In her closing speech to the Conservative Party Conference, the prime minister has announced that the government will shelve a borrowing cap in an attempt to free up local councils and ignite a boom in the amount of houses getting built.
The enforced cap has been long seen as a barrier in funding new developments with up to 10,000 homes constructed by councils before it was introduced under Margaret Thatcher’s reign, compared to the hundreds built by some councils today.
Today’s move by May is her biggest statement to date in her “personal mission” to get more houses built, more quickly which was outlined at the end of last year. In her speech she talked about solving the housing crisis being the “biggest domestic policy challenge of our generation”.
It follows on from last month’s announcement that £2bn of funding would be made available for affordable housing as part of the government’s affordable housing programme, starting in 2022.
“More new homes were added to our stock last year than in all but one of the last 30 years,” the prime minister told the conference. “But we need to do better still. The last time Britain was building enough homes – half a century ago – local councils made a big contribution. We’ve opened up the £9bn Affordable Housing Programme to councils, to get them building again. But something is still holding many of them back. It doesn’t make sense to stop councils from playing their part in solving it. So, today I can announce that we are scrapping that cap.”
Local Government Association chair Lord Porter welcomed the news and said the announcement showed the government has “heard our argument that councils must be part of the solution to our chronic housing shortage”.
“It is fantastic that the government has accepted our long-standing call to scrap the housing borrowing cap, he added. “We look forward to working with councils and the government to build those good quality affordable new homes and infrastructure that everyone in our communities need. The last time this country built homes at the scale that we need now was in the 1970s when councils built more than 40% of them. Councils were trusted to get on and build homes that their communities needed, and they delivered, and it is great that they are being given the chance to do so again.”
The Housing Builders Association (HBA), the house building division of the National Federation of Builders (NFB), has also shared its delight about the end of council borrowing limits.
Richard Beresford, chief executive of the NFB, said: “The NFB congratulates the prime minister for recognising a substantial barrier preventing the Government from meeting its target to build 300,000 new homes a year. Lifting the borrowing cap for councils will diversify the housing market, stimulate industry capacity and help councils more easily meet their affordable homes requirements. The entire housing supply chain should be very proud of their collective campaigning on this issue.”