Friday, 24 October 2014

Spending review could help councils build homes

Communities minister Don Foster has hinted the government may unveil plans to help councils build homes in the spending review.

Grant Britain Homes logo

Mr Foster suggested the announcement on 26 June could include lifting the current cap on council borrowing for house building.

In parliament earlier this week Caroline Lucas, the green MP for Brighton Pavilion, asked: ‘If the government is serious about increasing housing supply, will they look again at lifting the current cap on council borrowing for house building, and at providing direct capital spending to allow councils to build a mass programme of affordable housing?’

Mr Foster answered: ‘We are looking at the point the honourable lady has raised and an announcement will be made on 26 June.’

Bodies representing councils and social landlords have frequently called for the cap to be lifted since its introduction in April 2012. In its submission to the spending review the Chartered Institute of Housing claimed allowing councils to borrow up to £7 billion would result in 75,000 homes being built over five years.

The cap was imposed as part of the move to self-financing for local authorities.

Councils were given control over housing revenue but had to take on historic debt and a limit was placed on the amount they could borrow against their housing assets.

Mike Jones, chair of the Local Government Association’s environment and housing board, said: ‘The chancellor has an unrivalled opportunity to create jobs, provide more 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.’

Ms Lucas also asked what steps the government is taking to ensure that tenants in the private rented sector had the option to sign up to longer-term tenancies.

‘Does the minister agree that longer-term tenancies should be much more widely available and will he consider measures to incentivise landlords to offer longer-term tenancies through changes to capital gains tax and national insurance contributions, which have been proposed by a number of housing charities?’ the Brighton MP asked.

Mr Foster said: ‘We are already considering the proposals the honourable lady mentions.’

Inside Housing is campaigning for the government to commit to long-term grant funding for affordable homes in the spending review. Find out more, and back the Grant Britain Homes campaign

Readers' comments (18)

  • Dear Don, you are not still taking into account the objections to building are still in place.

    You know from Bath, where you still are the MP, there are constant objections and the Inspector is working on these at present.

    We are having some serious issues on lack of housing here, also, the private renting sector is very expensive, I would say in some circumstances above what is affordable to the man on the street.

    We have several empty properties that could be used, as Eric Pickles states, for conversion into rented accommodation. There is at present a barge tied up on the weir illegally, it states clearly on the flying banner about one of the properties left empty for many years.

    Don, I would like a statement on the serious issues you have in your area, I have submitted my remarks to the Inspector, we need progress and it appears there is little too late, I await your reply.

    Most of the comments still insist, what we have in place is not going to be enough, we have over 12,000 on the waiting list.

    The new rules have removed those who would like to move back to the area with family ties, I know of someone who has a medical condition and is an older person, they wished help from their family here.

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  • Not "Affordable homes, "social rent homes". The government have corrupted the word "affordable". Please lobby for social rent homes.

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  • @Paul Jones, that is one thing I am trying to do, and I understand your comments fully.

    For a very long time it was just acknowledged we have a housing problem. Even larger with the bedroom tax.

    Complain, complain, that is all we can do, until someone realizes we have serious financial and housing problems, they both are closely related.

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  • • Council borrows to build homes to rent (on proper secure tenancies) at affordable or ideally social/target rents.
    • Skilled jobs get created building the homes.
    • People pay less to put a roof over their head and go out and buy say an Astra built in Merseyside or a mattress made in Birmingham or lawnmower in Suffolk.
    • More jobs get created.
    • Less people are forced to claim social security to pay the bills (including the government sponsored subsidy to parasitic private landlords).
    • Government has more money to spend - maybe say some shiny new trains built in Derby. Or some more council homes. So more people can buy Astras, mattresses and lawn mowers.

    Now what's not to like about that?

    Oh yes - how could I forget.
    • It would be unfair on private landlords who as we know have had such an hard time lately, only being able to increase rents by a mere 5% a year. Have you seen the cost of a BMW Blingmobile these days?
    • Working people get a secure home when we all know that managing the plebs is best done with a mix of fear and discipline.
    • Those same working people might get jobs that give them ideas above their station.
    • Nasty evil public sector council workers keep their jobs. And we all know that they are the devil incarnate what with their evil 'Pravdas' and fortnightly bin collections.

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  • Social housing providers are already struggling to collect rent when it is due thanks to gummint initiatives.

    The more houses they have the bigger the rent shortfall, if interest rates hit 15% the sector would fall over.

    This is all down to the boom and bust in housebuilding of all types and tenure. What did New Labour do for a decade and a half? Nothing, just built the public sector black hole.

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  • I forgot to ask if the 'announcement' will benefit the long suffering people of Wales.

    Oh, and why don't councils use the reserves they are sitting on, or their pension schemes which suck in half of our council tax payments.

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  • @ Exasperated Me.

    I have made some comments for you, little I can do, but your comments do make others listen. We understand the situation, and of course it makes sense to get your other areas up, and on their feet.

    We need those awful words, Social Housing, the stuff that is more affordable.

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  • @ Gresley, totally agree, nothing I could possibly add.

    Austerity was never going to be the winner.

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  • "social rent homes" - these were a constructed in a past decade and that will never be repeated. Forget nostalgia and cry!

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  • If austerity is not the answer - then impliedly generating growth is the answer...

    But if that growth is to be derived from higher disposable incomes from welfare claimant households fuelling that growth in extra high street spending - funded by the taxpayers - then it is a bit like saying I have a great new plan for a perpetual motion fuel free machine...but forgetting some bugger is pedalling away like crazy in background.

    Yes of course it's better all round for people to be in work than on welfare - but with benefit clawback plus taxes taking away 90% of gross earned income above the 9440 tax threshold - and a minimum of 85% above the "applicable amount" - many looking at transition from welfare to work are gonna be worse off when funding commute costs/childcare costs/pension costs.

    We could argue that pay is too low - but need to note we compete in global economy - hence even DWP offshoring IT work to India for an 80% discount in labour costs.

    Or we could argue that benefits are (relatively) too generous.

    Too much of the well paid factory type work has been lost over past 40 years - and even if UK wins back manufacturing - it will be largely automated/robotic - hence providing relatively few jobs.

    That leaves many tasks which do not attract high pay - and therein lies the dilemma for many - whether to work say a 40 hour week for effectively the same net pay that welfare supplies - or just stay on welfare.

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