Lifting the council borrowing cap won’t address the biggest housing issue cities face. It’s time for land reform

Mmmm green belt. Image: Getty.

Prime Minister Theresa May danced her way onto stage to the disco sounds of ABBA last month – but the real mood music of Conservative Party Conference was house. Ending the housing shortage is a huge domestic priority for the government, and one of the things May, Boris Johnson and Jacob Rees-Mogg all agree on is that we need to build more homes.

The key policy the Prime Minister announced during her conference speech is that the government would relax restrictions on local government borrowing to build new council homes. However, while this might increase the rate of building and especially benefit those on low incomes, it doesn’t solve the key problem in our most high-demand cities – a shortage of land in the planning system that can be developed.

Getting councils building housing for rent is sometimes considered the silver bullet that will end the housing shortage. The Local Government Association itself makes the case that “the last time this country built homes at the scale that we need now was in the 1970s when councils built more than 40 per cent of them”. The Labour Party also pledged to abolish the same restrictions back in April as part of a plan to build 1m new council houses at social rents.

And, broadly, we should expect the removal of the borrowing cap to increase the amount of building by councils. There’s a key role for the public sector to play in providing good quality rented housing for those on low incomes, which would complement the recent private sector boom for those on medium-high incomes through Build to Rent housing.

But there is no guarantee that councils will use the new freedoms to build more homes.

The new policy assumes that all councils want to build more homes. And while a few councils in cities are keen on the idea of playing a much larger role in supplying homes, many others in and around high-demand cities are not. Different places have distinct politics and views, and simply giving local government the freedom to build more houses is no guarantee they actually will. The current existence and structure of Right to Buy also discourages councils from building – yet so far it remains untouched.

Moreover, it remains unclear how much freedom councils will have to borrow under the new proposals. The government expects councils will borrow up to £1bn a year and they will have to comply with the prudential code, but beyond that details are scarce. If councils borrow a lot more or less than expected, this will jumble up the sums that underpin the policy and force a rethink.


In particular, the abolition of the borrowing cap for housing comes at a point when concern is growing in Whitehall that councils are borrowing too much to invest in commercial property to create new revenue streams rather than foucsing on land assembly. One possible result of the new policy might therefore be a tightening of restrictions around borrowing for commercial purposes, in return for greater freedom for borrowing in residential property.

Nor will the new proposals address the fact that the UK’s central housing problem is a shortage of land for development in particular cities. In fact, they may actually push up land prices across cities.

If councils take on a much larger role in housing construction and also release much more land for development, then the additional building will dampen housing costs and make their cities more affordable to their residents. But if, hypothetically, no more land was released and the shortage of land continued as before, then adding councils as another developer will only push up prices for land as a whole.

Lower housing costs for families on low incomes – coupled with no change in the amount of land released for housing – would come at the cost of increasing housing costs for the rest of the city. This might be preferable to doing nothing, but it’s just not necessary, as we could make housing in high demand cities cheaper for everyone if enough land was released for development and used efficiently.

There are a number of technical changes that could make this happen, but for the keynote at Conservative conference the announcement has to be big enough to grab headlines, while also acknowledging it will take time for any reforms to filter through to the actual market.

A missed opportunity for green belt reform

Instead, what the Prime Minister should have done and do is announce a radical overhaul of the green belt. Grading green belt land by quality would protect the best countryside, while releasing ordinary scrubland and brownfield land for “button development” of dense housing around train stations would tackle a key cause of the housing shortage.

Doing it at one fell swoop would minimise political risk in a Conservative Party which is united on the need to build more homes, compared to the ongoing nibbling at the green belt which agitates local residents and councillors.

The government needs a radical domestic agenda to win the next general election – which could be four years or four months away, given the volatile nature of British politics. Housing will inevitably one of the key debates ahead of that election – the government needs to be bold in making essential reforms if it is to seize the initiative on this issue.

Anthony Breach is an economic analyst at the Centre for Cities, on whose blog this post first appeared.

 
 
 
 

There isn’t a war on the motorist. We should start one

These bloody people. Image: Getty.

When should you use the horn on a car? It’s not, and anyone who has been on a road in the UK in living memory will be surprised to hear this, when you are inconvenienced by traffic flow. Nor is it when you are annoyed that you have been very slightly inconvenienced by another driver refusing to break the law in a manner that is objectively dangerous, but which you perceive to be to your advantage.

According to the Highway Code:

“A horn should only be used when warning someone of any danger due to another vehicle or any other kind of danger.”

Let’s be frank: neither you nor I nor anyone we have ever met has ever heard a horn used in such a manner. Even those of us who live in or near places where horns perpetually ring out due to the entitled sociopathy of most drivers. Especially those of us who live in or near such places.

Several roads I frequently find myself pushing a pram up and down in north London are two way traffic, but allow parking on both sides. This being London that means that, in practice, they’re single track road which cars can enter from both ends.

And this being London that means, in practice, that on multiple occasions every day, men – it is literally always men – glower at each other from behind the steering wheels of needlessly big cars, banging their horns in fury that circumstances have, usually through the fault of neither of them, meant they are facing each other on a de facto single track road and now one of them is going to have to reverse for a metre or so.

This, of course, is an unacceptable surrender as far as the drivers’ ego is concerned, and a stalemate seemingly as protracted as the cold war and certainly nosier usually emerges. Occasionally someone will climb out of their beloved vehicle and shout and their opponent in person, which at least has the advantages of being quieter.

I mentioned all this to a friend recently, who suggested that maybe use of car horns should be formally restricted in certain circumstances.

Ha ha ha. Hah.

The Highway Code goes on to say -

“It is illegal to use a horn on a moving vehicle on a restricted road, a road that has street lights and a 30 mph limit, between the times of 11:30 p.m. and 07:00 a.m.”

Is there any UK legal provision more absolutely and comprehensively ignored by those to whom it applies? It might as well not be there. And you can bet that every single person who flouts it considers themselves law abiding. Rather than the perpetual criminal that they in point of fact are.


In the 25 years since I learned to drive I have used a car horn exactly no times, despite having lived in London for more than 20 of them. This is because I have never had occasion to use it appropriately. Neither has anyone else, of course, they’ve just used it inappropriately. Repeatedly.

So here’s my proposal for massively improving all UK  suburban and urban environments at a stroke: ban horns in all new cars and introduce massive, punitive, crippling, life-destroying fines for people caught using them on their old one.

There has never been a war on motorists, despite the persecution fantasies of the kind of middle aged man who thinks owning a book by Jeremy Clarkson is a substitute for a personality. There should be. Let’s start one. Now.

Phase 2 will be mandatory life sentences for people who don’t understand that a green traffic light doesn’t automatically mean you have right of way just because you’re in a car.

Do write in with your suggestions for Phase 3.