Housing supply

MQT on 2015-01-21
Session date: 
January 21, 2015
Question By: 
Tom Copley
Labour Group
Asked Of: 
Tom Copley


In your Housing Strategy you outline that you "would like to see new arrangements for prudential borrowing for new housing so that it is not counted as Government debt, which would distinguish it from more mainstream public borrowing, along the lines that apply in much of the rest of Europe". What progress have you made in lobbying the government to implement this change?

Supplementary Questions: 


Answer for Housing supply

Answer for Housing supply

Answered By: 
Tom Copley

Boris Johnson (Mayor of London):  Thanks, Tom.  We have made progress in the sense that we have considerable allocations for housing from the Housing Revenue Account in the Autumn Statement, another £300 million.  The Government has extended low‑cost borrowing through the Public Works Loan Board and the London boroughs support infrastructure in housing zones, but there is a long way to go.  The London Finance Commission, which I think everybody here supports, is making the case to the Government that if we are going to solve our housing crisis, then we need to be able to borrow and we need to change the rules so that the UK more closely resembles other European Union (EU) countries so that we do not have this antiquated concept that investment in housing must somehow appear on the Government’s debt.  I share your analysis and we continue to make that case.


Tom Copley AM:  Absolutely.  It is great that we had cross‑party agreement at the local and regional level in London on this very important issue, but I wonder if you could tell me what progress you have made in lobbying the Government on this, whom you have been speaking to, what you have been saying to them and what they have been saying to you.


Boris Johnson (Mayor of London):  I do not intend to go into detail about my conversations with my friends in Government, but suffice to say ‑‑


Tom Copley AM:  Give us a clue.  Go on.


Boris Johnson (Mayor of London):  The anxiety in Treasury is a rational and a predictable one, which is at a time when there is this huge deficit that we have to reduce - it is a subject I know that Labour is often minded to forget - it is very important to reassure the markets that we are not using some notional accounting measure to disguise the state of the Government finances.  You will appreciate the risk that Britain runs by doing that and that is not --


Tom Copley AM:  Are you saying then this is not how they do it in other European countries?


Boris Johnson (Mayor of London):  As it happens, if you look at interest rates, if you look at bond yields at the moment and you look at the state of the bond markets, it is obvious that actually that risk is, in my view, pretty low because interest rates are extremely low.  There is an opportunity to do this and actually we are gaining ground in Government with the general London Finance Commission approach.  I do not want to anticipate too much a question we are going to have later on, but ‑‑


Tom Copley AM:  That could come in later on.


Boris Johnson (Mayor of London):  ‑‑ this method of funding in London is seen as increasingly attractive.


Tom Copley AM:  Obviously you are now potentially on your way back into Parliament, if the people of Uxbridge and South Ruislip decide that you are the MP that they want.  In Parliament - let us hypothetically say you are an MP - will you continue as an MP to push for the cap to be lifted and for it to be taken out of --


Boris Johnson (Mayor of London):  I have made it very clear.  I have made it very clear.


Tom Copley AM:  Even perhaps potentially as Leader of the Opposition after the next election?


Boris Johnson (Mayor of London):  I have made it clear.  Obviously, come to any hustings I may be taking part in, but I have made it very clear that I will continue to stick up for London, also for the very simple reason it is in the interests of the whole country.  By the way, this is something that will benefit other great cities.  It is a freedom that councils should have.  It would enable us to build more homes across the country.


Tom Copley AM:  There is an extra £2.8 billion for investment in housing in London and, to put that into context, your annual affordable housing budget from April 2015 will only be £483 million and so this is big money.


Boris Johnson (Mayor of London):  We totally appreciate that.  The issue is a hesitancy and a nervousness in the Treasury about the borrowing figures and the impact on the markets of seeming to fudge the figures.  The Government has been very clear so far but, as everybody knows, this is a practice that is followed in every other EU country and I do not see why we should not.