A LACK of capital funding for new schools is bringing housebuilding projects to a standstill as cash-strapped councils increasingly ask developers to bankroll the full cost.

The body which represents the majority of housing developers in Scotland said projects were grinding to a halt because councils cannot afford to build new schools, and are filling spare primary classroom capacity with pre-school children in order to meet the Scottish Government's early years education targets.

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Nicola Barclay, chief executive of Homes for Scotland, said developers were "quite happy" to fund the school spaces generated from a new housing scheme, but not the total cost of a new school.

She said: "As long as I can remember, we've always funded education contribution - that's not a problem. But when councils then turn round and say 'that doesn't fully fund a new school and we don't have the money to fund the rest of it, therefore we're going to have to refuse your planning application' - that's where there's a real problem.

"And we are finding this right across the country, where lack of funding for capital projects by councils means that new housing developments cannot come forward."

She said another problem was that projects previously granted the go-ahead on the basis that there was enough spare capacity in local schools already to accommodate extra children were stalling because those classrooms were now being used for two, three and four-year-olds, entitled since 2014 to 600 hours a year of childcare and early learning.

Ms Barclay said: "Councils are turning round to developers and saying 'ah, we can't now give you that place in school - you're going to have to build a school, or you're going to have to fund an extra school capacity', which they weren't expecting to have had to do.

"But it's the council's decision to put those children into a school rather than elsewhere. But then of course, no schools mean we can't build the houses - and we know we're short of housing. So it's a bit of a 'chicken and egg'."

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She added that she felt years of local authority cuts were "really beginning to bite", with any spare capital already used up. However, she added that the Scottish Government was also partially hamstrung because new cash coming from Westminster was mostly in the form of financial transactions rather than capital which ministers are free to spend as they choose.

She urged the Scottish Government to explore different models for funding school-building.

A spokesman for council umbrella body, Cosla, said: “I cannot comment on any specific council. However, what I can say is that a further cut to our capital funding announced in Thursday’s Budget will certainly not help the situation.”

A spokesman for the Scottish Government said its £1.8 billion ‘Schools for the Future’ programme would deliver more than 100 new or refurbished schools, and was also committed to delivering at least 50,000 affordable homes across Scotland by 2021. 

He added: “Despite the UK Government’s on-going cuts to Scotland’s budget, we have continued to ensure local government gets a fair deal – and next year’s local government finance settlement proposes an increase both in revenue and capital investment.”

A Scottish Government spokesman said its £1.8 billion 'Schools for the Future' programme would deliver more than 100 new or refurbished schools, and was also committed to delivering at least 50,000 affordable homes across Scotland by 2021.

He added: “Despite the UK Government’s on-going cuts to Scotland’s budget, we have continued to ensure local government gets a fair deal – and next year’s local government finance settlement proposes an increase both in revenue and capital investment.”