WIREDGOV

Parts of the country with tens of thousands of families languishing on social housing waiting lists are being prevented from building new council housing.

Councils are warning that Treasury restrictions on what each council can invest in housing are severely hampering their ability to tackle the ongoing housing and homelessness crisis.

Government has set caps on what each council can borrow to invest in new homes. At least nine councils are unable to borrow anything at all. Between them these areas have about 40,000 households on social housing waiting lists. Nationally there are 1.8 million households on waiting lists for social housing.

The Local Government Association, which represents councils in England and Wales, is urging the Chancellor to use this week's Autumn Statement to lift the housing borrowing cap and allow councils to invest in housing under normal responsible borrowing guidelines.

Up to 60,000 additional new homes could be built over the next five years if government lifted the cap. Market analysis has shown that the investment would be very low-risk and paid many times over by future rents on new homes.
Cllr Mike Jones, Chairman of the LGA's Environment and Housing Board, said:

"There are millions of people on social housing waiting lists and councils want to get on with the job of building the new homes that people in their areas desperately need.

"Local authorities have excellent credit ratings and we want to use our assets to help kickstart the housing recovery but our hands are being tied.

"The Chancellor has an unrivalled opportunity to use this Autumn Statement to create jobs, provide tens of thousands of homes and help the economy without having to find a single extra penny.

"New homes are badly-needed and councils want to get on with building them. The common sense answer is for the Treasury to remove its house building block and let us get on with it.

"Councils could build up to 60,000 additional new homes over the next five years if the Treasury removed the housing borrowing cap and allowed councils to invest against normal borrowing guidelines."

Government has set each council a different cap on the amount it can borrow to invest in new housing. Most councils are prevented from being able to borrow to build as many new homes as they need. The following councils have been given no borrowing headroom;

•  Darlington Borough Council  (2,068 on housing waiting list)
•  Dudley Borough Council (6,687 on housing waiting list)
•  Exeter City Council (4,300 on housing waiting list)
•  Gosport Borough Council (3,054 on housing waiting list)
•  Harrow Council (3,953 on housing waiting list)
•  Royal Borough Greenwich Council (11,656 on housing waiting list)
•  South Cambridgeshire District Council (1,593 on housing waiting list)
•  Waverley Borough Council (2,697 on housing waiting list)
•  Woking Borough Council (1,801 on housing waiting list)

Notes to editors

1. Housing waiting list figures taken from individual councils and the Department for Communities and Local Government:

2. English local authorities have more than quadrupled the number of new houses they built over the past three years – up from 370 in 2009/10 to 1,890 in 2011/12. The increase has, in part, been driven by councils being put back in charge of their own housing finances.

Live tables on house building

3. Research commissioned out by a coalition of housing organisations last year including the LGA, National Federation of ALMOs, Chartered Institute of Housing and the Association of Retained Council Housing found that councils could quadruple to up to 60,000 the number of new homes built over five years if the housing borrowing cap was removed. Under the current rules, councils would be able to borrow no more than £2.8 billion to invest in housing – enough to build 15,000 homes. Without the cap, councils could borrow up to £7 billion to invest in housing over five years, under existing prudential borrowing rules. As part of the research, Capital Economics spoke to 13 economists, fund managers and credit ratings analysts to provide a qualitative assessment of City opinion. It found they had little concern about borrowing for local authority-managed projects.

4. The LGA is also pressing for classification changes to level the playing field and shift the focus from which balance sheet council borrowing for housing sits on to its impact and value for money. The UK's measure of public sector debt results in council and ALMO housing expenditure and borrowing to be scored against the current measure of UK debt (PSND). Housing Associations, as non-profit private corporations score outside of this measure of debt. Only by establishing a level playing field by moving to the General Government Gross Debt measure of debt, used by other countries and by the EU, IMF, OECD and credit rating agencies will the Government be able to truly assess value for money and ensure the most effective public investment in housing. 

'Let's get building'

Author: LGA Media Office
Contact: Local Government Association Telephone: 020 7664 3333