UK Government to Unveil £39bn Housing Boost in Spending Review Shake-Up
In a significant move to address the country’s housing crisis, Chancellor Rachel Reeves is set to announce a substantial increase in government spending on affordable housing, with a £39bn package to be unveiled as part of her long-awaited spending review. The funding, which will be allocated over a period of 10 years, represents a major boost to the housebuilding sector and brings the government’s housing targets a step closer to being realised.
According to The Guardian, Reeves will reveal that the government will provide nearly £40bn worth of grants to local authorities, private developers, and housing associations, marking a significant increase on the previous programme. The chancellor will also allow social landlords to raise rents by 1 percentage point above inflation for the same period, another key demand of housing providers.
The announcement, which is expected to make Angela Rayner and her housing department one of the biggest winners of the drawn-out departmental negotiation process, is part of a £113bn increase in capital spending across the country. Reeves will fund the extra spending with additional borrowing, made possible by changes to the government’s fiscal rules earlier this year.
As The Guardian reports, Reeves is expected to tell MPs: "This government is renewing Britain, but I know too many people in too many parts of the country are yet to feel it. This government’s task – my task – and the purpose of this spending review is to change that. To ensure that renewal is felt in people’s everyday lives, their jobs, their communities."
A government source, cited by The Guardian, added: "We’re turning the tide against the unacceptable housing crisis in this country with the biggest boost to social and affordable housing investment in a generation, delivering on our commitment to get Britain building."
The boost for affordable housing comes after protracted and occasionally fraught negotiations between Rayner and Reeves, which ended over the weekend just days before the review was due to be announced. The announcement will enable the chancellor to promise a generational shift in government investment, as she looks to turn the page on a difficult few weeks during which she has done a U-turn on cutting winter fuel payments for millions of pensioners and unemployment reached its highest level in nearly four years.
As reported by The Guardian, the housing announcement will come alongside an extra £15.6bn for local transport projects and £14.2bn to build a new nuclear power plant at Sizewell C. Rayner was the penultimate cabinet minister to reach agreement with the Treasury, followed on Monday by the home secretary, Yvette Cooper, who is reported to have accepted a settlement that could mean a cut to police numbers.
The agreement fulfils Rayner’s demand for a major boost to affordable housing funding, after warnings she would miss the 1.5m homes target this parliament without it. A recent Savills report warned that ministers were further away from hitting that target than they previously admitted.
Reeves will allocate £39bn to the affordable homes programme for 10 years from 2026-36, to be paid for by the extra capital spending she has freed up by changing the government’s borrowing rules. This represents a major uplift on the funding provided by the previous government, which allocated £11.8bn for the programme over a five-year period.
The investment has been welcomed by housing associations, with Kate Henderson, the chief executive of the National Housing Federation, which represents housing associations, calling it "the most ambitious affordable homes programme in decades". She added: "This is a transformational package for social housing and will deliver the right conditions for a decade of renewal and growth."
Mairi MacRae, director of campaigns and policy at Shelter, said: "This increased investment is a watershed moment in tackling the housing emergency. It’s a huge opportunity to reverse decades of neglect and start a bold new chapter for housing in this country."
The announcement will come a day after the government’s planning bill passed its third reading in the Commons, another major plank of the government’s efforts to reach the 1.5m target. Ministers say the changes to the planning regime, which will make it easier for developers to build on previously protected sites, are essential for easing Britain’s housing crisis. However, environmental campaigners say they will put thousands of sensitive natural habitats at risk.
In related news, Rayner has also announced she will repeal a 200-year-old law that criminalises rough sleeping, a move that campaigners said could prevent hundreds of people being arrested for being homeless. The housing secretary said she would remove the Vagrancy Act of 1824 from the statute book within a year, making it impossible for law enforcement officers to arrest people purely for sleeping on the streets.
The government’s commitment to addressing the housing crisis has been welcomed by many, but it remains to be seen whether the increased investment will be enough to meet the 1.5m homes target. As The Guardian notes, the announcement is a significant step towards addressing the country’s housing shortage, but more work remains to be done to ensure that everyone has access to affordable and decent housing.
