In a flagship Budget announcement, Chancellor Rachel Reeves revealed Holyrood stood to benefit from an additional £3.4bn in funding through the Barnett Formula, with £610 million being allocated for the capital budget.

It comes after the Chancellor announced £5bn in government funding for housing delivery, including measures to support social and affordable housing provision. These measures consist of £3.1bn allocated for the affordable homes programme, investment in remediation, a reduction to Right to Buy discounts and rent settlements of CPI +1% for the next five years. 

The Chancellor also announced the UK Government would plough an additional £500m into England’s affordable homes programme, and the SFHA has now called for fresh investment in Scotland’s affordable homes budget.

The Scottish Government declared a housing emergency in May following criticism from campaigners across the housing sector over its £196m cut to the affordable housing budget amid record homelessness.

The SFHA has said the additional capital funding in yesterday’s Budget presents the Scottish Government with an opportunity to reverse serious underfunding in Scotland’s housing sector in recent years.

Sally Thomas, SFHA chief executive, said: “The Scottish Government has repeatedly said that affordable housing would be its number one priority in the event of an increase to its capital budget, it must now keep that promise and build a better future for the thousands of people across Scotland in need of a safe, affordable home.

“With homelessness at record levels, and the number of housing association homes built last year at its lowest since 1988, it’s clear that recent cuts have had devastating consequences for many of Scotland’s citizens. However, by investing today’s additional capital funding in affordable housing, we can take the first significant step to ending our national housing emergency.”

Callum Chomczuk, national director of CIH Scotland, agreed that the announcement by the Chancellor provides “some welcome flexibility” for the Scottish Government as the country seeks to end the housing emergency.

He said: “An additional £1.5bn this year and £3.4bn for next year provides an increase for both capital and day-to-day spending. The Finance Secretary previously cited housing as her priority ahead of March 2024 UK Budget which did not deliver any capital uplift. Now that an increase has been confirmed we hope that social and affordable housing spending will remain THE priority for the Scottish Government so that the sector can get building, get buying and deliver the affordable homes Scotland needs to end the housing emergency.”

Shelter Scotland has also urged the Scottish Government to commit to investing any new capital funding into delivering the social homes needed to end the housing emergency.

However, the housing and homelessness charity expressed disappointment at the continuation of the two-child limit and ongoing freeze to Local Housing Allowance. 

Shelter Scotland director, Alison Watson, said: “Having declared a housing emergency it’s clear that the Scottish Government must back words with actions.

“It is vital that any capital funding which becomes available as a result of the Chancellor’s investment plans is in turn used by Scottish Ministers to deliver social homes here, but we also need to see growth in the capital budget over a sustained period to support continued investment.

“Delivering more social homes remains the single most effective way to tackle the housing emergency in Scotland, and only the Scottish Government can decide how much of its budget it commits to that endeavour.

“However, we can’t ignore the role that austerity has played in exacerbating Scotland’s housing emergency.

“The freeze on local housing allowance and the two-child limit has forced thousands into poverty; they will continue to do so as it seems the Chancellor has chosen to keep them in place.”

GWSF director David Bookbinder said that the budget had been a double-edged sword for housing associations.

He added: “On the one hand we see increased taxes being used to boost house building, with the expectation that this will have consequential benefits for Scotland. But on the other, the sharp increase in employers’ National Insurance will add significantly to costs and it’s hard to see how this won’t have to be reflected in rent increases.”

Elsewhere in the Budget, Ms Reeves has committed to investing £128m into initiatives to launch new housing developments across England, such as beating river pollution that is currently stopping the construction of up to 28,000 new homes and investment in 3,000 energy-efficient properties nationwide.

Right to Buy discounts will be cut so that local councils can keep receipts from any social house sales and reinvest that money into increasing housing supply. There will also be a social housing rent settlement of CPI plus 1 per cent for the next five years.

Also, £1 billion will be invested to remove dangerous cladding on homes following the Grenfell Report.

The Chancellor also confirmed her commitment to funding the establishment of GB Energy in Aberdeen.

Response from Scottish charity sector

Citizens Advice Scotland (CAS) said the Chancellor’s Budget needed to go further to stop people experiencing harm.

CAS spokesperson Emma Jackson said: “We said we would judge this Budget on how it delivers for the people who are experiencing the most hardship. The Budget contains several welcome measures, but we need to go further and faster if we are to stop people experiencing harm.

“Reducing maximum debt deductions from Universal Credit, increasing the earnings threshold for Carers Allowance and extending Household Support Fund are all welcome and will mean some more money for some households. But what we really need to do is address the fundamental flaws in Universal Credit that mean far too many households don’t have enough income to live on. We need systemic change to the social security system.

“In September, demand for food bank advice across the Scottish CAB network was up almost 20% compared to the same period last year. All of this has a devastating impact on people’s physical and mental wellbeing.

“Keeping the previous Government’s cuts to payments to disabled people is disappointing, as is cracking down on ‘fraud’ in the benefit system. We welcome the focus on criminal gangs, but the current definition of fraud includes arresting payments to people who have been overpaid through faults in the system - including stopping direct access to their bank accounts. This causes more harm to those experiencing the most difficult of circumstances.

“On energy, households across Scotland are desperately worried about their gas and electricity bills. Our energy markets are broken and need to be changed. Everyone should be able to afford to heat their home, be able to sleep at night, not worrying about debt. We welcome additional support but need to see this targeted at those who need it most. This is why we need the introduction of a social tariff and targeted debt write-off schemes. We urge the UK Government to take action here.

“Increased spending on social homes is welcome, and we will need to see the details of what this means in terms of additional funding coming to Scotland. We urge the Scottish Government to use all available capital to build more affordable homes. Our real concern is that there was nothing in regard to unfreezing local housing allowance. Our evidence demonstrates far too many cannot afford their rent, forcing far too many into arrears and potential homelessness.”  

The Scottish Pensioners’ Forum (SPF), the campaigning organisation for older people in Scotland, has hit out at the “shameful omission” of any mention of the Winter Fuel Allowance.

Rose Jackson, SPF chair, stated: “This was supposed to be a budget for change and progression but there was nothing new from where we are sitting.

“Whilst the retention of the triple lock and a 4.1% increase in state pension from April 2025 are welcome, this won’t help to heat older people’s homes this winter.

“Applications for pension credit have gone through the roof with people losing out by a few pounds per month and even then having to wait in excess of six months for a decision. How is that going to help older people during a bitterly cold winter?

“The Chancellor has displayed a ‘burying her head in the sand’ mentality today by ignoring the demands of older people’s organisations and trade unions alike.  Just because she hasn’t mentioned the winter fuel allowance, it doesn’t mean that these demands can be ignored.

“What the Chancellor should have done today is shown strength of character, admit that she had got it wrong and revoked her dreadful decision on the means testing of the winter fuel allowance but what she has done instead has shown nothing but extreme cowardice by not even mentioning it in order to avoid questions over the consequences of her actions.

“It is absolutely shameful from this Labour Government when so many older people expected more”

Age Scotland’s chief executive, Katherine Crawford, added: “This was a big opportunity for the Chancellor and Prime Minister to protect the health of hundreds of thousands of low-income pensioners in Scotland, and they missed it.

“Cutting the Winter Fuel Payment so drastically means that 85% of pensioners in Scotland living in poverty or on the poverty line will have at least £200 less in their pockets this winter as they face increasing energy bills.

“A rise to state pension next year is welcome, and was expected, but doesn’t compensate for losing the Winter Fuel Payment and falls short of what the majority of pensioners need to get by. The bottom line is that pensioners on the lowest incomes are going to be worse off than they would have been.

“With an extra £3.4 billion in Barnett consequentials announced for Scotland we desperately hope the Scottish Government will now use it to reinstate the devolved Pension Age Winter Heating Payment for all pensioners, the cost of which would amount to less than 5% of extra money. This would show what Scotland can do using the powers of devolution.” 

According to the Joseph Rowntree Foundation (JRF), more certainty is required for those living in hardship, particularly private renters and people receiving sickness benefits.

Paul Kissack, chief executive, said: “(Yesterday’s) actions alone won’t be enough to fix the foundations for millions who struggle winter after winter in devastating hardship. The Chancellor is right that change must be felt. The people who needed to feel the most change are those living in and at risk of hardship.

“Limiting the devastating impact of deductions is a good step. There was also welcome investment in social homes, help for carers to work and care, and a rise in the minimum wage.

“It’s deeply worrying that we haven’t seen changes to social security that will seriously bring down hardship. In particular private renters will feel let down by the choice to keep Local Housing Allowance frozen means that it will become further out of step with local rent levels, which have soared in recent years.

“People receiving sickness benefits also face a fearful future at a time when almost two thirds of those experiencing destitution have a long term health condition. The government has failed to explain how they will save £3bn from the benefits bill and will offer no certainty and more anxiety rather than the respect they deserve.”