The prime minister has announced that the government will abolish the cap on councils’ borrowing against housing revenue accounts.
Theresa May told the Conservative party conference in Birmingham that solving the housing crisis is the “biggest domestic policy challenge of our generation” and councils must play a part in solving it.
She added: ”There is a government cap on how much they can borrow against their housing revenue account assets to fund new developments.
“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 can announce that we are scrapping that cap.”
In response, Solace president Jo Miller tweeted: ”This is phenomenal news. Local government has wanted this for a generation. It gives us new tools and opportunities to deliver in our communities and is very welcome.”
Local Government Association chair Lord Porter (Con) admitted to LGC that he “nearly cried” when the prime minister made the announcement.
He added: ”The housing announcement means we can go and deliver half a million units over the course of the next parliament now. It’s a hundred thousand units a year, when we’re all tolled up.
”It’s absolutely massive, the single biggest piece of news since Thatcher was in charge. The devil’s going to be in the detail as usual.
I think Number 10 has taken ownership of it. [Former housing minister and current Number 10 chief of staff] Gavin Barwell has got a lot of fingerprints on this.”
Chartered Institute of Housing director of policy Gavin Smart said: “This is excellent news and we look forward to seeing the detail.
“If we are to have any hope of tackling our national housing crisis, councils must play a critical role and this move will help them reach their potential. But of course it’s not just a numbers game – we need to make sure we are building the right homes, in the right places, at the right prices. That’s why it is so important to give councils the tools they need to build more truly affordable homes for social rent.”
Chief executive of the Chartered Institute of Public Finance & Accountancy, Rob Whiteman, described the announcement on Twitter as “huge and welcome news if no strings attached”.
He said: “The abolition of the housing borrowing cap can transform council house building for the first time in 30 years and restore supply side failure.”
Other responses include:
LGA WIN! Fantastic news as @theresa_may announces the housing borrowing cap will be scrapped. The LGA has lobbied tirelessly for this move to allow councils to resume their historic role as a major builder of affordable homes.— LGANews (@LGANews) October 3, 2018
Full reaction from us to come 🏠🏡🏘 #ukhousing
OK, this is positive. May announces scrapping of borrowing cap for councils to build houses and says spending on public services will rise in the spending review. All in the detail, of course, but these could be big steps forward. #cpc18 #localgov— Adam Lent (@adamjlent) October 3, 2018
Sector win - fantastic news and shows what can be achieved when we speak with one voice. And show great persistence! https://t.co/irTN59g70w— Piali Das Gupta (@PialiDG) October 3, 2018
Adam Lent, director of think-tank the New Local Government Network, said the announcement would be “warmly welcomed” by local government.
He added: “It is vital that… the government moves fast given the serious crises affecting both housing and council finances.
”There is only so much uncertainty that both service users and those needing decent accommodation should be expected to endure, so clarity over the detail of these announcements is crucial.”
This story was updated to correct the reporting of Lord Porter’s estimate of the timeframe in which 10,000 homes could be built. LGC apologises to Lord Porter for the error.