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Let councils borrow to build 27/11/2012

Lets get building largeARCH, together with four other leading UK housing organisations, is calling on the government to allow councils to finance the building of 60,000 much needed new homes over five years, adding 0.6 per cent to Britain's GDP.

In a report called 'Let's Get Building' the organisations say there is 'a golden opportunity' to help tackle the housing crisis and to stimulate the economy, creating jobs, increasing the tax take for the Exchequer. The report points out that there is a very strong case for economic stimulus, with the construction sector's massive spare capacity making it very well placed to respond.

In addition, it says that 92p out of every £1 spent on building stays in the UK and that 56p of this returns to the Exchequer - with 36p of that bringing direct savings in tax and benefits.

'There is consensus among politicians and business that we need more housebuilding, so why can't we get building?' says the report.

Councils and arm's length management organisations (ALMOs) want to help, but 'the stumbling block', says the report, 'is the centrally imposed debt ceiling on councils, which prevents them from releasing the capacity tied up in their housing stock.'

The report comes one year after government published its housing strategy for England and argues that local authorities need to be given more freedom to play a leading role in providing new homes.

It has been published by the National Federation of ALMOs, and produced in association with the Association of Retained Council Housing (ARCH), the Chartered Institute of Housing (CIH), the Local Government Association (LGA), and supported by the Councils with ALMOs Group (CWAG).

The organisations which represent councils, housing professionals and social housing organisations are calling on government to unlock the potential of local authorities to build by removing a borrowing cap which councils and the markets agree is unnecessary.

Let's Get Building urges the government to adopt internationally recognised rules to measure government borrowing, which would acknowledge that extra investment for council housing would not count towards government borrowing levels because it is paid for through future rent income.

Cllr Mike Jones, Chairman of the Local Government Association's Environment Board, says:
"With house-building stalled and a lack of finance for development, now is the time to lift the restrictions on local government's ability to invest in housing to provide the homes we so badly need and to release millions of pounds of economic activity and jobs in construction.

"Councils have a proven track-record of responsible borrowing, their credit rating is excellent and interest rates would be low. We need the Treasury to free up councils to get local economies growing and play their part fully to provide the new housing the country desperately needs."

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