Zero Emission Social Housing Taskforce cost and affordability sub-group minutes: 13 May 2021

Attendees and apologies

• Sally Thomas – CEO, Scottish Federation of Housing Associations (SFHA)
• David Bookbinder – Glasgow & West of Scotland Forum for Housing Associations (GWSF)
• Michael Cameron – Scottish Housing Regulator (SHR)
• Tony Cain – ALACHO
• Mark McArthur – Energy Saving Trust (EST)
• Craig Spence – Orkney HA
• Bryan Leask - Hjaltland HA and Rural and Islands Housing Association Forum
• Jon Turner – Link HA
• Patrick McGrath – Southside HA
• Stacey Dingwall – SFHA
• Roddy Hamilton – Changeworks
• Bruce Cuthbertson – Tenant Representation
• Dion Alexander
• Shona Mitchell – SFHA
• Casandra Dove – SFHA

SG Officials

• Ragne Low – Heat Strategy Unit
• Amy Tickell – Low Carbon Support Unit

​SG Secretariat

• Catriona MacKean – Scottish Government
• Simon Roberts – Scottish Government
• Tony Cruickshank – Scottish Government

Apologies

• Laura Caven – Cosla

• Ian Smith – Changeworks

Items and actions

Welcome and Introductions

The chair welcomed everyone to the meeting and set out the remit of the group and what the aims and the objectives and highlighted that it would be a challenge to identify the various sources of funding required to address Zero Emission Social Housing, but to ensure that fuel poverty is note exacerbated

​​​​​​Sub-group Terms of Reference (ToR)

• The ToR was discussed and the 2 framing questions were highlighted.
• Agreed that the main objective is to reduce fuel poverty and consideration should be given on the impacts of any recommendations that are made.
• Agreed that there is the need ensure value in any approach and recognise the impact for housing associations revenue.
• Recognise that tenants are key partner in any work that is undertaken and that investment and innovation and the possibility of the Scottish Government and industry working together.
• Agreed that there needs to be understanding of the link between capital investment and tenants and the impact on fuel bills and that it is not solely about capital costs, but ongoing costs

Evidence base (3 short presentations)

Changeworks – findings from SFHA research

Survey of RSL plans for EESSH2. The presentation highlighted the average EPC ratings, but indicated that there was still work to be done to achieve an acceptable rating. It was also highlighted that the potential cost to achieve an increased rating would be in the region of £2bn, but could be higher. The average running costs to tenants was £1,300 per year, which is lower than the national average. The issue of insufficient available capital to make the changes was highlighted and that there is a discrepancy between running and capital costs. It was highlighted that the cost per unit to bring a housing unit up to standard could be between £8k to £12k. The Scottish Government’s Eco Fund and the loss of RHI payments were highlighted.

Affordability considerations of housing associations

• The presentation highlighted housing association borrowing was at its highest levels and that £400m had been repaid to date, leading to competing priorities for housing associations. The provision of additional services requires extra resources was highlighted and that the maintenance costs results in increased borrowing, which increases rents to tenants, which creates rent poverty as well as fuel poverty. The issue of housing associations being asked to go further faster was raised and that there was more scrutiny on social rents compared to the private rented sector and was seen as an easy target. Agreement that there are huge risks and opportunities for investment in the current housing stock. The issue of costs and challenges trying to attain EESSH2 across the sector was highlighted.

SFHA proposals for funding mechanisms in HIBS consultation response  

• The presentation highlighted the feedback from SFHA members and the Scottish. Discussed problems with ECO funding in Islands projects, particularly disincentives for electric vs. case, and difficulties in getting PAS accredited installers. Government’s £100m Net Zero Social Housing fund was mentioned, with a focus on the challenges in submitting applications. It was also highlighted that the fund was highly competitive and it was suggested that the fund should be split proportionally between housing associations. SFHA view is that we need:
  1. Multi-year funding for at least 20% of capital costs, allocated rather than awarded by competition
  2. Additional flexibility to award up to 50% for innovative projects, especially in tenements
  3. funding for solutions to redress impact on tenants where performance falls short of modelling

General discussion

• The paper Scottish Government provided by the Scottish Government was discussed and paragraph 16 was mentioned in terms of the group make-up.
• It was highlighted that housing associations ability
• Discussion of the balance between the social rented sector as leaders of change, against managing the risks of innovation for tenants
• RSLs are experiencing the fallout from Austerity and Universal Credit rollout, plus picking up the slack in public services – realistically very little capacity to put the capital costs of net zero projects onto rents. The idea that increase rents could be balanced by lower fuel bills is problematic, given lack of control over fuel prices.
• The loss of borrowing at favourable interest rates from the European bank was mentioned and it was queried whether there needs to be something similar within the UK. Discussion Scottish National Investment Bank and the bank’s replication of commercial banking.
• Discussion on the Scottish Government’s devolved competence in-terms of energy pricing and the difference between gas and electricity pricing. Highlighting of the issue of extreme fuel poverty in the Highlands & Islands and the suggesting of targeting Scottish Government funding to specific areas of Scotland was mooted.

Actions / Next Steps

• Additional meetings to be held (2-3)
• ToR to be amended to include tenants & impacts
• Scottish Government to undertake Scenario planning
• Scottish Government to engage with analytical colleagues with possible presentation at future meetings.
• Scottish Government to undertake financial mapping exercise.
• Further discussion to be had on Scottish Government £100m NZSH Fund

AOB

• The chair stated that there may be a requirement for additional meeting of the sub-group.
• No other business was discussed.

Date of next meeting

20 May 4pm to 5pm. Meeting invite issued