Rural and islands housing: action plan

Housing and Local Economies

Housing is about far more than bricks and mortar. It is the quality of the homes as well as the place they are located which affect people’s life chances and outcomes including employment, education, health and access to wider resources. Location is also important for local employers who need staff all year round as well as seasonally and a lack of suitable affordable local housing can impact on businesses recruiting and retaining staff – including key workers.

Housing to 2040, National Infrastructure Mission, Infrastructure Investment Plan, National Transport Strategy, Scotland’s Digital Strategy and The Strategic Framework for a Cyber-Resilient Scotland are all driven by a determination to create and sustain a resilient national infrastructure that can support a high-productivity economy.

We recognise the vital contribution that housing across all tenures provides to Scotland’s economies. Housing investment can be a powerful driver of local economic activity and the Scottish Government is making available £3.5 billion over the lifetime of the current Parliament across Scotland to deliver more affordable homes. Delivering the Scottish Government’s ambitious target of 110,000 affordable homes by 2032 could support a total investment package of around £18 billion and up to 15,000 jobes each year.

It is important that there is strong collaboration between local authority housing, planning, and economic development officials to ensure close joint working in support of housing, economy, and place ambitions. Linked to this, the activity and role of Highlands and Islands Enterprise and South of Scotland Enterprise is also key in facilitating joint working regionally and locally, connecting with local authorities in support of the housing and economy interface. This includes working collaboratively with a range of interests to drive forward shared priorities, including business, statutory partners, development trusts and community-led organisations.

We are aware there are businesses who are actively providing housing solutions to meet their business needs and attract the workforce they need. This is being achieved in a range of ways including through the purchase and re-use of existing properties, provision of modular units or through the provision of purpose-built accommodation. The private sector has a key role to play in the provision of homes, including the use of existing land and building assets, and it is important that the sector continues to play its part. There are also opportunities for greater joint working between the private and the public sector to meet respective housing requirements and stronger collaboration can support delivery.

The Minister for Housing has recently met with Scottish Council for Development and Industry to explore how we can work more closely together to support joint objectives. This includes collaborative working through local chambers of commerce and other appropriate routes to identify barriers and challenges as well as solutions and opportunities.

As outlined in our Programme for Government 2023-24, the Scottish Government intends to help businesses and investors realise the enormous economic opportunities of the global transition to net zero and of creating good, well-paid jobs in sectors such as offshore wind and hydrogen.

Many of these sectors will have a presence in our rural and island communities. We will seek to engage with offshore wind and hydrogen, emerging industries such as the space sector, and significant existing rural industries such as aquaculture and Scotch Whisky industry to explore opportunities for collaboration and investment in housing. This will help to ensure local benefits as well as supporting the delivery of national ambitions such as responding to the climate crisis.

Scottish aquaculture is a significant contributor to our economy through trade, employment and investment in infrastructure such as housing, broadband and harbour facilities.

The sector supports a wide range of highly skilled and well-paid jobs across farming operations, supply chain businesses, research institutes and new innovative enterprises. Many of these jobs are located in Scotland’s rural and island communities where they help to underpin valuable economic development although some employees do experience challenges in securing appropriate housing or housing close to the site of their employment.

Recent examples of positive partnership between communities, the sector, and Scottish Government, where the Rural and Islands Housing Fund has played a key role in supporting the delivery of new homes in Rum and Colonsay.

Building on such examples, we will continue to work with the aquaculture sector and others to utilise these partnerships and facilitate collaborative working between the sector and the communities they operate in to support workforce growth and retention through the provision of homes.

Abergeldie Road – Ballater, Aberdeenshire

Grampian Housing Association’s project completed in October 2021, delivering 24 social rented homes at a former school site in Abergeldie Road, Ballater and was supported by £2.011 million Affordable Housing Supply Programme funding.

It is a rural regeneration project and is a combination of existing old buildings and modern new build homes. Each unit benefits from its own ground source heat pump so tenants are fully in control of their own heating and hot water. Local contractors were used for the development helping to boost the local economy. The project was shortlisted for a Scotland’s Regeneration Forum award.

Action

Recognising the important role that housing plays in supporting rural and island economies, we will refresh Local Housing Strategy guidance in 2024 to strengthen links at a local level between housing and the economy.

We will work with local authorities, enterprise agencies and business representatives including private developers to improve understanding of housing requirements arising from key sectors. We will seek to enable more housing provision through sharing of good practice and collaboration between employers and housing providers.

Through the development of this Action Plan and through the Convention of the Highlands and Islands and Convention of the South of Scotland, stronger bonds are being forged including through the Regional Economic Partnerships to identify and take forward key actions to support housing and the economy. The Regional Economic Partnerships bring together regional interests, focussing and aligning resources, sharing knowledge, and identifying new proposals to accelerate inclusive economic growth at a local, regional, and national level. They have a key role to play in identifying future economic opportunities, including key areas of growth, and working with local partners to support the delivery of identified housing requirements.

This plan presents an opportunity to strengthen those links at a national, local and regional level between economic development and housing delivery and to strengthen collaborative ways of working to ensure its delivery.

South of Scotland

The collaboration between the Scottish Government, key regional partners and the housing sector, including the establishment of the Regional Economic Partnership’s Strategic Action Group on Housing, provides an opportunity to work together to support the delivery of more homes. This builds on the existing work of partners including the statutory role of the two local authorities (Scottish Borders Council and Dumfries and Galloway Council) and will consider and identify deliverable collaborative actions and opportunities for partners, including the role of the private sector and community housing in the delivery of high-quality homes. A key area of collaboration will be ensuring the benefits of increased housing development are realised for the South of Scotland’s economy and supply chains as well as linking into wider work of the Regional Economic Partnership on regional skills requirements.

Highlands and Islands

Similarly, through discussions at the Convention of the Highlands and Islands, a Housing sub-group of the Regional Economic Partnership has been established. The group, facilitated by Highlands and Islands Enterprise, includes representatives from local authorities, the Scottish Government, Scottish Federation of Housing Associations, Scottish Futures Trust, Community Land Scotland and others to consider the economic linkages, opportunities and pressures in terms of existing housing supply and the delivery of new homes alongside broader investment, skills and capacity requirements.

The group has recently convened and discussions are ongoing around potential areas of focus. This includes consideration of potential growth opportunities over the next 10 years, private and public sector building activity including affordable and employer-led housing as well as construction capacity and skills requirements.

Action

We will work collaboratively with South of Scotland Enterprise and Highlands and Islands Enterprise through the housing sub-groups of the Regional Economic Partnership including consideration of future economic growth opportunities, housing delivery, construction and skills capacity and the broader role of the private sector in supporting and responding to housing requirements.

Growth Deals

City and Region Growth Deals agreements between the Scottish Government, the UK Government and local government are designed to bring about long-term strategic approaches to improving regional economies. They are delivered by regional partnerships led by authorities working withthe private sector, education and skills providers, and our enterprise and skillsagencies.

Many of these deals include the delivery of housing. The Argyll and Bute Growth Deal, which is progressing towards Full Deal, includes proposals to support affordable housing of the right type and in the right place to support housing for key workers as well as to identify help for rural employers to support employee housing including accommodation for rural contractors where required. These proposals include housing for worker accommodation at Tobermory on the Isle of Mull.

The Knab Redevelopment project in Shetland, supported with investment of up to £9.6 million of Scottish Government funding as part of Scottish Government’s £50 million investment in the Islands Growth Deal, aims to go beyond creating a simple housing project with ancillary services, by delivering a mixed-use site that embeds living and ageing well, creative innovation, wellbeing and a dynamic use of public space alongside future fit housing for a flexible approach to work and life.

Through the Moray Growth Deal, a Housing Mix Delivery project will be supported with investment of up to £5 million of Scottish Government funding. The project aims to support and accelerate the delivery of over 300 affordable homes, stimulate the private housebuilding sector to deliver market houses, support town centre regeneration of brownfield sites and the provision of housing in rural towns and villages cross Moray.

Through the Inverness and Highland City Region Deal, the Scottish Government has committed £5 million to deliver high-quality affordable housing in rural locations across the Highlands, helping enable young and economically active people to remain in or move to the Highlands. Similarly, the Innovative Assisted Living project is constructing 32 technology-enabled homes and retrofitting eight more for vulnerable adults and military veterans to enable them to live independently.

Modern Methods of Construction

The potential for increased use of offsite construction (often referred to as Modern Methods of Construction or MMC) has been viewed as an opportunity for new build housing development for many years. Scotland successfully uses various offsite approaches (predominantly open panel timber frame) in most of its housing construction however this has not yet translated to widespread adoption of more advanced systems.

The Scottish Government has for many years supported offsite construction in housing through investment in projects as part of the Affordable Housing Supply Programme, with approximately 90% of all new homes delivered through the programme currently using some form of Modern Method of Construction. Rural and island stakeholders have expressed interest in further exploring new approaches to housing delivery.

Through the Edinburgh Home Demonstrator project, we are testing real life performance gaps, componentry and design standardisation, and a new business model based on collaborative procurement.

We are seeking to grow the evidence and identify the potential for supporting greater use of offsite construction methods, where this can help to efficiently deliver high-quality and energy-efficient homes.

Ulva Ferry, Isle of Mull – Argyll & Bute

Mull and Iona Community Trust was awarded £805,340 from the Rural and Islands Housing Fund for this project. Six houses have been built over two phases to meet an acute housing need on the island, and to support the local primary school roll.

Thanks to the innovative modular design, construction on site by The Wee House Company took just 7 months, as part of a four-year project. Each house is made of between 4 and 6 modules, depending on the size of the finished home and 90% of construction was completed under factory conditions in the company’s Cumnock facility, meaning site preparations could be completed in tandem.

Action

We will examine the potential and impact of modern methods of construction in rural and island areas over the next twelve months to establish benefits of such approaches (for example cost, time, quality, environmental and economic).

Housing for Key Workers

Scotland’s remote, rural and island areas face challenges when it comes to recruiting and retaining staff. Proposals such as the Scottish Government’s Rural Visa Pilot could play a role in helping to facilitate migration to remote rural and island areas as well as supporting employers to better meet their needs.

It is essential to the economic vitality of the region that employers can attract and retain the key workers they require, not only to support service delivery for communities but also to support economic growth and prosperity. Employers, including public sector employers such as Forestry and Land Scotland, Crown Estate Scotland, South of Scotland Enterprise, Highlands and Islands Enterprise and others including Health Boards, have an essential role to play here in considering how they can contribute. This could be through the better use of the resources, properties and land they may own to support the provision of homes for key workers and others, and in so doing, supporting and ensuring their own business security.

We recognise that it is not a one-size-fits-all approach in relation to key worker policies and it is for local authorities to set their own policies. ‘Key workers’ can include doctors, nurses, teachers and police officers but also extends to private sector businesses, both permanent and seasonal staff. Competing demand for private sector homes, linked to limited supply can impact on the ability of key workers, particularly those seeking to move to an area, to find appropriate housing.

In recognition of the challenges with recruiting and retaining staff in remote, rural and island communities, particularly although not exclusively in the public, health, and emergency sectors, we are making up to £25 million available from our affordable housing supply programme budget over the period 2023-2028 in the form of the Rural Affordable Homes for Key Workers Fund. The fund will enable local authorities and registered social landlords to purchase existing suitable properties in rural and island areas which can be rented directly or leased to employers to provide affordable homes for key workers. This can include bringing empty properties back into use or acquiring properties on the open market to increase the supply of affordable homes for key workers.

Local authorities are expected to engage with a range of organisations in their localities including public sector employers, key agencies including Highlands and Islands Enterprise and South of Scotland Enterprise, as well as local businesses and registered local landlords to identify requirements and proposals.

Action

We will work with local authorities to deliver the Rural Affordable Homes for Key Workers Fund to ensure that there is effective local engagement with local employers and registered social landlords to support the identification of additional homes for key workers.

Local Housing Strategies and Local Authority Key Worker Policies

All local authorities are required to prepare a Local Housing Strategy which sets out its strategy, priorities and plans for the delivery of housing and related services. Where evidence suggests that there is a requirement for action to provide suitable housing for key workers, the Local Housing Strategy should include a policy on this. While key workers can be essential public sector employees, the term can also be used more widely to reflect the employment and retention of people vital to the delivery of and improving essential local services. It remains for local authorities to set out their approach.

Scotland Housing Network’s Local Housing Strategy Forum supports local authorities responsible for strategic planning to meet housing needs. It covers a wide and varied range of topics related to housing policies and strategies including Local Housing Strategies and Strategic Housing Investment Plans. It provides local authorities with an opportunity to highlight specific issues and has a strong focus on the sharing of good practice.

We recognise the importance of local authorities having good workforce data from a range of different sources to help inform the development of key worker policies and housing priorities.

Action

Working with Scotland Housing Network, we will ensure local authorities have appropriate policies in place for remote, rural and island areas to increase the supply of homes available to key workers including identifying appropriate sources of workforce data.

Addressing Depopulation Action Plan

The forthcoming Addressing Depopulation Action Plan, due to be published in Autumn 2023, will deliver a strategic plan aimed at providing the policy framework to enable population retention and repopulation.

The early development of the Addressing Depopulation Action Plan has been, in part, informed by the feedback from communities in response to the Islands Bond consultation. This consultation highlighted a number of key barriers to population retention and growth, including housing, and a low-wage economy as well as access to skills training.

In response, we have worked in partnership with the Convention of the Highlands and Islands Population Working Group to deliver an Island Skills and Repopulation Pilot. Three projects are being delivered in Arran & Cumbrae, across the three islands of Bute, Coll & Tiree, and in Uist.

The aim of these projects is to test the impact of a targeted, place-based approach, aligned and responsive to local skills and employment needs. Upon completion, evaluation will help to identify how or whether these approaches may support or refineskills and employment programmes across governments and relevant agencies.

Through supporting career pathways, retraining, and upskilling, we can help to diversify local economies and also look to increase capacity and skills across a variety of sectors, including the construction sector. In doing so, we can further support the delivery of more homes in remote, rural and island communities.

Isle of Rum, Highland

The Isle of Rum Community Trust took forward an ambitious project to deliver affordable housing as a way of protecting the future of the island school, which previously only had two pupils. With an aim of encouraging new people to move to Rum, the trust looked to attract families and skilled tradespeople and businesses to make the community more viable.

The project, which was supported by the Rural and Islands Housing fund with a grant of £454,300, to build four two-bedroom houses. The homes, which have solar roof panels, high levels of insulation and a wood stove for additional heating, were completed in Autumn 2020.

The Isle of Rum Community Trust worked together with Mowi, who provided the community with four fully serviced plots when building their own staff accommodation and office space. Mowi helped with additional financial contribution to the building of the community homes. Mowi also provided 10 yacht moorings in the bay, which has brought more visitors to the island, and additional revenue to the community. One of the attractions for the new residents to Rum has also been fast broadband, enabling them to move to the island and work from home. Mowi installed the fast broadband connection to the benefit of the entire island, with fibre optic installed in the village.

Action

In 2023-24 undertake a review of the success and challenges of implementing the Island Skills and Repopulation projects delivered in Argyll & Bute, North Ayrshire, and the Western Isles. Working with partners, we will then explore how the approaches taken may offer opportunities to address skills and capacity issues in construction supply chains.