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Council leaders cautiously welcome Budget announcement

Date issued: 22 October 2017

Colchester Borough Council leaders have given a cautious welcome to today's Budget announcement lifting the cap on local authorities borrowing to build new council homes in areas of high-affordability pressure.

Chancellor Phillip Hammond has said he will invite local authorities to bid for increases in the amount they can borrow to build new homes from 2019-20, allowing them to bid up to a total of £1billion by the end of 2021-22.

The Treasury announcement comes less than a week after the Communities Secretary, Sajid Javid, handed control of finances back to housing associations in a bid to encourage them to build more homes.

The news that local authorities will once again be able to borrow to build more council houses follows recent criticism by both the Local Government Association and the Communities and Local Government Committee, that caps on local authority housing revenue accounts (HRAs) were limiting housebuilding and should be raised or, in areas where housing affordability is at its worst, removed altogether.

Since 2012, national rules governing HRAs have restricted the amount councils could borrow.

Responding to the Chancellor's announcement, Leader of Colchester Borough Council, Cllr Paul Smith, said: "I am pleased the Government has listened to concerns from councils up and down the country and is set to ease restrictions on borrowing to build more council houses in some areas.

"However, we will have to wait and see if Colchester will benefit from the Chancellor's proposals. If it does, we will of course look to do whatever we can to increase the supply of new council houses in the Borough - including lobbying our local MPs to back our ambitions.

"As I promised the Minister earlier this year, Colchester will start work immediately to build up to 50 new council houses for local families, just as soon as the Government gives the formal go-ahead."

Cllr Tina Bourne, Portfolio Holder for Housing and Communities, added: "Today's announcement hopefully signals the beginning of the end to an era when 'right-to-buy' reduced our stock of council houses by almost 38%.

"We have always had the appetite to invest in new council housing, and this announcement means we can now begin to plan to provide the affordable quality homes which are so desperately needed by families and young people in the Borough."

ENDS