Opposition Parties Welcome Announcement that Housing Borrowing Cap is to be Lifted

Published on: 5 Oct, 2018
Updated on: 12 Oct, 2018

Guildford Liberal Democrats were quick off the mark to welcome the announcement by the prime minister at the Conservative party conference that the government will scrap the cap on the ability of councils to borrow to build new council houses.

In a press release issued on Wednesday (October 3, 2018), the day of the announcement, the Lib Dems say that the cap should be lifted as soon as possible and that Guildford Borough Council (GBC) should seize the opportunity and build “thousands” of new council houses.

The announcement might have taken the Conservative leadership by surprise, along with Guildford Labour, they have still to respond to an invitation to comment.

Reaction from the leader of the Guildford Greenbelt Group was lukewarm. Although welcoming the news Cllr Susan Parker warned that new developments should not be on green belt land. Independent Tony Rooth, a former Conservative lead member for housing, was more enthusiastic but thought that changes to the right to buy policy were also needed. Around 25 houses are sold through the right to buy scheme in Guildford annually from Guildford’s stock of 5,200 council houses.

Theresa May’s announcement means that councils will no longer have a cap on the money they can borrow from the Housing Revenue Account (HRA) – the pot of money where councils in England manage their housing revenue and expenditure.

Since 2012, the rules around HRAs have been tightened to restrict the amount that local authorities can draw down to build new social housing.

According to the BBC, 40 years ago, local authorities were responsible for more than 40% of house builds. Last year, it was less than 2%.

GBC is already investing £56 million in building a mix of homes for sale or affordable rent and the council set up a company, North Downs Housing, to circumvent the cap on council borrowing. Whether that company will need to continue as envisaged will be a decision to be considered.

Zoe Franklin.

Guildford Liberal Democrats’ parliamentary spokesperson Zöe Franklin said: “I’m very pleased that the Conservatives are finally listening to what the Liberal Democrats and others have been saying for years about the cap on council borrowing for housebuilding: that it made no sense and was fuelling the housing crisis. The government should prove this announcement is more than just warm words and provide action by scrapping the cap as soon as possible.

“If they do so then it’s vital that Guildford Borough Council grasps the opportunity and builds the thousands of council houses that we need to finally give people affordable options for renting in our borough.

“Guildford Liberal Democrats and our group on the borough council will be developing detailed proposals for exactly how these council houses can be built within the constraints of the Local Plan.

“Options we’ll be looking at will include the possibility of the council compulsory purchasing potential development sites and then building on them itself, or for the council to work with developers to build out the affordable housing percentages on private developments as council houses.

“We want to make sure that, at the ballot box in May next year, residents have the option to vote for a party that will build new council houses we need to tackle the housing and renting crisis, whilst protecting the character of our town and villages and without requiring any further building on the greenbelt.”

At its party conference last month the Liberal Democrats called for the housing borrowing cap to be lifted and for Right To Buy to be scrapped as part of a package of measures designed to tackle the housing crisis.

Cllr Susan Parker.

Cllr Susan Parker (Send), leader of the Guildford Greenbelt Group said: “There is some need for genuinely affordable urban housing. It would not be inappropriate for Guildford Council to borrow modestly to fund this. Guildford should recognise that it would be using public money so this should not be a large amount. Perhaps the £81 million borrowing planned for student homes could be used (at least in part) to build council homes.

However, all council homes should be built in the urban area on land that Guildford or Surrey councils already own. There’s quite a lot of this. Development on green fields is an environmental disaster whether it’s done by developers or councils.

There should not be any right to buy fields at agricultural prices to build council homes – the government’s mooted Land Value capture policy is a Zimbabwe-style land grab with dire environmental consequences.

“Provided the building is done on urban brownfield land, and so is sustainable, then I welcome the prospect for more affordable council homes within our borough, of the size we need, rather than developer-built executive homes.

Cllr Tony Rooth.

“Independent councillor Tony Rooth (Pilgrims) said: “I welcome the removal of the cap. Guildford should certainly build more social housing; we have more than 2,000 on the housing waiting list. I’m also pleased that, separately, the government has apparently scrapped the forced sale of our high-value social housing to finance extension of the right to buy to housing association tenants. Guildford could have lost a third of our 5,000 plus housing stock as a result.

“Giving the right to buy after only three years as a tenant with discounts of up to £80,900 is too attractive. It may help existing tenants put their foot on the ladder of home ownership but what about the increasing numbers who can only afford to rent? Sale of existing homes reduces the impact of new building on the numbers of available social housing.”

The Conservative and Labour groups were invited to comment.

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