Among the florid prose of Boris Johnson’s 2020 Vision were some significant political interventions, none more so than the call for the government to lift the cap on councils’ borrowing and allow them to build more affordable housing. Boris wrote:
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 caps 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.
George Osborne’s ideological aversion to borrowing and to social housing means he has so far refused to act, but could a U-turn be on the cards?
Recently asked by Green MP Caroline Lucas whether the government would “look again at lifting the current cap on council borrowing for house building, and at providing direct capital spending to allow councils to build a mass programme of affordable housing?” Communities minister Don Foster replied: “We are looking at the point the hon. Lady has raised, and an announcement will be made on 26 June.”
26 June is the date of the Spending Review. Is Osborne finally about to remove this block to house building? Let’s hope so.