The announcement from Housing Minister, John Healey MP, to allow local authorities to keep their own council house rents to build more social housing is a "victory for common sense", says the Federation of Master Builders (FMB).

Brian Berry, Director of External Affairs at the FMB said: "John Healey's announcement will help make a difference to the 4.5 million people on council house waiting lists. It is far better to allow local authorities to keep the cash generated from rents to build more homes in their own areas.

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"The estimated £200 million surplus, which councils will now be able to keep, could deliver around 1,800 council houses which is a lot more than the £50 million extra for new council housing announced in the Chancellor's Budget in April."

Berry continued: "By allowing councils to keep the money they generate the Government will be allowing councils to operate in a similar way to housing associations; they will be able to borrow freely and plough the money collected from rent back into their businesses. This will also benefit the ailing house building industry which is at its lowest level since 1924.

"At no extra cost the Housing Minister John Healey MP is making a real difference to thousands of people, both in terms of providing more affordable homes and creating jobs in the building sector and helping to restore the Government’s tarnished record on housing policy."

(CD/JM)