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City council call to get Birmingham building

Birmingham City Council leader Sir Albert Bore is calling on the Government to lift a housing borrowing cap to get Birmingham building.

Councillor Sir Albert Bore, Leader of Birmingham City Council

Birmingham City Council leader Sir Albert Bore is calling on the Government to lift a housing borrowing cap to get Birmingham building.

The Labour leader wants the City Council to lead the way in helping Birmingham meet the demand for up to 80,000 new homes in the next 20 years.

But he says he can only do that if strict Government borrowing limits are removed and the council is able to use its existing 65,000 properties as leverage for further funding.

At present Birmingham City Council can borrow £1.1 billion against its housing assets. But the authority’s credit card is almost to the limit following major investment in double glazing and central heating over the last ten years, at the same time as taking a £336 million slice of Government housing debt two years ago.

Meanwhile the registered social landlords, are free to go to banks or the open market and borrow far larger amounts for new construction based on their property vaules and rent income.

Sir Albert is adding his voice to those of other local authorities demanding the Government lift the cap.

He said: “We are trying to respond to the demand for new homes. We are told 80,000 plus will be needed by 2031, although not all of that will come into Birmingham.”

He recognised there are issues about where to put the homes, currently being looked at under the Birmingham Development Plan – but warned that paying for them is as important.

“We’ve been asking how do you fund all of that? There’s a lot of work going on looking at new funding models – to allow us to draw down funding.

“One example would be if the Government removed the cap on borrowing against the Housing Revenue Account – there’s a ceiling in there.

“If you look at the level of borrowing of a housing association against its rent base compared to the City Council against its Housing Revenue Account – the housing associations are well in front – they’re borrowing on a greater multiple of their rent base.

“Why is the local government ceiling so much lower than the social landlords who are operating in the same sector?”

Officials estimate that if they could get the cap lifted, and borrow in line with other council funding under prudential borrowing rules they could double the amount available to invest in new homes.

Not only would this meet housing demand, but it would also give a boost to the local economy it is argued.

The council’s 65,000 homes are valued at £1.5 billion on the accounts, partly due to secure tenancies, but the open market value is thought to be nearer £4.5 billion.

Sir Albert, during his previous term as City Council leader a decade ago, failed in a bid to transfer the housing stock to social landlords after tenants voted to stay under council control.

He says that the council is also talking to private developers, social landlords and public agencies about other funding models which will deliver the 6,000 homes a year needed – including 40,000 to 50,000 within Birmingham’s built up area.

Like his transport plans unveiled last week, he wants a long-term housing and development plan which will bring forward the volume of construction needed at the same time as developing the job opportunities and infrastructure – schools, roads and so on.

Communities Minister Nick Boles said; “This Government has given councils greater control over their housing stock, and new financial freedoms allow councils to make long-term investments and improvements. But councils cannot go on a credit card spending spree, as all borrowing counts towards the national deficit. Reducing the deficit left by the last Administration is essential to keep interest rates down and ensure long-term economic growth and stability.”

 

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