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David Orr, who is currently chief executive of the Scottish Federation of Housing Associations but takes over at the NHF in July, said the current system, in which Communities Scotland distributed funds to about 160 associations, was inefficient.

Communities minister Malcolm Chisholm said at the Chartered Institute of Housing in Scotland conference last Thursday that Communities Scotland will hand out 拢404m to councils and housing associations to build 6400 affordable homes for 2005/6.

Orr said the funding could be spent more efficiently if associations formed partnerships and established jointly owned development companies.

He said: 鈥淭oo many associations get development funding 鈥� it鈥檚 not an efficient use of resources and, in the light of the Gershon review, is an issue we must address.

鈥淎ssociations should be looking at how they can set up joint development companies 鈥� unless they consider this, it could be a change that is forced upon them.鈥�

Orr added that this would give them more say in how developer associations were chosen. He said: 鈥淪ome councils don鈥檛 want more than two or three development associations in their area. If there are eight in a given area 鈥� rather than allowing a council to choose one, those eight could set up a development company.鈥�

Orr said his comments applied solely to the Scottish housing association sector.

Communities Scotland welcomed the proposals, saying it would achieve 鈥渆conomies of scale鈥�. Bob Major, Communities Scotland communications manager, said: 鈥淚f more efficient procurement methods can be developed, we encourage it.鈥�