Senior figures in the construction sector and local government have said the investment pledged by the government to provide new homes does not go far enough.
Speaking at a meeting of the Treasury Select Committee today (28 November), the industry representatives were united in their view that more radical measures were needed to ensure public and private housebuilders could provide the 300,000 homes a year the country needs.
Chancellor Philip Hammond pledged £44bn of investment over the next five years in the Autumn Budget to ramp up housebuilding, but only £15bn of this was new money – the rest having already been earmarked for investment.
David Orr, chief executive of the National Housing Federation, said it was “perverse” that local authorities were not being allowed to borrow more at a time when interest rates remained near historic lows, with the base rate at 0.5 per cent.
He pointed out that it is relatively easy for local authorities to organise long-term debt and that doing so poses “no real risk to the public purse”, as the sale of new homes will cover the costs of borrowing.
His view that the borrowing cap on local authorities should be lifted was backed by Brian Berry, chief executive of the Federation of Master Builders, and councillor Nick Forbes, senior vice-chair of the Local Government Association.
Mr Forbes welcomed the extra money announced in the Budget but suggested Mr Javid’s plans should have been adopted.
He called for local authorities to be able to keep 100 per cent of Right to Buy receipts to reinvest in new supply, rather than the 50 per cent currently permitted by central government.
Mr Forbes criticised the process by which local authorities are forced to compete for funding for making it “difficult to guarantee a longer-term replacement programme”.
“The argument we would make is rather than have a competitive process, lift the borrowing cap for all local authorities,” he said.
Mr Orr also lent his support to ideas set out by Conservative MP Nick Boles to cut the cost of land that had been given planning consent by allowing local authorities to purchase at its existing use value, rather than its inflated price.
He said: “We have been tinkering with the planning system for 40 years, and it has not made any difference. If we want to get 300,000 homes a year, we have to think big.”
Mr Forbes said councils also had a role to play in ensuring developers build at an acceptable rate, saying that council tax could be levied on the firms after a certain number of years to give them an incentive to keep up the pace of construction.
Mr Berry called for the issue of developer contributions under Section 106 agreements and the Community Infrastructure Levy needed to be looked at, as they can prohibit developments from taking place.
He said: “I think it needs to be more proportional for SMEs [small and medium-sized enterprises],” adding that SMEs can be knocked out of the bidding process by large tariffs.
simon.allin@ft.com
