The Local Government Association says they cannot help deliver Government targets of 300,000 new homes a year without extra reforms.
This Wednesday Chancellor Philip Hammond said he wanted local councils to build more homes, and that the Government could lift a borrowing cap to help.
But the LGA says it wants these caps abolished completely, according to the FT.
The LGA says this would allow a “renaissance” in council home building.
Local councils use the Housing Revenue Account to fund housebuilding. This was capped at around £29.4bn in 2016-17.
Councils borrowed around £26bn in the period.
The new Budget proposals will only let local councils collectively apply to increase their caps by up to £1bn by 2021-22.
Local authority housebuilding has been minimal for many years (see graph below).
(Credit – DCLG)
An LGA statement says: “This is an important recognition of our argument about the vital role that councils must play to boost homes for local families in need and solve our housing crisis, but does not go far enough.
“Our national housing shortage is one of the most pressing issues we face. The last time this country built more than 250,000 homes a year – in the 1970s – councils built more than 40 per cent of them. Councils were trusted to get on and build homes that their communities need, and they delivered.
“If we are to get back to building 300,000 homes a year, then the Government needs to ensure all areas of the country can borrow to invest in resuming their role as major builders of affordable homes.”