Local Government and Housing Committee

Yes. First of all, it's really an honour to be here, and I'm very happy also to follow up this session, sharing more information, if there are specific asks, from my colleagues in our research observatory or our policy centre, so please make this a to-and-fro, a quite informal session, so that I can also hear more specific asks from your side, so that I don't just go off the target for you.

So, in terms of obstacles at the moment—. And just so you know, Housing Europe represents quite a mixed bag of contexts, as you can imagine. We go from countries that have only 2 per cent social housing, and it's mainly purely municipally managed—so, if you think about Portugal, for instance; Italy is also under 10 per cent public housing, the so-called case popolari there; Belgium is also around 6 per cent; right up to, let's say, Denmark, which would have 20 per cent of what they call 'general housing', which is how we would understand social housing; and, in Austria, in some cities, up to 60 per cent of limited-profit housing and municipal housing. So, it's a really, really mixed picture we have. So, what we can see is that there are definitely some common issues coming up—obviously, the construction materials. So, it has slowed down or delayed up to 30 per cent of projects, let's say, in one of the biggest countries in Europe—so, 30 per cent of the social housing projects are slowed down because of the mixture of the increase in construction material costs, but also the cost of capital. So, basically, this macro-financial situation is impacting all of our members, from Norway to Spain to Portugal. The latest figure we saw, for Copenhagen, is that they would normally expect to build 27 per cent from the limited-profit sector, but they are down at 6 per cent in the last three years. So, the cost of capital, cost of construction materials, interest rate are really impacting almost all of our members.

Of course, this is to different degrees, because what we see, for instance, in Spain and Portugal is that they have got a big injection of capital, following COVID, from the EU. So, they are some of the only countries that have managed to really maintain the rate. Keep in mind that this is a small sector. It's quite residual, the social housing sector in Spain and Portugal. However, they have managed to keep up the rates because—I don't know if you followed it—the EU had a recovery plan after COVID and, depending how much your GDP was hit by COVID, you got an injection of capital. And there the social housing and the renovation rates have remained quite high because of that increase in public support coming from the EU. But, in general, in Scandinavia and also the Baltics, there has been quite a freeze. We fear also in, let's say, Estonia, for instance, or countries even closer to Ukraine, there has also been the impact of the war being close and that causing also so much insecurity and a freeze on construction.

So, it's a mixed picture. As I said, there are a few exceptions. So, in those countries that have had that increase in public support, which is large in proportion to the size of their sector, we see still quite a lot of activity. In the Netherlands, also, there is a lot of political will there to get off gas. The social housing providers there have been subject to what they've called a social housing tax over the last 14 years. That was removed by the last Government last year. They also had no housing Minister for quite a few years. But, because of the housing crisis in the Netherlands, particularly impacting workers and students, there has been a removal of this social housing tax and a reinforcement of public support. So, we do see that extra support has helped to offset the impact of the macro-economic conditions. Also, we hear back from our Austrian members that the Government has stepped in with more subsidies to tackle the high interest rates and the high cost of capital. So, that has offset a bit the slowdown. So, we see some policy measures kicking in to basically bring about relief.

So, those are, let's say, the macro-economic conditions, and we have also more precise data from our observatory that really shows the drop-off with each country. But, what we also hear, particularly in the social housing sector, is the freeze on land take, particularly where you have Governments now—. There are some Governments who have come into power who are, let's say, not very socially minded, and we see that the land restoration law or the freeze on land take is also incentivising in some cases—in Flanders, for instance—a slowdown in the delivery of social housing, as well as the capacity for numerous, or the space given for, potential complaints from local councillors, which also slows down planning permission. So, we hear it quite a lot, there's quite a lot of frustration and even calls for the EU to do something about it, which would be outside EU competence, this very exaggerated time it takes to get planning permission and to get projects up and running for various reasons— objections. And that also applies to the transformation of existing buildings—so, brownfield developments. So, in general, there's this frustration, and even, say, in looking to an outside power, outside their country, to say, 'Look, we need to get that planning permission off the ground', or, 'We need to get permission for the transformation of existing buildings.' So, that's also what we hear back—so, apart from the financial issues, just bureaucratic issues that are slowing down the kick-off of projects. So, that's a bit of a taste of the feedback we are getting on the ground from the different countries.

Okay, thanks for that, Sorcha. It's useful to have that overview. I guess we're familiar with a lot of the factors that have come into play, economic and otherwise, over recent years, but in terms of political will, which you mentioned, I guess, would you say that that ebbs and flows across Europe, depending on which administration is in place, which political party is governing at any one time—you wouldn't point to any particular trends there, would you, in terms of support for social housing or not?

So, actually, for 13 years, there was no meeting of the housing Ministers at the EU level. And I think that that was a bit of an indication of the trend to basically stand back from responsibilities on housing in quite a few member states. What we saw as well, obviously, was the growth of the EU to the east. And, obviously, that's going back some time now, but when we went from the EU 15 to EU 27, most of the eastern countries did not—. Most of those had abandoned, actually, to a large extent, public housing policy. So, even in those with strong co-operative sectors, there's been a slow erosion of the co-operative sector. Let's say in Poland, we see a weakening; in Czechia, we've seen a weakening; in Hungary, there is an almost non-existent co-operative sector. So, what only would exist there is a municipal—some municipal housing, but a very small percentage.

So, what we have seen, and that's also because of Ukraine, is that even those countries that thought that they didn't have to engage on housing, and that the market would take care of it, are just waking up to the reality to see that they were not able to cater for new households moving into cities. So, on new household formations, there's not the affordable housing there. When Ukraine happened, they weren't able to absorb people arriving from Ukraine, so I think that's been one of the drivers. There is much more of a realisation now across the political spectrum when we hear debates in the European Parliament—so, a much bigger realisation; it's the highest profile we've seen of the housing crisis ever that's been spoken about at European level, and the Ministers are meeting again. So, that happened three years ago for the first time and then every year since.

The question is now—. So, Hungary now holds the presidency of the EU. You're probably aware how controversial that is, because of the rule of law issues, for instance the criminalisation of homelessness in Hungary—it's still enforced, sadly. But what we are seeing is that Ministers are sitting around the table again and finding that they have very, very similar problems. So, those are problems with bringing down the cost of new delivery so that there's more of a push on modular construction. I think you call them modern methods of construction in the UK.

There's also a realisation that short-term letting is in direct competition with long-term affordable renting in attractive areas. There is also a realisation that, in many countries, they actually need the types of housing associations that we take for granted, so that you take for granted in Wales, in the Netherlands, in Denmark. So, I think it's certainly a lesson that we should all learn. We take a lot of the structures of the governance we have for granted, and in the countries that are coming up now, they actually only have private real estate companies and the Government. So, they're struggling to find a governance method to fill in that gap. Ukraine is an extreme example now, but we are being contacted now because Ukraine literally has only—so there's a huge amount of funding coming off this and a £50 billion facility approved. Obviously, a lot of that is just to keep the country running and to fill in the gaps in the national budget. However, part of it will go to redevelopment, so reconstruction of housing, but also there's a commitment to try to develop a type of housing association or municipal housing structure, because they have nothing in between the Government and private real estate companies. So, this we see to different extents in different countries. Even now, Lisbon is struggling—you may have followed—an average flat now in Lisbon, two bedrooms, costs over 100 per cent of an average income, so they have a severe problem there linked with short-term lets and linked also with golden visas to a certain extent, and linked with investment coming from outside of Portugal. But what they are now doing is inviting in private real estate construction companies to solve the problem. Well, often, the issue is that it's on their terms. This is what we are dealing with now. We have been asked for advice. How can we shift the balance, though? It's not just about real estate companies getting a sweet deal, a tax deal, it's just sticking in there for nine years and then out you go to the free market.

So, these are the type of conversations we're having. Cities are looking for solutions. Private real estate developers are saying, 'We're the ones who can save Europe from the housing affordability crisis.’ And what we are looking at potentially is resorting to very short-term solutions.

So, yes, a big part of our role is trying to highlight the type of function—housing associations like those you have in west Wales highlight that they are important, a vital part of the solution to the housing crisis, and we need a critical mass, so at least 20 per cent, to create options for people who have been pushed out of the market. Obviously, more and more people, so elderly, key workers, young couples, people also with illness, people who are really not being catered for by our housing systems—housing associations play a really, really vital role in giving dignity to those people. But we also have more studies to show this, how it can create a balance to the prices in the private market, so we’ve seen an important study from Austria: per metre square of limited-profit housing that you have, what impact that has on the private market.

So, in short, to answer your question, there's a huge recognition of the housing crisis across the political spectrum. The issue we have is that on the solutions that are being provided, there are a lot of opportunities and short-term solutions being offered, and not a lot of—. The capacity on the public side to manage those offers must be reinforced so that we don't just go to further transfer of wealth to the private sector without having a decent medium, long-term solution for the general interest. So, this is what’s keeping us busy now, to make sure we go in the right direction and that local authorities are in contact with each other, that the housing providers are in contact with each other, and not just being blindsided by private interests.

And the other point is that we have the recognition from all political spectrums that this is a huge problem. The solutions they've been coming up with, being proposed, are very divergent, but also the causes—. This is also another issue, so if there's quite a lot of scapegoating, blaming on the green transition, so blaming the house prices on the fact that we have, of course, this existential crisis that we all face where we have to reduce our carbon emissions. And that’s being conflated as one of the reasons of the housing crisis, because it's through that there has been some exploitation of this where we've had cases of renoviction, for instance in Germany, where houses are renovated and then rents are no longer affordable, particularly for people on benefits, who then have to move elsewhere. So, there's been some exploitation and badly implemented greening policies around Europe. So, this is being also scapegoated by some forces now in the Parliaments to say we have to stop greening and this we are firmly against. We have to find a way to bring down carbon emissions, but maintain affordability in a clever cost-optimal way. And, of course, migration is also being blamed for the lack of housing, just a classic example of pitting poor against poorer in our societies.

So, it's big attention to the sector, and some countries really showing the way. Quite a few member states, quite a good few countries have really stuck to their commitment to housing delivery—if we think of Austria, it's always given as a good example. Denmark as well have a very solid revolving scheme where they manage to maintain this 20 per cent of housing, general housing, they call it, so social housing. Then we see some countries with some turnarounds, so, for instance, Czechia has now really woken up to the challenge and is now starting off an affordable and social housing programme for the first time. You have a new housing fund also in Slovenia that is delivering cost rental housing. We have big efforts from Ireland, although they don't manage to take the edge off the prices, so they're investing up to €5 billion annually and working on trying to come back from what is a problem that is basically paralysing the country. But they have developed a cost rental scheme inspired by Netherlands and Austria, so moving away from not only having just residual social housing for the poorest, but also catering for the regulated rental housing perpetuity for middle-income groups. So, Ireland is working on that. Catalonia has also been an example where they have tried to diversify and bring in different types of rental co-operatives, also for not only the lowest income groups. So, we've seen them really make amazing progress there. As I said, Netherlands, as a result of its removal of the social housing tax, is also now committed to address what they call the squeezed middle, and they are launching a new programme to address that squeezed middle, really radically increasing the rate of construction, but also their target group, so increasing the target group, which is limited to the target group at the moment of €36,000 a year. They are also making efforts to regulate what they call mid-income private rents.

So, again, it's a mixed picture with the big new recognition of the problem, and, basically, countries just scrambling to find the best solutions. Some have a solid base to work on, others not so much. So, fascinating times, but, of course, not fascinating for those who are stuck out in the cold or sleeping in the street.

Yes. Okay, Sorcha. Thanks very much for that. That's very useful background for us, I think. I'll just bring in other committee members with questions, starting with Siân Gwenllian.

Bore da, Sorcha. Diolch am ymuno hefo ni. Dŷch chi wedi dechrau sôn ar ddiwedd eich cyflwyniad yn fanna am yr arfer dda sydd yn digwydd mewn rhai gwledydd, er gwaethaf y darlun eithaf du dŷch chi wedi ei beintio. Ond mae yna arfer dda allan yna, onid oes, a dwi'n meddwl ein bod ni fel pwyllgor yn awyddus i ddysgu o'r arfer dda sydd yna. Er enghraifft, mae'r Ffindir a Denmarc wedi bod yn lled lwyddiannus, o leiaf, hefo taclo digartrefedd. Ydy hynny oherwydd eu bod nhw yn ymdrin â'u cyflenwad tai cymdeithasol nhw mewn ffordd arbennig? Oes yna arfer dda yn fanna i ni ddysgu amdani, yn enwedig o ran sut maen nhw'n mynd ati i gynyddu'r cyflenwad tai cymdeithasol?

Yes. In Denmark, they have been exemplary in a number of areas. It's one of our references, also, for the energy transition, so the regeneration of rundown areas where they are renovating but also bringing up the average income in the area by 10 per cent, working with local businesses and socioeconomic players to also have links with re-inserting into the labour market. But also, they work a lot with very detailed data as to why people are furthest from the labour market, and they work with a buddy system to engage with people. What they have discovered is that, very often, it's health reasons, and the housing providers are stepping in with more customised health centres in the social housing districts.

In terms of the delivery of social housing, Denmark has been very successful because of their revolving fund, which is limiting the weight on the public budget. That has been in place for many decades already. They also have a so-called tenant democracy, where the tenants are sharing in all of the decisions around the developments in housing, apart from who can come into the housing. And on homelessness, they have a clear objective, although they didn't start with very high levels. But they have a clear objective, also, of prevention. So, they work with an early warning system, particularly with young people, because they identified that where you might have high numbers of so-called 'couch surfing' young people, they have a high risk of going into homelessness. So, they try to have this early warning system to help those people who are in pre-homelessness.

They also have managed to work with youth homelessness to link them up with education, so helping them to get their education grant, even though they may not have managed to enter off their own bat. However, they work and they give them access to their very generous education grant and link that with housing, also, to try to prevent youth homelessness, but also linking education. I think what's always quite inspiring in Denmark is that there's a more holistic system of identifying the causes of exclusion, whether that's health, or whatever the family reasons are. So, I think that this holistic approach has been key. Obviously, there's the collaboration, not leaving housing providers on their own, but working, also, with the local authorities. Having said that, you have to keep in mind that they have over 20 per cent social housing, so you have a good base to work with.

In Finland, similarly, they have a strong delivery of—. They also don't use the term 'social housing' in Finnish. But they have also up to 20 per cent of limited-profit and municipal hybrid housing provision. But they've been exemplary in housing first. From what we've seen, it's really impressive there and I think it's probably worth Wales looking at that. There's also the training of social workers—so, linking up social workers with people working in housing provision and the cities. They've actually developed housing first training. Because I think what we often see—and a recent international OECD study has shown this—is burnout, low income and low job satisfaction among social workers. I think this can often be the missing link in that we are neglecting those people who are the key to linking up people with housing. So, they're some of the points that come to mind regarding Denmark and Finland. But there's a lot of other information that can be shared, indeed, on the Finnish housing first approach.

I've managed to visit some of the housing first in Finland. What did take me by surprise is that, in many cases—. The Y-Foundation is one of the leaders there. They go for standalone complexes, which often wouldn't be, let's say, the practice of housing first that's put forward as good practice in other countries. In the Netherlands, the examples I've seen would be maybe one family coming from homelessness in a block of others that don't, and then that family would have the support from an association to support them with potentially extra needs. But the idea would be not to have a concentration, whereas in Finland I've seen blocks of people in housing first with the caregivers living in as well. So, it's different. They have varied solutions, but the Y-Foundation is an excellent reference.

Just before you go on, Siân, I think Carolyn Thomas would like to come in at this point.

Sorcha, you said, rather than calling it social housing, they call it housing first or municipal housing. What name do they give it?

It's just a language issue. If you translate the Danish, it's called 'general housing', if you actually Google translate, and in Finland it's 'right of use'.

We're just trying to get round that stigma of calling it social housing.

Because they never did. Yes, I know. And it's something we struggle with here, because now, indeed, we've sort of exported the stigma from our English-speaking world. And it's an issue then, because at EU level they tend to use those same terms and it carries the stigma, whereas we have started to use a little bit the term 'general interest housing', which isn't very catchy.

Can I just ask you as well—? The Scandinavian countries that are doing well seem to invest more in public services generally. In Austria, there's 60 per cent social housing. Am I correct in saying that they also look at building schools and health facilities, transport as well, around them? It sounds like they do that in Finland, you said, and Denmark—you know, that health as well within housing. So, is it that they invest more in public services generally? And how is that paid for? Is that paid for from within their Government by higher taxes? Maybe others know this, but I don't. Or is it coming from EU funding? Just generally, how is it funded? Thank you.

There wouldn't be a big portion of EU funding, because that's always determined by the levels of GDP. So, they wouldn't enjoy enough—. Most of the EU funding tends to be on innovation, that sort of area. And just a point on Austria, it's 60 per cent in the city of Vienna. It would be less around there. And in Austria, it's a mix between—. They call it 'limited-profit housing'. They're limited-profit co-operatives, which have an obligation to reinvest. They had something similar in Germany, and they took away the limited profit law. They're actually looking to reintroduce it now, because it hasn't gone well. Because, basically, if you push the housing association to be more independent, use private capital, you have a financialisation of the sector that's very hard to come back from, and that's a little bit what has happened in Germany in some cases.

I definitely don't have the figures on investment in health and social services, but I think you've hit the nail on the head there. I think, very often, they can rely on well-funded services, and also rent subsidies in the case of Finland, which supports the system. And, in the case of Denmark, they also rely on a strong social sector and then a good infrastructure. So, indeed, I think you've really got an important discussion there. You can never take housing just on an island; it's linked with the whole ecosystem. This is something that we've always noticed in the UK. Now we don't have the UK housing associations on board, but the integration of social services and housing, because they weren't being delivered satisfactorily, was something very specific in the past with the UK. I must say that it is changing in some countries now, but, of course, it has a big role to play.

I should mention, indeed, not to give such a rosy picture, that the current Government in Finland is planning to cut the housing agency's staff by 40 per cent. The recent Government is to the right of the political spectrum, and these are the sorts of discussions that are going on. They also want to cut the whole programme of right-of-use housing, so we have to keep a close eye on Finland. This might swing back. But nothing is a given.

Thanks very much. We'd better press on, because we've got limited time left, I'm afraid. Siân.

Diolch yn fawr iawn. Allem ni jest ofyn am un nodyn pellach gennych chi ar y revolving fund yn Denmarc—ynglŷn â sut y mae hwnna yn gweithio? Byddai gen i ddiddordeb mewn clywed mwy am hwnna, ond ddim rŵan. Gan symud rŵan at aelwydydd un person, mae'n amlwg bod yna ddim digon o'r rheini yng Nghymru. Oes yna enghreifftiau allan yn fanna yn Ewrop o sut y mae gwledydd yn cydbwyso'r angen i adeiladu cartref un ystafell wely â'r angen i sicrhau cymunedau cymysg?

Do you also refer to the problem of under-occupancy? Is this also part of that issue, let's say where you have an individual living in a three-bedroomed house? This is also part of it.

Ie, oherwydd dyna'r broblem, mewn ffordd: bod yna ormod o bobl mewn tai mawr ond dim digon o lefydd iddyn nhw symud allan iddyn nhw. Mae hwnna'n rhan o'r broblem, ond, yn sicr, mae angen mwy o gyflenwad ar gyfer un person beth bynnag. Ond mae'r under-occupancy yn rhan o'r broblem.

Yes. I was visiting Paris Habitat, the biggest public housing provider in France, and 30 per cent of the apartments were under-occupied, with 60 per cent of those people being over 65. We see this in many countries. There are a couple of good examples. There's a scheme in the Netherlands where they are stepping in and they are converting the homes. They are transforming the homes so that instead of one house, they are converting it into two apartments. It's only the start of a pilot that we've come across. There are rightsizing schemes. I've seen a good one in Cork, where empty nesters, let's say, can swap their home for a smaller unit with, also, potentially, access to healthcare, if needed.

But, of course, the delivery of those smaller units also needs to be done—there's also a lack of those. There's one very nice scheme in Cork that we could give you the context for, which could be worth looking at. It's also not very far from you. We also see the intergenerational projects. There's one in Valencia, where they developed apartments for elderly people with a quota for young people as well, where they also would have, potentially, lower rent for young people, in exchange for some provision of different types of assistance to the elderly.

Another example is OBOS, a big co-operative in Norway. They have a living lab now where they are trying to check—so, they're looking at co-living—to what extent people are happy to share space, so that it's not something that's imposed on people. So, they are developing different models and testing them to see to what extent is shared space something that elderly people actually opt for. But, again, this implies the delivery of those developments with smaller units. So, indeed, everything from house swapping to conversion of individual homes and rightsizing schemes. So, there are different types of solutions, but it's the shared issue you have.

Okay, Siân. Okay, Sorcha. Thanks very much. We'll move on to Lee Waters, then. Lee.

Thank you. Just two very quick questions, really. Factual ones. If you can you tell us a little bit about what's been referred to as cost-based social housing and the role that plays, and also—

Sorry, I missed a word there. Sorry.

I was asking—. I wanted to find out more about what's referred to as—

I just heard 'the role that plays'.

Can you hear me now? Can you hear me?

For some reason, you're just breaking up slightly—yes, I can hear you.

Okay, I'll keep trying. I wanted to ask about cost-based social housing and what contribution that makes, and also, if you could as well, a little on the role that private finance plays, because our social housing in Wales tends to be largely funded through direct public grant—part of the evidence we've been hearing is there's greater opportunity to leverage borrowing or private finance—and how that compares with other parts of Europe.

So, the cost-based social housing you referred to, is that cost rental schemes?

Yes, that's right.

Yes, we do have a comparative study on that—I think it could be very interesting—that our observatory has done with six countries. So, they have analysed the cost rental schemes in six countries. Are you still hearing me there?

Yes, we can hear you.

So, basically, it's very much inspired again by the Austrian model, but I must—. The Swiss also. The co-operatives are based on a cost model, but of course that also implies that, when the costs go up, the rents go up. So, in Switzerland, for instance, Zurich has a target of 35 per cent co-operative housing by 2030. I was curious to hear about how they were managing to deliver that in the current environment. The detail was that they already owned the land, bought 100 years ago, so they didn't have to deal with current land prices. This is why they were managing to maintain reasonable costs. We see also the cost rental scheme in Austria is putting pressure particularly in—so, the subsidy schemes depend on which region you are in Austria, it's not federal, and in some regions the rents are actually going up and pushing people out of the limited-profit housing because the cost has gone up, because it's cost rental housing.

So, it can work very, very well. What you have to keep in mind is that you do still need subsidies for the upfront delivery and to maintain the affordability. So, I hope that answers your question. So, yes, in Austria, in Vienna, they stepped in to cover this cost so that the tenants wouldn't have to deal with it, but in other bundesländer they didn't. So, indeed, there are risks also attached to cost rental, but the difference is—. How we feel is that, for instance, in Portugal, Italy, Belgium, it's not cost rental, it's based on income, and it's much smaller than other sectors, so it's a more residual sector, where tenants are paying very, very small amounts. You also have high levels of lack of payment and you don't have a mix of incomes, and you're completely relying on the exchequer, exchequer borrowing, so it means the sector is very, very sensitive to changes in Government and changes in available finance. So, what you see in different countries is different ways to make the system more resilient and less sensitive to political changes and public finances.

So, that's the difference indeed between an income-based model and a cost-based model. You usually have a mix, you're able to charge higher rents, so it depends on your regulatory system, but those rents, ideally, should be supported also with some rent allowance. Then private finance is used in various different ways. What's important is—. What I always think is it's not really the finance, it's the regulations, at the end. So, if you can have a solid regulatory system that's going to work for citizens and is not subject, then, to unaffordability, there's a weight of different ways that private finance is brought in. So, in France, they have a savings book that all of the population can open. In Ireland, we would have had a post office account that your granny opened for you in the local post office, but there they have that all over France, the livret A, the red A book, and that then is private finance, basically, off balance sheet, that is then used to deliver social housing. So, that is one model.

In Denmark, the tenants also give a contribution when they're moving into the apartment, and the same in Austria, so it's also a source of private finance. Then, to varying degrees you have—. Indeed, the revolving system in Denmark is based on bonds issuance, so they're coming from capital markets. Then we also have—. In the Netherlands, basically, you only have a public guarantee, and the rest is coming in from public interest banks, but primarily private finance. So, in the very mature systems where they already have a lot of solid financing, they leverage, it's used to lever, to bring in, private finance by maintaining the subsidies—so, keep in mind you need to have subsidies as well to support lower incomes. So, it's a very mixed picture, and we do have a study, 'Housing 2030', which covers all the different financing schemes as well.

Okay. Thank you. Can I just ask, in terms of the appetite of authorities to borrow, we've had some evidence that the impact of inflation and the volatility of interest rates are discouraging housing co-operations even more from being willing to borrow. Is that a pattern you're seeing too?

Unfortunately, yes, both for renovation and new construction. The cost of capital, inflation, the rates are impacting and slowing down project delivery, both on the renovation and the new construction side. Unfortunately, that's a reality we're seeing everywhere, and I think it is a pattern. What we see is—. If you look back to 2008, so the great financial crisis, we saw, for instance, the French social housing sector really brought forward to the whole construction sector, because they were able to maintain the delivery rate—

I think you mentioned the—

—they were able to maintain construction activity.

Sorry. I think you mentioned that Denmark relies on bonds. Are you still finding that, even with longer term public-backed debt, there's a reluctance to leverage that because of the financial instability, or does that provide a greater level of assurance?

Yes, I don't want to—. I'm not 100 per cent sure on that, but I have seen, as I've said, that, in Copenhagen, we went down from 27 per cent to 7 per cent of delivery. So, there are different factors, I think, impacting that. It's also because they have a cap on how much the construction can cost in the general housing sector. So, basically, you can't go above a certain amount because of construction costs again. So, I think it's a mix of different factors there, so I might have to check precisely what are the different factors that are slowing down.

Okay. Thanks, Sorcha; thanks, Lee. Sorcha, just in terms of use of publicly owned land for housing, I wonder if you could—I'm afraid we've reached the end of our allotted time, so we'll have to be very brief—but, in terms of guiding principles for Governments in terms of the use of publicly owned land, and possible delivery models such as development corporations, is there anything that you'd say about that? We've heard, for example, that Copenhagen has a strong example of such a development corporation. Are they seen as a productive and successful model?

In terms of land—. Firstly, if we don't have much time, we also have in our ‘Housing 2030’ study a review of the different policies. They also mention community land trusts, which is a way of preventing speculation, to stop speculation on land. What works in many countries is clear quotas, so, social land allocations, so that, if you develop public land, there has to be a percentage of affordable, social and different types of non-market housing.

Yes, okay.

And—. Yes.

Yes, okay. Thanks, Sorcha. Carolyn, did you want to quickly ask some questions?

I did have a question about skills and construction. We've got a skills shortage in Wales, and I was wondering how that might be tackled in Europe, in any of those countries there. It does sound like you're having issues there as well, but any ideas?

Indeed. Do you talk about renovations and also construction?

Yes. So, we've got a general skills gap, construction gap. It's not just materials, but also a skills gap in construction as well.

Yes. We work a lot also with the construction sector here, and it's a shared challenge. We do see some potential in modular renovation and modular construction. What we do see, though, is that—. So, we work a lot on innovation projects, and we have many pilots with different types of prefabricated renovation solutions. These would be solutions where you are 3D scanning the building and semi-building—I think you've definitely seen examples in the UK and Wales as well—building most of the components in the factory, installing them with the photovoltaic inserted, with the ventilation inserted. But we're not seeing a real take-up on the market. And it's a study we are currently doing to check is this actually something that's going to actually catch on. Because what we are seeing is that they're still too expensive, these types of renovation toolkits, let's say. Perfect for fully funded projects, but not catching on. But it is being focused on as one of the ways to tackle a skills shortage. So, we'll be working a lot on that to check is there a fundamental flaw in the approach, or is it something that could address the problem.

Then, of course, we would also work with the trade unions here, and they would raise the issues on the quality of jobs within the sector, something that's often the elephant in the room when we talk about skills as well in the sector; it's about the quality of the jobs, and salaries. Then building information modelling, BIM, is a big part of it, which I'm sure you're familiar with as well, so the potential coming from digitalisation to change, in a way, the nature of the skills that are needed in the sector—so, building information modelling and levels.

So, yes, it’s a bit of an irony. There's more and more pressure on the construction sector now to cut down on embodied energy, so, to look at circularity and reuse of materials. Now we have the 2040 carbon emissions targets, and there's a big focus on the potential of the construction sector. So, there are more and more demands. However, we don't see innovation in the sector keeping up with those demands. But I think it's something—. There's a big push for recognition or renovation as a sector on its own, an industrial sector on its own, and the need for massive support for that sector so that we can make it more attractive, make it deliver what we need and bring in the skills. But it's one that's a big topic here also at EU level.

Okay. Thanks for very much, Sorcha. I'm afraid that's all we've got time for today, but we will write to you with some further questions, Sorcha. Thanks very much for giving evidence to committee this morning. We will send you a transcript to check for factual accuracy. Diolch yn fawr.

Great, yes. Thanks.

Okay. Diolch yn fawr.

It's been a real pleasure. Sorry not to be there in person and good luck with your—. I'm happy also to share the results of your consultation with others, because you're definitely not alone. And, indeed, I don't know if you've seen, Ireland have just had a commission running over the last two years, and this report has information that the Government now will potentially use to guide their strategy. So, it could be something useful for you.

Yes. Okay. Diolch yn fawr, Sorcha. Thank you very much. Okay, committee will break briefly until 10:35.