£60m underspend on building and buying new houses in Edinburgh branded ‘scandalous’

Almost £60m for building and buying new housing is set to go unspent by the council this year, something an opposition councillor has called ‘scandalous’.

The forecast figures include £14.3m for building new council housing left on the table – as well as £45m not used for buying existing housing, over half the year’s budget.

A report to Thursday’s risk management and best value committee – convened by Cllr Campbell – described another £11m saved from the budget for homelessness services.

SNP councillor Kate Campbell said the numbers showed a ‘complete lack of focus’ by the administration on the housing crisis facing the city.

But Labour councillor and finance convener Mandy Watt said tackling the housing emergency was an ‘absolute priority’ of the council.

Top bosses said in the Thursday meeting that city staff are ‘flat out’ doing what they can to tackle the housing crisis, which is an ‘absolute priority’ for the council.

Cllr Watt told the Local Democracy Reporting Service that the council was ‘duty bound’ to provide good value to taxpayers, and said these funds would be used for housing next year.

The underspend comes as Edinburgh enters the tenth month of a council house allocations freeze, cutting off waiting lists to open more flats for temporary housing.

Cllr Campbell told the Local Democracy Reporting Service: “During a housing emergency, to fail to spend £60m allocated for homes shows a complete lack of focus on the number one issue facing the city.”

She also questioned whether the city could use new funding for housing being made available by Holyrood in the budget would be used effectively.

Cllr Campbell added: “Given these revelations about massive underspends and failures to take basic steps, what confidence can the people of Edinburgh have that it will be used effectively by this Labour administration?”

When asked by Cllr Campbell in the meeting about the £10.7m temporary accommodation underspend, council director of place Gareth Barwell said it achieved good value for money.

She replied: “Is that value for money, or is that actually a saving being made because we’ve got failures to accommodate that have gone through the roof?”

Mr Barwell replied: “I’d have to politely disagree. I don’t think it’s being made from people rough sleeping.

“I think the supply of temporary accommodation, regrettably, is what’s led to us not being able to accommodate on occasion.”

He added that the savings had in part come from shifting away from the use of unlicensed HMOs and bed & breakfast spaces for temporary housing.

‘Failure to accommodate’ refers to situations where a council does not fulfil its legal obligation to house someone who presents to it as homeless.

The city’s supply of temporary accommodation has been exceptionally strained since early last year, when the council stopped using unlicensed HMOs and B&Bs for the task.

It had started using them to cope with demand during the pandemic, but the policy was found to be in breach of the law in late 2024.

Mr Barwell added: “I won’t shy away from the fact we need to find a way to increase the supply of temporary accommodation so we can accommodate everybody that needs it.”

Cllr Campbell then asked the place director what action was being taken by the council in order to meet its legal obligations.

The place director replied that works were constantly underway to bring more housing online wherever possible, including through private sector leasing and buying buildings.

He added: “Probably the most regrettable part of my job is that I walk into the office and see people sleeping outside of our headquarters.”

Mr Barwell said a draft budget prepared by council officers for councillors, meant to inform each council group’s budget proposals in the coming weeks, would include significant spending on housing.

Finance director Richard Lloyd-Bithell said the draft budget, set to be seen by councillors on Friday, would propose ‘as much as we can prudently and sustainably afford’ to help tackle the problem.

He added that the scale of the housing crisis the council faces would worsen, saying that it expected an extra 750 people needing temporary accommodation per year.

Cllr Campbell then turned to the £45m underspend on buying existing homes, and asked why it had occurred.

Mr Lloyd-Bithell replied: “That’s to reflect slippage in the programme.”

When asked if that meant £14.3m of new homes were not getting built in 2026, Mr Barwell replied, “that’s correct”.

He added that the timing of the programmes had caused some difficulty, but confirmed that the money would be spent in future.

When asked about the £45m underspend in purchasing housing, Mr Barwell said timing was also part of the issue, but that he also had to ensure good value for money.

Cllr Campbell then asked what assurances Mr Barwell could give that the money would be spent early next year, and that similar problems would not be encountered with the next budget.

Mr Barwell replied that it was an ‘absolute priority’, and acknowledged that it was a large amount of money.

He continued: “We do have our foot to the floor, and I appreciate the sentiment of what you’re saying here. I am very, very confident that the team are absolutely flat out doing everything they can.”

He then added that he would look more into the details of the £45m housing purchase underspend and circulate information about it to the risk management and best value committee.

Councillor Watt said: “Tackling the housing emergency remains one of our absolute priorities as a Council, which of course goes hand in hand with addressing poverty.

“Capital budgets being underspent is not unusual and there are many complex factors at play here, not least market pressures and availability of housing.

“We’re also duty-bound to provide good value for all taxpayers’ money. I want to reassure residents that these funds will still be used on housing, albeit in the next financial year.

“The upcoming Council budget will have housing and homelessness at its core, signalling loud and clear that we are committed to meeting our responsibilities here in Edinburgh.”