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Scottish Budget: cut threatens providers’ ability to build new homes, warn sector bodies
Leading housing organisations in Scotland have warned that the reduction in funding for affordable housing in 2023-24 “risks stalling the real progress” made in the delivery of new homes over the past few years.
The housing sector bodies made the warning after the government revealed yesterday that it had allocated £752m for affordable housing for 2023-24, around £37m less than its planned spend of £789m, making it a 5% cut.
The figure is also around £79m less that the £831m allocated last year.
Given that the value of its capital budget “will not be able to extend as far as was envisaged when inflation and other costs were at more benign levels”, the government said it will continuously review the impact of these factors on our capital programme.
It said overall it will invest £3.5bn in this parliamentary term to increase the supply of affordable and social homes, which will support those facing socio-economic disadvantage.
Up to £11m capital investment will support older and disabled housing association tenants to make adaptations to their homes.
But sector bodies have criticised the cut, saying it seriously threatens providers’ ability to build new homes.
Callum Chomczuk, director at the Chartered Institute of Housing Scotland, said the Budget “risks stalling the real progress” made over the past eight years in increasing the supply of affordable housing in Scotland and reducing housing need.
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He said: “In real terms, the budget for ‘more homes’ is 70% of the equivalent budget for 2022-23, and that is without considering higher new building standards and probable limitations on social landlords setting their own rent levels post March 2023.
“As we approach the mid-point of the parliament, we called for additional investment so completions could gather pace and the Scottish government could meet its target of delivering 110,000 affordable homes and decarbonise existing stock by 2032.
“Instead, the budget for new affordable homes has been reduced by over £200m in real terms, which makes the challenging target of 110,000 affordable homes even more difficult.”
Mr Chomczuk added that given the understandable focus on the climate emergency and the cost of living crisis, it is “disappointing that the Budget did not prioritise investment into one of the key areas that would support both of these outcomes – building social housing”.
Sally Thomas, chief executive of the Scottish Federation of Housing Associations (SFHA), said: “We welcome the Scottish government’s aim in this Budget to try and provide further support to those in greatest need, with increases to Scottish social security benefits and £20m to extend the Fuel Insecurity Fund in 2023-24, which should help tenants who are struggling with spiralling living costs and heating bills.
“However, social housing provides one of the greatest protections against poverty, and we are alarmed to see a cut to the Affordable Housing Supply Programme which, coupled with continuing uncertainty over rent setting and inflationary pressures on costs, seriously threatens our members’ ability to build homes."
SFHA has urged the government to rethink the cut “if it’s serious about tackling poverty in Scotland”.
David Bookbinder, director of the Glasgow and West of Scotland Forum of Housing Associations, said any such cut is “always regrettable” but could be down to a projected underspend over sky-rocketing construction costs.
“In this case, there’s a question over whether the cut reflects any expectations that the original budget may not have been fully spent because of unwillingness on the part of some councils and/or the Scottish government itself to fund new build at current prices”, he said.
It comes the same week as a new report from the Scottish Housing Regulator which showed that social landlords in Scotland are forecasting an annual growth of 5% on average.
However, it also warned of a “challenging” financial outlook ahead. The regulator said that since landlords’ financial plans were submitted in May, the outlook has “worsened considerably”.
