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NFA calls for council borrowing restrictions to be lifted

Council borrowing restrictions must be relaxed to create thousands of new homes, the National Federation of ALMOs (NFA) has urged.

A new report, ‘Treating council housing fairly’, calls for the government to adopt the General Government Gross Debt (GGGD) measurement to bring the UK in line with other European councils and allow councils to deliver 60,000 new homes.

In the autumn statement, chancellor George Osborne announced that the HRA borrowing limits for councils would be raised by £300m and allocated on a competitive basis. The NFA welcomed the move as a “first step”.

Relaxing the restrictions entirely could add an estimated 0.6% to GDP, creating 19,200 jobs as well as providing more housing.

NFA policy director, Chloe Fletcher, said: “The government clearly recognises that the shortage of affordable council housing is a major problem and went some way to improving the situation by raising council borrowing caps by a modest amount in the recent autumn statement.

“However we urge the government to go further and to do more. No other EU country treats social housing investment in the same way as we do in England where new borrowing is restricted because it counts towards public sector debt even though it is paid for from rental income.

“There are many bodies outside the public sector that present liabilities to the government including privatised utilities such as water and power as well as PFI schemes involved in essential services such as transport or health. When we are facing a housing crisis, it makes clear sense for the government to consider changing these rules to bring the UK into step with the rest of Europe to allow councils to borrow modest sums to invest in new social housing.”

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