By Mark Smulian | 10 October 2014
Housing minister Brandon Lewis has revealed that £178m of Housing Revenue Account borrowing allocations remain available to support council housebuilding after too few authorities came forward with proposals to use extra borrowing powers.
Lewis announced yesterday that 22 councils had been awarded the right to borrow an additional £122m over the next two years to deliver some 1,700 homes.
This is on top of what they could borrow by using their entitlements under the Housing Revenue Accounts system, under which councils were make self-funding for homes in April 2012.
Under this system, a cap was placed on how much town halls can borrow, but since then councils have argued that they should be free to borrow prudentially for housing as they can for other spending areas.
This led to Chancellor George Osborne to announce in last year's Autumn Statement that an extra borrowing allocation of £300m would be offered to town halls.
Lewis said the £178m of borrowing was still unallocated and called for more councils to put themselves forward, especially as many have asked for the very borrowing powers that are being offered.
He added: ‘I’m giving borrowing powers to 22 councils who over the next 2 years will use that to build over 1,700 new affordable homes for their communities.
‘But with £178m additional borrowing still up for grabs I want more councils to do their bit, to follow in the footsteps of these 22, and bid for the very powers they asked for.’
He has given the additional borrowing powers today to six councils, on top of 16 to which they were earlier awarded.
These include an award of £15.4m to the London Borough of Ealing, and £11.6m to Thurrock Council.
The Department for Communities and Local Government said the additional borrowing powers offered were ‘a responsible way’ to meet demand from councils to borrow more for house building, but said there were no plans to remove borrowing limits in general as doing so would create additional public debt.
