Borrowing cap to be lifted

News that the borrowing cap imposed on local authority housing revenue accounts (HRAs) is to be lifted was widely welcomed on the grounds that this would enable councils to borrow to build new homes. The media generally ignores the little question of who pays for the borrowing. Since the HRA is ‘ringfenced’ it is council tenants whose rent and service charges repay the debt and interest charges.

Without government grant to support building the only source of funding (other than Right to Buy receipts that aren’t purloined by Westminster) is borrowing. But the media ignore the current £26 billion debt held by HRAs and the funding shortage which means they have insufficient resources to maintain and renew existing stock.

Here is an article on the Inside Housing website by Martin Wicks which says that existing council tenants should not bear the cost of new building.



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