Since the Tories came into government the national debt has risen by over 70%. By any measure that is hardly evidence of the savage austerity of left-wing rhetoric. Britain is still running a deficit, in 2018/19, taxpayers will fund interest payments of some £53 billion. A billion-a-week to service the national debt, you can put that on the side of three red buses.
Spreadsheet Phil is getting nearer to finally closing the deficit that George Osborne promised to close by 2015. This should not be taken by spending ministers as a signal to up spending, the national debt still has to be serviced and it would be prudent to start paying down the debt. Likewise giving councils carte blanche to borrow to finance an extended council house building programme will add to the debt burden. If that is what Theresa May is signalling in her conference speech it is bad politics for the Tories.
In Asia it is not uncommon for the state to build low cost housing for sale at below market rates. If councils were encouraged to build and sell properties they would not end up on the state’s balance sheet. It would spread capital ownership more widely by allowing people to own their own homes. It is good politics because property-owning democracies don’t tend to elect socialist governments…
By all means encourage councils to actively build new developments on their land. Scrapping the government cap on how much they can borrow to fund new developments should not however be a licence to build another generation of council estates – the petri dish for municipal socialism. The government should insist that the low cost homes should be offered on construction to qualified buyers who would have to be owner occupiers. When Phil Hammond announces the budget at the end of the month it would be good if the removal of the cap was coupled with a new “right to buy” that granted local residents the right buy any new council homes built. Councils would be obligated to offer new build homes for sale without the high profit margins often commanded by private sector developers. Politically it is a winner and the Treasury would be happy that long-term it would pay down the government debt used to fund the construction.