Housing Stock Transfer Briefing

Introduction

September 2004
This briefing outlines UNISON Scotland's position on housing stock transfers as well as highlighting some of the problems that have arisen with previous stock transfers.

Background

According to the Scottish Executive, 70% of Scotland's council housing stock currently falls below their new Scottish Quality Housing Standard (SQHS). This standard has to be met by all social rented housing by 2015.

However many councils also have problems investing or even maintaining their existing stock due to the proportion of their rental income going towards servicing their housing debt.

Additionally public investment in housing is counted against the Public Sector Borrowing Requirement (PSBR) which the Treasury is keen to reduce. On the other hand private investment in housing is not attributable to the PSBR.

Therefore a combination of the new SQHS, council housing debt and the Treasury's PSBR rules has left councils to consider stock transfer as the only option to investing in their housing stock.

UNISON Scotland's View

UNISON Scotland is against housing stock transfers for a number of reasons including the implications for staff, loss of democratic accountability, the costs of transfer as well as a reduced choice for tenants.

Staff Issues

There are a number of issues regarding the future employment of housing and associated staff if a stock transfer goes ahead.

One of the main issues is deciding which staff get transferred to the new housing body. Normally any staff who spend 50% or more of their time working for the services which the new housing body will provide will be transferred. However this raises problems with some staff working on related areas such as policy, legal, wages and IT. Once the housing stock has transferred these services may not be required and this could lead to job losses. There will also be an impact on building staff (DLO's etc) with regard to maintenance work on the transferred housing stock. Although some transfers have allowed DLO's to tender for such work there is no guarantee that they will receive it. In the case of Glasgow the DLO was not successful in getting the maintenance and repair work it had carried out previously and had to lay off some apprentices.

There is also a concern about the terms and conditions of transferred employees. Although TUPE will provide some protection this is limited and eventually the new employer will want to impose their own terms. This is already happening in a piecemeal fashion in Glasgow Housing Association.

Related to this is the issue of pensions. While all council staff have access to the Local Government Pension Scheme this may not be the case for staff who have transferred to a new housing body. To continue within the LGPS the new employer must seek, and be granted, admitted body status and there is no guarantee that this will happen. For instance the new employer may not be admitted to the scheme, may decide that employer contributions are not sustainable or may decide – as many private employers have – to replace a final salary pension scheme with a money purchase scheme. This will have serious implications on the pension provisions for all transferred staff.

The transfer of housing to the private sector is often most dramatically felt in the relations between trade unions and management. In the case of the GHA there is a whole different business ethos and attitude towards unions. This has seen policies and procedures introduced by management without consultation with staff or their representatives as well as a drastic cut back in facility time. This obviously has an impact on the ability of union officials to organise staff and carry out their union duties. The GHA has also initiated a move towards performance related pay which will obviously have a significant impact on staff.

There is also a concern about financial pressures on private housing bodies which has led to more demolitions in order to reduce the capital costs of repairs. This, in turn, has led to a need for fewer frontline staff.

Democratic Accountability

There will be a major loss of democratic accountability within the social rented sector if local councils decide to transfer their housing stock. Currently council tenants can vote councillors out of office if they are unhappy with their management of the housing stock. This will not be the case with the new landlord bodies where tenants will only be able to choose 'tenant representatives' for the management board. These representatives will normally be a minority of the members of the board.

Cost

The National Audit Office (in England and Wales) revealed that stock transfers have turned out to be more expensive than stock retention by local councils. One of the main reasons for this is that the new landlord bodies cannot borrow money at the same low rates that local councils can. Also councils are exempt from VAT with regard to housing investment whereas the new landlord bodies will have to pay this. There is also the additional costs, and time, of establishing a new landlord.

In Glasgow around £100 million extra was allocated for VAT payments while £13 million was spent on feasibility studies. This is all extra money that could have went towards repairs and investment.

There is also a concern about councils still having to fulfil their statutory responsibilities for helping the homeless yet having no properties in which to re-house them. For instance Renfrewshire Council have spent £500,000 on temporary bed and breakfast accommodation in local hotels but this situation will get worse once all their housing stock is sold off.

A similar concern exists that as housing association rents are normally higher than council rents then a shift of council housing stock to housing associations will see rent rises. This will lead to higher levels of housing benefit.

Removal of Tenant Choice

The commitment to tenant choice is a charade unless local authorities are able to act in accordance with the wishes of their tenants. However telling tenants that they face massive rent rises if they don't transfer is not providing tenants with a real choice.

In England their equivalent of the SQHS (the Decent Homes standard) has been condemned by MP's in the ODPM (Office of the Deputy Prime Minister) Select Committee as a 'Trojan Horse by the Government in a dogmatic quest to minimise the proportion of housing stock managed by local authorities'.

UNISON Scotland Proposals

Direct investment via an investment allowance would allow councils to borrow to invest in their housing stock. It is the quickest way of getting investment into council homes and, as the Audit Commission has demonstrated, cheaper for the taxpayer by an average of £1,300 per home.

A change in the government's accounting procedures from using the PSBR to using General Government Financial Deficit (as used by most other E U countries) would be beneficial. The GGFD excludes public investment in social rented housing and would therefore allow the government to invest in council housing.

UNISON Scotland is also concerned that housing debts are either paid off or transferred in the case of housing stock transfer. In the interests of creating a level playing field and providing real tenant choice UNISON believe that the housing debt burden should similarly be removed from councils wanting to retain and invest in their housing stock

Further Information

Further information on housing stock transfers can be found at:

http://www.unison.org.uk/handsoffhousing/index.asp

http://www.defendcouncilhousing.org.uk/dch/