'Let council borrow much more money to build homes' says Coventry councillor - The Coventry Observer

'Let council borrow much more money to build homes' says Coventry councillor

Coventry Editorial 5th Aug, 2015 Updated: 28th Oct, 2016   0

A PLEA to government to allow Coventry City Council to borrow much more to build homes has been issued by a leading councillor.

Labour cabinet member Ed Ruane says the easiest way to solve a housing crisis is to let councils build homes again.

He said he understood concerns it would lead to more council and public sector debt.

But he argues the money would be repaid – and a desperate shortage of housing in Coventry would be finally addressed.

Coventry’s Labour leaders also want to tackle the shortage of social housing, and build homes on ten per cent of Greenbelt to aid growth to become a ‘top ten city’.

Coun Ruane writes: “Currently, Coventry and the rest of Britain doesn’t have enough homes… Those are the facts about an issue that for many years slipped under the political radar.

“Britain has a growing population that needs to be housed, but the planning system often slows development, and successive governments have not enabled the building of social housing as much as they once did. Private rents and house prices have risen rapidly, and the housing benefits bill has grown to £26bn.

“The government has made a number of commitments on housing, introducing Help to Buy, extending the Right to Buy to housing association tenants, announcing plans to build 200,000 new starter homes to be sold to first-time buyers under 40. It’s also looking to force councils to give land with planning permission to people who want to build homes, and to open up public land for house-building.

“There is a missing element in all this – our local authorities. We want to build.

“Many of my colleagues and I are desperate for the authority and financial ability to answer the pressing needs of our constituents, especially when you have 12,000 people on the Coventry Homefinder waiting list.

“… At present, the government imposes a cap on borrowing under a mechanism called the Housing Revenue Account. That means local authorities can only take on up to £29.8bn in debt to build more homes. In the 2013 Autumn Statement, chancellor George Osborne said this cap would rise, by £150m in 2015-16 and 2016-17.

“This isn’t nearly enough. In November 2012, Let’s Get Building, a report by the National Federation of ALMOs (Arms Length Management Organisations) and the Local Government Association, suggested that lifting the cap could unlock an extra £4.2bn in funding.

“I understand the concern about more debt in the public sector, but these aren’t bad, or risky, investments to make. We certainly have the people to fill up new homes for rent, and they’ll pay that rent. That gives local authorities a steady stream of income with which to pay back any loans. And this is an investment in our people, it gives them a decent place to live so they access the jobs they need, and it gives their families a space to learn, be safe and grow.

“The Key Cities group recently published a report: A Manifesto for Devolution to Britain’s Key Cities. The report argues that Britain should employ tax increment financing to get access to further funding for developments, such a move would allow us to borrow money on the basis that increased business rate revenues can pay for the original investment.

“If we can increase the amount of extra revenue which stays with local authorities, rather than returning to the Treasury in Whitehall, that will give councils an incentive to find answers to the housing crisis and develop constructive relationships with local businesses.”


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