Economy  

Labour to let councils borrow against housing stock

Labour to let councils borrow against housing stock

Labour leader Jeremy Corbyn has said he would scrap a rule limiting the amount councils can borrow against their housing stock, in a bid to fund thousands of new council houses.

Speaking at the Labour Party conference in Liverpool yesterday (28 September), Mr Corbyn said the policy, which was part of what he called "municipal socialism for the 21st century", would "put public enterprise back into the heart of our economy".

"Today I’m announcing that Labour will remove the artificial local borrowing cap and allow councils to borrow against their housing stock. That single measure alone would allow them to build an extra 12,000 council homes a year," he said.

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Tanya Jackson, head of corporate affairs at Yorkshire Building Society’s head of corporate affairs, welcomed Mr Corbyn's policy, saying giving councils more power to borrow against its existing stock "would help to address the huge housing shortage we face".

She said Yorkshire Building Society estimated there had been a shortfall of almost 1.2 million homes being built since 2004, a factor that had contributed to rising prices.

“Any measures that increase supply of new homes are welcome but the needs of would-be first time buyers should not be overlooked," she said.

“Varying tenures of housebuilding are required across different areas and putting extra powers in the hands of local authorities would do more to ensure the availability of homes both for market rent and sale and further alleviate the underlying causes of the housing deficit.”

The Localism Act 2011 limited overall local authority housing debt to £29.8bn.

The coalition government itself conceded this was a "controversial" policy, and in his 2013 Autumn Statement then chancellor George Osborne committed to raising the cap by £300m between 2015 and 2017.