Prosperity begins at home: from making a mess to making amends

Making a mess

Scotland is in the grip of a housing polycrisis. This is not a sudden “emergency” to be quickly ended but a deep, long-running failure of our housing system. Homeownership rates for younger Scots have fallen for two decades. Rents in the private sector have climbed beyond what many can afford on the average salary, and queues for non-market housing grow ever longer. Homelessness has reached record highs. These housing system outcomes have diminished social mobility and inclusion, and slowed progress towards net zero.

These outcomes are not simply social and environmental misfortunes. They damage economic growth in ways unrecognised by policymakers and Scottish and local governments, and their bureaucracies remain largely blind to the productivity consequences of Scotland’s housing, infrastructure and planning systems.

Housing is a major sector of the Scottish economy; it comprises a quarter of household spending. It is the main source of wealth – and debt – for most Scots. It supports up to 15% of jobs. Once built, it shapes how children build their human capital, influences access to work and labour market functioning, and influences how households, and the wider economy, uses savings and investment to shape investment paths in the economy.

Arguably, Scots spend too much of our capital pushing up the price of existing homes and not enough on driving a modern, productive base for the economy. Yet despite this, housing has been treated by successive governments as a narrow social policy issue. This blind spot is now costing Scotland dearly in the uncertain, fiscally constrained, slow growth of Scottish futures to 2030.

The polycrisis is driven by two main forces. First, incomes of poorer Scots have lagged behind rising housing costs. As Scotland, in this millennium, has become (albeit slowly) more affluent, we have become less willing to support decent housing for the poor. The Scottish Government have maintained a stronger commitment to ‘affordable housing’ than most but still chose not to meet the ‘social merit’ good provision at historic rates.

Second, with four out of five Scots finding their homes in markets, there has been little attention to dealing with dysfunctional aspects of planning, strategy, financing and provision within that sector as homeownership became a ‘speculation’ rather than ‘savings’ system.  A siloed, top-down, controlling policy approach to Scotland’s housing market system, allied to the weakened merit good effort, has shaped the mess

Making amends

Prosperity Begins at Home, written with Jocelyne Fleming for the David Hume Institute, sets out the scale of the problem. It argues that unless Scotland changes course, the polycrisis will deepen, eroding trust in both Holyrood and Westminster.

With a growing recognition of the housing difficulties, though not yet their economic consequences, and of the looming Scottish Parliament elections of 2026, the Scottish Government have begun to address the housing question.

A Cabinet Secretary for Housing has been appointed, and she has quickly secured resource increases and initiated actions to speed up some planning processes and made a good start in difficult circumstances, most notably modifying rent control proposals to allow important conduits for major commercial scale investment in the sector.

Other parties are also advocating measures for immediate change. However, given the uncertain and fragmented nature of Scottish politics at the present time it is apparent that few politicians are willing to advocate the major disruptions that will begin to reverse the polycrisis.

History, including the last two decades, shows us that piecemeal measures will not suffice. Scotland has faced housing crises before, in the 1920s, 1950s, 1970s and Glasgow’s public housing crisis of the 1990s. Each time, it took radical shifts – often from large-scale public housing to new support for housing associations – to restore stability. Business as usual has never solved a housing crisis.

What would a bold, systemic reform look like that the Scottish Parliament, with cross-party working, could deliver by 2030?

First, housing should be recognised as essential economic infrastructure. That means placing it at the heart of productivity, growth, and climate strategies, rather than at the margins of social policy.

Second, we need to fix the supply. Current targets of 25–30,000 new homes a year are unrealistic without tackling planning delays, shortages of developable land, infrastructure, skilled labour, materials,  and fragile supply chains. Modern Methods of Construction could transform delivery, but only if government and finance provide stable, long-term backing.

Third, more orderly and accessible routes for entry into, and exit from, homeownership need to be recreated and that will require more stable house prices and a direct linkage of first buyer support to new supply.

Fourth, rental affordability must be addressed from both ends. We need more social and mid-market rental homes, but also fairer income supports, such as reform of Local Housing Allowance. Regulation of the private rental sector must protect tenants while ensuring that investment is not driven away. There needs to be a step change in the roles that larger non-profits play in the Scottish system in diverse rental and first buyer provision, and creatively linking capital with community needs.

Fifth, homelessness demands an integrated approach. Expanding Housing First, embedding harm reduction, and ensuring adequate affordable supply are vital if we are to reach “functional zero” – making homelessness rare, brief, and non-recurring.

Sixth, likely budget constraints, unless governments trim back middle-class welfare spending, are insufficient to deliver all of the above. A major review of the taxation of housing in Scotland, including the Council Tax, stamp duty, and capital gains, would potentially both diminish some housing difficulties and provide more fiscal resources. Governments can’t run away from this issue and fix the housing system.

Seventh, we must change governance. Since the loss of Scottish Homes, policy has become fragmented and over-centralised. An Infrastructure, Housing and Planning Ministry within the Scottish Government, supported by a strengthened Scottish Futures Trust, is empowered to mobilise finance, innovation and partnerships at scale. Should negotiate strategic five-year housing-infrastructure budgets/deals with regional economic partnerships, with clear spatial and infrastructure strategies, that would support a Combined Strategic Housing Authority and would be informed on regional supply and housing system performance, problems and prospects by a Regional Housing Supply Council involving industry, finance and other experts.

The message is simple. Scotland cannot prosper without fixing housing.

If politics does not change housing, then housing—through the anger of locked-out young Scots and left-behind places—will change politics. We have overcome crises before by looking to new ideas rather than old ideologies and shaping bold system reforms. Now is the time to leave twentieth-century housing policy thinking behind and do so again.