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Government rule out increase in borrowing caps 11/11/2016

In its response to the report of the House of Lords Select Committee on the Built Environment published on 8 November, the government appears to have ruled out any prospect of an increase in Housing Revenue Account (HRA) borrowing caps ahead of the Autumn Statement and Housing White Paper.


The House of Lords Select Committee had made a specific recommendation to Government in their report saying: "In recognition that housing need has rarely been met in England without a significant direct contribution from councils, the government should take steps to ensure that local authorities are able to fulfil their potential as direct builders of new mixed tenure housing. This should include reviewing the impact of borrowing restrictions and proposed social rent reductions".


In its response to this recommendation, the government said it: "does not accept the recommendation to review the impact of borrowing restrictions on local authorities ability to deliver housing"  and goes on to say specifically "there are no plans to remove these limits" and claims that the 166 local authorities with a HRA had accumulated reserves of almost £2.5bn and borrowing headroom approaching £3.4bn.


The government also says it "agrees with the underlying thrust that local authorities have an important role in supporting delivery of more housing"  but that it supports the proposals in the House-Elphicke Review that councils "should move from being statutory providers to being 'Housing Delivery Enablers" working in partnership to drive housing delivery activity.


Their response also seems to rule out the possibility of any across the board exemption from the four year 1% rent reductions imposed under the Welfare Reform and Work Act 2016 saying that "it does not accept that the social rent reductions may threaten the viability of new council building schemes".


Read the government's full response (Chapters 169 to 179).


John Bibby ARCH CEO comments:


"Despite encouraging noises emanating from the new government under Theresa May that councils may be encouraged to have a more direct role in the building of new social and affordable rented homes, the government's response to the House of Lords Select Committee's recommendation seems to suggest there will be little or no change in policy on council house building from that under the previous Cameron Government."


"We look forward to seeking clarity on the Government's policy towards stock retained councils when we meet Housing Minister Gavin Barwell on 21 November."

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