Question to the Ministry of Housing, Communities and Local Government:

To ask Her Majesty's Government why local authorities can borrow from the Public Works Loan Board to buy commercial property but not to fund the construction of social housing.

Under the Local Government Act 2003, local authorities have the freedom to borrow and invest, without government consent, provided that their borrowing is affordable. This is known as the Prudential Framework. Local authorities can borrow from the Public Works Loan Board to fund the construction of social housing. However, this is only where they have headroom to do so under the Housing Revenue Account borrowing caps and provided that any such borrowing is prudential.

We have listened to local authorities who asked for additional borrowing to build more housing. We recently announced that we will raise the Housing Revenue Account borrowing cap by a total of up to £1 billion in areas of high affordability pressure for local authorities who are ready to start building new homes. Local authorities will be able to bid for increases in their caps from 2019-20 to 2021/22.

This will complement measures to support local authorities to build more homes through a longer term rent deal that provides a stable investment environment to deliver new homes. This is alongside an additional £2 billion to deliver more affordable housing for social rent in areas of acute affordability pressure. This will help to deliver the new generation of council house building which the Prime Minister announced recently.