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Why a pair of leather trousers will prevent the Treasury from lifting the borrowing cap

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LGC’s essential daily briefing.

Every cloud has a silver lining.

One good thing to emerge from the MP expenses scandal was a revamp of parliament’s select committees, which in turn boosted their scrutiny functions.

Since then many of those committees, and especially their chairs, have become household names – Dame Margaret Hodge became an instantly recognisable figure following a formidable stint as the public accounts committee’s chair.

Andrew Tyrie was another to make a name for himself. As chair of the Treasury select committee he built a reputation as a relentless interrogator, especially of bankers and chancellors, which went down very well with the public in the aftermath of the financial crisis.

Today it is Mr Tyrie’s successor, Nicky Morgan, who has made headlines, as well as friends (in local government) and enemies (in central government).

Ms Morgan and her fellow select committee members have called on the government to lift the borrowing cap for councils so local authorities can be “unleashed” to build more homes.

It is a line the Local Government Association has long lobbied on, but for an influential group of MPs to join those calls is both a timely and significant intervention on one of the biggest issues facing the country right now.

The Treasury has regularly hidden behind concerns that lifting the borrowing cap for councils will add to the country’s national debt.

The select committee dismissed this argument with disdain, saying such a measure “would have no material impact on the national debt, but could result in a substantial increase in the supply of housing”.

In the Budget chancellor Philip Hammond outlined the government’s desire to build 300,000 new homes every year by the middle of the next decade.

Office for National Statistics data shows the country has not managed to build 300,000 houses in a single year since 1977. Over the past three decades councils have built, on average, 4,000 homes a year.

Yet when councils were building about 156,000 homes a year between 1953 and 1977 the country regularly hit the 300,000 target.

That evidence is quite stark. So one has to wonder why the government just does not lift the borrowing cap for councils, especially if Theresa May really is on a “mission” to solve the housing crisis.

After all, the select committee warned: “The government will need to show greater commitment to housing supply to achieve its aspiration and will need to bring forward additional policy measures.”

So what are the chances of the government listening to Ms Morgan and her band of merry MPs?

Very slim, if you go by a June 2015 Institute for Government report on the impact of select committees, which said: “From a government perspective, there is little to be gained from evaluation which gives the credit for positive change to parliamentary committees.”

There is even less chance when you consider who would stand to take some of that credit.

Ms Morgan was among a group of high profile casualties who lost their jobs in Ms May’s first cabinet reshuffle after becoming prime minister. Ms Morgan and Ms May subsequently fell out over Brexit, the latter’s leadership credentials, and a pair of leather trousers.

Things have got quite personal.

Even if there was a departure from the playground politics and Ms May told the Treasury to loosen its purse strings for councils (because, y’know, it makes sense), that measure alone will not solve the housing crisis. After all, numbers on a spreadsheet do not build homes and communities.

Philip Atkins (Con), County Councils Network spokesman for housing, planning, and infrastructure, said lifting the borrowing cap “is not a panacea to solving the housing crisis” and added: “The planning system itself is an issue, holding back development in two-tier areas because of the additional complexities posed by the fragmentation of planning and infrastructure powers.”

He said that “more consideration must be given to strategic, countywide planning” and developing statements of common ground between different areas.

There are severe issues with land shortages in many places and discrepancies between local and central government about how many homes each area can take.

For some councils, the only way they can meet demand is to start building on green belt land but hundreds of campaigners in Rochdale showed at the weekend that is not a favourable option for many residents. It will remain unpalatable unless the government takes bold steps and is more forceful in telling the country it needs to take its fair share of homes.

However, as a previous LGC briefing highlighted, that is unlikely to happen anytime soon under new housing and planning minister Dominic Raab.

While today’s intervention from the Treasury select committee will be welcomed by the sector it’s unlikely to result in much change. Yet a change is just what is required if the country is to build the homes, and communities, it really needs.

David Paine, acting news editor

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