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Government urged to let all councils borrow to build

Words: Huw Morris
Housing / Shutterstock: 253816894

The government should allow all local authorities to borrow to build houses as the number of plots with planning permission yet to be developed is now enough for 400,000 homes, according to a senior councillor.

The government pledged to allow some councils with “high affordability pressure” to bid to borrow up to an additional £1 billion on housing revenue accounts in the Budget.

But Local Government Association vice-chair Nick Forbes said the government should lift the cap entirely, arguing that previous attempts to link stringent conditions to such a measure had failed to deliver any homes. He said councils should also be allowed to keep 100 per cent of their right to buy receipts, while planning departments’ cost of applications should be covered by funding from central government.

Speaking at a Commons Treasury Committee, he said: “It’s better to just lift the housing borrowing cap for all local authorities, so that we can all get on and take the decisions that are in the interests of our respective communities.

“We have a situation where most of the borrowing caps for local authorities are operating under 20 per cent of their cap, so the flexibility to manoeuvre is very limited.

“The government’s indication in the Budget of £1 billion for housing revenue accounts goes some way towards helping tackle our housing shortage, but I don’t think it is necessarily going to meet the scale of the challenges we face.”

Forbes said planning departments approve nine in 10 applications, estimating that “the number of plots with planning permission that have yet to be turned into built-out homes at approximately 400,000”.

“Where I’ve seen delays in the planning system, it’s been arguments between developers over particular pieces of land and access rights and so on, and that has held up delivery, but I don’t see the planning system as the barrier here, in terms of delivering the new homes that we want.”

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