Theresa May
Prime Minister Theresa May has announced that the government will lift borrowing caps on local authorities to allow them to borrow more to fund council house building programmes.
Announcing the move at the Conservative Party conference yesterday, May said: “Solving the housing crisis is the biggest domestic policy challenge of our generation. It doesn’t make sense to stop councils from playing their part in solving it.
“So today I am announcing that we are scrapping that cap.”
Local authorities were responsible for more than 40% of house builds 40 years ago but that fell to less than 2% last year, according to government figures.
Since 2012 there have been stricter rules on the amount that councils can draw down to build new social housing.
Reacting to the news, Lord Porter, chairman of the Local Government Association, said: “Today’s speech by the Prime Minister shows that the Government has heard our argument that councils must be part of the solution to our chronic housing shortage.
“It is fantastic that the Government has accepted our long-standing call to scrap the housing borrowing cap. We look forward to working with councils and the Government to build those good quality affordable new homes and infrastructure that everyone in our communities need.”
Scape Group chief executive Mark Robinson added: “Today’s news that the Prime Minister has lifted the Housing Revenue Account cap so that local councils can borrow against their assets to fund new developments, is a huge turning point in the delivery of new homes.
“Finance has always acted as a key barrier to local councils ability to make a difference to housing output, and now, with the right resources and powers, they can serve as high powered engines for housebuilding in communities across the whole of the UK.
“However, there is more to be done. To meet housing demand we need a revolution in housebuilding and this means thinking more innovatively about the method and speed in which we are able to deliver high-quality new homes."
