The Scottish Governments agenda for future investment in new social housing

1
The Scottish Governments agenda for future
investment in new social housing

• Bill Barron
• 3 November 2008

2
What I will cover

• Recap on Firm Foundations vision
• What about the Credit Crunch?
• Development consortia
• Lead Developers
• How we get there
• migration and competition

3
The current position

• The next stage will be to reform the investment
  processes to permit a more strategic and
  competitive approach.. this could be done in a
  variety of ways. We need to explore all the
  options before deciding on the form that the new
  system will take.. we intend to work with the
  Scottish Federation of Housing Associations,
  COSLA and other housing stakeholders to develop
  specific proposals on which we will consult in
  the autumn.
• Nicola Sturgeon Scottish Parliament 25 June 2008

4
Objective and Context

• Our Objective more houses higher standards
• Firm Foundations improving supply
• Being more strategic

5
Firm Foundations Basic Proposal
RSLs
Sift / self-selection
Competition
Ownership/Management
6
The credit crunch

• Scottish Government response
• Private finance scarcer and more expensive
• Impact on construction industry and supply of
  housing
• Increased demand for social housing?
• Land costs falling
• Implication for Affordable Housing Investment
  Reform?

7
The way forward

• Development Consortia
• (Regional) Lead Developers

8
Proposed Structure
9
Development consortia

• Development for ownership by another
• Important role for consortium head
• Will depend on partnership working underpinned by
  clear agreements

10
Role of consortium head

• Leadership
• Contracting and procurement
• Quality
• Finance
• Risk issues?

11
Formation of consortia

• Led by an RSL
• Membership open to other RSLs
• Local authorities?
• Private sector organisations?

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What is a Lead Developer?

• An RSL to which central and local Government have
  chosen to commit investment over a sustained
  period
• Responsible for a significant proportion of
  development in a given region
• Able to innovate

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Why Lead Developers?

• Indentify and apply resources most effectively
• Specialise Treasury management
• Specialise management of procurement and
  development
• Economies of scale, longer term programmes and
  innovation
• More sophisticated land acquisition
• Single point of contact

14
The Lead Developer role

• Co-ordinate and manage input of resources
  required
• Promote innovation
• Responsible for agreed outputs and outcomes
• Exercise leadership
• Negotiate with partners
• Ensure quality

15
How we get there

• First stage
• Pre-qualification of RSLs
• Formation of consortia
• Second stage
• Competition for subsidy
• Appointment of Lead Developers

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Pre-qualification

• Will need a process
• Capacity
• to develop and manage larger projects
• to engage strategically
• Would need assurance that LD
• Is well managed and well governed
• Has a sound financial position
• can demonstrate high standards quality,
  procurement and management

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Results of pre-qualification

• Pre-qualified RSLs are eligible to bid for
  subsidy
• Pre-qualified RSLs are eligible to apply to
  become Lead Developers
• Membership of consortia can be confirmed at this
  point

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Competition for subsidy

• Organised on a regional basis
• All pre-qualified RSLs can bid
• Projects must be firmly planned and costed
• Criteria for award
• Price deliverability quality strategic fit

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Applications to be a Lead Developer

• Submitted at same time as costed proposals for
  specific projects
• Includes plans for a further programme for up to
  5 years
• Supported by clear targets, indicators and
  milestones to track programme delivery

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Appointment of Lead Developers

• At the discretion of central and local Government
• Confers agreement to fund a substantial programme
  for up to 5 years
• In effect, exempts Lead Developers from annual
  competitions for renewed subsidy
• Lead Developers must be empowered to innovate
  from a position of strength

21
Summary

• Importance of maximising supply
• Development Consortia
• Lead Developers
• Opportunities for RSLs to exploit