Local Authority Housing Investment and the Borrowing Cap

Briefing Paper

Self-Financing for Local Authority Housing was introduced in April 2012. The idea behind the new system is to allow local authorities to retain all their rent income locally and to take strategic decisions locally about their budgets and business plans in accordance with the principles of ‘localism’.

Local authorities wish to improve the condition of their existing housing to at least the government’s decent homes standard; and to build new homes to meet the need for more affordable and social housing. However, in practice the self-financing system mitigates against this. In the case of decent homes it is because the self-financing settlement increased the debts of local authorities to a level that the government deemed to be affordable, but the government did not take account of the resources that are needed to meet the decent homes standard. Instead, they said that they would provide capital grants but in practice these are insufficient. Furthermore, the government introduced a ‘debt cap’ that prevents most authorities from borrowing any significant amount of money even when they could afford to do so.

There are now hopes that the borrowing caps could be relaxed as part of the 2013 Spending Review.

This briefing paper looks at local authority housing investment and the borrowing cap including: Decent Homes, New Build, Let's Get Building, Recent Developments, the Borrowing Cap, Trading Borrowing Capacity and Developments in Local Authority Housing Finance.

To download a copy of the full briefing paper, please click HERE


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