By Vivienne Russell | 11 March 2013
Councils in England and Wales have renewed calls for the government to scrap the caps on the amount they can borrow to invest in housebuilding.
Ahead of next week’s Budget, the Local Government Association said lifting he cap would allow councils to invest in housebuilding on a scale not seen since the 1990.
Mike Jones, chair of the LGA’s environment and housing board, said: ‘Councils are eager to kick-start the housing market into action by using their assets and good credit ratings to invest, but are being prevented from doing so by an arbitrary cap. Given the pressing need for more housing and the relative safety of the investment, it makes no sense for government to place this extra restriction on local authorities.
‘The country desperately needs more housing, developers need investment and our flatlining economy is in urgent need of a shot in the arm. The chancellor could deliver all three by using his Budget to give councils the financial autonomy to embark on an ambitious housing programme.’
Previous research commissioned by the LGA and social housing bodies estimated that councils could build up to 60,000 new homes over the next five years, delivering a 0.6% boost to gross domestic product, if prudential borrowing rules were allowed to govern housing investment. The association adds that increasing the supply of properties for cheaper rent would drive down the benefit bill.
The House of Lords will tomorrow discuss an amendment to remove the cap as part of their consideration of the Growth and Infrastructure Bill.
Also today, the CBI called for housebuilding to be a central plank of the Budget. The business lobby said capital investment in housing should receive a £1.25bn boost.
