Anger as Scottish Government cuts grant rate
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The Scottish Government has sparked anger among housing associations by making a £1,000 cut in its target level of grant per home.
The government has devised a new figure of £74,000 as the amount of subsidy housing associations are expected to need for each home they build. The figure, known as the ‘HAG [housing association grant] subsidy target benchmark’, was set at £75,000 just two months ago.
Bids for developments needing more grant per home than this face extra scrutiny, which the Scottish Federation of Housing Associations warns will put developments across Scotland ‘in jeopardy’.
SFHA chief executive Jacqui Watt said: ‘The SFHA recognises that we need to get the most from the public pound, but these changes will delay many projects, put some back to the drawing board and create extra red tape.’
Out of 171 housing association schemes planned over the past 12 months, 115 required grant above the £74,000 benchmark.
In its guidance for housing associations, the government says it is assuming that tender prices for construction work will fall by 2.5 per cent over the next year, a figure it is keeping under quarterly review amid predictions that prices could fall by 10 per cent. The guidance says the grant benchmark will be changed again if prices drop further.
The grant squeeze comes just three months after the government announced it was increasing housing association grant levels by an average of six per cent, to keep associations building through the recession.
A Scottish Government spokesman denied that the new benchmark would delay affordable housing schemes.
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