BACKGROUND
Although the initial proposal from UNISON was to conduct a critique of the HACAS feasibility study, subsequent actions by the Scottish Executive may have made much of this approach redundant. With the introduction of a Steering Group, under the co-chair of the Minister of the Communities, and an associated Development Team under the direction of Bob Allan, the effective leadership of discussions of a proposed stock transfer has been removed from the control of the Council. The assumptions made about the timing, nature and form of the process have been undermined, therefore, with a new set of criteria in place. Speculation suggests that the Minister has rejected the HACAS report, preferring instead to commission Ernst & Young to undertake a new feasibility study.

Although no information has been made available on this new study, including the cost of these consultants, many of the fundamental flaws and lessons from the HACAS proposals will apply in this case, but more strongly. The apparent steer from the government to promote the rejected options based on a large number of community based housing associations(CBHA's) will build in; the loss of economies of scale in management, the loss of the use of a single DLO, and the incurring of such additional costs as VAT on building services.

The following report has been written in some ignorance, therefore, with significant gaps in our knowledge due to a lack of access to the full feasibility studies, to the foundations of the assumptions made in these and derived from the City Council, potential funders and the Government, and to the short timescale. Nevertheless, despite these limitations and qualifications, we believe that the conclusions of the analysis are sufficiently robust to confirm the concerns of UNISON, tenants and others. We question the entire concept of stock transfer to a non-Council body. In summary, the proposals are bad for the tenants, council taxpayers, and workers of Glasgow City, and for Scotland as a whole. We argue this in terms of the economic, financial and employment effects, but also because stock transfer will be detrimental to the social inclusion and democratic agendas this Executive promotes. The mechanics of the proposed transfer appear to have been ignored in favour of a final solution. At this stage, it appears as if Glasgow will have to accept the so-called 'community based housing associations' model if its debt burden is to be reduced, regardless of the disruption and costs of establishing this form of management.

The significant questions raised cannot be answered definitively here as the Council and Scottish Executive have been secretive over their own research. As the devil will undoubtedly be in the detail in what is proposed, these are the critical underpinnings that the tenants and workforce need to scrutinise if they are to be included in the development of policy and to make informed judgements. That they are not being informed, indeed they are not being involved at all, is of great concern and confirms the suspicions that all is not what it seems.

SUMMARY
1. The HACAS study has been overtaken by the establishment of the Scottish Executive led Steering Group and the associated Development Team.
2. We have analysed the HACAS report to the extent that we have details on its assumptions, workings and findings.
3. Despite this, the analysis here suggests that new models of transfer suggested by the Minister compared with the whole stock transfer option preferred by HACAS, will undoubtedly be more expensive, lead to greater job losses and not demonstrate any appreciable benefits to tenants.

It is therefore even more vital that the details of the Ernst Young and all other relevant reports are open to public scrutiny and debate. If the tenants of Glasgow are to make an informed choice on the options being presented then this is the minimum required.

ECONOMIC ISSUES AND HOUSING DEVELOPMENTS
All available evidence indicates that with demographic changes over the next two decades there will be an increase in demand for affordable good quality housing in the United Kingdom. For example, in Autumn 1995, the House of Commons Environment Select Committee along with the Government itself produced a new set of figures which revealed that 4.4 million new households are expected to emerge. The Department of Environment projected that somewhere between 60,000 and 100,000 new homes would be required, each year over a similar time period, for those emerging households who could not be expected to purchase homes on the open market, that is, 'social affordable homes'. If the backlog of unmet needs is included this figure rises to 120,000 per annum, 140,000 including Scotland and Wales, according to the Chartered Institute of Housing. Although the population of Glasgow is expected to continue to decline, underinvestment in housing in the past and future net household formation mean that even here there is a need for new housing. Indeed, Glasgow Regeneration is proposing significant new 'villages' in Ruchill and elsewhere in the city to meet this need.

For England, the DoE committed itself to working towards the lower end of this projection, 60,000 homes. This figure, though, includes what is described as new social lettings, which includes schemes which encourage tenants to buy existing properties on the open market. However, although even this commitment was undermined by the cutting of investment in new social housing in the 1996 budget, the new government has announced increased planned investment in housing in England, with an extra £3.9 billion proposed for the next three years.

For Scotland, the Scottish Executive has budgeted for an increase in spending on housing from £558.5 million in 1998/99 to £576.7 million in 2001/02. Although this appears to represent an expansion of 3.2%, these figures do not take account of inflation and so suggest a decline in total expenditure. This contrasts starkly with the position in England.

To compound this picture of underinvestment in new stock of social affordable housing we find further cuts and underinvestment in repairs. Stock surveys conducted in preparation for Large Scale Voluntary Transfer indicate that the backlog of disrepair in the local authority sector is at least £20 billion and expanding by a £1 billion per year across the country. To date selling council houses has generated more revenues than selling off public utilities, but unlike other privatisations the housing has to be replaced.

It is against this background that we find the Government solution, attempting to be introduced in Glasgow, namely stock transfer.

The first stage in the process of addressing these problems was the Community Housing Trust Feasibility Study (the study) which identifies the following as beneficial to whole stock transfer in Glasgow. All of these are contentious and open to challenge:
full modernisation of all the Council's housing stock which has a long term life
stable and affordable rents for tenants
more community involvement and tenant control of service delivery
transfer of responsibility for the Council's Housing Revenue Account (HRA) debt from tenants to the Government, and
continuity of employment on current terms and conditions for Council staff.

The fundamental reasons underpinning the proposed stock transfer are financial. Past housing investment decisions taken by successive Glasgow city councils, sanctioned and supported by successive Westminster governments, have left a legacy of poor housing and a large public debt. Any history of social housing anywhere in the world inevitably will return to a consideration of the position in Glasgow and Clydeside, starting in the early years of this century. The Rent Strikes of 1915 through other forms of social and economic unrest have stimulated various reactions by local and central governments. Progressively over this century, Glasgow has embarked on revolutionary changes to solve its massive housing problems.

With an extremely high level of overcrowding and congestion in the period up to and including the first world war, with one million people living in three square miles, there has always been a pressure to improve the basic accommodation of the population of the city on a very large scale. The garden suburbs of the inter-war years failed to rehouse the vast majority of Glasgow's residents, yet these first moves into social housing did suggest that a better life could have been provided for all. The depression, indebtedness and underinvestment meant that there were still horrendous housing problems after the second world war, with one in seven of the Scottish population living in the same crowded city.

The creation of the New Towns around Glasgow and the establishment of the peripheral estates offered a way to address these levels of deprivation and overcrowding. However, selective residential policies by the New Towns and gross underinvestment in Castlemilk, Pollok, Drumchapel and Easterhouse in housing and other social facilities meant that the repeated cycles of despair were generated. Massive economic dislocation caused by the decline of Glasgow's traditional industries exacerbated these problems to a high degree. Instead of comprehensive remedial action over the years, the fundamental basis of the regional economy was allowed to decay. Housing was then to be addressed with the next cheap solution: the multistorey building. Again early examples were promising but the longer term reality was for further underinvestment. In each and every turn, the government offered a panacea only to undermine the vision and the population's confidence with short-term cutbacks in programmes and levels of investment.

This history of bad private landlordism, failed local and central government plans and promises, and increasingly technocratic solutions to the massive housing problems have left a legacy of debt and distrust for quick-fix managerial strategies. Progressive cycles in Glasgow and Clydeside housing of grand plans, underinvestment and structural deterioration have been exaggerated by industrial decline and suburbanisation. The relative quality of city housing has not closed on the UK average over this century. Yet rents and public sector housing debt have continued to increase.

By 1999, the debt on Scottish council housing amounts to some £4 billion, for Glasgow, the total debt is £920m. The current housing stock numbers 94,000, so that unit debt is approximately £9,800 (£9,787). Just to service this debt costs council tenants 47% or £106.5m of the total housing revenue account income. It has been suggested that freeing the tenant and council of this debt would solve the financial problems of the authorities and allow increased investment. The origins of this debt are important to the understanding the critique of the feasibility study.

This debt is the result of Council borrowing rather than government expenditure; it is in effect private borrowing from the market. But, as the government guarantees the loans, the Treasury counts this as part of the public sector borrowing requirement (PSBR) and therefore controls this, apparently for macroeconomic demand management reasons. To maintain the confidence of the City (of London) in the Chancellor, Glasgow must pay the price of control of its ability to borrow for even basic housing improvement. As explained above, the debt arose out of past investment decisions. Many of these have been questioned subsequently, witness the criticisms of the peripheral schemes Castlemilk, Drumchapel, Easterhouse and Pollok, system built solutions such as Queen Elizabeth Court, other high rise developments and Darnley/Hutchie E. These account for much of the debt.

The nature of the debt is dependent on the scheduling and terms agreed when the loans were secured. Periods of high inflation in the 1960s and 70s could have led to interest rates of 15% being fixed for 60 years. The switch to modernisation programmes rather than new-build in the later decades increased the debt further. The attempts to avoid the public funding crisis of the mid-1980s through 'off the balance sheet' investments exacerbated the debt problems even further.

The scheduling and terms of this debt are critical to the assumptions underpinning the problems of servicing and of the alternative stock proposals. Without access to these details, the choice being offered to tenants and the potential to pursue alternative strategies are restricted.

It is important to note that, unlike previous 'writing-off' of the debt for Scottish Homes, the present exercise is not effectively a debt 'write-off' for the Council. Rather the Council is being offered a temporary servicing of the debt by the Scottish Executive. The terms of how this debt will be serviced are still to be confirmed. As the New Housing Partnerships - the apparent source for the servicing - will have a budget of only £120 million in 2001/02 (Spending Plans for Scotland, Scottish Executive, 11/99); although the Scottish Office was planning on spending £160m in 2001/02 in February 1999), there is a question over how much of the debt will be taken over by the Scottish Executive. If all the budget of the New Housing Partnerships is to be devoted to the servicing of Glasgow's debt, then there is a problem for other areas. Also, there is no guarantee that this servicing will continue beyond the initial period. Glasgow City Council could face the return of the debt burden, therefore, with no rental flow to cover this. The Council Taxpayers would then have to absorb this burden; in effect, given the poverty of most tenants and their dependence on welfare benefits, the cost of servicing will have been passed from housing benefit to council tax benefit. The latter, however, only covers up to 80% of the tax whereas housing benefit can cover up to a maximum of 100% of the costs; a more regressive tax-benefit system would have been imposed into the financing of Glasgow housing. That changes are being mooted for housing benefit also will shift even more of the cost of supporting Glasgow's poor onto the poor themselves.

As a consequence of the Comprehensive Spending Review, the recent growth of public expenditure on health and education at the expense of housing is projected to continue. Fiona Hyslop of the SNP has argued that "At 1999 prices, the capital programme in Scotland's council housing had fallen from £687m in 1989/90 to an estimated £312m in 1999/2000." Much of the attention in the 1990s on housing has been towards debt and rent levels, rather than quality. Compounding this, UK government restrictions and real cuts in public expenditure in Scotland as a consequence of the application of the Barnett Formula are leading to an 8% cut over the first three years of the new Parliament's life. A realistic appraisal of the power balance between local authorities and Holyrood suggests that the former will be expected to bear a disproportionate share of these cuts.

It is also noteworthy that in February 1999 the Scottish Office had provisionally earmarked £13m for the 'transfer feasibility and option appraisal' of Glasgow's housing stock ('New Housing Partnerships - 1999-2002. Report of Advisory Group', Scottish Office, February 1999). This not insignificant sum was not to be spent on housing, on keeping rents affordable, on eradicating dampness, etc., but on consultants.

In line with wider government policies throughout the 1990s, local authorities are progressively being considered as enablers rather than as providers of services. Glasgow City Council is seen, therefore, as a strategic partner in a series of initiatives, as much to provide an apparent degree of democratic legitimacy as to set, control or influence the agenda. The recent strong criticism by community leaders of the Glasgow Regeneration proposals partially to demolish Ruchill and to replace it by a new extension of the West End are witness to this manipulation of democratic control. Having to accept the agendas of non-elected QUANGOs effectively reduces accountability and the ability of local people to manage their own lives.

PSBR to GGFD
The preferred option outlined in the feasibility study is for whole stock transfer. The suggested benefits of this are discussed elsewhere in this critique. But the study itself notes that this option is only considered given the current policy framework surrounding the Public Sector Borrowing Requirement (PSBR). In the words of the report: "It is the view of the independent advisers that without a significant policy change by the Government relating to the Public Sector Borrowing Requirement, whole stock transfer is the only way the Council could achieve these benefits in the foreseeable future." (page 7) It would appear that there are good reasons for the City Council to spearhead a campaign to alter the composition of the PSBR. Currently, the UK government is out of line with many of our EU partners in including social housing in its PSBR figures. The re-defining of the PSBR would therefore have other political and economic advantages for the UK as a whole. This is a point made clearly by Tony Blair in addressing the 1999 Labour Party Conference regarding the need to release funds for investment: "And if there are Treasury rules or antiquated concepts of public borrowing that hold us back, change them. That is what intelligent government is for."

UCATT, the STUC and others have argued for a changing of these Treasury accounting rules. In particular, it is suggested that there are strong reasons to support public borrowing where this will create an income stream, or reduce expensive outflows to private sector financial institutions, by investing in the social and economic infrastructure, such as housing. Changing these rules to focus on the General Government Financial Deficit (GGFD) rather than the PSBR would bring the UK into line with the rest of Europe. The idea of changing the Treasury rules in this way has been voiced by the Labour Party for some time, as witnessed by the quote above from the Prime Minister's first speech as party leader to a Labour Party conference.

As argued by the STUC, the adoption of the GGFD would allow new opportunities to open up to establish public corporations, such as housing companies wholly owned by local authorities. This would enable them to borrow from the market to fund projects where there is a long-run commercial return without a consequent impact on the public finances. Government reluctance to embrace this move to come into line with the rest of the EU has been based on the fear that it would signal to the markets that financial control was weakening. It has been calculated that this change would have led to a 1998/99 deficit of but 0.25% of GDP. Indeed, recent statements by the Treasury on the moves in public taxation and spending suggest a surplus would have been achieved this year or next.

Overall UCATT has estimated that Council Housing is in profit. On the back of this and given their size, local authorities should be able to borrow in the market on more favourable terms than community, voluntary sector or private housing companies. Historically, the intervention of local authorities into the provision of housing was to provide a good example to the private sector, and to avoid paying excessive interest charges to the banks and other lenders. The scale of council housing provision and of associated debt does not negate the underlying argument over the legitimacy of the need for change.

A further reason to reconsider the whole area of government debt has been presented recently by the need of the pension funds and life assurers to have access to investing in government bonds. These are their safest form of long-term investment and are believed to be critical in ensuring they have sufficient assets to meet future pension commitments. The conservative fiscal regime adopted so vigorously by the Chancellor has resulted in a reduction of such opportunities for investment so that the Financial Times (for instance, 20/8/99) amongst others has raised the need to expand the availability of long-term gilts. These have a low rate of return: 'It is far cheaper at present for the British government to borrow money over a 30-year period than over 10 years' (FT 16/8/99), offering the opportunity for much lower costs of borrowing for the public sector than the privatised or housing company model.

In any event, the eagerness of the Westminster government and of the Scottish Executive to pursue the stock transfer of social housing is often predicated on the need to address perceived management inefficiencies under council control. It is noteworthy that these neither are identified nor improvements suggested in the HACAS feasibility study. The suspicion is that with the same management structure and the same senior managers, but with trades unions effectively excluded and the debt removed initially from the backs of the new organisations, the opportunity to make higher surpluses is being created for these managers and their financial supporters. Arguments over definitions of public borrowing and management inefficiencies are secondary but useful distractions.

SUMMARY
1. There is a need to maintain the provision of affordable homes for all in Glasgow.

2. The Scottish Executive is budgeting for further real cuts in public investment in social housing.

3. Past under-investment means there is a massive repairs backlog.

4. The recommendations of the HACAS feasibility study to transfer all Glasgow City Council's housing stock stem from financial considerations rather than from identified management inefficiencies.

5. The proposal for a stock transfer threatens to be but the latest in a long history of grand designs for Glasgow housing.

6. It is still unclear how the Scottish Executive intends to service the housing debt and for how long, there are no guarantees. With no promises to 'write-off' the debt, this uncertainty will continue.

7. A change by central government from PSBR to GGFD would benefit the whole economy and the adoption of the GGFD would allow new opportunities to open up to establish public housing corporations.