By Richard Johnstone | 14 November 2013
Three-quarters of councillors say that their authorities would borrow to build more homes if the government’s existing cap on Housing Revenue Account borrowing was lifted.
A poll of councillors with a lead responsibility for housing in councils that have retained their housing stock in England was carried out by the Smith Institute think-tank. This revealed that 93% said they planned to build new council homes.
However, the survey found that the current HRA cap – set when the central HRA subsidy system was scrapped in April 2012 and councils were made self-financing for housing – was restricting progress. Each authority took on a proportion of the historic housing debt, which was set as the limit for subsequent borrowing.
Of the 45 councillors questioned, 73% said they were very satisfied or satisfied with the HRA reforms.
However, 75% said the government should abolish the HRA debt cap and 78% said that, if their borrowing headroom were to double, they would use the extra capacity to build new council homes.
In terms of possible tenure for new builds, nearly two-thirds (64%) said building social housing was a top priority, while private housing for sale was deemed least important.
However, aspirations to build over the next ten years were ‘relatively modest’, the Does council housing have a future? report stated.
Nearly half (43%) of councillors were planning to build between 101-500 homes, while only 10% had plans to build more than 1,000 homes. In addition, around two in five said what they planned would not make up for the loss of stock as a result of the Right to Buy programme.
Smith Institute director Paul Hackett said the survey showed ‘widespread support for a renaissance in council housing, and an appetite among larger local authorities to borrow to build under the new HRA system’.
He added: ‘Investing in new council housing could help solve the nation’s housing crisis.’
The report was supported by the Housing Voice campaign group which campaigns for more affordable homes to buy or rent
Chair Lord Whitty said there was a chronic shortage of supply in all parts of the affordable housing market.
He added: ‘We should see councils who have retained their own housing stock make a major contribution to new build. This survey shows that in many cases there is a strong commitment to expanding council housing – but that substantial barriers need to be overcome, some innovative solutions need to be developed, and that central government needs to change its view.’
