“Government’s new council house building drive will come at expense of housing associations”
The Government’s council house building drive will come at the expense of fewer new units constructed by housing associations, The Independent has learned.
The revelation that housing associations will be partially crowded out casts doubt on the Government’s claims to be fully committed to a surge of new housing for people on low incomes.
In her Conservative conference speech in October Theresa May announced the borrowing cap on local councils would be lifted in order to allow authorities to start building houses for low-income families again in serious volumes for the first time in thirty years.
It was a reform that housing campaigners and many council bosses had long pressed for as a vital element of solving the shortage of social housing.
In the Budget on Monday, Philip Hammond followed up on the pledge, with official Treasury estimates suggesting the removal of the cap would lead to extra borrowing to build by councils of £4.6bn over the next six years.
The independent Office for Budget Responsibility said it expected new council house construction of 20,000 units over the period as a result of the lifting of the cap.
However, the OBR, also added that it expected this to crowd out private house building, with every two new council houses resulting in roughly one less new private house, meaning the net impact on new housing supply as result of lifting the cap would be only 9,000.
And The Independent has learned that the basis for this assumption is that councils, as well as funding new council building from borrowing, will also partly fund the new supply by tapping funds from the Affordable Housing Programme (AHP).
This is a pot of government grant money currently mainly drawn on by housing associations (charities and third sector organisations that provide housing at below-market rates) to fund their own construction of social housing
The upshot is that the OBR thinks housing associations’ available government grants will effectively be squeezed to accommodate councils. …”