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New housing minister criticises councils over unused borrowing capacity
The new housing minister has said he is “at a loss” to understand why councils are not using Housing Revenue Account (HRA) borrowing headroom.
Kit Malthouse made the comments today during his first appearance before parliament in the role.
He was responding to a question from Alex Norris, Labour MP for Nottingham North.
Mr Norris asked: “The building of new homes is being choked off in Nottingham by the refusal of the department to remove the cap on the HRA.
“I put this to ministers on 12 March and was told that if Nottingham stepped up and made a strong case it would be looked upon favourably. Such a case has been made and it was not look upon favourably, why not?”
Nottingham is one of the areas which is not eligible to bid for the £1bn of extra HRA capacity announced by the government in the Autumn Budget.
The programme is only available to local authorities in which weekly private rents are £50 higher than social rents on average.
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In response, Mr Malthouse said: “Well, Mr Speaker, as a person who’s new in post I’m happy to look at the specifics of that rule but obviously we have given an extra billion of funding to local authorities to bid into and we’re inviting bids at the moment for HRA expansion.
“And I would point out that across the whole piece, local authorities do have about £3.6bn of headroom already and I’m at a loss to understand why they’re not using it.”
Savills research published in November found that 89% of stock-retaining councils have borrowed to within 20% of their total borrowing capacity – accounting for 60% of the combined available headroom.
HRAs are ringfenced, meaning they are used to fund all spending on councils’ social housing delivery and maintenance, including paying for fire safety work in the wake of the Grenfell Tower fire last June.
Councils have blamed the rent cut – which wiped billions from their 30-year business plans – for reducing development ambitions.
Other commentators have mentioned a lack of development teams at some town halls. Debt cannot be transferred between local authorities.
In the same session, housing secretary James Brokenshire avoided a question from Sarah Jones, Labour MP for Croydon Central and shadow housing minister, about whether the final version of the updated National Planning Policy Framework (NPPF) will mention social rent in its definition of affordable housing.
Local government and housing organisations voiced concerns after the draft document, published in March, removed the term from its glossary.
Responding to Ms Jones, Mr Brokenshire said: “I entirely reject the characterisation the honourable lady has given to this government’s approach to dealing with affordable homes and also social housing as well and she will see that from the funds we have committed to secure on the homes agenda.
“And I say to her that it is under this government that we’ve seen 1.1m additional homes delivered since April 2010 and over 378,000 of those are affordable homes, including 273,000 affordable homes for rent.”
And the housing secretary remained sitting at the end of the session after John Healey, shadow housing secretary, attempted to raise a point of order regarding the Social Housing Green Paper, the updated NPPF and the Rough Sleeping Strategy – which were all previously promised by July or recess but has not yet appeared.
