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Councils and ALMOs call for flexibility in £1bn borrowing cap programme
Council housing representative bodies are urging the government to set out flexible bidding criteria for the £1bn of additional borrowing headroom announced in the Autumn Statement.
The Association of Retained Council Housing (ARCH), the National Federation of ALMOs (NFA) and the Local Government Association (LGA) are also calling on their members to prepare to bid for the debt.
There are fears that too much red tape could cause the programme to be undersubscribed – as happened when the Treasury announced a similar policy in 2014 – damaging future opportunities of funding for council housebuilding.
Ministers are expected to provide further details on the programme around the end of March. When the programme was announced at the Autumn Budget the government said headroom would be available for areas in “high affordability pressure”.
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“The worst thing for the sector would be if the programme is undersubscribed,” said John Bibby, chief executive of ARCH.
“We have been saying to our members that it’s vitally important we make use of the extra borrowing capacity.
“We would urge our members to begin thinking now about how they will make use of the extra borrowing capacity and gearing themselves up now to start putting together a bid when the criteria is released to make sure that the programme is not undersubscribed.”
Former chancellor George Osborne offered councils £300m of additional HRA borrowing headroom – but the programme was wound down after £220m was allocated to build just 3,000 homes.
ARCH and the NFA said that money had come with too many strings attached to allow enough councils to bid.
Eamon McGoldrick, chief executive of the NFA, said: “We are still waiting to see what the definition of high affordability pressure is and we are encouraging our members to take it up.
“In a way we’re saying this is the only game in town for a while and it’s take it or leave it.”
A spokesperson for the LGA confirmed it is encouraging its members to bid.
The Treasury has costed £880m over three years for the new round of extra borrowing capacity, with the Autumn Budget policy costings document stating that figure “assumes that 80% of the borrowing headroom will be taken up by local authorities”.
Steve Partridge, a director at Savills Housing Consultancy working with councils on their bids, added that the government should release its bidding criteria as a matter of urgency.
He said: “It really is as important as it could be that the government balances getting the criteria right with the timing of the criteria coming out, because development is a long game and so councils need to get that information as early as possible.”
The Ministry of Housing, Communities and Local Government has been approached for comment.
