under schedule 4 to the Housing and Planning Act 2016 and the Regulation of Social Housing (Influence of Local Authorities) (England) Regulations 2017. In April 2012 English local authorities became self-financing in relation to their housing stock. To the uninitiated, this may sound like a route to independent local decisions on housing investment. However, central government imposed a cap on Housing Revenue Account (“HRA”) debt (ironically under Localism Act 2011 powers), which significantly restricted councils’ ability to borrow against their housing rental streams, and thus to invest in housing stock. The Local Government Association has consistently called for the borrowing cap to be scrapped, with support from the Chartered Institute of Housing and other bodies in the housing industry. The example of Scottish councils’ successful building programmes has often been cited in support of this contention. In its unanimous report on the Autumn Budget 2017, the Treasury Committee agreed, recommending that “in order to increase local authority construction to levels sufficient to meet the Government’s 300,000 target, the Housing Revenue Account borrowing cap should be removed.” However, the main thrust of government policy has been heading in a different direction. In its evidence to the DCLG Select Committee inquiry leading up to self-financing, the Chartered Institute of Public Finance and Accountancy had called for the government not to press ahead with the borrowing cap. The government responded as follows: “Our reforms must not jeopardise the government’s first economic priority, which is to reduce the national deficit.” The government’s position was that adherence to the Prudential Code governing local authorities’ capital finance decisions would ensure local affordability but would not achieve national priorities. The UK is alone within the EU in counting local authorities’ debt as part of the national debt. As a result, councils’ borrowing for house building has remained firmly in the sights of the Chancellor of the Exchequer as part of government policy of deficit reduction. Little was said in the Housing White Paper about reviving councils’ traditional role as house builders. At paragraph 3.32, there was a vague commitment to: “work with local authorities to understand all the options for increasing the supply of affordable housing.” This may be contrasted with the statement at paragraph 3.24 that: “Housing associations have a vital role to play if we are to build the homes we need. They already build the vast majority of new affordable homes, in addition to increasing numbers of homes for market rent and sale.” Recent relaxations of the cap including an extra £1bn headroom for areas of high demand have been very modest, when compared with the Association of Retained Council Housing’s June 2013 estimate of the financial capacity of national council housing stock, at £27.5bn. It remains to be seen whether the Prime Minister's announcement at the Conservative Party Conference in October 2018 that the borrowing cap would be "scrapped" will go that far. However, potentially, this policy shift could spell a new era of house building by local authorities. A strengthened strategic role The government announced a review of local authorities’ role in supporting housing supply in the 2013 Autumn Statement. The result of the review was the Elphicke-House Report dated January 2015. As its sub-title From statutory provider to Housing Delivery Enabler suggests, the main emphasis of the report’s recommendations was in strengthening councils’ strategic role in planning and facilitating the required house building by the private sector. The Elphicke-House Report thus laid the foundations for the 2017 White Paper, which announced three things that the government was going to make happen to fix the broken housing market: (i) planning for the right homes in the right places, (ii) building homes faster and (iii) diversifying the housing market. So far as local authorities were concerned, the Executive summary stated as follows: “the Government is offering higher fees and new capacity funding to develop planning departments, simplified plan- making, and more funding for infrastructure. We will make it easier for local authorities to take action against those who do not build out once permissions have been granted. We are interested in the scope for bespoke housing deals to make the most of local innovation. In return, the Government asks local authorities to be as ambitious and innovative as possible to get homes built in their area. All local authorities should develop an up-to-date plan with their communities that meets their housing requirement (or, if that is not possible, to work with neighbouring authorities to ensure it is met), decide applications for development promptly and ensure the homes they have planned for are built out on time. It is crucial that local authorities hold up their end of the bargain. Where they are not making sufficient progress on producing or reviewing their plans, the Government will intervene. And where the number of homes being built is below expectations, the new housing delivery test will ensure that action is taken.” The use of the National Planning Policy Framework (“NPPF”) to influence local authorities to deliver the local need for new housing, often despite resistance from their existing residents, may be illustrated by the Morris Homes case in the Supreme Court, reported at [2017] 1 WLR 1865. The Supreme Court decided that, because Suffolk Coastal District Council could not demonstrate a five-year supply of deliverable housing sites, paragraph 14 The UK is alone within the EU in counting local authorities’ debt as part of the national debt. As a result, councils’ borrowing for house building has remained firmly in the sights of the Chancellor of the Exchequer as part of government policy of deficit reduction. Local Government Lawyer Insight December 2018 Local Government Lawyer Insight December 2018 28 LocalGovernmentLawyer