London’s boroughs have led welcomes from across the capital’s housing sector for Theresa May’s decision to lift the cap on local authorities’ freedom to borrow money for building their own low cost homes.
Darren Rodwell, executive member for housing and planning with London Councils, the body that represents the capital’s 33 local authorities, said: “We are delighted that the government has listened to councils and freed us to build more council homes.”
Rodwell, who is also the leader of Barking & Dagenham Council, pledged that boroughs would “use this new freedom to play a bigger role in delivering the housing that Londoners so desperately need and look forward to working with government in making it a reality.”
The move was also praised by national housing charity Shelter, which said it “represents a major reform” that will allow councils “onto the playing field as significant house builders.” Shelter chief executive Polly Neate said May’s move “shows real intent to back social house building” and is “a big step towards helping repair the damage done by years of under-investment.”
There has also been approval from Paul Hackett, chief executive of the Croydon-based Optivo housing association and chair of G15 group of London’s largest housing associations. He wrote on Twitter that the government should be “applauded” for lifting the cap, saying it will “set local authorities free to build another generation of council housing” and adding that housing associations “stand ready to help our partners in local government deliver their vision”.
May’s intention to completely remove the limit on the amount council’s can borrow against their housing revenue accounts follows a slackening of the restriction in last autumn’s budget, in which chancellor Philip Hammond made an extra £1 billion of borrowing “headroom” available for councils to bid for. Inside Housing has reported that councils in London had complained that only half of this sum was potentially available to them.
In the section of her speech about addressing the housing shortage problem, the Prime Minister said: “It doesn’t make sense to stop councils from playing their part in solving it. So today I can announce that we are scrapping the cap.” However, Inside Housing commentator Jules Birch has cautioned that “vital details remain to be seen” concerning exactly when and how the cap will be lifted” and whether there will be strings attached.
London boroughs of different political complexions have long campaigned against the imposition of the borrowing cap, which was brought in in 2012. They were supported by Boris Johnson, currently a conspicuous critic of the government’s approach to Brexit, when he was London Mayor. In January, a cross-party House of Commons Treasury select committee recommended that the gap be removed.
A 2013 London Assembly report said that council housing “is a more significant form of tenure in London than elsewhere in England,” with one in eight London households accommodated in the capital’s approximately 400,000 council dwellings – almost double the proportion in the rest of the country. Earlier this year, Sadiq Khan announced that £1.67 billion he had received from the government to help fund affordable home-building in London would be allocated to boroughs as part of his Building Council Homes for Londoners scheme.