Scottish Government

This section of the website explains the general process and criteria for the council house building funding stream. are set out in the following letter to councils.

Please note these proposals only apply to 2011-12, for which the Budget has been published. We expect resources available to Scottish Government to remain very tight over the coming years and will review arrangements for future budgets later this year.

Our objectives in managing the new £50m fund in this competitive way are to maximise:

• Innovation;
• Collaborative working; and
• Value for money to Scottish Government.

Whilst the overall process will be familiar to those local authorities that have previously applied for subsidy, when completing applications it would be worthwhile taking these 3 objectives into account.Grant level and assessment criteria

Discussions have taken place between COSLA and the Scottish Government on the principles and processes that will be used in allocating the money and also to set the level of subsidy to be offered per unit. It has been agreed that a maximum subsidy of £30,000 per unit will be offered and that work must have started on site by the end of March 2012. In previous rounds, some local authorities indicated an ability to build greater amounts of new housing at lower subsidy levels for a higher total subsidy by using economies of scale. We will consider any such applications on a case-by-case basis, but where greater value for money can be achieved in an application, it is likely to be well regarded during the assessment process.

As before, the overall aim in allocating the money is to maximise the number of new houses built of sufficient quality, in the right places. The five overarching principles remain largely the same from the last round and are as follows:

• The council has the ability to manage and maintain the new stock effectively.
• The development is affordable at the available level of grant and proposed rent levels are affordable to the tenant.
• The new homes are prioritised to contribute to meeting evidenced housing and/or regeneration need and homelessness targets.
• The council can demonstrate that it has well developed plans to ensure delivery of the proposed new housing.
• The proposed developments fit with the Local Housing Strategy and the number of units that are built is maximised within the resources available but not at the expense of having to compromise on design quality and quality of place.

The criteria are set out in detail in annex A* including guidance for the format of submissions which allows for the comparable assessment of all bids.

The assessment of applications will remain primarily housing needs driven (with prioritisation on the 2012 homelessness target). Submissions are also welcomed from councils that have made progress in addressing their homelessness target and can justify further investment.

Partnership working

Given the limited funding available, we would encourage all local authorities to actively engage with local RSLs to pool resources and explore the opportunities for collaborative working. Stock transfer councils, which have previously been limited by their lack of Housing Revenue Account to manage any new housing, may apply for subsidy through a partnership agreement with a local RSL. Under this arrangement a council would be able to apply for funding and then use that to subsidise developments which an RSL would own and manage. The remainder of the investment would come from the council and the RSL's financial resources, including land, income from second homes council tax and borrowing, rather than other government funding. Please note that if a council is borrowing from the Public Works Loan Board to lend to a RSL, then Scottish Ministers will need to provide consent.

Please note that if a joint project is being submitted where a part of the development site is included in another part of the Innovation & Investment Fund (e.g. a joint project with a RSL where both organisations are seeking to develop different parts of the one site) this should be clearly highlighted.

Process

As before, applications will be considered jointly by COSLA (along with relevant local government officials) and the Scottish Government against the principles and criteria provided in this letter. Details of key steps in the decision making process and indicative timescales are provided below.

If you decide to apply for funding from the Scottish Government, please respond to this letter with evidence of your ability to meet the principles listed above by 17:00 on 31 May 2011. Please could all applications follow the specified guidelines and format, including completed versions of the financial pro forma (please do not attach the pro forma as a PDF, it should be in an Excel spreadsheet). Applications should be sent, by email only, to both the Scottish Government and COSLA:

Housing Supply Division
housingsupplyteam@scotland.gsi.gov.uk

Caroline Johnston
COSLA
Rosebery House
9 Haymarket Terrace
Edinburgh EH12 5XZ
caroline@cosla.gov.uk
0131 474 9200

The Scottish Government's regional office contacts will be available to provide procedural advice on the preparation of applications but will not be able to offer advice on proposed projects.

• Contacts for the Scottish Government's regional offices.

Funding agreements

Separate funding agreements will be reached with each council based on the specifics of its proposal and available resources. Grant offers will be similar to those issued previously. Prior to issue of individual grant offers we will require information on all projects covering capital costs, rents or sales prices, funding sources and numbers/sizes/types of housing provided will be required as a condition of grant funding in order to assist future evaluation. All or a proportion of projects will also be subject to post-completion scheme review in order to confirm compliance with grant conditions and to promote sharing of lessons learned. In planning your proposed development, you should note that Scottish Government subsidy will not be provided until after developments have been completed.

If you require further information on this letter or wish to take informal soundings on any aspect of your potential application please contact the relevant Scottish Government office for advice.