Affordable Housing Supply Programme (AHSP) Budget information: FOI release

Information requested

What is included in "Financial Transactions" in the table showing the "Affordable Housing Supply Programme (AHSP) Budget 2023-24" and why it is shown separately from the More Homes Grant figure?

Does all the funding in this table come from the Block Grant/tax raising powers of the Parliament, or is any funded by additional borrowing?

Is there a similar breakdown available of the funding for 2024-25?

Why RSLs receive higher grant funding for new housing than local authorities?

Response

The answers to your question are:

Financial Transactions (FTs) can only be used to make loans to or equity investments in private sector entities. FT utilisation in More Homes Division is mainly through the Open Market Shared Equity scheme and Charitable bonds, FTs must ultimately be repaid by the Scottish Government to the UK Government. The More Homes Grants are used for the delivery of grant-funded affordable homes for social rent, mid-market rent and low cost home ownership. The main grant recipients are local authorities, Registered Social Landlords (RSLs), local authority arms-length external organisations and RSL subsidiaries.

Scotland receives a capital block grant and a separate allocation of Financial Transactions from the UK Government, in accordance with the Barnett Formula. (The UK Government supports some capital investment programmes and other projects through a separate allocation of Financial Transactions Capital (FTC), which is sometimes referred to as ‘net lending’ or ‘policy lending’ but can also involve other financial instruments such as equity investment and guarantees – more detail is available on Financial Transactions in the Statement of Funding Policy (November 2023)). 

Capital Borrowing is added to this grant funding to support our overall capital programme and determine the total capital funding available. We do not distinguish between capital grant funded projects and those funded by borrowing.

The Affordable Housing Supply Budget for 2024-25 has still to be published on the gov.scot website but is as follows

AHSP Budget 2024-2025	£m
More Homes Grant	414.417
TMDF Grant	92.245
Total Capital Grant	506.662
Financial Transactions	49.200
Total	555.862

Following an announcement of an additional £80m over 2 years for the AHSP the budget above has increased by £40m capital in 2024-25 taking the total to £595.862m.

There is no set level of grant funding for local authorities or RSLs. When applying for grant assistance at tender stage to deliver homes for social rent and mid-market rent, local authorities and RSLs are required to self-certify that the amount of funding they are requesting is the minimum required for a project to be financially viable for their organisation whilst ensuring rent affordability. We then use what are known as ‘affordable housing investment benchmarks’ to determine the level of scrutiny that an application for grant funding receives. Projects that can be delivered with grant funding at or below the relevant benchmark follow a streamlined assessment process, with projects which are seeking grant funding in excess of the relevant benchmark following a more detailed value for money assessment Further information on the use of benchmarks can be found on our webpage through the Affordable Housing Supply Programme (AHSP) Process and Procedures and the Report on the work of the 2021 Affordable Housing Investment Benchmarks Working Group .

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