Reeves offers £2bn affordable housing boost ahead of sweeping cuts to public services

Thousands of new homes in England will be built as part of the biggest boost in social and affordable housebuilding in a generation, the government has said.

Chancellor Rachel Reeves vowed the £2 billion in grant funding to deliver up to 18,000 new homes in England will go some way to “fixing the housing crisis”.

The funding 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 announcement on Tuesday comes a day ahead of the spring statement, in which the Chancellor is expected to announce spending cuts for some government departments, having already unveiled cuts to welfare – which have proved unpopular with Labour backbenchers – and amid reports the digital services tax – a levy on big tech companies – could be slashed in order to stave off American tariffs.

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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.

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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.”

Her cabinet colleague Ms 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.

The government cautioned that the figure for those on waiting lists is likely to “overstate the number of households who still require social housing at any one time”.

It said this is because some households can be recorded on more than one council’s list and registers are reviewed at varying times to remove those who no longer require housing.

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 Tuesday’s 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”.

He urged the Government to “ensure that the vast majority of the initial 18,000 homes are for social rent so that people facing homelessness can access them”.

This plea was echoed by Shelter which said the funding is a “positive step” but that it is “vital that the majority of this funding is directed towards social rent housing, not expensive alternatives that won’t help struggling families”.

The charity’s chief executive, Polly Neate repeated their call for a commitment to build 90,000 social homes a year, saying this vow was come in the June Spending Review.

She added: “This is the Government’s moment to prove it is serious about tackling the housing emergency. Without a major funding commitment to 90,000 social homes a year for ten years, homelessness will keep spiralling, and millions will remain trapped in unstable, overpriced housing.”

But Conservative 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.”

People in the UK illegally are unable to apply for social housing. Those who have been granted asylum can apply, but the Chartered Institute for Housing has said their lack of a “local connection” means they have less chance of securing a social home than longstanding UK residents.

Meanwhile, Ms Reeves said she does not “recognise” reports ministers may means-test free school meals for young children as part of the cost-cutting drive across government and insisted the digital services tax was “hugely important”.

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 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.