Planned investment of £1.5bn is expected to create at least 21,500 new approved affordable homes by 2011, it was announced today.

Unveiling this year's Affordable Housing Investment Programme, Communities Minister Stewart Maxwell said the funding for the next three years was 19% more than planned by the previous administration for the last three years.

He said that the present arrangements for subsidising Housing Association Grant - money from the public purse to build affordable houses - will be reformed to deliver better value for money.

He also said that, in the short term, Housing Association Grant (HAG) will be based on more realistic assumptions about the costs of housing associations and their alternative sources of extra funding.

A short-term working group will also be set up to streamline the management and operation of the existing Housing Association Grant system.

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Mr Maxwell said: "This is a mature, forward-thinking Government with a long term, strategic vision for housing provision in Scotland. We want to maximise our record planned investment of £1.5bn over the next three years.

"Unfortunately, the previous administration's ostrich-style approach of burying its head in the sand has left this Government saddled with unsustainable inherited commitments.

"We need new and improved ways of working to achieve the 2012 target on homelessness, and in doing so, we will ensure that there will be absolutely no compromise on the quality or standards of new social housing."

The Affordable Housing Investment Programme is allocated mainly to RSLs (Registered Social Landlords). Approximately 70% of the programme is spent on helping RSLs to meet demand for new social housing for rent, on average subsidising just over two-thirds of the construction costs of each new housing unit.

Housing Association Grant per unit increased in real terms by 35% in four years between 2002-03 to 2006-07.

The Scottish Government expects that at least 21,500 new affordable homes will be approved by 2011, the same number as planned by the previous Executive over the previous three years.

Subsidy levels in England, which in 2006-07 averaged £62,000 per house and less, are low compared with Scottish levels, which averaged £77,000, suggesting substantial scope to make savings, which will be used to build more houses.

(GK/JM)