Scottish Budget extends affordable housing commitment but ‘falls short of target’
Ending Scotland’s contribution to climate change, tackling inequalities and investing in the economy and public services were at the forefront of the 2022-2023 Scottish Budget yesterday though some in the housing sector believe it has fallen short in delivering on house building and energy efficiency targets.
Housing and energy efficiency
Finance secretary Kate Forbes outlined £831 million for affordable housing, which she said will progress the Scottish Government’s commitment to delivering 110,000 affordable, energy efficient homes by 2032.
Welcoming the announcement, Shelter Scotland director Alison Watson said: “Social housing has a central role in everything from being a vehicle for delivering social justice, addressing the climate crisis, to upscaling digital connectivity and reducing child poverty. Before the budget we asked Kate Forbes for a guarantee that affordable housing need would be lower at the end of this Parliament by building the 38,100 social homes promised over the next five years. Today we welcome the extra investment for social house building and the restated commitment to the longer term ten-year goal in the cabinet secretary’s Budget statement.”
While “pleased” to see the increase against the projected affordable housing budget for this year, Callum Chomczuk, national director of CIH Scotland, said the figure “is still not enough to meet the ambitious target to build 110,000 affordable, energy efficient homes over the next decade and deliver on both our net-zero ambitions and keep homes affordable”.
The Scottish Federation of Housing Associations (SFHA) noted that year-on-year increases will be required if the target of 110,000 new affordable homes by 2032 is to be delivered, adding that the pressures now facing the social housing sector, including rising costs and supply chain issues, are affecting its ability to develop.
Aaron Hill, SFHA director of policy and membership, said: “We are pleased that the Scottish Government has responded positively to our call to increase investment in both new and existing homes. However, with our members facing new long-term
“Our concern is that, without investment that rises with increasing costs, our members will not be able to play their full part in helping the government to meet its target of delivering 110,000 affordable homes, and decarbonising their existing stock, by 2032. We are keen to work with our members and the Scottish Government to ensure we can deliver the homes Scotland desperately needs.”
The draft budget included £194.3m for fuel poverty and energy efficiency projects – a 3.4% increase on last year.
Callum Chomczuk added: “We also welcome the support being offered to those least able to pay for home energy improvements, however, this again is likely to be insufficient to allow everyone the opportunity to live in a home that is truly energy efficient while also tackling fuel poverty.”
The Existing Homes Alliance (EHA) also welcomed the increase but warned that next year’s Spending Review must show scaled up, multi-year commitments to eradicate fuel poverty and slash climate change emissions.
Professor Lori McElroy, EHA chair, said: “We recognise that this is a really difficult budget year but investing in energy efficiency and heat decarbonisation is a great way to help address all three of these priorities.
“Whilst this budget is a small step in the right direction, it does not provide the scale of resources needed to deliver the Heat in Buildings Strategy aim of transforming a million homes by 2030. With every budget year that passes, it becomes more and more challenging to meet Scotland’s fuel poverty and climate change targets.”
Professor McElroy added: “Next year’s Spending Review is an opportunity for the Scottish Government to put its money where its mouth is. The First Minister was right when she said in her speech at COP26 that ‘to be credible, their pledges must be backed by action’.
“We have the ambitious targets, we have a robust Heat in Buildings Strategy, now is the time to match that ambition with the financial commitment needed to encourage homeowners to invest, whilst ensuring no additional costs for those in or at risk of fuel poverty.
The recent Climate Change Commission progress report for Scotland identified that, whilst ambition was clear, there’s a lack of detail in some areas. Unfortunately, this budget will not alleviate these concerns, but we have an opportunity through the Spending Review to provide the assurance that the actions and resources committed match the urgency of the climate emergency.”
Ms Forbes said the Budget funds the Scottish Government’s priority of tackling child poverty and inequality by targeting over £4 billion in social security payments. This includes £197m to double the Scottish Child Payment from April 2022, and extend it to under 16s by the end of 2022, helping to lift an estimated 40,000 children out of poverty in 2023-2024.
These proposals were “wholeheartedly welcomed” by Save the Children.
Claire Telfer, the charity’s head of Scotland, said the announcement and other commitments will put money in the pockets the families who need it most.
She added: “This winter especially, we will see families struggle with inflated bills to heat their homes as well as rising food prices and costs of living.
“Even after the Scottish Child Payment increases and is extended to under 16s, too many children will be living in poverty and we will remain some way off achieving Scotland’s statutory child poverty targets.
“Today’s priorities are very welcome. We will need a continued focus on children and tackling child poverty by putting money directly into parent’s pockets next year and beyond.”
Tax and other measures
Land & Buildings Transactions Tax (LBTT) rates and bands will remain unchanged for both residential and non-domestic properties, and the government will shortly launch a call for evidence and views on the operation of the Additional Dwelling Supplement which remains unchanged at 4%.
Other notable green announcements included the expansion of the Business Growth Accelerator relief for property improvements to include the installation of solar panels as a qualifying improvement. That will provide 100% relief on new builds for up to 12 months after first occupation and no rate increases for 12 months after a qualifying property improvement.
On income tax, the Starter and Basic Rate bands will increase with inflation, while the Higher and Top Rate thresholds will remain frozen in cash terms. This is estimated to raise an additional £106m in 2022-23.
Other measures announced in the Budget include:
- record funding of £18bn for Health and Social Care, including £12.9bn for health boards, to ensure the necessary support through the pandemic and accelerate the recovery of vital services
- over £1.6bn for social care and integration to progress a commitment to increase spend in social care by 25% by the end of this Parliament, and laying the groundwork for the establishment of a National Care Service
- £150m for walking, wheeling and cycling – progressing our ambitions to create an active travel nation, reduce car kilometres and progress towards net zero
- the biggest increase in funding to support teacher recruitment since 2007, with £145.5m for the sustained employment of additional teachers and classroom assistants
- £123m to protect and restore nature, woodland creation and the sustainable management of Scotland’s woodlands
- almost £1.4bn for the police, maintaining a commitment to protect the police resource budget in real terms for the entirety of this Parliament
- the first funding allocation of £20m for the 10 year £500m Just Transition Fund for the North East and Moray
- an overall funding package of almost £12.5bn for local authorities, representing a like with like real terms increase of 4.5% and a fair settlement for councils
- over £124m for employability and training, including through the Young Person’s Guarantee, National Transition Training Fund and Fair Start Scotland.
Finance secretary Kate Forbes said: “The 2022-2023 Budget addresses our key priorities, targets resources for low income households and paves the way for future investment over the life of this Parliament. It is a budget of choices.
“My last two Budgets have been shaped by our experiences of Covid but we are now lifting our eyes to the future. This is a transitional Budget, as people, businesses and services get back on their feet.
“This Budget focuses on tackling the climate emergency, reducing inequalities and supporting economic recovery. It is the first budget of this partnership in government and has been development in cooperation with the Scottish Green Party, delivering on commitments made as part of the Bute House Agreement. I welcome their support and their constructive challenge.”
Scottish Government minister and Scottish Green Party co-leader Patrick Harvie said: “This Budget delivers on key commitments made in the cooperation agreement between the Scottish Government and the Scottish Greens, including making bus travel free to children and young people and doubling the Scottish Child Payment. Our plans will also see over £2bn invested in tackling the climate emergency, helping accelerate a just transition to a net-zero economy and laying the foundations for a green economic recovery.”
The “budget of choices” missed a prime opportunity to encourage a consumer shift towards low carbon homes and fails Scotland’s would-be First Time Buyers, according to Homes for Scotland (HFS).
HFS chief executive Nicola Barclay said: “With COP26 still fresh in our minds, it’s essential that environmental factors become a key determinant for people when choosing a home so it is extremely disappointing that a prime opportunity to encourage such a shift by linking rates of Land & Buildings Transaction Tax and council tax to levels of domestic energy-efficiency has been missed.
“Also frustrating for the 82% of households in Scotland that would like to own their own home, the Scottish Government abruptly closed its hugely successful Help to Buy main scheme and First Home Fund earlier this year due to a reduction in Financial Transactions received from Westminster. Now this has been increased by £134m but nothing has been allocated to restore these initiatives, leaving the Open Market Shared Equity scheme, the criteria for which excludes many would-be purchasers, as the only means of government assistance. Rather than tackling inequality, I fear this will see the gap between the ‘housing haves’ and the ‘housing have nots’ continuing to grow.
“Whilst the continuing commitment for affordable housing is to be welcomed, it once again appears that the fundamental role that the private sector has to play in terms of both delivery and wider economic recovery has been overlooked.”
Scottish Land & Estates chief executive, Sarah-Jane Laing, said: “There are many positive announcements in today’s budget. £831m for affordable housing and significant investment towards energy efficiency, natural environment restoration and decarbonisation projects will help ensure Scotland is on the right track to becoming a net zero nation.
“We hope rural Scotland will receive its fair share of this spending and it is welcome to see £51m being invested in rural and island services. The recent storms highlight how important it is that our rural communities are fully supported during such difficult times.
“With the pandemic ongoing and the emergence of the omicron variant, it is also pleasing to see many rural businesses will benefit from a continuation of 50% rates relief into at least the first quarter of 2022.”
ICE Scotland’s director Hannah Smith said: “The Scottish Government’s budget sets welcome commitments across net-zero, transport and housing. However, Scotland’s infrastructure depends not on short-term funding but long-term visions followed by positive action.
“The 2020s must become the decade of delivery not just to meet our 2045 net-zero target but also to ensure our infrastructure is fit for purpose now, and in the future, so it can continue to improve our places, productivity, health and wellbeing.”
Morag Watson, director of policy at Scottish Renewables, added: “Today’s Scottish Budget acknowledges the need to tackle the climate emergency and take key steps to deliver Scotland’s clean energy revolution, with significant pledges made for heat, transport and the energy transition.
“With just 6.4% of Scotland’s heat demand met by renewable sources achieving progress on heat decarbonisation will require us to deploy every tool in the box. The announcement of £414m for energy efficiency, and low-carbon and renewable heat is a welcome step forward for achieving warm homes which are compatible with our net-zero future.
“Scottish Renewables has called for The Scottish Government to increase the size and scale of its existing interest-free loan programmes for heat pumps and to commit to multi-year funding. We welcome the announcement from the Cabinet Secretary for Finance and the Economy in today’s budget that The Scottish Government will double and refocus grants for energy efficiency and heat measures, including heat pumps.
“Scotland’s transition to low-carbon energy offers enormous opportunity to create the green jobs of the future and deliver a just transition for those impacted by the shift away from fossil fuels. Ensuring that Scotland has a skills base which is compatible with net-zero will be critical to achieving this. Scottish Renewables has consistently campaigned for green skills programmes and we welcome the announcement of £23.5m for the Green Jobs Fund.”
The Scottish Trades Union Congress (STUC) acknowledged the increase in public sector pay floor to £10.50/hr and insisted that pay rises must be fully funded by the Scottish Government to avoid cash strapped councils having to make other cuts to pay the increased rate.
STUC general secretary Roz Foyer said: “Workers across Scotland will be bitterly disappointed as they hear about the pay cuts announced today. Below inflation pay increases do nothing to help people deal with escalating costs this winter. Councils will have to rob Peter to pay Paul as services could be cut to meet the gaps in funding.
“There is a desperate need to back our public services. Huge gaps in funding in the NHS and social care have left some of the most vulnerable people in our communities without the treatment and services they urgently need. The Scottish Government have failed to take the opportunity before them to step up and back public sector workers.”
Russell Gunson, director of IPPR Scotland, said: “Today’s draft budget has a number of welcome measures called for by IPPR Scotland. This includes a doubling of the Scottish Child Payment, improved wages for social care staff, funding for a just transition to net zero and the freezing of the higher rate income tax threshold below inflation - raising much-needed additional funding for public services from higher earners.
“This draft budget has been delivered at a time of great uncertainty as we don’t yet know what the impact of the Omicron variant will be. It’s essential for the UK government to commit to offering the Scottish Government the financial support and flexibility it needs, should additional Covid protections be needed in Scotland over the coming months.
“To build a fairer Scotland than the one that entered the pandemic we need to reshape the economy and build fairness in from the start. This will need to see significantly stronger action from government to deliver fair work and living hours across the economy.
“It’s especially positive to see ambitious investments today in building an anti-poverty Scotland, particularly bringing forward the doubling of the Scottish Child Payment to £20 a week from April 2022, as announced last week. This is a measure that will support 400,000 families and lift 30,000 children out of poverty. We’re pleased to have supported this policy alongside many others across Scotland. However, to meet Scotland’s legally binding targets on reducing child poverty, agreed by all parties in the parliament, we will need to see further action on poverty over the coming years”.