Council ‘development corporations’ need borrowing cap to be lifted

LGA says the idea of development corporations as outlined by MHCLG must be backed by a lifting of the borrowing cap.


New council ‘development corporations’ won’t lend themselves to house building unless government lefts the local authority borrowing cap, the LGA says.

Cllr Martin Tett, LGA Housing spokesman, said the LGA had long-called for oversight of local development corporations to be carried out by councils, so that local communities can have as much say as possible about developments in their areas.

“However, there is no quicker way to deliver these homes than by triggering the renaissance in council housebuilding we need by lifting the housing borrowing cap and enabling councils to borrow to build once more,” he said.

Cllr Tett acknowledged as “positive” the fact that Government has listened to the views of local communities on local development corporations.

“We will continue to engage with the Government to ensure that we can make the most of these new opportunities to deliver homes through local development corporations, and will continue to support the sector in efforts to deliver new homes,” he said.

Housing Minister Dominic Raab has outlined councils as able to seek Government approval to launch a New Town Development Corporation – which would be responsible for delivering new towns and garden communities in their area.

As envisaged, the new bodies will be responsible for master planning and project development, bringing on board private investment, partnering with developers and overseeing the completion of a new town or garden village with each expected to deliver tens of thousands of new homes.

Held accountable by councils, the development corporations will be expected to involve communities in their projects, which includes allowing residents to have their say on how high-quality homes are delivered.

Subject to the normal planning requirements, including safeguards that protect the Green Belt, the corporations will be led by teams made up of council representatives, community stakeholders, experts in delivering major projects and other partner organisations involved in the delivery of sites.

This measure is part of the Government’s programme of planning reform and targeted funding to deliver 300,000 homes a year by the mid-2020s.

Raab said development corporations would be “locally accountable” in ensuring “the right homes are built in the right places.”

Previously, all New Town Development Corporations created by the Secretary of State remained accountable to the Ministry of Housing, Communities and Local Government.

Raab will introduce the regulations to Parliament, which are subject to further debate by MPs.

If approved, they will come into force later this year once approved by Parliament.

David Churchill, Partner, Carter Jonas, said it was “critical” that Development Corporations were independent at Board level and embraced partnership arrangements for delivery.

“Allowing flexibility to potential state borrowing is sensible given the variety of scale and complexity of these developments.

“However, it is important the Treasury, when agreeing borrowing levels with potential Oversight Authorities, ensures requests for funding is supported by a robust business case, with it demonstrated that all possible measures to utilise investment from the private sector is taken,” Churchill said.

“If done correctly, this will incentivise the creation of public-private partnerships, which will ensure that Development Corporations don’t place undue burden on an already stretched public purse.

Whilst the public sector will maintain control over the projects, the private sector needs some protection or investment won’t come forward in the way envisaged.

Used properly these models can deliver the high quality large-scale developments that the Government is seeking to deliver through Development Corporations, like Alconbury and Barking Riverside are achieving outside of this mode,” he said.



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