"It is utterly absurd that councils are allowed to borrow to speculate in commercial property but are stopped from borrowing to build affordable council houses," said Liberal Democrat leader Vince Cable in his speech to the Liberal Democrat conference.
Cable called on the Government to allow local councils to remove barriers and let them borrow to build.
Brian Berry, Chief Executive of the FMB, said “Mr Cable is absolutely correct in saying the Government must be bold if it is to solve the housing crisis. The private sector will continue to play the lead role in building our way out of the housing shortage and if SMEs are given the access to finance and access to land they need, these firms will deliver many more homes than they do currently. We’ve only ever built at the level we need to keep pace with demand when both the private and public house building sectors were simultaneously firing on all fronts. For example, in the 1960s, we were building around 400,000 homes per year and half of those were social housing.”
“Investment by local authorities in a new generation of social housing would deliver many more homes that the country needs urgently. This could also help aid the expansion of private sector output by providing more opportunities for SME builders. Local authorities are currently constrained in the amount they can borrow to invest in housing by an artificial cap. If this was changed and replaced with prudential borrowing rules, it could empower local authorities to take much fuller advantage of their borrowing power to supplement private sector supply and build thousands more new social homes. Put simply, if we are to build our way out of the housing crisis, private sector and local authorities alike must be allowed to build to their full potential.”