By Richard Johnstone | 7 April 2014
The government has today opened the bidding process to allocate an extra £300m of Housing Revenue Account borrowing to local authorities, intended to fund the construction of 10,000 affordable homes.
Setting out the requirements for the funding, Local Government Secretary Eric Pickles and Chief Secretary to the Treasury Danny Alexander said councils would need to have the bids approved by their local enterprise partnership to be successful. The ministers also announced authorities would need to include their own land or capital receipts in projects bidding for funds, to demonstrate best value for money.
The additional borrowing headroom, which comes after CIPFA and the Local Government Association called for the restrictions to be lifted, was first revealed in last year's Autumn Statement. It will be split into £150m in both 2015/16 and 2016/17, and allocated as part of local growth deals.
The borrowing limit was introduced as part of the government’s abolition of the HRA subsidy system for council housing, which made town halls self-financing. Each authority took on a proportion of their historic housing debt as part of the localisation.
Pickles said these changes had ‘untied the hands of councils so they can take more responsibility for housing in their area’.
He added: ‘Councils have built more homes in the last three years than under the whole of the last government – 170,000 affordable homes have been delivered since 2010, and housebuilding is now at its highest level since 2007.
‘But there is still more to do. Today we are offering extra borrowing powers so councils can build more homes. We are also making it easier for councils to sell surplus and redundant property for new affordable housing, and they should consider what land they can release for the benefit of their local community.’
Alexander said the extra borrowing capacity would compliment the government’s review of social housing supply, announced in January.
‘This additional borrowing flexibility, together with funding from the sales of high value social homes and other forms of local investment will deliver 10,000 new affordable housing over the next few years – supporting the construction sector and providing new homes,’ he stated.
Bids from councils, which must be agreed with local enterprise partnerships, should be submitted to the Department for Communities and Local Government by June 16.
