Labour will look to raise the cap on the amount councils can borrow to fund the construction of new homes as part of a package of measures to boost housebuilding

Labour will look to raise the cap on the amount councils can borrow to fund the construction of new homes as part of a package of measures to boost housebuilding if the party is elected to government.

The recommendation to raise the council borrowing cap is expected to form part of Sir Michael Lyons’ review of housing policy.

According to the Guardian, Lyons, who was asked by Labour to produce a report on measures necessary to boost the number of homes built each year to 200,000 by 2020, will also recommend a new generation of “urban extensions”, modeled on the postwar new-town expansion, in a bid to expand existing towns to accommodate more housing.

Lyons told the Guardian that he wanted councils to build more homes so long as they were not competing with private developers, and they should be freed from current constraints on borrowing in to do so.

He said: “In England there is a specific cap on the council Housing Revenue Account (HRA). The overwhelming weight of the evidence that has come to us from public and private bodies, says ‘for goodness sake lift the HRA cap’.”

According to the Guardian, Lyons may recommend the cap on borrowing be lifted for councils with balance sheets that suggest they are fit to borrow more.

The paper also reported that Lyons would recommend:

  • Increasing plans for shared ownership
  • Enable housing associations to unlock their balance sheets and work with construction firms to build more homes
  • Launch a new generation of Urban Development Corporations to build sizeable extensions on the edge of existing towns and cities

Lyons is expected to unveils his detailed report in September.

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