My Lords, I have just been over that. I want to get to the point about the borrowing headroom.
The noble Baroness also asked how a local authority with limited stock that wants to provide more for local residents does so. I mentioned in debate on the previous group that we have made available a significant amount of additional borrowing headroom, and the allocated
extra borrowing will support about 3,000 new affordable homes in 2015-16 and 2016-17. Local authorities’ ability to borrow will continue to be constrained by whether borrowing is prudential, obviously, and within borrowing limits. Consideration of the former will primarily concern the affordability of the borrowing, which should not be affected by this policy.
The Government are committed to making a deduction from payments in respect of the debt supported by those properties that are taken into account in a determination. This should provide some assistance for local authorities to borrow within their existing caps, as well as utilising other options available to them to finance the building of new homes.
Amendment 68B would ensure that any agreement with a local authority outside London would require the delivery of at least one new affordable home for each property taken into account under the authority’s determination. We want the flexibility to enter into agreements that will result in as many new homes nationally as possible, but it would be better to be able to have an agreement that resulted in slightly less than one for one in some cases, rather than have no new homes built at all. Therefore, we would not want to constrain through primary legislation the flexibility to make this choice. The amendment would limit the Secretary of State’s ability to support agreements in cases that would deliver less than one new home for each one sold, removing the chance for some local authorities to have agreements to retain receipts and lead on the delivery of new housing, and devaluing the key flexibility in the legislation that receipts can be used to fund new housing or things that facilitate its provision.
The need for services and infrastructure to support new developments has been raised in your Lordships’ House, the other place and by local authorities themselves. I understand the sentiments with which the noble Lord, Lord Best, tabled Amendment 68C. If we had specified a target for the delivery of additional homes in primary legislation, we would want to consider carefully how combined authorities could help to deliver that target. However, we do not think that a target is the right approach for local authorities outside London. Instead, the provisions enable the Secretary of State to enter into an agreement with local authorities regarding the additional homes. Local authorities will have the flexibility to work collaboratively with each other, with combined authorities—as they already are doing—or with other housing providers to deliver the agreement. The key thing is that delivery should be a local decision and that the Government will be able to hold them accountable for this delivery.
Finally, I address opposition to Clause 72. Building new homes is at the heart of these proposals. We want as much flexibility as possible in what new housing will be provided and where, in order to ensure that as many new homes can be built as possible. We believe that this will be best delivered through agreements rather than putting restrictions and exemptions in the Bill.
Clause 72 enables the Secretary of State to make an agreement with a local authority to reduce the amount that it is required to pay under the determination. The
local authority will use this amount to provide more housing. To avoid accusations of good money being thrown after bad, we would consider councils’ past performance and plans for delivery in deciding whether they should be able to retain some receipt. For example, if a local authority wanted to lead on a programme to build new homes using funds from the sale of vacant high-value housing, it could seek an agreement with the Secretary of State to reduce the amount that it had to pay. If that agreement was signed, the local authority would use that retained amount to fund the provision of new housing, in accordance with any terms and conditions set out in the agreement.
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Although there is a national need for more houses, we also know that there are particular housing pressures in London, as many noble Lords have pointed out. When the Secretary of State has an agreement with a local housing authority in London, it must require the delivery of at least two new affordable homes for each high-value dwelling. It is important to stress that every home built using receipts from the sale of the vacant high-value housing is an additional home. We have been clear that funding of the building of new homes is one of the two key uses for these receipts, along with funding right-to-buy discounts for housing association tenants. The voluntary right to buy will further increase housing supply, as the housing association will use the sales receipt to fund the provision of another home.
Turning to some specific questions, the noble Lord, Lord Kerslake, asked why there was a special provision for the funding of two new homes for every one that was expected to be sold in London. It is because of the specific needs of London. London has such an acute housing need that it is estimated that about 49,000 to 62,000 additional homes are required every year. Net housing completions stand at 23,986 for 2013-14, and these represent 80% of the 29,830 target in the 2011 local plan. The Secretary of State and the Minister for Housing are continuing to engage with the GLA and the local councils on how two new homes will be delivered for each one that is expected to be sold in London.
The noble Lord, Lord Kerslake, also talked about the local authorities’ borrowing capacity and limitations. The 165 HRA authorities in 2014 had an in-year net surplus of £464 million. They accumulated general HRA reserves of almost £2.5 billion and a borrowing headroom approaching £3.4 billion. While we will continue to consider the impact on local authorities, we have no further plans to raise the borrowing caps.
The noble Lord, Lord Stunell, asked again about the geographical level at which high value would be set. The Bill provides some flexibility on the detail of the legislation, which is important as we continue to collect data and engage with local authorities on the best way to set the high-value threshold. Although I said that I believed that local authority level is an option, and that we have collected the data to this level, the decision has not yet been made. I probably made that clear already in my previous comments. Again, this debate will inform how we take this forward.
I hope that I have covered all questions that noble Lords wanted answering and that our clear commitment to using receipts to fund the delivery of more housing provides reassurance to noble Lords. Clearly, noble Lords may ask me any further questions if they wish, but, on that note, I ask the noble Lord to withdraw his amendment.