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PM pledges to scrap HRA borrowing cap

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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:

 

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.  

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Readers' comments (1)

  • Dare I suggest this could all end in smoke and mirrors! When exactly will the cap be lifted and under what terms and conditions given Hammond is an honours graduate of the Micawber school of public finance. I have read that it will not before 2021/22 which means that not until the middle of the next decade will tenants be moving in. Meanwhile, housing stock continues to be ravished by RTB.

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