A new £50 million fund will be used to finance new affordable housing developments across the country, Housing Minister Alex Neil revealed today.

The majority of the funding included in the Draft Scottish budget is intended for social rented housing.

The Scottish Government is reforming the way funding for affordable housing is administered and seeking to maximise supply through increased efficiency, greater leverage and encouraging bold, innovative approaches, such as tapping into pension funds.

The new Innovation and Investment Fund is expected to support the building of around 1,500 new affordable homes and release more than £100 million in additional investment.

It will support around 2,000 jobs in the construction sector and related industries and be delivered via three streams:

* Up to £10 million for innovative development schemes open to all potential builders, including the private sector

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* At least £20 million open to Scottish local authorities to help build a new generation of council houses

* At least £20 million open to housing associations to build affordable houses, mainly for social rent

Mr Neil said: "Due to the UK Government's swingeing cuts to the public purse, capital funds available to the Scottish Government are set to be severely constrained for at least the next ten years.

"If we are to build anything like the number of affordable homes that we need, this will need to be done with far less government subsidy per house.

"Recent research by leading housing academics at Heriot-Watt and York Universities confirmed that there is scope for councils and housing associations to develop new housing at lower levels of subsidy than in recent years.

"Unlike the Westminster government however we are not turning our back on those in greatest need, and which is why the bulk of funding will be for social rented housing. This fund will stimulate creative ideas, fresh thinking and innovation to invigorate social housing across the country. We welcome proposals from across the private and public sectors that represent excellent value for taxpayers' money."

Jonathan Fair, Chief Executive of home building industry body Homes for Scotland, said: "Increasing efficiency in the delivery of new affordable homes is especially important at a time of such pressure on public finances. This is an area the private sector excels in.

"We therefore look forward to playing a key role in building the new affordable homes Scotland needs whilst maximizing the public's return on investment."

(GK)