Budget: Government commits £825m towards 50,000 affordable homes target
More than £825 million is to be invested in 2019-20 to deliver on the Scottish Government’s target for 50,000 affordable homes over the course of the Parliament, finance secretary Derek Mackay has announced.
Presenting his Scottish Budget 2019/20 to the Scottish Parliament yesterday, Mr Mackay said the funding is part of the government’s total investment of over £3 billion over five years towards the housing commitment.
The government will continue to deliver on its commitments to end homelessness with further investment in its £50m Ending Homelessness Together fund and continue its welfare reform mitigation with £52.3m to make sure no-one pays the ‘bedroom tax’.
The budget also includes more than £5bn of capital investment to “grow and modernise” infrastructure – including a new £50m Town Centre Fund to support the future of high streets.
There were also real terms increases in funding for local government and an increase in the additional home supplement from 3% to 4%.
CIH Scotland welcomed the affordable housing investment but was disappointed to see little increase in the adaptations funding and fuel poverty budgets.
Callum Chomczuk, national director of CIH Scotland, said: “We strongly welcome the Scottish Government’s announcement of £836m in 2019-20 towards the target of delivering 50,000 affordable homes. It is vital that funding for affordable homes is maintained across this Parliament and the next in order to end our housing crisis. This money will help deliver on that commitment.
“In addition the real terms increase of over £210m for local government spending is vital so local authorities have the confidence to set out future spending plans which continue to invest in Scotland’s homes and communities.
“However we are disappointed to see a roughly standstill budget with regards to both adaptations funding and fuel poverty. Given our ageing population, adaptations are one of the most effective interventions that support older and disabled people stay in their own home. And with 25% of households considered fuel poor in 2017 it is clear we need to do much to make sure everyone can live in a warm, energy efficient home. More of the same is not enough.”
The Federation of Master Builders Scotland (FMB Scotland) said the Budget includes positive measures that will help Scottish builders deliver the homes the country needs.
Gordon Nelson, director of FMB Scotland, said: “(Yesterday’s) Budget comes hot on the heels of the latest Quarterly Housing Statistics for Scotland that revealed a 4% increase in the number of new build homes in Scotland over the year ending June 2018, compared with 2017. Although a step in the right direction, this constitutes just 695 additional homes and such an increase will not solve the housing crisis. We’re therefore pleased that the finance secretary has recommitted the government to establishing a Scottish National Investment Bank as this will help provide finance to the small building firms.
“A further £50m to support lending to the house building sector has been announced through the Building Scotland Fund and this is also welcome. Many small-scale house builders are experiencing real difficulty in accessing the finance they need to build homes, with fees, overdraft limitations and meagre loans posing a significant barrier to house building. This new funding will help to speed up the delivery of homes and lead to a more diverse and resilient housing supply.”
Nelson added: “It’s also positive that the Scottish Government has announced a £50m capital fund and has acknowledged the importance of investing in our high streets. There is a dire need to re-invest in Scotland’s floundering town centres in light of changing patterns of retail and leisure. The government should therefore be commended for its ambition to safeguard the vitality of our high streets. All in all, this was a good budget for Scottish builders.”
The Royal Institution of Chartered Surveyors (RICS) said there were “many positives to take” from Mr Mackay’s statement but warned that the second home supplement increase causes a “significant concern”.
Hew Edgar, RICS interim head of policy, said: “Providing a more favourable tax regime for Scotland’s commercial properties, and significant commitments to capital investment in infrastructure, are welcome steps to boost Scotland’s economy. Introducing a reduction in non-residential LBTT for two-thirds of Scotland’s commercial properties, and reducing business rate increases, will be welcome news for those operating in Scotland’s commercial sector.
“The Scottish Government commitments to city region and growth deals, coupled with significant infrastructure spends, should provide the impetus for many of Scotland’s shovel-ready projects to start, and invigorate further development and investment.
“The Scottish Government has finally recognised the need for a cross tenure approach to tackling the housing crisis by committing £50m to the Building Scotland Fund. This fund should unlock much needed finance for private developers and housing associations (and others) to support development of housing across all tenures.”
He added: “However, a significant concern is the increase in the second home supplement. Not only will this potentially be brought in within a short, six-week period - it will further disincentive investment in the private rented sector at a time when more and more of the population are reliant on it – whether through choice or necessity.”
The sentiments were echoed by property management firm DJ Alexander Ltd.
Managing director David Alexander said: “Although many will believe that those buying second properties can afford any level of tax that the Scottish Government wishes to impose on them the truth is that increasing the rate of this tax at a time when many landlords are exiting the private rented sector market could have serious implications.
“The latest official figures show that the PRS accounts for 15.2% of the Scottish housing stock comprising just under 400,000 homes. Recent cuts to tax reliefs by the UK government have resulted in many landlords leaving the market so if these property investors are to be replaced then a more benign environment is required to encourage them. Taxing them a 4% higher rate in addition to the existing higher Scottish LBTT rates is unlikely to attract many property investors to Scotland who will be able to buy cheaper properties just across the border.
“Although Mr Mackay undoubtedly sees this as a progressive tax on wealth the results could be the loss of a substantial part of the private rented sector which is not being replaced in any meaningful way with social housing. Quite where the Finance Minister expects the people currently living in the PRS to live if more landlords leave the market and none come in to replace them is not explained. Making Scotland a less attractive place to invest in property is likely to result in lower government revenues rather than higher ones over the medium to long term.”
Mr Mackay said: “This is a budget of stimulus and stability. It delivers for today and invests in tomorrow and does so with fairness, equality and inclusiveness at its heart.
“It provides an increase of almost £730m for our health and care services, invests more than £180m to raise attainment in our schools and gives a vital boost to our economy through a £5bn infrastructure programme.
“As a result of these decisions, we have been able to invest in essential public services, particularly the NHS, while ensuring 55% of income taxpayers in Scotland pay less tax than those earning the same income in the rest of the UK. Taken together with the personal allowance, 99% of taxpayers will pay less income tax next year on the same income.
“This budget delivers the public services, social contract and economic investment people expect while mitigating, where we can, the impacts of the UK Government’s policies of austerity and Brexit that are causing so much harm.”
Assessing the impact of ongoing uncertainty around the UK’s exit from the EU on this year’s budget, Mr Mackay added: “Our spending plans for 2019-20 include a commitment to mitigate the risks of Brexit as best we can, to enable our economy to thrive in any circumstances, now and in the future.
“It is disappointing that we are facing the prospect of having to revisit these plans in the event of a chaotic no-deal outcome. If leaving the EU can be avoided, those resources currently being directed towards essential preparations can be reinvested into our public services and economy.”
The 2019/20 Scottish Budget includes:
- More than £180m in raising attainment in schools, including £120m for head teachers to spend on closing the attainment gap
- Continuing to deliver a progressive income tax system
- A public sector pay deal that continues the journey of restoring pay levels and provides an above inflation pay uplift of 3% for those earning up to £36,500
- Providing the most generous package of business rates reliefs in the UK, and ensure more than 90 per cent of properties in Scotland will be charged a lower tax rate than other parts of the UK
- More than £600m in colleges and maintain investment at more than £1bn in universities
- Increasing direct investment in mental health by £27m, taking overall funding to £1.1bn, including improving mental health services for young people, and providing support in schools, colleges and universities
- Increasing investment in Health and Social Care Partnerships to more than £9bn for delivery of primary and community health services
- Delivering new and improved social security benefits based on dignity and respect
- Providing local government with a real terms increase in both revenue and capital funding, and a real terms increase in total overall support, through a £11.1bn settlement
- Almost £500m to expand funded early learning and childcare, supporting the recruitment and training of staff and investment in building, refurbishment and extension of around 750 nurseries and family centres
- Initial funding of £130m towards the establishment of a Scottish National Investment Bank
- Protect the police resource budget in real terms
- More than £20m for zero waste, supporting the transition towards a more resource-efficient, circular economy, including design and implementation of a deposit return scheme
- £80m for Active Travel to help build an Active Nation
- More than £70m in 2019/20 to drive forward sustainable and inclusive growth in the rural economy