Labour Party Conference this week, Shadow Chancellor Ed Balls
announced a proposal to build an additional 100,000 affordable
homes using the expected receipts from auction of the 4G
These would include 40,000 new social homes, 50,000 for shared
ownership and the rest for "intermediate" rent, and would be on top
of the 25,000 homes Labour has already proposed are funded from a
tax on bank bonuses.
These are welcome proposals that would give a significant boost to
the economy. But they are modest compared with what could be
delivered by allowing councils freedom to borrow up to prudential
limits to build new homes.
In principle, the headroom already written into the self-financing
settlement is enough to fund the construction of 25 - 30,000 new
council homes - a large share of the number proposed by Labour.
Relaxation of debt caps would in theory release enough borrowing
power to finance around 200,000 homes at social rents, or 275,000
at affordable rents.
But these numbers are derived simply by plugging new assumptions
into the CLG self-financing model; they take no account of the
distribution of development land, other calls on housing investment
and local council policies on new build.
That is why ARCH, in association with the LGA, Councils with ALMOs
Group, NFA and HouseMark, is funding research to establish just how
councils intend to use the resources released by self-financing,
how many new homes they are planning to build, and how many more
could be built is borrowing restrictions were relaxed.
A questionnaire has gone out this week to all councils which own
housing, including those with ALMOs, asking for detailed business
plan and related information, and this will be followed up with
visits to a selection of authorities to get more in-depth
information on key issues. A research report is expected to be
published before the end of the year.
Any estimate of the number of new homes that councils could in
practice deliver if debt caps were abolished is at this stage
necessarily a guess. But it would not be surprising if it turns out
that councils alone could deliver as many homes as Labour is
proposing - but with no need to call on current or future tax