The Scottish Government's 'plea of poverty' after slashing the cash for affordable homes by more than £195m in just one year has been called into question as it emerged its spending ability has actually risen by more than £1.3bn.

Official UK Treasury analysis seen by The Herald shows that the budgeted block grant paid to Scotland to pay for public services from taxes and revenues collected across the whole of the UK had actually increased by £91m in 2024/24 to £42.758bn.

And according to the Scottish Fiscal Commission, an independent public funds oversight body, ministers have been able to raise a further £1.3bn with the help of higher taxes.

Together that would take funding to £44.058bn - three percent more than the previous year.

It is £11.17bn more than the 2019/20 pre-pandemic block grant of £31.126bn.

Ministers have made cuts estimated at more than £570m in real terms to the Scottish Government affordable homes budget over the past three years - set up as a move to cut the scourge of homelessness across Scotland

Six years ago the Scottish Government launched an action plan to build affordable homes which was meant to curb homelessness, cut the use of temporary accommodation and rapidly rehouse people.

But so far it has not worked, with 4,700 households more stuck in housing limbo in 2023 than there were six years ago - a rise of 43% - with 15,625 in temporary accommodation last year - the highest for over 20 years.  Over two decades, that number has trebled with just 5403 in the makeshift homes in 2003.

The Herald series has also revealed that Scotland's councils have spent a £720m of public money on placing the homeless in temporary accommodation such as bed and breakfasts and hotels over the last five years because of an affordable homes shortage.

Higher earners in Scotland have been taxed more heavily to raise more money in this financial year after ministers sought to reduce cuts to public services and fund an council tax freeze.

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Shona Robison, Scotland’s finance secretary, had said a new “advanced” 45p tax band would be introduced for all those earning above £75,000, and the top rate of income tax, for those earning above £125,140, would rise to 48p.

Shona Robison  (Image: Jane Barlow/PA)

According to the University of Strathclyde's Fraser of Allander Institute, the block grant for 2024/25 in real terms with adjustments for inflation is one of the highest ever.

And the Scottish Fiscal Commission says that the Scottish Government's funding for 2024/25 was estimated to be £1.3bn higher than the previous year with most of the rise coming from income tax.

Ministers have consistently blamed the trimming of government block grants from the UK Government for huge cuts to the spend on the building of affordable homes - a key plank of a long-term bid to solve the housing crisis.

In February Ms Robison said that the UK Government had cut the block grant by 1.2% in real terms since 2022/23. UK Treasury data shows there was an annual increase of 0.212% without taking inflation into account.

Some public finance experts also point out that the changes in funding to Scotland are not politically driven decisions.

Changes in the block grant are mechanically driven by the Barnett formula, which calculates the nation's funding proportionally based on what the UK government pays out in England.

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Rather than making decisions to spend less or more in Scotland, the UK government is making its choices about England or England and Wales which have a knock-on effect on what the nation gets.

Scottish Conservative shadow finance secretary Liz Smith MSP said: “The blame for these cuts to the affordable homes budget – during a housing emergency across much of Scotland – lies firmly at the SNP’s door.

“They are setting the priorities, and not only have access to one of the highest UK block grants ever, but have imposed taxes that produce a further £1.3bn.

“Their attempt to blame the Treasury for their own decisions about spending and cuts has no foundation.

“Their obsession remains independence, and their continued focus on that goal is one reason why Scotland’s real priorities, including housing, the NHS, schools, transport and policing have been neglected on their watch.”

Shelter Scotland said that the perceived cut to Scottish Government's capital budget "does not explain" the depth of the cuts to the affordable homes programme.

In mid-May when the Scottish Government finally formally stated there was a housing emergency after four local authorities by then including Glasgow and Edinburgh had already made declarations, First Minister John Swinney warned: “We have to recognise that the government does not have a limitless amount of money and we can’t invest everything if our capital budget [from the block grant] is being reduced by the UK government.”

And concerns were reiterated by the housing minister Paul McLennan as it emerged the number of starts on the building of affordable homes to deal with the housing emergency had dropped to the lowest for nearly 10 years.

Some 6755 new homes were begun in 2023/24 nearly half the number that were started in 2019/20 before the pandemic when 12,039 were on the go.

The housing minister in response said that the Scottish Government remained focussed on delivering 110,000 affordable homes by 2032, but that the capital element of their block grant was being reduced by nearly 10%, a loss of more than £1.3 billion by 2027-28.

The capital budget is the amount available to spend on the infrastructure of the nation including houses, schools and transport.

Later Scottish Government sources told The Herald that this was based on a projection by the Office for Budget Responsibility, the public body funded by the UK Treasury. But they accept that this is likely to change as a result of new spending decisions after the general election.

UK Government sources also state that the Scottish Government can transfer money from the revenue element of the grant if it wished to support any capital projects like affordable homes.

Meanwhile, there has been an estimated cumulative £573m real terms cut to the Scottish Government affordable homes budget over the past three years.

The Scottish Government's affordable homes budget has taken a cumulative hit of over £280m over the past three years without taking inflation into account - based against the 2021/22 allocation of £779.776m - despite a pledge by outgoing First Minister Humza Yousaf of a £80m uplift for affordable housing over the next two years.

Housing campaigners have been staggered by a £196.08m (26%) cut to the budget in the 2024/25 alone, without taking into account inflation, with the spending plans set at £555.862m before an extra £40m was promised by Mr Yousaf.

If the budget had kept up with inflation since 2021/22 in 2024/25, the spending plans would have been at an estimated £958.32m.

When inflation has been taken into account, it is estimated that instead of getting £2.631bn over the three years - the affordable homes budget is at £2.058bn - a drop of £573m.

Ministers have already come under fire for having an "unforgiveable" capital project underspend of £130m while slashing the cash for affordable homes.

The underspend for the associated 2023/24 budget was at the highest level in five years and over four times higher than last year. Underspends are usually carried over to the following year.

Public finance minister Ivan McKee said: “Every penny of the capital identified is being spent in this financial year – any suggestion that this funding will not be fully utilised is simply not true as anyone who understands this process would know. Effectively managing a significant capital programme means that inevitably there will be some funding movements across financial years. In this case the sums involved represent the equivalent of just over one week’s worth of spend from a budget of £5 billion.

“Due to financial rules placed on Scotland by the UK Government, we are not allowed to overspend on our budget, so must leave headroom to manage any issues that might arise, including any in-year budget cuts imposed by the UK Government delivered through negative consequentials as has happened in recent years.

“This issue shouldn’t distract us from the main point, that the planned cuts by the UK Government in Scotland’s capital budget are significant..."