As the Scottish Futures Trust (SFT) publishes its 2016/17 Annual Business Review outlining where its work has secured £138 million of benefits and savings, its chief executive, Barry White is calling on the housing industry and Scotland’s councils to work together to further increase housing supply.
Housing is often thought of as a social good but in a service-led economy with increasing demand and changing regional demographics, it is now a vital element in securing future economic growth.
Building houses to sell along with grant aided social housing have traditionally been the biggest elements of housing supply, and it is vital that the great activity in those sectors accelerates.
SFT has been a pioneer of a third element – affordable housing. It has secured £400 million of additional investment into Scotland’s housing sector with contracts signed to build 2,700 affordable-rent homes through a range of innovative approaches. These modern, energy efficient homes are targeted at households with modest incomes, for whom housing costs would otherwise take up a very high proportion of their monthly budget.
SFT is developing further “public partnerships” to boost housing investment to over £650 million and given the low cost of local authority borrowing, there is the potential to do much more without any grant subsidy.
A further new opportunity to help increase housing supply is through attracting large scale “Build to Rent” (BTR) investment. Already well established in the US and much of Europe, BTR is now fast developing as a new route to supply housing in the UK.
It is estimated that £50 billion of finance, much of it international and pension fund money, has been allocated to the BTR sector in the UK, and Scotland must fight to attract its share of this significant investment. This sector brings faster development than homes for sale as well as a professional landlord with a long time-horizon of managing homes for a range of people from globally mobile millennials keen to locate in Scotland to families living in the rented sector.
To encourage BTR investment in Scotland, SFT manages the Rental Income Guarantee Scheme (RIGS) recently launched by Scottish Government. RIGS, together with recently issued advice on planning, puts Scotland in a great position to attract significant investment into new housing supply. Scotland’s local authorities have a key role to play in embracing this new approach to providing homes.
Barry White, SFT’s chief executive, explained: “Increasing housing supply is a vital element of helping an economy grow and to keep house prices and rents at stable levels. With the lowest local authority borrowing rates to be seen for many years and the wall of money behind the BTR sector, there’s never been a better time to build.
“Having already worked very closely with local authorities on housing to secure £400 million of housing investment, there is now a great opportunity to increase that partnership to build more homes, of all tenures across the country, to ensure Scotland attracts and retains more great people to grow our economy.”
Increasing the supply of much-needed housing is just one of many programmes managed by SFT. In delivering these programme, SFT’s work secures substantial savings and benefits and since becoming operational in 2009, the total estimated value of benefits and savings delivered by the company has topped £1 billion.
SFT’s work also generates significant economic benefits which includes attracting increased levels of private sector investment, improving energy efficiency across the public sector and establishing super-fast broadband in rural areas.
Some of SFT’s key achievements in addition to the £400m of investment secured for affordable housing, include:
- The 50th school opened in the SFT-managed £1.8 billion Scotland’s Schools for the Future programme and collectively 30,000 pupils as well as the communities in which they live are benefitting from new and inspiring learning environments and first-class community facilities
- Across the SFT-managed hub programme, over 100 community-based buildings have opened and a further 60, valued at over £1.1 billion, are under construction which are supporting over 9,000 jobs
- Working with the public sector, SFT secured £50m from the sale of surplus properties with the money being invested back to the public sector
- Our Growth Accelerator has unlocked £850m of additional economic investment into the heart of Edinburgh with construction well underway on one of the most significant city-centre regeneration projects to be seen anywhere in the UK
- SFT’s asset management team has assisted Scotland’s public sector save over £200 million through the more efficient use of its offices and buildings
- SFT’s Street Lighting programme has seen 28% of Scotland’s 900,000 street lamps replaced by energy-efficient LEDs, helping councils save 70,000 tonnes of CO2 and £12 million a year
- Five of the 12 buildings shortlisted for the RIAS 2017 Doolan Award were delivered through SFT’s programmes, including the recently announced winner 'Best Building in Scotland' the Dunfermline Carnegie Library & Galleries, designed by Richard Murphy Architects and delivered by hub East Central
Barry White, SFT’s chief executive continued: “In securing £138 million of savings and benefits over the past 12 months and over £1 billion since becoming operational in 2009, SFT has made a huge difference to the infrastructure landscape of Scotland and I extend our congratulations to the many public and private sector partners with whom we work in securing this success.
“Working with others to unlock public sector land to build much-needed housing, or by rolling out our innovative Growth Accelerator programme to attract multi-million-pound levels of economic investment are just two of many examples where our expertise has been put to best use to make a real difference to communities and Scotland’s economy.”
Finance Secretary Derek Mackay said: “I congratulate Scottish Futures Trust for delivering cumulative savings and benefits to the public purse of more than £1 billion since 2008. These savings clearly demonstrate how they have improved the efficiency and effectiveness of infrastructure investment in Scotland by working collaboratively with public bodies and industry, leading to better value-for-money and ultimately improved public services. I look forward to Scottish Futures Trust continuing to deliver similar savings and benefits in the years to come.”
Martin Perry, Project Director, Edinburgh St James, comments: “SFT’s bold and innovative work in devising the Growth Accelerator Model agreement, coupled with the City of Edinburgh Council’s vision for the city, has paved the way for us to invest £1 billion into Edinburgh, at Edinburgh St James.
“The scheme is one of the largest and most significant regeneration projects currently underway in the UK and will transform Edinburgh’s east end into an inspiring, attractive and vibrant destination for people to live, shop, experience and play.
“Upon completion in 2020, Edinburgh St James will provide long-term benefits to Edinburgh for generations to come, pushing the city six places up the UK retail rankings to eighth place and delivering over 3,000 permanent full-time jobs in a variety of sectors.”
Speaking of Sanctuary Group’s purchase of the Victoria Hospital site in Glasgow, the sale of which was managed by SFT, Peter Martin, Sanctuary’s Group director – development, said: “We were very impressed at the speed in which SFT brought the vacant Victoria Hospital to market.
“The process facilitated by SFT has enabled Sanctuary to work with the local community to create the planning application being considered by Glasgow City Council.”
Scottish Futures Trust
SFT is an infrastructure company owned by Scottish Government but operates independently. Working with numerous public and private sector partners across its many programmes, SFT:
- Plans future infrastructure investment
- Innovates to secure new ways to fund essential infrastructure
- Delivers important infrastructure programmes
- Improves the management of existing properties
Having Scotland's economy front of mind, SFT’s aim is:
"to improve the efficiency and effectiveness of infrastructure investment and use in Scotland by working collaboratively with public bodies and industry, leading to better value for money and ultimately improved public services."
SFT’s Annual Benefits and Savings
Every year SFT publishes a financial estimate of the benefits delivered by its work related to that financial year – SFT’s financial years run from 1 April until 31 March. Given the diverse and long-term nature of SFT’s work programmes, the methodology is based on an in-year calculation approach which is then considered on a 10-year rolling average basis.
This methodology has been independently validated by both the London School of Economics and Grant Thornton and the approach is summarised on SFT’s website.
The benefits from SFT’s work are wide-ranging and much of it achieved by joint working with the public and private sectors.
For the 2016/17 financial year, the SFT benefit estimate is £138 million. This sits between last year’s figure of £146 million and the 2014/15 figure of £135 million and demonstrates good progress in meeting the target set in SFT’s 2014/19 Corporate Plan to deliver benefits within a range of £500 million - £750 million over that five-year period.
Value of Benefits and Savings delivered by SFT since becoming operational:
2009/10 - £111 million
2010/11 - £129 million
2011/12 - £131 million
2012/13 - £132 million
2013/14 - £139 million
2014/15 - £135 million
2015/16 - £146 million
2016/17 - £138 million
TOTAL £1.06 billion