Earlier this week the Government published details
of bidding arrangements for the extra £300 million in HRA borrowing
announced in the Autumn Statement
last year. Councils are invited to submit firm bids for
additional borrowing by 16 June, or expressions of interest for
borrowing in 2016/17. However, the prospectus warns that firm bids
get priority and councils submitting expressions of interest may
find that all £300 million has been allocated to firm bids.
Government objectives for the initiative are clearly described.
The priority is to increase the supply of homes at affordable
rents, and for affordable home ownership. Social rent provision
will only be supported in "very limited circumstances" although
what these might be is not specified.
Another key objective is to minimise the public sector costs of
additional homes, or, to put it the other way round, to maximise
the number of additional homes supported by the additional
borrowing. The Autumn Statement claimed that the initiative could
yield 10,000 new homes, or around four times as many as could be
provided if the additional borrowing was the only source of funding
Successful bids will come from councils which maximise
contributions from other sources. The prospectus mentions:
- use of local authority land
- receipts from the sale of stock, particularly high value vacant
- other sources for cross subsidy, including surpluses from
- other contributions, including other free or discounted public
land, New Homes Bonus or s106 commuted sums.
The Government is particularly keen to see councils dispose of
high value vacant stock, although the prospectus gives no
indication of the potential contribution it believes this might
provide. It is clear that councils are expected to have considered,
as part of an active asset management strategy, disposal of homes
that are either uneconomic to manage or of particularly high value
compared with the rest of the stock. Bidders which have not done
this are likely to get short shrift, but it is less clear how CLG
will respond to a council which can show it has looked at the
potential for disposals but concluded, for clear reasons, that it
The prospectus also encourages councils to consider use of
private finance to support development through the establishment of
special purpose vehicles or similar arrangements. There is also a
paragraph encouraging provision of "market tenure housing",
presumably meaning homes for letting at market rents.
However, there is no discussion of how privately and publicly
funded schemes are expected to fit together and complement each
other. All that is left to the ingenuity of local authorities and
their legal advisers.
ARCH is keen to hear from councils considering bids for
additional borrowing, including in particular how they plan to meet
the requirements of the prospectus in relation to affordable rents,
disposal of high value vacant homes and other sources of cross
subsidy and contributions to scheme costs.