Theresa May promises to scrap housing borrowing cap for councils

Theresa May has promised to end the borrowing cap on local councils to build new homes and ‘fix the broken housing market.’

In her speech this morning at the Conservative Party conference in Birmingham, she said that the borrowing cap was holding councils back and contributing to the current housing crisis, adding: ‘It doesn’t make sense to stop councils from playing their part in solving it.’

In the 2017 Autumn Budget, Chancellor Philip Hammond announced he would be raising the borrowing cap for councils in some areas to £1bn, but it’s now expected that the cap will be scrapped entirely.

It’s hoped the move will kickstart housebuilding and help the Government meet its target of 300,000 new homes being built every year by 2025.

An ending of the cap has long been called for by both the Labour Party and the Liberal Democrats as well as local authorities.

Lord Porter, chairman of the Local Government Association, welcomed the speech, saying: ‘Today’s speech by the Prime Minister shows that the Government has heard our argument that councils must be part of the solution to our chronic housing shortage.

‘It is fantastic that the Government has accepted our long-standing call to scrap the housing borrowing cap. We look forward to working with councils and the Government to build those good quality affordable new homes and infrastructure that everyone in our communities needs.

‘The last time this country built homes at the scale that we need now was in the 1970s when councils built more than 40% of them.’

‘Councils were trusted to get on and build homes that their communities needed, and they delivered, and it is great that they are being given the chance to do so again.’