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Mayor calls for removal of debt caps Matthew Warburton - 07/02/2013

Boris_300Speaking at the CIH Presidential Dinner, London Mayor Boris Johnson this week called for removal of borrowing caps to allow councils to build more homes.


His demand for control over the £1.3 billion in stamp duty raised annually in London attracted more column inches in the media, and was instantly rejected by the Treasury, on the grounds that it would distort housing markets on London's fringes.

But this was only the first demand in a list which included the transfer of surplus government land to City Hall, more freedom for councils to build new homes, a sustainable financial environment for housing associations and new private rented sector development on 3 GLA sites.

London will need a million new homes by the mid-2030s to retain global competitive and secure continuing economic growth. The current "planning-led" system has not delivered in the last 20 years and cannot be relied on to deliver in future, argued Johnson.

The Mayor and councils both need more powers and freedom to solve London's housing crisis. Localisation of receipts from stamp duty would provide a substantial and dependable income stream to support investment and intervention in London housing markets, and would be in line with plans to allow Scotland to retain Stamp Duty receipts from 2015, which may also be extended to Wales. But councils also need more freedom to tackle housing problems, including removal of debt caps to allow more borrowing for investment.

The Mayor joins a growing list of advocates for reform normally more in sympathy with Coalition policy. It includes the central London boroughs of Hammersmith & Fulham, Kensington & Chelsea and Westminster, all Conservative-controlled.

In response to the disappointing GDP figures published two weeks ago, the Liberal Democrats also broke ranks with the coalition to propose that councils to be freed to build 60,000 new homes to meet housing need, create jobs and boost the economy. Will the argument now start getting through to the Ministers responsible?

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