The Chancellor’s keynote budget speech did not have the smoothest starts following the mistimed release of the Office for Budget Responsibility’s (OBR) Economic and Fiscal Outlook document, which gave the nation’s media and the wider public a major spoiler hours in advance of the Autumn Budget.
Despite these technical challenges, Rachel Reeves was on her feet for around an hour explaining the measures the government will take to boost prosperity and growth. Focusing on the housing sector, many housing leaders will welcome the increase to the national living wage and the abolition of the two-child benefit cap, answers to pressing challenges are still not forthcoming from today’s fiscal event.
What we learned is that the government remains committed to delivering 1.5 million homes in England this Parliament, building on the £39 billion Social and Affordable Homes Programme and the new £16 billion National Housing Bank announced in June. Decisions on new town locations will be informed by Strategic Environmental Assessment, with new town locations announced in the spring and boasting at least 10,000 homes.
Marking the government’s progress, the OBR calculates that net additions to the UK housing stock are expected to fall from an average of 260,000 a year (in the early 2020s) to a low of 215,000 in 2026-27, due to recent subdued housing starts. In the final year of the parliament, net additions are predicted to rise sharply to 305,000, due to planning reforms, but this figure is tempered by higher forecast mortgage rates from 2028 onwards. This leaves cumulative net additions between 2024-25 and 2029-30 at 1.49 million, around 10,000 lower than predicted in March.
To unlock more new homes across the country, the government is devolving housing funds across Greater Manchester, Greater London, Liverpool City Region, the North East, South Yorkshire, West Midlands and West Yorkshire through the integrated settlement. In total, £1.3 billion of the new National Housing Delivery Fund will be devolved, supporting established and non-established Mayoral Strategic Authorities (MSA). MSAs will also be able to bid for around £7 billion through the successor to the Affordable Homes Programme, enabling them to set strategic direction for social and affordable housing in their areas.
There was less clarity around Social Rent Convergence, with the government ‘committed to implementing Social Rent convergence’ but taking the time to get the precise details right, taking account of the benefits to the supply and quality of social and affordable housing, the impact on rent payers and affordability. The government will respond to this summer’s consultation on how Social Rent convergence will be implemented in January 2026, before the launch of the Social and Affordable Homes Programme (SAHP). Labour stressed its commitment to the 10-year rent settlement for 2026-36, which permits social housing rents to increase by CPI+1% per annum.
The Budget referenced VAT treatment of land intended for social housing, with the government due to consult on the reform of VAT rules to incentivise the development of land intended for social housing. There was also a reminder that the government is pressing ahead with the next phase of reforms to the planning system, including default ‘yes’ to development around train stations
In an earlier announced policy, there is £48 million of additional funding to boost capacity in the planning system. This includes additional investment to recruit an extra 350 planners in England by expanding the Pathways to Planning Graduate Scheme and creating a new Planning Careers Hub to retain and retrain mid-career professionals. The government is also funding improvements to environmental regulators, with extra resources for priority projects. They calculate a boost to the planning system of 1,400 new roles by the end of this Parliament.
On skills and recruitment, the government is making more than £1.5 billion for investment in employment and skills support. This includes £725 million for the Growth and Skills Levy to help support apprenticeships for young people, including a change to fully fund SME apprenticeships for eligible people under 25.
The OBR finds that Local Authorities (LAs) face financial risks related to the cost of housing, statutory services, and uncertainty over future revenue. A key risk is the housing and revenue account (HRA) becoming unprofitable as growth in spending (a cumulative 90 per cent between 2019-20 and 2024-25), driven by rising safety and maintenance costs in the sector, have outpaced growth in revenues (a cumulative 8 per cent between 2019-20 and 2024-25) which have not kept up with rising costs due to restrictions on social housing rent increases.
The OBR also finds uncertainty surrounding the Fair Funding Review 2.0, which will see a redistribution of central grant income towards LAs with higher assessed spending needs and lower local resources. This will therefore see LAs with lower assessed spending needs but higher local resources receiving less in grants.
On energy costs, the Chancellor has removed around £150 of costs on average from household energy bills from April next year. There is also an extension of the £150 Warm Home Discount to a further 3 million of the poorest households. The government will provide an additional £1.5 billion capital investment to tackle fuel poverty through the Warm Homes Plan, in addition to the £13.2 billion of funding allocated at Spending Review 2025.
Lee Goodenough, Director at Harmony Fire, said: “The headline grabbing policies from today’s Budget will certainly be welcomed by Housing Leaders for addressing some of the deep inequities in society, however many will have wanted to see more detail on issues including Rent Convergence and the Local Housing Allowance.
“There was a conspicuous absence of any reference to building life safety in either the Chancellor’s speech or in the Budget Policy Paper, which could suggest the government is confident that existing frameworks and the revitalised Building Safety Regulator have the resources they need to deliver vital safety assurance.”