Investing for success: An interview with housing minister Paul McLennan

Paul McLennan can time his political awakening precisely to the miners’ strike of 1984-85. His grandfather, though long retired, had spent his entire working life down the Fife pits and, when members of the National Union of Mineworkers downed tools in protest against a series of closures, the young McLennan felt their pain. 

With the strike leading to the decline of trade unionism, and, by extension, the Labour movement too, McLennan wanted to support a party that would have the best interests of Scotland’s mining communities at its heart. For him, that meant the SNP.

“I remember going back to school after the holidays in 1984 wearing a ‘Coal not Dole’ badge,” he says. “I was always political, but the strike lit the flame. For me it was always about helping the most vulnerable and it was a case of asking will that be done by Westminster. When you saw how they treated Scotland… I was about 12 when [Conservative Prime Minister] Margaret Thatcher came in and it wasn’t so much about her but about how the parliament treated Scotland. That’s always been my driving force – that we could be making decisions on our own.”

It would be another 10 years before McLennan joined the party, having initially focused his attentions on building a career at the Bank of Scotland in his hometown of Dunbar. He’d had ambitions to study law at university but, with his mother working as a cleaner and his father as a lorry driver for local brewery Belhaven, the family couldn’t afford it and he went straight into the bank from school, working as a financial adviser and in the corporate and business banking departments.

When his wife Sharron gave birth to their son Scott in the early nineties it was the thought of what independence could mean for his future that spurred McLennan into joining. From being one of just 20 members in the local SNP branch, he has risen steadily through the party ranks, joining and then for three years leading East Lothian Council before being elected to Holyrood in 2021 and being handed the housing brief when Humza Yousaf succeeded Nicola Sturgeon as first minister earlier this year.

“When I joined the party, I was just trying to get involved but I remember people saying to me ‘you’re wasting your time son’,” he laughs. “That made me even more determined. When I joined, the Dunbar branch had about 20 people and meetings would have just two or three. Now it’s about 230 or 240. 

“In 1999 I campaigned for Callum Miller [the unsuccessful SNP candidate in the East Lothian seat] in the first Scottish elections and in the 2003 council elections I wanted to represent my own community. Dunbar was growing – it was getting a new school and community facilities – and I’d been on the community council for eight years but wanted to do more. I narrowed Labour’s lead [for the Dunbar East seat] from 660 to 25 then in 2007 I was elected.”

McLennan became leader of East Lothian in 2009 and a year later gave up his job at the bank, taking a significant pay cut in the process. Scott had been joined by younger sister Kirsty by then and, while Sharron had a full-time job at financial services giant Standard Life, McLennan says the family wouldn’t have managed financially if his mum and Sharron’s mum hadn’t stepped in to help with childcare. The leader’s job felt too big to do part-time, though, and it was during this period that his interest in housing issues began.

“There hadn’t been a lot of council house building going on,” he says. “That was a problem. I saw how East Lothian and Dunbar were growing and it became a real interest. We had a real focus on how we could deliver that. East Lothian was one of the fastest-growing areas in Scotland and it had real challenges around infrastructure.”

Housing in general is a problem in Scotland, with McLennan stressing that “we need to be building more houses”. The Scottish Government has established a £3.5bn fund that councils can use to pay for affordable housing projects, but it will not go far enough. First Minister Humza Yousaf told the SNP’s recent conference that he was looking into issuing a government bond to finance “vital infrastructure”, which will include affordable housing schemes. McLennan, who has just returned from a trip meeting investors in London, believes interest in the offering is likely to be high.

“I met with 25 institutional investors to speak about investing in social housing and housing associations and there’s a lot of money out there,” he says. “Our capital budget is £3.5bn but construction inflation is sitting at about 15 to 20 per cent so if you look at the cost of trying to build, that’s literally taking £700m out of our spending power. We need to be doing more to bring money into the sector. I met with the investors the day after the announcement on the bond was made and there was a fair degree of interest.”

A bond would be attractive to institutional investors, McLennan says, because they are typically long-dated and offer the steady kind of income stream pension funds require for matching with their own liabilities. Such investors are similarly attracted to the private rental market, which McLennan says must also be boosted in order to meet Scotland’s housing demand.

“The demand in Scotland is huge but the key thing that investors need is policy clarity,” he says. “They are not against things like rent controls [there is currently a three per cent cap on rent increases for private tenancies in Scotland]. They’d prefer them not to be there, but they can operate with them, they just need to know what they would look like. They want to invest in Scotland and my job is to give them that policy clarity. The more money we can bring in, we can get that mix of provision. If you look at somewhere like the Highlands, there are a lot of mid-market rental opportunities and there’s a real opportunity to scale that so it becomes attractive for investment.”  

Though housing shortages create problems in terms of people getting on the housing ladder, one of most pernicious aspects of the lack of housing is the impact it has on homelessness, with Scottish Government figures showing that the number of people classed as homeless hit an all-time high last year. The problem is most acute in Edinburgh and Glasgow, where housing stock is in such short supply that the city councils are routinely failing to meet their legal obligation to accommodate everyone who presents as homeless. In July, Yousaf announced £60m of funding for councils and social landlords to use to buy empty properties, some of which will be allocated specifically to address homelessness, but McLennan says work has also begun on trying to prevent people from becoming homeless in the first place.

“The cost of living and Covid impacted on homelessness and people ended up in situations they were not comfortable with,” he says. “Local authorities can bid into the £60m fund and it is up to them to decide on their acquisition plan. It’s about what we can do in the short term.

“Longer term, we’re looking at prevention duties and we issued a report in August [from the Homelessness Prevention Task and Finish Group] that talks about the duties of local authorities and other organisations around preventing homelessness. As part of that we’ve set up a ministerial group that will bring together 10 ministers on a quarterly basis to talk about the issues – things like addiction or domestic abuse impact on homelessness. A £500,000 fund has also been set aside for local authorities to help women leave abusive relationships.”  

These issues will all be covered in the Scottish Government’s forthcoming housing bill, which is expected to deliver stronger rights for tenants at the same time as requiring social landlords to have a domestic abuse policy in place and placing a duty on a range of public bodies and landlords to reduce the risk of homelessness. Though it is expected in the current parliamentary year, McLennan says the exact date is yet to be determined as work on the finer detail of the bill is ongoing. The recently announced Cladding Remediation Bill will be delivered imminently, he adds, and will give ministers the power to deal with buildings that are covered in unsafe materials that present a risk to life.

Elsewhere, McLennan’s first few months in office have been taken up focusing on the government’s short-term lets legislation and the backlash against a licensing scheme that came into effect at the beginning of October. Though there has been vociferous opposition to the scheme, McLennan stands by what it was designed to achieve and says uptake has been high.

“This was all about standards and making sure that the standards you would expect in a hotel you get in a short-term let too,” he says. “The number of applications that came through was really strong. We’re working on getting the final figures from local authorities, but we expected to see a lot of applications come through in the last few weeks and we did see that. It’s a selling point for the sector.

“One thing we didn’t have before was data on the number of properties there are for short-term let and now we have a rough idea. That gives each local authority the ability to look at the situation and see whether they need to do more, such as put in a control area [in control areas planning permission is required as a part of the licence when entire properties are let out].”