Rachel Reeves announces ‘biggest cash injection into social housing in 50 years’

Rachel Reeves has announced a £39 billion affordable housing programme over the next decade at the spending review to fund Labour’s housebuilding aspirations and experts have said it could be a “game-changer”.

The new funding settlement for social housing was revealed at today’s (11 June) comprehensive spending review as Labour aims to deliver on its promise to build 1.5 million homes.

The funding is will replace the current affordable housing programme (AHP) of £11.5bn over five years running until March 2026, working out at around £2.3bn a year.

The 10-year £39 billion funding Reeves review represents a 50% uplift on the size of the previous programme, rising to £3.9bn per year to build new social rent, affordable rent and shared ownership homes.

The chancellor said she was “proud to announce the biggest cash injection into social and affordable housing in 50 years” and signalled the government’s intention to focus on social rent homes.

“Our planning reforms have opened up the opportunity to build, now we must act to make the most of those opportunities,” said Reeves. “A plan to match the scale of the housing crisis must include social housing. Neglected for too many decades but not by this Labour government.” 

Reeves added that plans were already underway to bid for funding in Blackpool, Preston, Sheffield and Swindon.

However, the Labour chancellor did not state how many social homes would be built under the new programme in her spending review speech.

Alongside the affordable housing programme, Reeves also announced a ‘housing bank’. Designating Homes England as public financial institution to provide an extra £10bn for financial investments and to deliver more homes.

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Stephen Teagle, chair of The Housing Forum, said: “This is a hugely welcome and game changing announcement from the government, meeting its promise to bring a transformative change in the supply of affordable homes.

“This unprecedented funding, together with a 10-year rent settlement will help turn policy ambition into reality and deliver the high quality affordable homes the country so badly needs. It will also support the efforts of the wider industry to lift the output of new homes of all tenures. The industry now needs to respond and invest in the longer-term delivery that the government’s planning reforms and this longer sighted funding settlement support.”

Just under a year into Labour’s time at Number 10, there is already plenty of skepticism over the party’s goal of building 1.5 million homes by 2029.

Both housing secretary Angela Rayner and housing minister Matthew Pennycook have admitted that they face a challenge to deliver the pledge at a time when housebuilding is in a slump.

At the Spring Statement, Office for Budget Responsibility projections found an additional 1.3 million homes will be built across the UK over the next five years with Labour projected to miss its target in England by as much as two-thirds.

There have been widespread calls from across the housing and homelessness sectors for 90,000 social rent homes – the most affordable housing tenure – to be built each year to tackle record-high homelessness.

But Rayner has declined to put a figure on the number of social rent homes to be delivered as part of the 1.5 million homes, despite introducing mandatory housing targets for local councils to build 370,000 homes per year.

That’s despite social rent homes being widely regarded as a solution to record-high private rents and essential to bring down the 1.3 million households on social housing waiting lists or the 127,890 households living in temporary accommodation.

But the new announcement has raised optimism among housing experts.

Mairi MacRae, director of campaigns and policy at Shelter, praised the £39bn investment but said that the government must now set a target for the number of social rent homes to be delivered through the programme.

“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. To truly tackle rising homelessness, it must come alongside a clear target for delivering social rent homes,” said MacRae.

“For too long, past governments allowed thousands of social homes to be lost each year, while funnelling public money into so-called ‘affordable homes’ which are priced far out of reach for many. The result has been record homelessness, and families, young people, and key workers priced out of their communities.

“Social homes are the only genuinely affordable homes by design with rents tied to local incomes and around two thirds lower than private rents. They keep communities together, save public money and provide the stability people need to thrive. To ensure this funding tackles homelessness at its root, the government must now set a target for how many social rent homes it will deliver through this programme.”

Matt Hutchinson, director at flatshare site SpareRoom, also supported the government’s decision to increase affordable housing funding.

“This sort of long-term thinking and investment is exactly what’s needed. For too long we’ve spent the vast majority of our housing budget paying people housing benefit, which just keeps rents high,” said Hutchinson.

“This spending commitment should mean a gradual reduction in the amount spent on housing benefit and, most importantly, a reduction in the number of people forced to rely on it.

“Of course, housebuilding takes time. In the short term, we’d like to see more creativity in how we use the UK’s existing housing stock, because people are suffering right now.”

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