County councils have warned of a need for greater strategic planning after the prime minister scrapped restrictions on authorities borrowing to build housing.
At the Conservative Party conference on Wednesday, Theresa May said the government cap on how much housing authorities can borrow against their housing revenue account assets to fund new developments will be abolished.
Mrs May said: ‘Solving the housing crisis is the biggest domestic policy challenge of our generation. It doesn’t make sense to stop councils from playing their part in solving it.’
A housing authority is the local authority with a statutory obligation to house the homeless. This could be a unitary or a district council in a two-tier localtion.
As county councils are transport authorities and districts are local planning authorities, the Government's move, while widely hailed across the local government sector, could create further tension between planning and transport, senior figures have said.
Cllr Paul Carter, chairman of the County Councils Network (CCN) and leader of Kent County Council, said said 'For those district local authorities who may now seek to use these extra borrowing capabilities, the role of county councils in providing vital infrastructure to support housing is now even more important.'
‘As the housing minister suggested [on Tuesday], this must come alongside greater strategic planning across larger, county-wide geographies, and we will work with government and district partners to deliver this.’
Cllr John Fuller, chairman of the District Councils’ Network (DCN), said: ‘The Government expects district councils, as the planning and housing authorities, to manage their local housing markets to benefit people at all stages of their lives.
‘Finally the Government has recognised that councils need the fiscal tools to manage their housing markets by lifting the housing borrowing cap. We welcome this important new power which the DCN has long called for.’
But he added: ‘Many councils with extensive housing potential, often surrounding the largest cities, have transferred their own stock to registered social landlords and therefore don’t have housing revenue accounts. These districts should not miss out on the opportunity to build the homes this country badly needs.’
The Ministry of Housing, Communities and Local Government said the move would see up to an estimated 10,000 additional homes a year and ‘recognises that councils see the borrowing cap as the greatest barrier to building new homes'.
Officials said the cap will be lifted ‘as soon as possible, with further details confirmed in the Budget’.
Transport Network understands that councils had previously tried to get around the borrowing cap by setting up arms length bodies.