The UK housing crisis has reached a boiling point as disagreements over social housing funding unfold within the Labour Party leadership. Tensions have flared between Housing Secretary Angela Rayner and Chancellor Rachel Reeves over the government’s ambitious target of building 1.5 million new homes over the next five years.
According to sources close to the matter, Rayner has been pushing Reeves for billions of pounds in additional funding for affordable housing, arguing that it’s essential to meeting Labour’s home-building goals. However, the chancellor has reportedly made it clear that there won’t be sufficient funds available in the upcoming spending review to accommodate an immediate cash injection of this magnitude.
Cabinet Tensions Mounting
The standoff between Rayner and Reeves is indicative of broader tensions across the cabinet as ministers grapple with the upcoming budget and spending review. Several cabinet members have yet to sign off on their individual departmental settlements, adding to the uncertainty surrounding the government’s fiscal plans.
Rayner is said to have emphasized to the chancellor that social housing should be viewed not merely as a charitable endeavor but as a crucial component of the government’s growth agenda. During the recent Labour conference, she stated:
I actually think it’s a moral mission with the Labour government to recognise the problem and to build the social housing we need … But hopefully at the spending review, you’ll see that this government is really serious that we’re going to build those houses we desperately need.
Treasury Pushes Back
Treasury sources maintain that accommodating every department’s demands is simply not feasible given the current fiscal constraints. A Downing Street spokesperson acknowledged the challenges ahead:
Not every department will be able to do everything they want to. There will be tough decisions taken, there will be tough conversations, but ultimately, this government has been very clear that it will fix the foundations.
The Treasury has stated that while no final decisions have been made, the government remains committed to its goal of building 1.5 million homes over the next five years.
Industry Calls for Urgent Funding
The housing industry has been vocal in its calls for immediate funding to support affordable housing projects. Kate Henderson, chief executive of the National Housing Federation, stressed the need for an “urgent top-up in affordable housing funding” at the autumn budget.
Housing associations and local authorities rely on the government’s £11.5 billion Affordable Homes Programme, which is set to expire in 2026. Industry sources claim that the programme is already running low on funds and requires an immediate boost of up to £2 billion to maintain momentum.
Polly Neate, chief executive of Shelter, emphasized the importance of investment in social housing:
This government was elected on a promise to deliver the biggest increase in social housing in a generation. The only way to do this is through serious investment and by recognising housing as fundamental to communities and growth and counting it as critical infrastructure.
Long-Term Funding Uncertainty
While the chancellor has reportedly ruled out an immediate top-up to the Affordable Homes Programme, the long-term funding for social housing remains uncertain. Government insiders suggest that Reeves is likely to make a decision on the programme’s size and scope after 2026 during next year’s multi-year spending review.
Housing industry groups estimate that hitting the government’s annual housing targets would require building 90,000 social-rent homes per year for the poorest households, at a cost of approximately £11 billion. However, lobbying groups concede that they would be satisfied with closer to £4 billion annually – double the current allocation.
Broader Spending Review Frustrations
The housing funding dispute is just one facet of a spending review process that has left many cabinet members frustrated. Ministers are not only upset about the proposed cuts to their capital spending budgets but also about what they perceive as a lack of communication from the Treasury.
One departmental source lamented the Treasury’s apparent unresponsiveness, stating, “Essentially when you get to them, all you hear back is the lines to take.” Cabinet ministers have expressed particular frustration with Chief Secretary to the Treasury Darren Jones, who they feel has been inscrutable during the process.
Despite these complaints, Treasury sources insist that Reeves and Jones have engaged regularly with MPs and Whitehall officials, making changes to some of their original plans based on the consultation process. They also dismiss suggestions that this spending review has been more contentious than previous ones, with one source stating, “It’s totally normal, happens every time.”
As the autumn budget approaches, all eyes will be on the government to see how it balances its ambitious social housing targets with the stark realities of limited funding. The outcome of this internal battle could have far-reaching implications for the UK’s housing crisis and the millions of families in desperate need of affordable homes.
