By Mark Smulian | 16 August 2013
The Local Government Association has reiterated calls for financial restrictions that prevent councils from building more homes to be lifted after government figures showed the number of new homes completed in the first half of this year was down on the same period in 2012.
Work could start at thousands of ‘shovel-ready sites’ if the cap imposed on borrowing for home building was removed, the association said.
According to the LGA, councils could build an additional 60,000 homes over the next five years if they were allowed to invest in housing under normal borrowing guidelines, rather than the restrictive ones that apply to this area. Housing-related borrowing is capped at a limit set at the time of the abolition of the Housing Revenue Account subsidy system.
Under the current rules, councils would collectively be able to borrow only £2.8bn to invest in housing – enough to build 15,000 homes. Without the cap, under the normal prudential borrowing rules, they could borrow up to £7bn, the LGA said.
LGA environment and housing board chair Mike Jones said this would deliver a 0.6% boost to gross domestic product.
‘Local authorities have excellent credit ratings and we want to use our assets to help kickstart the housing recovery, but our hands are being tied,’ he said.
‘Government has an unrivalled opportunity to create jobs, provide tens of thousands of 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 commonsense answer is for the Treasury to remove its house-building block and let us get on with it.’
Government statistics published yesterday show annual housing completions in England totalled 106,820 in the 12 months to June 2013, a decrease of 9% compared with the previous 12 months.
Council house building increased sharply but is still tiny as a proportion of new homes completed, having grown from only 370 in 2009/10 to 1,890 in 2011/12.
However, communities minister Brandon Lewis said there were 29,510 new homes started between April and June this year, 6% higher than the previous quarter, and a third higher than the same time last year.
The increase was seen in just over half of local authority areas, with 178 out of 326 reporting more house-building starts.
‘We’ve already delivered over 330,000 new homes over the past three years, and 150,000 affordable homes,’ he said.
‘There is more to do, but today’s figures reinforce the momentum towards getting Britain building again.’
