Current Petitions

I will say a few words, if I may.

Thank you for the opportunity. We have undertaken an internal review to consider whether any changes should be made to the home loss payment system. As the committee is aware, having considered the situation, we decided not to increase the levels of payment or to change the system for calculating the amount of the home loss payment.Home loss payments, lest we forget, are made in recognition of the distress that inevitably is caused when a person loses their dwelling mainly, but not exclusively, as the result of compulsory purchase. The payments are part of the wider compensation package, which includes compensation of the market value of their property and assistance with the cost of relocation. We are aware that the maximum levels of home loss payment are higher in other parts of the UK, which means that people there may receive a bigger payment, depending on the value of their property. However, that fact in itself does not justify increasing levels in Scotland at the expense of vital infrastructure projects.Home loss payments are made by the promoters of compulsory purchase orders. Cumulatively, increases in home loss payment levels could have serious implications for the delivery of key policies, especially new-build housing under the affordable housing investment programme. We estimate that increasing home loss payment levels to the equivalent levels in England would raise the cost in the period 2008 to 2011 from the current £19 million to £51 million. We believe firmly that it is better to allocate that money to other priorities, such as increasing the availability of social housing.I take the opportunity to reassure members of the committee that, although we have decided not to make changes to the Scottish home loss payment process at present, we will continue to monitor the situation in the context of Scottish policy priorities. If circumstances change in the future, we may revisit the issue. We examined whether there were issues that we should consider further. I am happy to take questions from the committee.

This may be a tangential issue, but according to my notes the maximum payment that can be made is £15,000 and the minimum is £1,500, depending on the value of the property. If a home loss payment is made for what I might describe as distress at having one's property taken away, it is not immediately obvious to me why its size should depend on how big the property is or how much it costs. Are you in a position to rationalise to me to some extent how a tenfold difference in anguish can be justified in monetary terms?

The member makes a fair point. Distress is unlikely to be related directly to the value of the house. At present, the home loss payment is set at 10 per cent of the value of the house, up to a house value of £150,000. The distress that is suffered by owners of higher-value properties should not be materially different. People also receive compensation for the financial value of their house and financial assistance in moving to a new property.

The member makes an interesting point that I do not seek to disregard, but the petition asks us to increase the levels of payment. I draw committee members' attention to the fact that more than 90 per cent of compulsory purchases are settled before the compulsory purchase order process has been completed. There is a high degree of acceptance of the financial compensation that is on offer to people.One of our considerations is that home loss payments are made by the promoters of compulsory purchase orders, which are used primarily when old properties are demolished to build social housing. Any increase in payments would have implications for the social housing budget.The key point in the petition relates to increasing the payments. I am saying that we have considered the matter and we are not minded to increase them.

I do not want to mislead committee members. It is not our immediate intention to reconsider the scheme. I do not disregard the point about the time that someone has spent in their house, and we will take it on board when we next consider the scheme.

In England, the ceiling is three times higher, or thereabouts, and it is incremented annually. At the moment, the compensation goes up to £47,000, which is substantially more than in Scotland. However, I return to the point that we are making different policy choices for the money. I will give you some figures. If we adopted the English model, we would spend an extra £32 million on the scheme over three years and an extra £75 million in the period to 2016. That money would be displaced from our investment in affordable housing. The policy choice that we have chosen to make, which I defend, is to put the money into social housing rather than use it to increase home loss payments, especially as the clear evidence from the behaviour of people in Scotland is that the overwhelming majority—more than 90 per cent—accept the compensation package including the compensation for distress.

There are three parts to the financial settlement that people get: home loss payment, which is the subject of the petition; the purchase of the property at a fair market value, which is always the subject of some negotiation, as you would expect; and the expenses associated with moving. In the great majority of cases, the matter is settled by voluntary purchase, which is freely entered into and made, and there is no need to complete the compulsory purchase order process. Even when compulsory purchase is put in place, more than 90 per cent of purchases are completed without the order having to go through the full legal process. By and large, and in the generality, the evidence is that the system is working reasonably satisfactorily.

How many houses are involved in compulsory purchase?

It varies from year to year, but broadly there are about 5,000 demolitions per annum.It is perhaps worth while for me to make the additional point, as it has not arisen either in questioning or in my remarks, that tenants are entitled to compensation for the loss of their home and owners are entitled to compensation for the value of the house. Tenants are included in the figures as well.

We certainly intend to continue to monitor the situation, although, as I have said, having just completed an internal review we shall not be doing a further review immediately. Fairness is about striking a balance. Our overriding concern is to ensure that we improve the quality of housing that is available to people—particularly affordable and social housing—and our preference is to put the money into that pot rather than increase the home loss payment. I accept Rhoda Grant's interesting point, which has not been made to me as minister before—although it might have been made to officials in the past—and we will certainly take it on board for future reviews. I appreciate the logic of what she said. However, raising the payment when no substantial pressure to do so arises from the outcomes of compulsory purchases would simply divert money away from providing affordable housing and supporting the social housing sector and would increase the amount of money that is available to people with more expensive houses. The policy choice that we will continue to make is to retain that money for affordable housing and the social housing sector.

Remember that compulsory purchase orders are available only to the public sector for a defined public benefit. The promoter of the compulsory purchase order has to pay all the costs that are associated with it, including the home loss payment, so if the overwhelming majority of home loss payments are made in the context of housing and urban refurbishment, the budgets for those activities must bear the cost of the home loss payment and the other costs that are associated with compulsory purchase orders. The budget for railway or road schemes would bear the cost of any compulsory purchase orders, because that is part of the process by which the necessary resources for such projects—the land and so on—are put in place. It would be difficult in policy terms to change the way that the home loss payment scheme operates only in relation to railway projects. That position would be unsustainable. The overwhelming majority of compulsory purchase orders are associated with the demolition of homes to make way for urban regeneration, urban refurbishment and housing, so the primary home of additional costs would be the budgets that relate to the policy choices that arise from our priorities.

To be clear, Northern Ireland has a higher figure but no incremental increase. England and Wales have a higher figure that is incremented annually in line with inflation. We have a lower figure that is fixed. That is the position as of today.

No annual uprating takes place in Northern Ireland or Scotland.

In 2003, the system in England and Wales changed from one that was similar to ours.

The uprating since 2003 in England and Wales is not the substantial contributor to the ceiling of £47,000. The level in Northern Ireland was amended in 2004 to £45,000, but no provision was made for annual reviews. The position is simply the result of a policy decision, to which the Government adheres. I cannot speak for what ministers might have thought about in 2003. I have—properly—no access to any advice that they might or might not have been given. The previous Administration chose not to follow England then and we do not choose to follow it now.

It was fascinating to return to an old stamping-ground.

Just as you did not wish to fall out with the Presiding Officer, I do not wish to comment on that remark.

We have done what we should do. We have taken the issue to the appropriate authority and discussed it seriously. The minister has done what ministers do, which is make decisions, by which he will stand or fall. We have finished. We might have personal views, but it is time for the committee to close the petition, because we have done what we can. I suggest that that is it.

I agree.