The Prime Minister’s announcement at the Tory party conference this week that the Government will lift the borrowing cap on councils to allow them to build many more homes has been welcomed by local authority leaders.
Conservative Coun Richard Wright, Leader of North Kesteven District Council, said: “The Prime Minister’s conference announcement that the borrowing cap applied to the Housing Revenue Account will be scrapped is very welcome news.
“It will enable proactive councils such as North Kesteven to borrow more for investment in new homes and as a leader in the investment in new homes and existing stock, I am sure we will view the initiative with some enthusiasm as we seek to deliver ever-more quality, affordable and accessible housing solutions for our residents.
“It is a positive step and a good response to the longstanding call by local government – which I personally have given voice to at Westminster – to remove the cap.
“We will of course review the impact and opportunities for NK. But as one of the leading local authorities investing in new homes and stock improvements, this provides further scope to extend our programme and the focus of our Housing Plans.”
South Kesteven Conservative Coun Matthew Lee said his authority were ‘delighted’ by the ‘inevitable’ lifting of the borrowing cap.
He said his authority was committed to building more council and affordable houses.
“The level of house building that needs to happen in this country can only be achieved, and has only been achieved, when councils were building houses and the private sector was building houses,” he said.
“So it was inevitable that the government was going to have to do this. If you want to build the level of housing you need, we as councils are going to have to build.”
Councillor Lee said the authority wanted to ensure no-one was priced out of the housing market in the area, especially for instance, if people had specific skills such as nursing.
He said they would be bringing plans to look for grant funds and the ability of the council to borrow money ‘to support our local community’.
Mrs May made the announcement in her closing speech at the Conservative party conference when she said the government would scrap the cap on the amount local authorities can borrow against their housing revenue account assets.
“Solving the housing crisis is the biggest domestic policy challenge of our generation,” she said. “It doesn’t make sense to stop councils from playing their part in solving it.”
It is understood the change could potentially lead to an extra £1bn borrowing and tens of thousands of new homes.
The cap was introduced under Margaret Thatcher.