Why won't Osborne let councils borrow to build housing? Even Tories want him to

Conservative councillors and Boris Johnson are among those calling for the Chancellor to lift the "artificial cap" on borrowing but, for entirely ideological reasons, he still won't act.

Demand for housing might be surging owing to George Osborne's Help to Buy but supply remains pitifully constrained. The Local Government Association reveals today that 381,390 homes have been given planning permission but have yet to be built. Rather than the planning system (as many on the right claim), it is a lack of finance that is blame. 

Tory councillor Mike Jones, the chairman of the LGA's environment and housing board, has responded by calling for the government to lift the "artificial cap" placed on councils' borrowing and allow them to build more affordable homes. He said:

While there has been progress made, this risks being undermined if we do not find a way to ensure developers keep up with demand. These figures conclusively show that it is not the planning system holding back the building of much-needed new homes.

The challenge now lies in actually getting houses built. Government schemes to help buyers access finance risk creating a bubble if there isn't an increase in house building to match it.

Government has an unrivalled opportunity to create jobs, provide tens of thousands of homes and help the economy without having to find a single extra penny.

New homes are badly needed and councils want to get on with building them. The common sense answer is for the Treasury to remove its house-building block and let us get on with it.

In his recent manifesto for London 2020 Vision, Boris Johnson similarly argued: 

We should allow London’s councils to borrow more for house building - as they do on continental Europe - since the public sector clearly gains a bankable asset and there is no need for this to appear on the books as public borrowing.

In policy terms, it is a no-brainer. The Chartered Institute of Housing estimates that raising the cap by £7bn could enable the construction of 60,000 homes over the next five years, creating 23,500 jobs and adding £5.6bn to the economy.

So what's holding Osborne back? In a word, ideology. Unlike in other European countries, borrowing by councils appears on the national balance sheet making the deficit appear larger than it is. For a Chancellor determined to ensure that borrowing falls every year (to the extent that he delayed payments to institutions such as the World Bank and the UN and forced departments to underspend by £10.9bn), regardless of other policy objectives, lifting the cap is out of the question. 

In an attempt to win Osborne round, Vince Cable proposed allowing councils to pool their borrowing limits so those not using their full entitlement can donate it to authorities with housing waiting lists, but this too was blocked. As Cable recently told the Social Liberal Forum: "What is stopping them? Frankly, Tory dogma. And the Tories are hiding behind Treasury methodology, saying that more borrowing by councils beyond permitted limits will break the fixed rules.

"So even though freeing up this borrowing space would result in tens of thousands more homes being built, and many times more jobs, they would rather start talking about the cuts they want to make, rather than the houses that we should build. That is the difference between Lib Dems and Tories on this matter."

Cable's housing plan will be put forward for endorsement at the Lib Dem conference next month. So long as Osborne continues to resist any reform, he risks being outflanked on an issue of increasing political significance. 

 

 

George Osborne at the Berkeley Homes Royal Arsenal Riverside development in Woolwich. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Rarely has it mattered so little if Manchester United won; rarely has it been so special they did

Team's Europa League victory offers chance for sorely needed celebration of a city's spirit.

Carlo Ancelotti, the Bayern Munich manager, memorably once said that football is “the most important of the least important things”, but he was only partly right. While it is absolutely the case that a bunch of people chasing around a field is insignificant, a bunch of people chasing around a field is not really what football is about.

At a football match can you set aside the strictures that govern real life and freely scream, shout and cuddle strangers. Football tracks life with such unfailing omnipresence, garnishing the mundane with regular doses of drama and suspense; football is amazing, and even when it isn’t there’s always the possibility that it’s about to be.

Football bestows primal paroxysms of intense, transcendent ecstasy, shared both with people who mean everything and people who mean nothing. Football carves out time for people it's important to see and delivers people it becomes important to see. Football is a structure with folklore, mythology, language and symbols; being part of football is being part of something big, special, and eternal. Football is the best thing in the world when things go well, and still the best thing in the world when they don’t. There is nothing remotely like it. Nothing.

Football is about community and identity, friends and family; football is about expression and abandon, laughter and song; football is about love and pride. Football is about all the beauty in the world.

And the world is a beautiful place, even though it doesn’t always seem that way – now especially. But in the horror of terror we’ve seen amazing kindness, uplifting unity and awesome dignity which is the absolute point of everything.

In Stockholm last night, 50,000 or so people gathered for a football match, trying to find a way of celebrating all of these things. Around town before the game the atmosphere was not as boisterous as usual, but in the ground the old conviction gradually returned. The PA played Bob Marley’s Three Little Birds, an Ajax staple with lyrics not entirely appropriate: there is plenty about which to worry, and for some every little thing is never going to be alright.

But somehow the sentiment felt right and the Mancunian contingent joined in with gusto, following it up with “We’ll never die,” – a song of defiance born from the ashes of the Munich air disaster and generally aired at the end of games, often when defeat is imminent. Last night it was needed from the outset, though this time its final line – “we’ll keep the red flag flying high, coz Man United will never die" – was not about a football team but a city, a spirit, and a way of life. 

Over the course of the night, every burst of song and even the minute's silence chorused with that theme: “Manchester, Manchester, Manchester”; “Manchester la la la”; “Oh Manchester is wonderful”. Sparse and simple words, layered and complex meanings.

The match itself was a curious affair. Rarely has it mattered so little whether or not United won; rarely has it been so special that they did. Manchester United do not represent or appeal to everyone in Manchester but they epitomise a similar brilliance to Manchester, brilliance which they take to the world. Brilliance like youthfulness, toughness, swagger and zest; brilliance which has been to the fore these last three days, despite it all.

Last night they drew upon their most prosaic aspects, outfighting and outrunning a willing but callow opponent to win the only trophy to have eluded them. They did not make things better, but they did bring happiness and positivity at a time when happiness and positivity needed to be brought; football is not “the most important of the least important things,” it is the least important of the most important things.

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