Friday, 5 October 2018

Ending austerity > and allowing councils to borrow more to build more housing

The response to the Prime Minister's promise to 'end austerity' has been mixed:
Theresa May vows to END AUSTERITY as speech reveals NHS and housing boost | Politics | News | Express.co.uk
IFS: Ending austerity means PM May will have to find another £20bn | Daily Mail Online
New Chester council boss: "Austerity is not over" - Cheshire Live
West Midlands is on brink of 'social collapse' warn Labour leaders - Birmingham Live

One of the big stories coming out of Birmingham has been the promise to allow councils to borrow more to build more housing:
Theresa May scraps borrowing cap for councils to build new homes – Politics live | Politics | The Guardian

This might stop councils from gambling with tax-payers money:
Futures Forum: UK public finance: councils building a credit bubble >>> In October 2008, UK councils lost heavily from speculative investments. Could this happen again?

The Inside Housing magazine offers an overview:

All the reaction to May’s plan to scrap the borrowing cap


Theresa May’s announcement yesterday about scrapping the council borrowing cap received plenty of attention from the media, with The Express going as far as calling her speech “triumphant”.

In the news

Commentators from across the political spectrum have welcomed the prime minister’s plan to scrap the borrowing cap, in what was broadly thought to be a successful conference speech. This glowing report in The Express is one of the most effusive.

Jonn Elledge, the editor of CityMetric, has this interesting take on the announcement. He suggests that removing the cap will allow counter-cyclical building, which in turn will make the market more resilient.

Huff Post digs into what the announcement might mean for people who want to buy their own homes.

Meanwhile, the BBC has this piece explaining what the cap is and why it’s important, and economics editor Kamal Ahmed has written about why the prime minister’s speech yesterday may have made Philip Hammond’s Budget next month a bit trickier.

On a slightly different note, property advisor JLL has this interesting piece on whether new finance options are enough to coax smaller companies into the housebuilding market.

On social media

There was lots of tweeting going on during Theresa May’s speech yesterday as councils and housing professionals welcomed the news that the borrowing cap would be lifted:

Positive news from @theresa_may on the council housing borrowing cap - long overdue. We can’t fix things overnight, but councils building again at scale will make a massive difference.

LGA WIN! Fantastic news as @theresa_may announces the housing borrowing cap will be scrapped. The LGA has lobbied tirelessly for this move to allow councils to resume their historic role as a major builder of affordable homes.

Full reaction from us to come 🏠🏡🏘

Tom Copley, the housing spokesperson for London’s City Hall, gave some indication of what difference the change could make to local authorities:

I have been calling on the govt to remove the cap on council borrowing to build new homes for many years. The PM's announcement just now that they will finally do so is welcome, but it's a shame it has taken so long for them to listen to local authorities http://tomcopley.com/tom-copley-am-government-lifted-borrowing-cap-sooner-tackle-housing-crisis/ 
By pure coincidence I have a question down for tonight’s @LewishamCouncil meeting asking how many new council homes could be built if the HRA borrowing cap were lifted. Based on 2012 data it would free up additional capacity to deliver an extra 1,460 new homes in the borough pic.twitter.com/mrYWyA0Ziy

View image on Twitter

But one Grant Shapps was quick to pour cold water on the plans:

Well constructed, written & delivered @theresa_may speech today. Last yr was leadership change window, but now PM needs to complete deal. Btw, anyone who doubts 'end to austerity' pledge, should note Council House build borrowing cap removal could well increase deficit

More on the HRA cap announcement

Government now appears to recognise the role of councils - but it needs to scrap Right to Buy Terrie Alafat finds much to like in Theresa May’s council borrowing cap announcement, but wants the government to go much further

New council house borrowing will be under prudential rules, says Porter More details of how new council borrowing rules are likely to work, from the chair of the Local Government Association

More details to come in Budget on borrowing cap The government has been unable to provide any further detail on its plans to scrap the borrowing cap, saying more information will follow in the Budget later this month.

The HRA borrowing cap explained A useful explainer of the context to the council borrowing cap along with a timeline of the story so far

Councils say scrapping debt cap will boost house building More reaction from local authorities

Scrapping HRA cap ‘could see 100,000 homes built’ Details of estimates from Savills on the potential impact of the government’s decision

May’s HRA announcement deserves its warm welcome – but the Budget will be the real test Blogger Jules Birch picks over the announcement

Sector heralds lifting of the borrowing cap as excellent news Reaction to the HRA cap axe from across the social housing sector

Government expects annual £1bn of council borrowing once debt cap is scrapped The first indication of the amount of borrowing ministers are expecting once the cap is no more

Theresa May announces plan to scrap council borrowing cap All the details of Theresa May’s surprise announcement


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