Look again at Right to Buy and avoid clamping down on council companies

If the summit speech was a slap in the face for councils, prompting concerns that hopes for a resurgence in council housebuilding were dead in the water, the party conference announcement was an unexpected boon. And a particularly welcome one after Boris Johnson’s attack on “state-owned housing”.

Councils have long lobbied for government to lift the borrowing cap – allowing them to access more funding to increase building. In recent years, local government has turned up the volume, led by Lord Porter.

The work started to pay off a year ago, when chancellor Philip Hammond outlined a policy to allow councils to bid for £1bn extra borrowing headroom in “high-value” areas.

The policy was major progress, given that under David Cameron the government-commissioned Elphicke-House Review into speeding up council building was not permitted to even explore the cap. But the restrictions left many councils disappointed.

Earlier this year these pages warned that, notwithstanding the limitations, councils would be judged on their take-up of the headroom funding.

Figures on the number of bids to the programme have not been published but our research suggests that the scheme was set to be overwhelmed. Government will, no doubt, have gained confidence from the bids.

Ms May’s promise of scrapping the cap is a vote of confidence in councils. But just as her endorsement of associations was laced with a strong challenge to deliver, with the headroom announcement she is throwing down the gauntlet.

The government wants to see homes built – including building through any post-Brexit recession, so it should look again at the disincentives created by the reinvigorated Right to Buy, model how the changes to grant for social housing have affected social landlords’ ability to build through a downturn, and resist any temptation to clamp down on council-owned companies.

Emma Maier, editor, Inside Housing