Scottish Government slashes millions from housing budget despite crisis

Documents published by the Scottish Government show that state funding for housebuilding has been cut from £564.6 million in this financial year to £375.8m in the one to come – a fall of a third.

According to official statistics published in August, all measures of homelessness were up and there was a 10% rise in the number of people assessed as homeless.

Estate agents have also said the Budget failed to deliver measures to tackle the “housing emergency”.

Funding for fuel poverty support and housing quality was also slashed by 92% from £21.8m to £1.7m.

The Government’s total budget for housing and building standards was cut from £738.3m to £533.2m.

Cuts have been necessary due to a real-terms reduction in the Scottish Government's capital spending budget because Chancellor Jeremy Hunt did not "inflation-proof" his investment spending plans, according to the Scottish Housing Minister.  

Child poverty funding is also down by 5% – but the Government’s spending on social security benefits has increased from £507.2m to £567.6m, driven by a 6.7% increase of all benefits handled by the Scottish Government including the Scottish Child Payment.

This is in line with the consumer price index measure of inflation, which Finance Secretary Shona Robison (above) showed the Government’s commitment to “those most in need”.

'A hammer blow' 

But housing campaigners said funding cuts were “appalling” and called on the Government to deliver more homes.

And they will deliver a “hammer blow for tackling homelessness and poverty”, according to the Scottish Federation of Housing Associations.

READ MORE: Scots children living in temporary accommodation hits record high

Sally Thomas, the organisation’s chief executive who represents the vast majority of housing associations in Scotland, said the cuts would also have “long-lasting consequences for the nearly 250,000 people throughout Scotland stuck on a waiting list for a social home”.

She added: “It is therefore devastating that the First Minister would abandon his defining mission to tackle poverty by failing to support people who need social homes. It is the worst possible Budget at the worst possible time.”

Aditi Jehangir, secretary of the tenants’ union Living Rent said: “Government’s decision today to cut £200m from the housing budget is appalling.

“One after another, councils are declaring housing emergencies because they simply cannot fulfil their statutory duties to house homeless people.”

READ MORE: Income tax band for higher earners introduced during Scottish Budget

He added rents were reaching “record levels” despite the Government’s rent cap.

“Today's decision shows that the government is totally out of touch with the reality on the street and faces a sharp and dire reckoning,” said Jehangir.

“They need to commit more funding to deliver more social and council homes and clamp down on rising rents. In the meantime, we'll be paying the price of their utterly baffling decisions."

Child poverty targets

And concerns have been raised the Scottish Government may miss its targets of having less than 10% of children living in relative poverty and less than 5% in absolute poverty by 2030 may be missed.

Philip Whyte, IPPR Scotland director, said: “Figures next year will tell us if the government has met its interim, legally-binding, child poverty target, and is on track to meet its final target – but all indications so far are it will be missed.

READ MORE: The key points from Shona Robison's financial statement

“Taking a more progressive approach to taxation is right and important – but just as important is how that revenue is then used.

“This should have been a Budget that set Scotland on track to meet those targets but instead they remain a mere ambition.” 

Propertymark, the industry body for estate and letting agents, said the Scottish Government was “failing to address” the “huge demand crisis” in the private rented sector.

Timothy Douglas, the organisation’s head of policy and campaigns, said: “The cost of living legislation has raised costs for renters and it’s now imperative that the Scottish Government carry out a review of all taxes impacting private landlords and the wider property sector in order to introduce policies that help meet the demand from renters and tackle the housing emergency.”

Housing Minister Paul McLennan said: "The UK Government did not inflation-proof its capital budget which has resulted in a 9.8% real terms cut in our capital funding between 2023-24 and 2027-28.

"This alongside construction supply chain issues and labour shortages driven by Brexit, and high inflation last year means we cannot deliver on all our capital projects within the funding available.”

Joao Sousa, deputy director of the Fraser of Allander Institute, said capital funding had been cut "heavily". 

He added: "These cuts reflect the fact that even with some better news on taxes, the [Deputy First Minister's] Budget has had to face up to the fact that spending commitments were well in excess of funding available, which in the Scottish Budget cannot manifest itself in practice."

Defending cuts to the housing Budget and the funding of a council tax freeze worth 5% to local authorities, Robison said: "The priorities we’ve set out are frontline services, a real-terms increase to the NHS, local government getting £14bn – the highest level ever – at a time where our budget is being cut.

“Our budget, both resource and capital are being cut together, we had to make difficult choices, particularly on the capital side. So what we’ve done is protected those frontline services.”