The Scottish Government has revealed it will make use of financial transactions funding by investing £10m in a Charitable Bond.

Reinforcing the Scottish Government's support for community-led regeneration, the investment in a Charitable Bond will generate more than £1m grant funding for the over-subscribed People and Communities Fund and lend almost £9m to a Registered Social Landlord to build 150 affordable homes in Scotland.

The People and Communities Fund supports community-led regeneration to deliver a wide range of employability and preventative action outcomes for the benefit of local people and communities.

The Charitable Bond model was developed by Allia, a community benefit society which has been issuing the bonds since 1999, and has the twin advantage of generating a grant for charities and funding affordable housing.

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By using financial transactions funding creatively, the Government is able to generate grants for charities to support the most disadvantaged communities in Scotland.

Under existing loan facilities with Allia, approximately £8.6m of the £10m investment in an Allia bond will be loaned to Places for People Homes Limited, a subsidiary of Places for People Group. The loan proceeds will then be utilised by Castle Rock Edinvar Housing Association, also a member of the Group, to fund the development of 150 affordable homes in Scotland.

The Scottish Government is currently consulting with existing applicants to the People and Communities Fund about going forward via this new funding route.

Speaking at the Local Government and Regeneration Committee, the Minister for Housing and Welfare Margaret Burgess said: "This investment is an innovative way of generating additional funding for Scotland's most disadvantaged communities. It will be used to support projects and services that will benefit our local communities. I'm delighted too that our investment will be helping deliver much-needed affordable housing in Scotland.

"This is the first major investment in Charitable Bonds in the country, this Government is taking the initiative, however with full economic levers we could deliver more support for the poorest communities."

The Charitable Bond offer will open for investment by the public later this year.

(JP/CD)