What to look out for in next week’s Spending Review

In contrast with previous Spending Reviews, housing has the advantage of a politically powerful secretary of state in charge: Ms Rayner has repeatedly promised “the biggest boost to social and affordable housing in a generation”.

But the “biggest boost” can mean many different things, some of them genuine, some of them not remotely up to the challenge of the moment.

She’s also saddled with a manifesto pledge that most people regard as unfulfillable: 1.5 million new homes by the end of this parliament.

There’s a strong argument that she will not come close without a significantly increased Affordable Homes Programme, but others are making the case for ‘free’ alternatives: to boost private housebuilding and development by for-profit housing associations.

“Angela Rayner is also saddled with a manifesto pledge that most people regard as unfulfillable: 1.5 million new homes by the end of this parliament”

The Home Builders Federation is lobbying for the return of the Help to Buy equity loan scheme, arguing that this is the first time in decades there is no government programme to assist first-time buyers. If that sounds like a lot to swallow, only 10.4% of 20-44-year-olds who do not already own their home can afford to buy.

However, that argument is double-edged, since it also strongly suggests that the new-homes target cannot be met by the market alone, and supports the argument put forward by the housing sector that investment in affordable homes is key .

We know there is more money for capital investment. After chancellor Rachel Reeves tweaked her fiscal rules, she says an extra £113bn is available. But there are many competing demands on that: defence has joined health as a key priority, with new funding for military homes announced, and regional investment in energy and transport projects also being talked up.

England’s largest housing associations have warned that, “by the end of the parliament, affordable housing completions will have fallen to the lowest levels since [World War II] without urgent and specific interventions for London”.

But new homes are just part of the housing story. What about existing ones?

Campaigners fear that the Warm Homes Plan run by the DESNZ could be targeted for cuts – this after energy secretary Ed Miliband’s previous pledges on funding for decarbonisation had already been scaled back.

That would increase the squeeze on social landlord finances alongside escalating costs for building safety and repairs and maintenance.

London Councils warned that boroughs will be forced to cut their investment in council housing and that five will completely exhaust their Housing Revenue Account reserves by 2027-28.

It is just one of the organisations pressing for the proposed five-year rent settlement to be extended to 10 years, as well as the return of rent convergence and revisiting the 2012 self-financing settlement that was rendered unsustainable by the rent cuts introduced to reduce the housing benefit bill.

At the same time, Richard Blakeway, the housing ombudsman, has highlighted soaring tenant complaints about repairs and maintenance and called for a more ambitious Decent Homes Standard and the creation of a national tenant body.

And all this is before we consider what looks like an inevitable squeeze on day-to-day spending next week.

“Local Housing Allowance rates are already frozen until next April, but another freeze might look like an easy win from a Treasury perspective”

That would be very bad news for local authorities grappling with the soaring costs of social care and homelessness, unless an increased Affordable Homes Programme starts to cut their bills for temporary accommodation.

And for all the U-turns recently signalled by prime minister Sir Keir Starmer, the wider social security budget will be an inevitable focus for the Treasury.

The abolition of the two-child limit (which restricts parents from claiming child tax credits or Universal Credit for more than two children) might be the quickest way to cut child poverty, but the gains for some children in the poorest families could be wiped out unless the benefit cap is also scrapped.

There is no suggestion of any change to previously announced cuts in disability benefits that will cause several hundred thousand claimants to lose thousands of pounds a year each.

That could trigger further losses if it affects exemptions from the benefit cap, shared accommodation rate (a lower Local Housing Allowance rate for single people under 35 who rent a room in a shared house) and non-dependant deductions (a reduction in housing benefit and council tax support for each non-dependant living in a home) and there is a further increase in homelessness.

And what about Local Housing Allowance? Rates are already frozen until next April in a year in which private rents are rising three times faster than general inflation, but another freeze might look like an easy win from a Treasury perspective.

The Treasury should be looking at tax as well as spending when it comes to housing. Reform of stamp duty and property tax offer a way to boost the housing market and raise revenue, but this will probably stay in the box marked ‘too difficult’.

The first Labour Spending Review after 1997 introduced deep cuts in spending on new homes alongside funding for the original Decent Homes programme. The first Conservative-led Spending Review after 2010 flirted with complete abolition of the Affordable Homes Programme before settling for cuts of more than 60% and the virtual end of funding for social rent.

As Labour prepares for the first Spending Review since its victory in 2024, it is facing calls for action on housing across multiple fronts, and the stakes are even higher.

Jules Birch, columnist, Inside Housing