Local authorities plan to break government resolve over borrowing caps
Councils plot to win over Treasury
The first major study of local authorities’ ambitions under the new housing self-financing regime has been launched by four lobby groups ahead of the government’s spending review.
The study will be used to try to convince the Treasury to lift caps imposed on councils’ borrowing capacity which were introduced as part of April’s self-financing settlement.
Around 160 councils will be quizzed over the next few months about how they might spend the £2.9 billion borrowing capacity they were awarded in April when they were freed from the shackles of the Treasury-controlled housing revenue account.
Questionnaires were circulated last week for the research project, which is being run jointly by the Association of Retained Council Housing, the National Federation of ALMOs, the Local Government Association and the Councils with ALMOs Group.
The study aims to give the first realistic picture of how councils will use their new financial freedoms.
Matthew Warburton, policy advisor at ARCH, estimated that authorities could collectively build at least 100,000 homes over the next two decades if the caps are lifted.
‘The study is about fleshing out what we could do if there were some flexibility on debt capacity,’ he said.
He said the research will show whether this forecast figure matches local authorities’ real-life ambitions.
‘We will be asking councils about what assumptions they are making about rent, the impact of the welfare reforms, what borrowing capacity they think they have got and the availability of land,’ said Mr Warburton.
Gwyneth Taylor, policy director at the National Federation of ALMOs, said the study could also influence the next comprehensive spending review, which is expected in 2013.
Treasury officials remain reluctant to lift the borrowing caps despite the Liberal Democrats’ pledge to ease them, she added.
Ben Taylor, a financial consultant at CIH Consultancy, which advises Councils with ALMOs Group, says the research should get ‘behind the reality’ of what councils were doing.
He agreed councils have the capacity to build 100,000 homes.
Last week Labour called on the government to spend the expected £3 billion proceeds from the auction of the new fourth-generation mobile phone rights on building 100,000 affordable homes.