Infrastructure investment plan 2015: 2016 progress report

Housing

We want everyone in Scotland to live in affordable, quality homes that meet their needs. This is central to building and sustaining a fairer and more prosperous Scotland.

Scotland has a strong record in housing delivery. Over 2011-16, we exceeded our 30,000 affordable homes target. To end March 2016, a total of 33,490 affordable homes were delivered, 22,523 of these homes were for social rent, including 5,992 council homes. Building on this success, we and our partners want more homes delivered across all tenures.

During the current Parliamentary term, 2016-21, our target is to deliver more than 50,000 affordable homes, backed by investment of over £3 billion. We have listened to our partners and will continue to work with them closely to deliver More Homes Scotland - an overarching approach to support the increase in the supply of homes across all tenures. Key elements are:

• For 2016-17, the Housing Supply budget has been set at £690 million. This includes investment of £365 million grant funding in the Affordable Housing Supply Programme and represents a 42% increase on the previous year. For 2017-18, the overall Housing Supply budget has been set at £699.704. This includes investment of £375 million grant funding in the Affordable Housing Supply Programme - a £10 million increase on the equivalent 2016-17 figure.
• The target to deliver more than 50,000 affordable homes will support approximately 14,000 full-time equivalent jobs a year in the construction and related industries in Scotland and will generate around £9 billion of economic activity over the 5-year life of the programme.
• In January 2016 we announced an increase in housing grant subsidies by up to £14,000 for social and affordable homes. This is helping councils and housing associations to maintain momentum to help deliver the 50,000 affordable homes target.
• We have put in place a programme, now underway, to Achieve Excellence in Housing Development to help build the capability of the affordable housing sector to ensure best value and deliver the widest benefits possible from the increased housing investment.
• In 2016-17 we made available £160 million to help up to 5,000 people access homeownership. £70 million has been allocated to the Open Market Shared Equity scheme to help up to 2,000 first time buyers on low to moderate income and £80 million was allocated to the Help to Buy (Scotland) Affordable New Build and Smaller Developers Schemes to help up to 3,000 first time buyers and existing homeowners buy a new build home.
• Last year we launched a new grant and loan Infrastructure Fund with up to £50 million available for 2016-17. Working with local authorities, this is providing targeted assistance to help unlock strategically important housing sites and increase the scale of housing delivery. We have awarded loan funding to Grandhome in Aberdeen and grant funding to Glasgow City Council for affordable homes at Maryhill Locks.
• We have invited and progressed assessment of novel Mid-Market Rent proposals which have the potential to deliver large-scale investment and expand the supply of affordable homes. In 2017-2018 we will complete due diligence and agree funding for supportable proposals that will deliver new affordable housing at scale.
• We have followed up our support for the growth of the private rented sector ( PRS). A PRS Rental Income Guarantee Scheme, developed with Homes for Scotland and industry specialists through the PRS working party, is currently being finalised.
• We consulted local authorities, Registered Social Landlords and others in 2016 on the resources, skills and expertise they need to help build delivery capacity and to identify where the critical gaps are and how best to fill them. We have supported a Highland Hub to enable strategic engagement between the Scottish Government, local authorities and delivery partners. In 2017-2018 we will provide a central resource to support and advise local authorities on land assembly and Compulsory Purchase Orders to enable housing delivery.

A new £25 million fund was launched in February which will provide an estimated 500 new affordable homes specifically to rural areas across Scotland. Building affordable housing in rural areas presents different challenges compared to urban areas which is why we are ensuring this fund is open to rural interests, including community bodies, private landlords and landowners. We have also introduced a complementary £5 million Islands Housing Fund. Both funds are specifically targeted to increase the supply of affordable housing of all tenures in rural Scotland.

We are maintaining Scotland's leadership in financial innovation and competence, continuing to work creatively with our partners and use innovative ways to deliver more new homes across all tenures for less public investment. The creative use of government guarantees, loans, grant recycling and new sources of private funding is supporting the delivery of approaching 5,000 new affordable homes and generating up to £650 million of housing investment in addition to our conventional funding routes.

We are the first, and remain the only, national government in the UK and public sector body in Scotland to invest in Charitable Bonds, a form of ethical investment which creates loan finance to fund affordable housing, and generates charitable donations. Investment spend for the financial year 2016-2017 totals £32.3 million, generating grant of £8.44 million. Total spend on the CB programme is now just under £70 million, supporting the delivery of approaching 1000 homes.

We are committed to a wide-ranging review of the planning system, with a focus on improving the effectiveness of planning processes that support the delivery of good quality housing developments. After the current planning consultation closes on 4 April 2017, we will analyse the responses and provide an update in summer 2017. We will consider the planning delivery advice in light of the outcomes from the consultation. We expect to bring a Planning Bill to Parliament in late 2017.

Fuel poverty

Last year, we published the Fairer Scotland Action Plan, which at its heart featured 50 concrete actions for this parliamentary term to help build a better country - tackling poverty and inequalities. We believe that eradicating fuel poverty is crucial to making Scotland fairer, and have set out a clear ambition to ensure everyone has a warm home that is affordable to heat. Achieving this will go a long way to ending fuel poverty in Scotland.

Latest statistics indicate that almost 100,000 fewer households were in fuel poverty in 2015 compared to the previous year, and whilst this is welcome news, we know there is much more work to be done.

Tackling fuel poverty has always been a priority for this government. We have allocated over £650 million since 2009 and we will make available half a billion pounds over the next four years to tackle fuel poverty and improve energy efficiency. This includes allocating £114 million in 2017-18. This means, by the end of 2021 we will have committed over £1 billion to making our homes and buildings warmer and cheaper to heat. Our commitment to this significant investment will be used to build on the 1 million energy efficiency measures already delivered to over 1 million households since 2008. These measures were installed either directly funded by Scottish Government schemes or supported by the broader enabling environment created through our Home Energy Efficiency Programmes for Scotland.

As in previous years, the majority of Scottish Government budget for fuel poverty and energy efficiency programmes is allocated to the Home Energy Efficiency Programmes for Scotland ( HEEPS) Area Based Schemes ( HEEPS: ABS). Area Based Schemes are delivered by local authorities and prioritise fuel poor areas, providing a range of insulation measures. In addition, our national fuel poverty scheme, HEEPS Warmer Homes Scotland, offers insulation and heating measures to vulnerable private sector households to improve the energy efficiency of homes across Scotland. For owner occupiers and registered private sector or registered social landlords we also make available interest-free loans through the HEEPS Loan Scheme.

Our record investment is reflected in the big improvements in the energy efficiency of Scotland's housing. The share of the most energy efficient dwellings (rated C or above) increased by 74% since 2010 and we now have proportionately 29% more homes with EPC rating C or above than England.