‘Let all councils borrow to build’, says Nick Forbes

Nick Forbes, senior vice-chair of the Local Government Association (LGA), has urged the government to allow all councils to borrow to build at the House of Commons’ Treasury Select Committee.

The Budget saw the government pledge to allow some councils with ‘high affordability pressure’ to be able to bid to borrow up to an additional £1 billion on housing revenue accounts, but the LGA has consistently called for the cap to be lifted with no conditions attached.

Forbes argued for the government to lift the cap across the board, saying that previous attempts to link stringent conditions to such a measure had failed to deliver any homes.

Both the National Housing Federation and the Federation of Master Builders backed the Local Government Association in their call to allow councils to borrow to build new homes without further restrictions.

Forbes also argued for councils to be able to keep 100 per cent of their Right to Buy receipts, and for planning departments’ costs of applications to be covered by funding from the central government.

Nick Forbes, speaking at the House of Commons Treasury Select Committee, said: “It’s better to just lift the housing borrowing cap for all local authorities, so that we can all get on and take the decisions that are in the interests of our respective communities.

“We have a situation where most of the borrowing caps for local authorities are operating under twenty per cent of their cap, so the flexibility to manoeuvre is very limited.

“The government’s indication in the Budget of £1 billion for housing revenue accounts goes some way towards helping tackle our housing shortage, but I don’t think it is necessarily going to meet the scale of the challenges we face.

“There wasn’t an announcement in the Budget, as far as I saw, about Right to Buy receipts, and that’s another one of the issues that I know exercises local authorities. Currently, we only retain fifty per cent of the Right to Buy receipts and the rest goes to the Treasury. We therefore have to bid competitively to get that money back into our areas, against other councils, and that makes it very difficult to guarantee a long-term, like-for-like replacement programme.

“Our argument would be that we should be allowed to use 100 per cent of the receipts from Right to Buy sales to invest in new homes.”