Chancellor Rachel Reeves has announced £2 billion to build thousands of new homes in England in a bid to dampen down Labour’s civil war over massive spending cuts to be revealed in the spring statement on Wednesday. Homelessness charity Crisis welcomed the Government’s promise to provide the biggest boost in social and affordable housebuilding in a generation. However sources were reported saying the funding had been announced earlier than planned in an effort to “sweeten the pill” before the spring statement, which could see cuts to education, police and more.
Conservatives warned that the extra homes would do little to help solve housing shortages because the population is also growing as a result of immigration. Shadow housing secretary Kevin Hollinrake said without cutting the numbers of people crossing the Channel in small boats, there was “simply no way for the Government to stop every single home built with this funding from simply coping with the population growth from illegal migrants, many of who might not even have left Calais yet”. He added: “Only the Conservatives under new leadership will take action to stop illegal crossings and prevent millions from gaining access to social housing.”
The funding ahead of the spring statement is described by the Government as a “down payment from the Treasury” ahead of longer-term investment in social and affordable housing expected to be announced later in the year.
The Government expects at least half of the 18,000 would be social homes, as charities urged that the “vast majority” should be for social rent amid record highs in homelessness across the country.
The housebuilding boost is aimed at helping to fulfil the Government’s pledge to build 1.5 million new homes over the next five years.
Last year, experts at the New Economics Foundation said 90,000 social homes would need to be built by as early as 2027/28 to meet the Government’s target and that by the final year of this parliament, ministers would “need to go beyond this and deliver 110,000 new social homes to ensure 1.5 million homes are built”, amounting to a total of 365,000 social rent homes over the next five years to hit the target.
The Ministry of Housing, Communities and Local Government said thousands of new affordable homes will start construction by March 2027 and be completed by July 2029. They said the funding will also “unlock development and opportunity” on sites that are ready and waiting for construction to begin in locations including Manchester and Liverpool.
The Chancellor announced the plans on a visit to an affordable housing site in Stoke-On-Trent with Deputy Prime Minister Angela Rayner.
Ms Reeves said: “We are fixing the housing crisis in this country with biggest boost in social and affordable housebuilding in a generation.
“Today’s announcement will help drive growth through our Plan for Change by delivering up to 18,000 new homes, as well as jobs and opportunities, getting more money into working people’s pockets.”
Deputy Prime Minister Angela Rayner said: “Everyone deserves to have a safe and secure roof over their heads and a place to call their own, but the reality is that far too many people have been frozen out of homeownership or denied the chance to rent a home they can afford thanks to the housing crisis we’ve inherited.
“This investment will help us to build thousands more affordable homes to buy and rent and get working people and families into secure homes and onto the housing ladder.
“This is just the latest step forward in delivering our Plan for Change mission to build 1.5 million homes, and the biggest increase in social and affordable housing in a generation.”
The number of households on local authority waiting lists, or registers, for social housing in England stood at 1,330,611 in 2024 – the highest figure in a decade. The previous highest figure was 1,370,410 in 2014.
Figures published last month showed that both the number of households in temporary accommodation – a form of homelessness – and the number of children in this situation were at record highs.
The number of children in temporary accommodation hit 164,040 as of the end of September – up 15% in a year and is the highest since records for this measure began in 2004. The number of households in temporary accommodation was also at a record high of 126,040, having increased 16% in a year.
Matt Downie, chief executive of housing and homelessness charity Crisis, said the announcement is “hugely welcome” and hopefully “signals the beginning of a social housebuilding programme that will radically shift this country’s response to homelessness, putting housing at the heart of the solution”.
Ahead of the spring statement, the Prime Minister told BBC Radio 5 Live on Tuesday that he wanted to “take some money out of Government” and was looking “across the board” at where to make spending cuts.
Sir Keir Starmer insisted the Government had made “record investments” at last October’s budget and that the statement would not “alter the basics” of public spending.
He and the Chancellor face a difficult fiscal situation, as Ms Reeves has repeatedly said she will not budge from her fiscal rules, which rule out borrowing to fund day-to-day spending.
This has led to mounting pressure over how to balance the books – by raising taxes or cutting spending – amid disappointing growth figures and higher-than-expected borrowing.
Although the Chancellor is expected to announce a series of spending cuts on Wednesday, she has faced calls from some quarters to raise taxes on the richest instead.
The charity Oxfam is among those calling for a 2% wealth tax on people with assets worth more than £10 million, saying a YouGov poll of 2,257 people showed 78% would back such a move, while 77% would rather see higher taxes on the rich than cuts in public spending.