Edinburgh Council housing budget ‘almost cut in half’

Monday March 20th 2023


Written by Local Democracy Reporter, Donald Turvill

Edinburgh Council’s budget for building new council homes has been “almost cut in half,” sparking calls for officials to be “honest and upfront” about the scale of the city’s housing crisis.

A three per cent rent increase for council tenants agreed last month saw the 10-year housing budget slashed from £2.9bn to £1.7bn.

This means the authority now only has the capacity to build 2,400 council-owned social rent homes in the next decade, down from the previous commitment of 5,000 — and well below the 25,000 pledged by Labour during last year’s local election, which now appears to have been watered-down.

The council said “no sites or homes” have been removed from the programme and that its ability to construct new houses is heavily dependent on additional funding from the Scottish Government.

SNP councillor Kate Campbell said it was important officers were honest about the impact of the budget on housebuilding targets “if we are to have any hope of making the case for more funding for council housing in Edinburgh”.

A difficult budget setting meeting for councillors settled on the “modest rent rise” put forward by the Labour administration. However, a report before members said following a two-year freeze to rates, rents would have to be increased by 7.8 per cent each year for the next five years “in order to be able to deliver on current commitments”.

It said the delivery of new council homes is under further pressure due to a “28 per cent increase in assumed council housebuilding build cost”.

It added: “The impact of the increasing costs … as well as the reduction in income as a result of two consecutive rent freezes, means that the business plan has a lot less money to spend on capital investment.”

Quizzed on the matter in a question submitted by Councillor Campbell at a full council meeting last week, housing convener Councillor Jane Meagher said: “No sites or homes have been taken out of the programme.

“Officers are continuing to progress the housebuilding programme on the sites already identified and will continue to identify new opportunities.

“The Housing Revenue Account Business plan is reviewed annually. The Draft 10 year capital investment plan is indicative and subject to change to take account of inflation, borrowing rates, additional income from grant funding, increasing rents etc.”

Councillor Campbell pointed out the latest figure of 2,400 new council homes in the next 10 years is less than 10 per cent of the target set out in Labour’s Edinburgh council manifesto last year, which said: “Edinburgh Labour will start a programme to build at least 25,000 council owned homes within 10 years.”

That pledge has now been changed to commit to delivering “affordable homes” rather than council-owned homes, meaning new builds by private developers and housing associations will be counted as progress toward meeting the target.

After being voted in as council leader last June, Cammy Day called on officers to draw up a draft business plan including “a target to build 25,000 council owned homes over the next 10 years.”

The wording in the council’s final 2023-2027 business plan, which was agreed by councillors last week, reads: “We will Increase supply of affordable housing with an ambition to reach 25,000 new affordable homes.”

Cllr Campbell said: “The first budget this Labour administration passed for the Housing Revenue Account cut the ten year investment almost in half from £2.9bn down to £1.7bn and cut the number of homes in the council programme by more than half.

“But what worries me the most is that Labour councillors are still talking about their programme to build 25k council homes over ten years when it’s plain as day their current plan delivers less than 10% of their target.

“We need to be honest and upfront about the scale of the challenge facing the city if we are to have any hope of making the case for more funding for council housing in Edinburgh.”

Paul Lawrence, Edinburgh City Council’s director of place, said the scale of the capital’s housing crisis “is not matched by the current resources available to the council”.

However, he said keeping up with council housebuilding targets is “entirely dependent on the ability of this council to work with partners to deliver additional resource from the Scottish Government and others”.

Mr Lawrence added housing officers have been successful at “hoovering up” unspent Scottish Government funding.

“It’s critically important to keep that pipeline going,” he said.

Updated: 20/03/2023 quote from Cllr Jane Meagher:

Cllr Jane Meagher Housing, Homelessness and Fair Work Convener said: “There has been no reduction in the number of overall council homes planned and work on our new ambitious build programme continues at pace which has a strong pipeline of projects. There are currently over 600 Council homes under construction on sites across the city and over 1,000 in design or pre-construction.

“We’re under enormous pressure as a lot has happened over the last few years and we’re working hard to respond to the needs of our current and future tenants, whilst keeping rents affordable. The ongoing impact of Brexit and the pandemic combined with a cost of living crisis and the Ukraine war has meant that our budgets are under pressure and tough decisions need to be taken about where expenditure should be focused.

“There is no short term impact on delivery rates and if rents are increased by more in future years, costs reduce, or we receive much needed additional grant funding from Scottish Government then we will be able to increase our new build programme year on year. The budget is reviewed on annual basis and this gives us the ability to make adjustments as we move forward.”

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