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James Parker, editor of Housebuilder & Developer looks at whether the Prime Minister’s scrapping of the cap on council borrowing will have the desired outcome.

Theresa May has turned out to be the ultimate survivor as she navigates the seemingly un-navigable (the shark infested waters between extreme Brexiteers and an EU – both unhappy with her Chequers deal).

However she managed to do the unusual, and announce something universally welcomed in her conference speech.

Finally, they have scrapped the cap on council borrowing, after years of lobbying from all quarters.

The problem with removing the council borrowing cap is that it is so long overdue.

James Parker James Parker Editor of Housebuilder & Developer

The housing challenge

Presumably starting imminently, councils will be able to borrow money against their housing revenue account assets to fund new developments.

May admittedly candidly in front of the nation that the policy of capping this borrowing “doesn’t make sense” and that it had “stopped councils playing their part in solving the housing crisis.”

It is a heartening move whose arrival, PSBR-worrying as it may be for Phillip Hammond, shows the size of the challenge of building 300,000 homes per year.

Dancing Queen

This was one of the few points of light in what was otherwise a fairly bleak speech by ‘Dancing Queen’ May, harking back to the First World War, the dangers of Corbyn and a desperate call for the party to pull together around the highly unpopular Chequers deal, although May has rebadged it a “free trade deal”.

Reportedly, May was booed at a fringe event at the conference when she was singing the praises of the Chequers proposal, showing how hard it is to appease both sides of this febrile debate. 

Surely such treatment of a leader cannot have been heard often at a party conference, the one occasion where party loyalty is the overriding motive.

It suggests a large undercurrent of dissent such that if her deal falls, you wonder if she can survive.

Long overdue

While Brexit is the only real topic of conversation given its far-reaching nature (not least for its likely impact on construction staff to deliver ‘the homes we so desperately need’), the Government is trying to act on some policy commitments at least.

The problem with removing the council borrowing cap is that it is so long overdue.

In summary

There were solid rumours that Philip Hammond was going to announce it in his November 2017 budget, however for some unknown reason it was shelved until now, with Hammond merely lifting the cap to £1bn in some areas.

That’s many months of potential development lost – fairly hard to swallow given the immensity of the challenge, and hard to square with the Government’s vow to let local decision-making hold sway on future development.

Let’s hope they act quicker with further moves to tackle the housing crisis, the one problem that’s not going to go away.

James Parker is editor of Housebuilder & Developer