similarly with properties, same sort of picture. It's higher now than it was unlike the Scottish Borders, but it seems to be maybe now on a turn downward. Is there a lag or is there a slightly different explanation for why it would be like that in Dumfries and Galloway? Thank you.
I don't know the local variation sufficiently to be able to respond to that. I know that Jamie from Dumfries and Galloway Council mentioned that there had been a contraction in landlord registrations very recently. What I would guess - if I'm allowed to guess - is that if you're talking about from March 2020 onwards, I imagine that that was possibly fuelled by investment opportunities so landlords buying more properties because of - during the pandemic and the year after that, the market, at the lower end of the private rented sector, did dip slightly. It might be something to do with that. I don't know whether perhaps Dawn or Jamie might - my understanding is that Dumfries and Galloway has shrunk back in landlord registrations in recent months.
Yeah, so I do take that. I think it's more the trend is slightly different, I would say. I think there's maybe something where we have to accept that the solutions for Scottish Borders and Dumfries and Galloway might be slightly different, because there's maybe local factors that have determined.
Or maybe there's a delay for some reason or another. I don't know if Jamie can support that. I see him speaking hurriedly in Don's ear there. But maybe that's something that could be brought into the conversation. Thank you.
Helpfully Jamie's just provided me with a little bit of context around the Dumfries and Galloway data to say that our recording of registrations has improved, so we got more accurate data. Part of it is to do with the quality of data. But also in recent months, we have seen a sharp decline in registrations due to the economic factors that we've been discussing. Thank you.
Thank you, Don. I think, Stephen, it's fair to say that we've had a number of working sessions with colleagues from both local authorities to try and understand the nuances across the South of Scotland as well and to make sure that those are factored in as part of the potential model. Sorry. Cabinet Secretary.
Just picking up a question to Susan, you alluded to this about is there an opportunity for making it easier for PRS landlords to potentially sell to council or RSLs off market? If so, what can we do to incentivise that, make it easier, encourage that? Just finally - I don't know if it's just me, but I would just like to hear maybe a couple of minutes on Homes for Good and your model. What is it that you do differently that we could perhaps learn from? How wide is your reach across Scotland?
I think in answer to the first point, what can be done to incentivise landlords to sell, I suppose landlords are going to sell if it gets to a point where the operating conditions - well, there's a whole number of reasons why they'll sell, but the main one that we are seeing - and this is seen across the letting agency industry. We're seeing it in Glasgow that it's not economically viable to be a landlord anymore. If I'm being honest, it feels uncomfortable to me that all of the different market conditions plus legislation that is brought in at fairly short notice then creates the conditions that landlords feel they've got no choice other than to sell, but then another part of the public sector comes in and says, well, we'll buy. I think if there is a movement towards reducing the private rented sector - which is fine if there is - it would be good to understand that in a more strategic way.
What we do know is that there are other landlords who are buying properties, so there's some people that feel it's no longer viable to be a landlord and other properties are getting bought from them. There are two or three estate agents that have been created in the last year, I would say, and they've grown very rapidly, which is about buying tenanted properties. It's a funny dynamic. The market is shifting at the minute. But if the question is what could be done to incentivise, I think it would be - if RSLs and local authorities are able to buy properties, it would be being able to do that at a realistic market value, not over market and not under market. My most important concern would be the tenant, because what we've seen is great levels - we bought a lot of tenanted properties in Homes for Good. The distress that it causes a tenant when they think their landlord is selling, because of the wider context of the PRS market...
That is the number one thing, that people have to be protected when that transition of ownership is maybe going to happen.
It's on that last point that I guess I was getting at, because we've had some very productive discussions with COSLA around the potential purchase of with-tenant properties. I can recall conversations with a number of PRS landlords, going back even before this heightened economic challenge. A lot of them wanted to - their preference would have been to have sold to an RSL, the council with the tenant in situ, but they found it difficult to know who to talk to. Was there one kind of place of communication that those discussions could take place? A simple thing is to try and make it easier for PRS landlords, who are leaving for whatever reason and are worried about the effect on their tenant, to have a clear point of contact that - anyway, sorry, I cut across you there.
One thing I would say on that point, before I go on to talk about Homes for Good, is that Glasgow City Council has got quite a successful acquisition strategy where RSLs are grant funded to buy properties from landlords and other owners. That might be worth having a closer look at to see whether something might be replicable. Yeah, that's maybe a potential solution.
In terms of Homes for Good, I suppose in the context of what's happening here - quite often when I talk about Homes for Good in other parts of the country, the instant reaction is, we need a Homes for Good in our area. The one thing that we can't do is create a supply of properties out of thin air that isn't there. But there are two broad things that Homes for Good does. We're a letting agency which is a social enterprise and which is values led, so that means that we operate - I always say that we operate in the way that any good letting agency should. Now Homes for Good is 10 on Wednesday actually. When I started Homes for Good, the Cabinet Secretary may remember it was just when the lodging of deposits had become compulsory. It was one of the early parts of legislation that Scottish Government had created. That sent a lot of letting agents running to the hills with everybody's deposits. When I started Homes for Good, the letting agency industry was not a particularly savoury place to be operating. I think it's changed substantially since then.
But our letting agency model is around enabling landlords and tenants to live well in the private rented sector and to have their investments protected. Our core aim is to improve the quality of property and management in the private rented sector, so what we do is we're the middleman between tenants and landlords. We want our tenants to live well. But equally we want our landlords (1) to provide high-quality homes and understand what their roles and responsibilities are but also to be treated fairly. That's the first side of Homes for Good. It's a letting agency based with values. As a social enterprise from the outset, we're not motivated by maximising profit, which I think is important in this industry. What we could do in the South of Scotland would be engage with landlords that are maybe self-managing and maybe not doing a great job or that don't fully understand the legislation, so that's where we can operate.
The other side of Homes for Good, which is probably where I think there's more opportunity and potential, is that I saw about 11 years ago that there were a whole number of people on benefits who couldn't access anything in the private rented sector and also couldn't access social housing, so we created a - it's almost a tenure right in the middle. I call it the social private rented sector where I raised alternative investment to buy properties at lower value and renovate them but that they were still affordable for people on Housing Benefit. Our portfolio now is about 340 properties. About three quarters of them are in Glasgow and the rest are in Renfrewshire and Ayrshire. About 91 per cent of them are let out at Local Housing Allowance rate, which as you'll appreciate is becoming increasingly challenging in the environment that we're in. That's where I think there is an interesting opportunity.
I think that both elements so the way that we work with third-party landlords and the management approach plus our ability to raise investment and actually [takes] empty homes, lower-value assets that maybe the RSLs and other partners might not be interested in for whatever reason - I talk about us being the minnow that swims in-between the bigger fish. But in the South of Scotland, bringing two or three properties and turning them into homes could be really, really important, so we work at a small scale.
The third element of what Homes for Good does with tenants in the private rented sector is that because we're working with - we want people who have got very limited housing choice to get access to quality, so we have a tenancy support approach which we're working with people that are - maybe got multiple support needs, who many other private landlords may choose not to rent to. What we want to do is make sure that they have the home as long as they can have the home.
There's a combination of our standard letting agency model, tenancy support approach and an investment asset-building approach.
Thank you, Susan. If I could bring Rob in and then I'd like to briefly go to Mike...
Thanks, Jane. Cabinet Secretary, the perspective I wanted to just ask about and maybe get comments from Susan or indeed RSLs or private sector colleagues was about how private sector business might interact with the challenges that we've heard about in the housing. We saw in the video - and you highlighted, Susan - a tourism business that is not able to develop as fast as it would want to go. I confess bias in favour of tourism businesses, but other business, it's as true.
I'd be interested to understand what the opportunity is for them to address the shortage that they see in terms of housing, the link between that ability to have appropriate housing for employees, the tightness in the labour market that we touched on earlier and then the funding regimes that I think Gary in particular talked about - he's not here now, but for RSLs and whether the private rentage sector for those businesses might be a space into which they can invest at a lower risk than would otherwise be the case if they were doing this themselves, the development. They probably don't want to be developers. That's not what their business model is. But they do readily see that unless they can bring together the challenges we talked about and the tightness in the labour market and housing, they are simply not either going to be able to remain as a profitable business and/or grow at the speed they think this part of the country has in terms of potential for, example, more tourism.
I'm interested just in colleagues' perceptions on that and what more might be done in which VisitScotland can play a part if that's helpful.
Can I just jump in before others? I'm very aware of the Cairngorm partnership that they have been working around the development with businesses around a midmarket rent solution. Part of that for seasonal staff would be shared accommodation within that model. So there are examples happening where together businesses and obviously yourselves, a key organisation, have managed to make some progress through the midmarket rent model. It might be worth just unpacking that a bit and getting some of the detail to share locally here. It might not be entirely applicable, but it has been quite successful. Yeah.
What's good about today is that there's all different people from different sectors all having an input. South of Scotland Enterprise is very much the anchor or the blob of Blu-Tack as I call it that holds everybody together and pulls everything together. It struck me. One of the reports that I read early on when we started looking at working here was this concept of the low-wage economy. When I did a very quick analysis of rent levels and - at the one and two-bed end of the market. This is not talking about family housing now. This is talking about maybe for younger people. It struck me that the problem wasn't the rent levels. It was the wage levels potentially and the seasonal employment. It was that, first of all, rather than the actual rent. £400 a month for a one-bed property is not an excessive rent, but if you're in a low wage, it is a massive amount. Actually my ask to employers would be that, first and foremost, to look at the wage levels. Controversial that may be, but that's my feeling about it.
The next stage would be interesting. Could employers invest in property? Maybe they could. But I think that then there's something about collaboration instead. Why not collaborate with the housing providers? An employer's got their business model. A landlord, whether they be private or social, also have their business model. Maybe an employer could, for example, provide the deposit for a tenant moving into a private property or be the guarantor. There are different things that if we collaborate and understand what the employer's challenges are and what the housing provider's challenges are - and there's a joint way that that could work.
We saw that happen - this just a very quick anecdote - in a town in Ayrshire where we were advertising a property and the young person that was - he was a kitchen porter. It was his first home. He didn't have a tenancy history. Didn't have enough money for a deposit but needed a home. The restaurant owner agreed to be his guarantor and put a deposit up. That enabled the boy to get the job and to stay in his property for the duration of the job as well. That was a really easy thing with the restaurant owner saying, could I do this, and Homes for Good saying, yeah, that would work.
There's something about just conversation and actually just understanding, okay, so in that particular town, we're going to - if we had 10 more homes, that would be a transformational difference to the business, to the town and young people. Our employees would be able to come and stay here. It's just about bringing everyone together and us all talking openly about the business needs and risks.
Thanks, Susan. I think also there's a couple of good examples in the South of Scotland, Gretna being one and Laggan Life being another, where the employers have looked directly at what they can do to create housing opportunities, but that's obviously businesses of a scale that are able to do that. I think that's a fantastic anecdote.
I'm very conscious of time. If I could just very briefly connect the dots between the social enterprise, private rented sector model and the community-led model, Mike, if you want to say anything there...
Yeah. Thank you. Obviously we've been speaking to Susan as plans have been developing. I think we probably see potential for some quite significant synergy here. I think the community-led model - albeit primarily funded through affordable housing supply funding - does sit, as Susan described, slightly in-between the social rented and private tenures. We have I think a shared vision around supply of safe, warm, secure, locally affordable homes that are meeting local needs. A lot of the work that we do relates to de-risking for communities and that long-term planning around management, cyclical maintenance, planning for the future. I think there's definitely a synergy there around potentially working with Homes for Good around housing management for housing that's in the ownership of community trusts.
I think the other part of it that we see potential synergy for us is just the research element of SOSE's work. We do a lot of very localised housing demand research. We also recently have done a larger piece here for the Crichton Trust, trying to put some evidence around the scale of demand in keyworker sector locally. I think some of that research - we have the capacity to support each other, I think, in developing a partnership.
Thank you. If there are no additional questions, then I'm again conscious of time. To wrap up, I think as we've heard through the sessions today, there are a number of common threads. There are a number of pieces of the jigsaw puzzle that we need to try and solve the housing challenges across the South of Scotland, bearing in mind the nuances in different areas, different regions. But the rural economy perspective is incredibly important, the private rented sector. Particularly the social private rented sector seems to have a very important part to play in the solution and in the model. As Susan said, people need to live somewhere and we want them to live in the South of Scotland. We want them to live in homes that they want to stay in, they want to be in across the south as well. Susan, thank you very much. Cabinet Secretary.
Thanks very much, Jane. I think that what's coming out to me very clearly is that a lot of the building blocks are already here. There's a lot of really good work going on, but we can add momentum and amplification and do more at scale, I think, of some of the good things that are already happening. As a government, we're keen to help do that. Whether it's around the flexibility of existing funding streams, whether it's the need for us to look at some of that, whether there are barriers that we need to look at as a government, then we absolutely need to do that. Collaboration, working with partners across all of the tenures, working with local authorities, rural housing enablers, enterprise, educational institutions. Everybody around the table is absolutely playing an important role. I'm keen really that this joint working continues to ensure that the shared ambitions can be achieved.
Now we are hoping through all the copious notetaking that we would - and during the next short refreshment break that there's going to be an opportunity to pull together some of the outcomes that have been identified. I think those are very clear. It's about not ripping up what's going on and doing something entirely different. It's actually about doing more of what is going on around that collaboration. I think there's been some specific ideas generated through the day that we should capture. If we can give the secretariat maybe 10 minutes to produce these in a coherent fashion, then when we come back in 10 minutes, we can propose the outcomes of today's meeting and invite any final comments. We'll see you back here in 10 minutes. Good.
Okay. Thanks, everybody. In the final 10 minutes - well, the next 10 minutes, I'm going to ask Diarmaid just to do a very quick drawing the discussion together, five minutes, and then we'll get the outcomes put up on the screen. I'll take you through that and what I'm asking you to do in a moment. But first, Diarmaid, just hand over to you.
Thank you very much, Cabinet Secretary. I've got a few visuals if that's okay, just to walk through the discussion. I suppose the first key message is around the distinctiveness of here. Building on the first part, we talked about the different economic approaches but into Susan's discussion around work actively and engage differently, that kind of collaboration piece, the innovation and the adaptation bit, so I suppose just a foundation of the distinctiveness of here.
We then moved into the idea of aggregating. Because of the phenomenal opportunities here, bringing things together so making sense of that at different scales so [ones and twos] houses but also the renewable energy bit. That aggregating allows us to see across the next 10 years and the full potential of what's here, but it also means we need different models. We need to build the skills in it so a different way.
Inside the different way, we also then talked about facilitating the shared interest. To get the different way, a key role for the Regional Economic Partnership and the regional partners and working with local partners as well. That allows us then to build a structure around how we get all of this done from the small level to the big level on to the coordination level. The Deputy First Minister talks about not creating new structures but really about agreeing different ways of working and appropriate coordinating structures. That helps us to do three things. It helps us to get clear and coherent pipelines. It helps us to innovate around the products as you've rightly highlighted, Cabinet Secretary. Also it gives us clear visibility on the plans.
Just to bring that back together, why are we doing it really? I was really struck by colleagues in the housing association. In the affordable side, it's about the people but around positive life chances and living well. The coordination and the structural bits and Councillor Jardine's point around looking in the community bits. To do that, we need to agree to the shared interests which I know are part of the outcomes, build clear visibility on the pipeline but also commit to shared planning.
The final couple of slides then is just the potential of here to do that seems to be around tapping into the untapped human resource, but something very powerful in Susan's presentation about the right skills and the right approach to do that and the issues pre-employability. Second it's the untapped physical resources, bringing empty spaces back in but also anticipation around the development of the private rented sector and also that fantastic idea of the social rented sector. Then within that, to empower what's already happening and already powerful within the area. Mike's point around how small change in small areas can make a big difference, but it's around getting behind the community sector more.
To make the shared interest work, to give the visibility of the pipeline, to build on the shared planning, the resources we have are untapped human potential, untapped physical resources and to get behind the community sector. Developing that is, the Cabinet Secretary's point again, around connection over compartmentalisation and the opportunities of all of us as touchpoints to connect and bring things together, which then brought in Julia's point around a different way. That allows us to test different approaches to funding, different approaches to procurement, different frameworks of aggregating contractors as Councillor Thompson talked about and bringing that confidence and continuity of work.
The final slide is that then, within that, a key dimension of that to live well locally and to get behind the [purpose of people] is agile and effective approaches to skills, which allows us then to get behind what the industry is doing, what the college sector is doing, what the university sector's doing to be able to scale up, build up and sustain the region. With that, thank you very much.
I'm very impressed [laughs]. Thanks very much. We're going to just segue now into the outcomes if we can have those up on the screen please. Okay, so you'll be able to glance through these. One's going to follow from another, so there'll be a logic here in terms of the outcomes. We'll just let you look through these. While you're reading that, you will be able to give further written comments into these as they're sent round following the meeting, so don't worry if you're not able to flag something just now. You will be able to do that following this session.
Can we just move on to second one? It's that point about collaborative working, all of which has been a theme through the whole of the day, the coordination, working with a range of infrastructure providers. I think all of that captures the flavour of what was discussed earlier on.
Okay, moving on. Affordable housing, again capturing the importance to the local economy, good outcomes for people, collaboration - I think that's the word of the day - and the range of tenures. There's not one single solution here. The importance, though, of community-led housing and working with businesses. I think that for me is probably one of the key outcomes of the day. I'll certainly be taking a personal interest in seeing how that is taken forward. Okay. The role that we've just been talking about of the PRS and the flexibility and the fact that through the Homes for Good model that Susan was talking about, it shows how actually you can do that in a way that has a benefit to landlords but also to tenants in terms of ensuring quality and also supporting those who otherwise wouldn't get an opportunity to access that sector. I think that's been a very helpful area to cover today.
Next. Is that the four? Oh. Yeah. Okay. Well, hopefully you managed to get the gist of those outcomes. Is there any burning issues around these outcomes at the moment that people want to flag or are you happy to follow up with any comments once they are circulated round to you? [Pause] Everybody's nodding on the latter. Yes, it's been quite a long day.
On that point, I just want to thank everybody for your time today. I think it's time that's been well worth investing around the table. The agenda items for the next meeting, which is provisionally booked for 11 September, I think would be - if it could be communicated to the secretariat [of any] suggested themes, I think, rather than trying to do that by committee around the table today so if you've got thoughts around that. Thank you very much. I've got personally quite a few takeaways from today. I understand a lot more around the dynamics in the South of Scotland. I think you're doing some really good, innovative stuff. I really will keep a keen interest in how that's taken forward. If we as a government can play our part further to what we're doing at the moment, then we're really keen to do that. Thanks very much for your attendance. Thank you.
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