LGA: Councils must borrow to build

Councils have today urged the government to completely lift the housing borrowing cap to allow more homes to be built.

Cllr Nick Forbes, senior vice-chair of the LGA, appeared before the House of Commons’ Treasury Select Committee to make the argument that councils needed the extra funds.

Last week’s Autumn Budget saw the Treasury move the cap up to £1bn for some councils under high pressure, but the move has not satisfied authorities, who believe social housing must be a centrepiece of solving the housing crisis.

Chancellor Philip Hammond also used his Budget speech to reaffirm the government pledge to build 300,000 homes a year, but the LGA says the last time this was possible was in the 1970s, when councils built 40% of homes.

Speaking at the committee inquiry, Forbes also once again called on ministers to allow authorities to keep 100% of receipts from Right to Buy sales, a figure which currently stands at 30%.

The Right to Buy programme saw an increase of 10% to social housing sales across the country, meaning over 13,000 homes were sold under the scheme last year.

“It’s better to just lift the housing borrowing cap for all local authorities, so that we can all get on and take the decisions that are in the interests of our respective communities,” the councillor commented.

“We have a situation where most of the borrowing caps for local authorities are operating under 20% of their cap, so the flexibility to manoeuvre is very limited.

“The government’s indication in the Budget of £1bn for housing revenue accounts goes some way towards helping tackle our housing shortage, but I don’t think it is necessarily going to meet the scale of the challenges we face.”

In addition to the LGA, both the National Housing Federation and the Federation of Master Builders have backed calls to lift the cap on public sector housing borrowing.

The government announced in the Budget that it would be making a further £15.3bn of support for housing schemes available over the course of the parliament, bringing the full investment to around £44bn in the next five years.

The chancellor also pledged to introduce planning reforms which would look at making better use of space in cities and towns for housing.

Top image: Rui Vieira

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