Housing sector set for £100m boost to bolster the economy

ALEX Salmond announced a multi-million boost for Scotland's beleaguered housebuilding industry last night in an attempt to help the Scottish economy ride through the current downturn.

Housebuilders have been among the hardest hit by the economic slowdown, with economists predicting Scotland will lose up to 4,500 housebuilding jobs by the end of the year – or one-fifth of the total workforce.

This is almost entirely due to the lack of demand for new homes and the stagnation in the housing market. However, the slump in housebuilding has had a knock-on effect on other related trades and services.

Last night, the First Minister said he would accelerate the Scottish Government's social housing programme, bringing forward £60 million of work earmarked for 2010-11 and starting it as soon as possible.

Another £40 million of work will also be brought forward if Mr Salmond can get the agreement of Scotland's councils.

The First Minister made the announcement in a speech at the Edinburgh Book Festival, which he used to explain how he intended to help Scotland cope with the economic slowdown.

He said he wanted to speed up the investment of £180 million in European funding which, he claimed could help the Scottish economy weather at least some effects of the current slowdown.

Mr Salmond also said that he expected the country to benefit financially from the Homecoming events planned for next year, which are designed to bring Scots from around the world back to Scotland.

He said: "The global economic downturn is affecting economies across the world, and clearly Scotland cannot be fully insulated from its effects.

"But there are two reasons why the economic outlook for Scotland is positive.

"First, the Scottish economy continues to show encouraging signs of resilience. Second, Scotland has a government that, despite its limited economic powers, will take decisive action to strengthen our performance and prospects.

"We will not simply sit back and wait for conditions to get better."

Mr Salmond said housing was a top priority, adding: "That is why we have published the next steps for our housing policy, and why up to £100 million capital spending will be brought forward to support these efforts and help us meet demand for affordable housing.

"As part of the full programme we are announcing to meet the immediate economic challenges, promote growth and support business confidence, this investment will help us maintain Scotland's reputation as Europe's place of the future."

However, Labour last night said Mr Salmond had merely reversed a cut his government had made in affordable housing provision in its budget last year.

Labour claimed that in the budget, the SNP-led government reduced the 2008-9 spending on housing by £85 million, and that yesterday Mr Salmond increased the 2008-9 budget by up to £100 million, just by bringing it forward from 2010-11.

Elaine Murray, the party's enterprise spokeswoman, said: "The SNP's credit is low after disappointing first-time buyers by failing to deliver on its promise to provide £2,000 grants and now deliberately setting out to mislead the public that they are providing new money."

Meanwhile, Jacqui Watt, the chief executive of the Scottish Federation of Housing Associations, said: "While the SFHA believes there should be more funding overall for housing, we welcome the Scottish Government's decision to bring forward the allocated funding and give a key role to housing associations.

"This gives local authorities greater flexibility and recognises that housing associations are best placed to meet the needs of the affordable housing sector," she added.

And Alan Ferguson, director of the Chartered Institute of Housing in Scotland, welcomed the move, describing it as "very welcome".

He said: "This is important at a time when demand for affordable housing options is likely to increase as the credit crunch increasingly hits consumers and mortgage lending."