Lib Dems lead on calls for Councils to borrow to build homes

On 3 October 2018, the Prime Minister said the Government will scrap the cap on the amount local authorities can borrow against their housing revenue account assets.

Before the introduction of the cap under Margaret Thatcher, councils built around 10,000 homes a year - but that figure has subsequently dipped as low as 100.

The amount of extra investment in housing could be around £1bn a year, but this is dependent on how many councils decide to borrow.

The Liberal Democrats manifesto for the June 2017 General Election included a commitement to lift the borrowing cap on local authorities and increase the borrowing capacity of Housing Associations so that they can build council and social housing.

Responding to the Prime Minister's announcement that the housing revenue account borrowing cap will be scrapped, Liberal Democrat Leader Vince Cable said:

"We are pleased to see the Prime Minister finally lift the borrowing cap on councils so they can build houses, a policy I and my Liberal Democrat colleagues pushed for in coalition. The Conservatives' long-held resistance to this sensible, pragmatic policy has only deepened the housing crisis."

Local Government Association (LGA) Liberal Democrat Group Leader Councillor Howard Sykes said:

"Finally the Government has accepted the long standing call put forward by both the Liberal Democrats and the LGA that the housing borrowing cap should be scrapped. Councils have a key role to play in providing new homes for genuinely affordable rent and this will help them to do this.

"Our national housing shortage is one of the most pressing issues we face and increasing the provision of socially rented and affordable housing is an important part of solving the housing crisis."