In five years, Scotland has moved from the ambition of the 20 years strategy of Housing to 2040, navigating Covid-19 and the cost of living crisis, as well as the governing experiment of the Bute House agreement between the SNP and the Greens, before ending up with rapidly rising construction costs, budget cuts to the housing programme, a downturn in supply approvals and starts, and the declaration, nationally and locally, of housing emergency.

This is the context in which the Joseph Rowntree Foundation funded CaCHE to examine how Government and partners might revitalise Housing to 2040, focusing on one immediate issue, re-booting the Affordable Housing Supply Programme (AHSP), and a second, longer term question – reforming devolved housing taxes to improve housing and fairness outcomes consistent with the vision and principles goal of a stable non-speculative housing market. Here, we focus on the first of these two topics, reflecting on a report written by Kenneth Gibb, Gillian Young and Alice Earley.

The research sets out the promise and challenge of Housing to 2040, the role of the AHSP within it, and details how it has run into significant difficulty. Deep dives were then conducted into AHSP practice in different parts of the country and varying housing contexts (Edinburgh and the two Lanarkshire councils). The research team then developed a series of short, medium, and long-run conclusions, partly through discussions with an expert panel sounding board*.

The proposals include the following ideas, bearing in mind that long term proposals still need to start now.

Short run

The Scottish Government should provide a clearer direction of travel for the housing programme. It is ultimately political and a government’s choice as to which spending programmes are supported to reduce. There are other pro-housing options available. Recognising the growth of homelessness and other unmet needs, the Scottish Government should look to reprofile planned spend through benchmark increases in grants also by the shifting of funding into social housing by reducing the grant-funded element of mid-market rent.  Also, with reduced financial transaction capital in the future, the Government should examine extending the use of soft loans and guarantees for Mid-Market Rent (MMR) where land values support it. Spreading the money thickly so it makes a difference, albeit for fewer households, is preferable to likely underspending across the programme because grants per unit are generally insufficient. There should also be a general predisposition to accelerate S75 quotas and to focus them on social units.

Multi-year accounting rule changes would help move the system away from recycling underspends and provide more cross-year certainty. The Scottish Government should continue its advocacy for change in key reserved policy areas.  This would include restoring the value of LHA and making the case for more government borrowing powers specific to social housing as infrastructure (which pays for itself out of rental income).

Medium term

There is a need to undertake analytical work to strengthen how the AHSP allocation mechanism works from central decisions to local action. Specifically:

1. Develop a more localised version of the Housing Needs and demand assessment (HNDA) process (with testing of research quality, etc. from the centre) which links more directly to local SHIP plans so that grant funding corresponds directly to local priority needs and outcomes.
2. Conduct an inclusive review of the spatial allocation of resources (resource planning assumptions) embedded in the Strategic Housing Investment Framework (SHIF) and the transfer of the management of development funding (TMDF) arrangements for Glasgow and Edinburgh with a view to producing a new evidenced formula.
3. Provide an updated financial capacity assessment of social landlords to develop social and affordable housing.
4. Undertake a transparent new analysis of setting benchmark grant rates.
5. Develop an economic and social CBA of public spending on non-market housing investment (including wider prevention), providing a robust Green Book analysis that strengthens the public spending case for the AHSP against competing claims.
6. Establish a new national land and housing agency to focus on land assembly site readiness. After initial pump-priming, the new organisation would seek to recover costs and recycle income from selling on serviced sites with a view to secure social housing land price levels and/or utilising land value uplift on land it owns to support housing infrastructure.

Long run

• Reform the land market to be more transparent so that information is made available to all regarding available sites, or potentially for sale.
• Revisit land value uplift reforms to support paying for infrastructure.
• Revisit the case for land tax on appreciation by dint of planning permission, to incentivise re-use of vacant land and empty properties.
• Where appropriate, test and implement the Compulsory Sales Orders power. Also, consider land readjustment – facilitating land assembly by offering landowners lower site payments in return for an equity stake in the development.
• Introduce a legal requirement for public bodies to release land for social housing at current user value to limit inter-public sector land trading commercially.   
• All public bodies (including council departments) should notify the council of surplus/redundant land and give council the duty to maintain a public register of such land and the power (not duty) to acquire such land specifically for social housing at or near user cost.    
• Review whether and where social housing should become a standalone use category within Local Development Plans.
• Grant councils the power (or even duty) to acquire land at a value that offsets the cost of providing the infrastructure and services required for viable development.
• Potential measures to require developers to sell land if they fail to build out sites by a given date or at an agreed rate.

* The authors are grateful to the expert panel who consisted of Graeme Roy, Nicola McEwan, Kezia Dugdale, Tony Cain, Keith Anderson, David Bookbinder, Ashley Campbell, John Boyle, Gordon MacRae and Sally Thomas. All errors and opinions are the responsibility of the authors alone.

• This article was originally published on the CaCHE website