Restrictions Hampering Housing Association and Local Authority Relationships
Whilst recently announcing that 15 local authorities are at risk of having the ability to write their own Local Plan removed from them and given to Whitehall to carry out, it has also been confirmed that the Government has reversed their previous 2015 decision to add housing association debt to the public sector accounts.
There is a recognition in Government that more affordable homes (including socially rented homes) need to be built and that housing associations play a crucial part in delivering these homes (hence the removal from the public debt balance sheet), but there seems to be a stumbling block in allowing Local government the same freedom to borrow funding specifically for new homes as borrowing caps remain in place, thereby preventing council’s from doing so. Local government should be at the forefront of building new homes and in working closely with their local housing associations to deliver more housing. However, too many are unable to build new council houses despite those homes being valued by residents.
Whilst it is good that housing associations have had this public debt restriction removed from them in favour of greater flexibility to borrow to build; it is apparent that in order to deliver more new council houses local government also needs to have the same freedoms to borrow for housing development as housing associations do. Currently, local government is relying on (and hoping) that housing associations can deliver the affordable housing they need in their area without themselves having the ability to deliver much of it themselves.
If the Government raised the borrowing cap then councils could raise more funds specifically for house building. If they also allowed councils to ring-fence this borrowing so that it was held separately from the Council’s remaining public finances, then it would keep house building borrowing out of direct public debt and would allow more to be borrowed for this specific reason. As well as delivering more homes, doing so could also improve the relationship, co-working and co-delivery between councils and housing associations.