By Vivienne Russell | 17 May 2013
English councils have reiterated calls for borrowing caps to be scrapped to enable them to invest in a house building drive.
Government figures published yesterday showed that the number of new homes built each quarter has continued to decline. The Local Government Association seized on them to point out that thousands of 'shovel-ready' sites could be kick-started if councils were allowed to borrow to invest in housing stock.
The LGA believes if this happens, councils in England could build up to 60,000 new homes over the next five years, delivering a 0.6% boost to gross domestic product, more jobs and a reduced benefits bill.
‘Councils have excellent credit ratings and want to use our assets to help kick-start the housing recovery, but our hands are being tied,’ said Mike Jones, chair of the LGA’s environment and housing board.
‘At a time when housing waiting lists are rapidly expanding, levels of house building are languishing and the economy is still struggling, it makes no sense for government to continue preventing local authorities from investing in the new homes the country badly needs.’
The LGA said Chancellor George Osborne should grasp the opportunity presented by the June 26 Spending Review to remove the borrowing cap, which limits councils’ borrowing to £2.8bn for housing investment. Without the cap, councils could borrow up to £7bn over five years within existing prudential rules, the LGA says.
