UK Chancellor Unveils £39bn Affordable Housing Plan Amidst Spending Review
In a pivotal moment for the Labour government, Chancellor Rachel Reeves has announced a £39bn “affordable housing” plan as part of her multiyear UK spending review. The plan, which will span over 10 years, has been hailed as “the biggest boost to social and affordable housing investment in a generation” by the Treasury. According to a report by the Financial Times, the chancellor’s spending review combines a tight squeeze on day-to-day spending with a £113bn plan to bolster the country’s creaking infrastructure.
The £39bn earmarked for affordable homes is part of a broader effort to address the UK’s housing crisis. The National Housing Federation, whose members provide housing for 6mn people, described the package as “transformational”. “This is the most ambitious affordable homes programme in decades and alongside long-term certainty on rents, will kick-start a generational boost in the delivery of new social homes,” it said. As quoted in the Financial Times, Reeves’ promise of new roads, railways, public transport and green energy projects for the north and the Midlands is intended to raise regional growth rates.
Reeves’ spending review has been the result of months of intense haggling between the Treasury and cabinet ministers. The review sets departmental budgets and priorities for the coming years and lays the political ground for the next election. However, there are growing expectations that Reeves could be forced to raise taxes in the autumn, as economic growth remains sluggish and the cost of servicing government debt continues to rise. The Financial Times reports that Reeves remains in a tight fiscal spot, with speculation rife that she could be forced to raise taxes in her autumn Budget.
The chancellor’s decision to spare defence and health spending from the tightening of day-to-day Whitehall expenditure has been seen as a strategic move. Local government services, however, are expected to come under serious pressure. According to the Financial Times, Reeves will focus on a borrowing-fuelled spree on capital projects, promising £113bn of extra spending over the parliament that will particularly benefit “towns and cities outside London and the south-east”.
The National Housing Federation’s description of the affordable homes package as “transformational” underscores the significance of Reeves’ announcement. As reported by the Financial Times, Labour strategists hope that the focus on regions outside the capital will slow the advance of Nigel Farage’s Reform UK, which currently leads in opinion polls. Allies of London’s Labour mayor Sadiq Khan, however, have expressed concerns that the focus on regions outside the capital was “incredibly short-sighted” and would leave the city short of the funds it needed to improve its own infrastructure.
Reeves’ spending review has been met with criticism from opposition parties. Sir Mel Stride, shadow chancellor, criticised Labour for “spending money it doesn’t have” while loading Britain up with debt that was becoming more expensive to service. Stride said more tax rises in the autumn were “inevitable”. The Institute for Fiscal Studies, a think-tank, has also warned that Reeves’ spending plans leave big risks hanging over the public finances. According to Paul Johnson, director at the Institute for Fiscal Studies, “It leaves all the fiscal questions unanswered,” and there was at least a 50 per cent chance of tax rises in the autumn.
The Financial Times reports that Labour MPs are also expecting Reeves to address their concerns about child poverty, and set out longer-term plans for improving the NHS. An industrial strategy and a defence industrial plan will also follow later in the month. As quoted in the Financial Times, Reeves will say: “The government is renewing Britain. But I know too many people in too many parts of the country are yet to feel it.” The chancellor’s spending review has been seen as a significant moment for the Labour government, laying out its priorities for individual areas of spending after setting its overall plans for the parliament last October.
Reference:
https://www.ft.com/content/141f7280-f1e4-4dbd-a8a9-f97e97ad2a10
Source link
