Affordable and social housing finance innovation - synthesis, reflection and implications for Scotland: international evidence

Introduction

The Scottish Government launched, in the spring of 2024, a Housing Investment Taskforce (HITF). This was set against a backdrop of significant market and public funding challenges to the delivery of all elements of the Affordable Housing Supply Programme, the flagship element of ‘Housing to 2040’, the Government’s long-term strategy to transform the housing system. The relevant Scottish Government website stated that HITF will, by March 2025, “identify actions that will unlock both existing and new commitments to investment in housing by bringing together key interests of investors and investees”. The Taskforce remit is fourfold:

1. build investor confidence and attract further mobile capital investment into housing
2. unlock existing financial commitments
3. encourage and promote new delivery partnerships
4. identify ways to shift the balance of investment in affordable housing to increase private funding, including from relevant comparator markets and jurisdictions

From the initial discussions of the Taskforce, it was clear that ‘nothing is off the table’ and that the aim is to fully consider the range of possible ways in which both social and affordable housing can be augmented by private funding and other creative policy interventions to support more non-market supply.

In this context, I offered to undertake a rapid review of relevant national and international literature (both peer-reviewed and ‘grey’ and associated reports) from the period broadly post 2010 (or certainly post-GFC) building on a series of papers and reports I had already contributed (Hall and Gibb, 2010; Gibb, Maclennan and Stephens, 2013; Gibb and Hayton, 2017; Gibb, 2018; and Gibb, 2019, in Maclennan, Pawson, Gibb, Chisholm and Hulchanski, 2019). This led to an initial inclusion of more than 50 publications (see references). This paper is the revised draft of said review. I am grateful to feedback from HITF members and the Scottish Government secretariat.

This paper is an academic contribution but hopefully one in tune with policy and market sectors. As is discussed more below, it is premised on the idea that there is no silver bullet or indeed anything radically new or innovative that is ‘out there’. Rather, there are examples of good practice and different ways of assembling financial/subsidy components and responding to familiar challenges filtered by historical, institutional, local and national contexts that make some things possible in one setting but less so in ours. For instance, Sweden employs collective bargaining to negotiate over rents between federations of landlords and tenant unions. That is completely different to our rent setting mechanisms. Nonetheless, there are many ideas that should be considered and maybe perfectly deliverable here in a customised way or indeed if certain aspects of our national arrangements were amended.

Path dependency is also highly important with housing stock reflecting long lived assets premised on earlier policy decisions – most clearly this is true of the massive housing benefit bill and the underlying reliance that private rented, social and affordable housing have for DWP to make low-income payments to renter households. There are, as we will see, innovative ideas to move the dial on the balance between supply and demand subsidies but it is not at all straightforward.

The dominance of the stock over the flow of new supply is a critical factor, one implication of it is that we will certainly have to look at developing ideas that will take time to bring forth new supply – long term policies are inevitable given the complexity of development and the sound introduction of policy innovation. Some aspects of work can be more quickly piloted and introduced to have more time-sensitive outcomes, but the reality of the housing system is that policy needs to be consistent, sustained and tested – it will take time.

A final theme that runs through this paper is that of political priorities. There are trade-offs and many of the ideas suggested in the sections to follow have costs that will need to be met in a scarce resource context. At times the acuity of this trade-off will be reduced by deferring cost, sharing risk or by identifying cashable savings via prevention. But it will still require trade-offs between Scottish Government priorities and the championing of the holistic system-wide importance of housing to the Scottish economy, social coherence, child poverty, human rights, net zero, etc. – and that continuing with business as usual will only serve to damage all of these and other societal goals (see: Bowman, et al, 2021 and Marsh, Gibb and Earley, 2024).

An evidence review draws on systematic search methods as well as the prior experience of the author to pull together a unified literature subject to certain specific exclusions (e.g. a time frame, English language only and peer-reviewed materials, etc.). It is often used to identify themes and conclusions that we can have confidence in, highlighting priorities and gaps in the evidence base. There are many different approaches to undertaking such a task, usually shaped by time and resource constraints, disciplinary practice and the like. In my research centre (CaCHE - the UK Collaborative Centre for Housing Evidence) we undertake focused digital searches of peer reviewed literature around key words and exclusion criteria. We also often distinguish useful grey literature which, while not peer reviewed (though sometimes it is), still may have a contribution to make in terms of quality analysis^[1]. It is important to stress that this review has been closer to a more traditional academic literature review, primarily based on my own previous work and snowballing to other references as well as more rapid searches online for academic and policy research. I note that amongst the included materials are more than a dozen extant international evidence reviews on affordable finance and related topics. So, given resource and time constraints, this is not a purist’s scientific digital evidence search approach, but I would contend that it remains useful and is able to synthesise much relevant work from the last 15 or so years (broadly since the aftermath of the global financial crisis).

The rest of the paper is structured as follows. We start by briefly outlining the difficult context that has led to the establishing of the Taskforce building on the key themes identified above. Next, the paper sets out a simple but useful generic framework for analysis of affordable finance and subsidy, drawing on the thinking of Derek Ballantyne who worked with me in the 2019 Maclennan et al research on housing systems and strategies in Canada, Australia and the UK (see also Gibb, 2019). We then move on to two substantive sections of evidence findings from the literature: a review of my own previous work on national and international affordable finance (titled the ‘Glasgow’ research) and a synthesis of other international evidence reviews in this area. The final section tries to summarise, identify the key messages arising and reflect on their implications for Scotland.