Friday, 27 March 2015

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.

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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

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