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Peer2Peer Finance News | May 27, 2017

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Government urged to lift cap on local council borrowing

Government urged to lift cap on local council borrowing
Staff
  • On November 9, 2016

THE FEDERATION of Master Builders (FMB) has urged the government to lift a rule limiting the amount councils can borrow, in a bid to tackle the housing crisis and boost the UK’s construction sector.

The industry body on Wednesday called on the Chancellor Philip Hammond to use the Autumn Statement to address the shortage in housing by easing the controversial 2011 policy that limited overall local authority housing debt.

Labour leader Jeremy Corbyn has already called for the removal of the cap.

Such a move would provide a source of reliable borrowers for UK lenders, which could present opportunities for the peer-to-peer finance industry. 18 local councils already borrow money from Funding Circle to support local businesses.  

“The Autumn Statement presents an opportunity for the new chancellor to think creatively about how to address the country’s growing housing crisis,” said Brian Berry, chief executive of the FMB.

“We simply aren’t building enough new homes to meet current demand, which is why we’re calling for the chancellor to empower local authorities to borrow money to build thousands of new social homes.

“The gap between the number of homes we are building and the 250,000 a year figure widely accepted to be necessary in order to address the housing shortfall remains significant.

“Local authorities, who are well placed to identify local housing needs, can play a critical role in financing an increase in housing output in a safe and sensible way.”