Housing takes centre stage in Spending Review
Chancellor Rachel Reeves has placed housing policy at the heart of her latest Spending Review, pledging to nearly double the government’s investment in affordable homes and allowing social housing landlords to raise rents above inflation for the next decade.
£39 billion commitment to affordable housing
In her Commons statement, Reeves announced a significant boost in funding for social and affordable housing, committing £39 billion over the next 10 years. This equates to an average of £3.9 billion per year—a substantial increase from the £2.5 billion annual allocation in the previous 2021–2026 Affordable Homes Programme.
The funding will be distributed among local authorities, housing associations, and private developers, with the goal of increasing the supply of social housing across the country. Reeves emphasised that areas such as Blackpool, Preston, Sheffield, and Swindon are already preparing bids to develop new homes under the revised programme.
Rent increases and return of rent convergence
In a move that is likely to stir debate, Reeves also confirmed that social housing rents will be allowed to rise at a rate of 1% above the Consumer Price Index (CPI) inflation rate annually for the next ten years. This new policy doubles the five-year rent increase plan previously announced and aims to support investment in housing maintenance and development.
Additionally, the government is consulting on the return of rent convergence—a policy that permits lower social rents to increase more rapidly to align with other properties in the sector. The policy was originally scrapped in 2015 but may now return as part of efforts to streamline rental structures across the board.
Spending review: Broader highlights
While housing took the spotlight, Reeves' Spending Review also introduced major financial commitments across a range of public sectors. Here are the key takeaways:
Healthcare
- An additional £29 billion per year in NHS funding, equating to a 3% increase in day-to-day spending through the next election cycle.
Artificial intelligence and research
- A £2 billion injection into artificial intelligence, contributing to an expanded R&D budget of £22 billion.
Law and order
- £2 billion to recruit 13,000 more police officers, PCSOs, and special constables.
- £7 billion allocated for 14,000 new prison places.
Winter fuel payments
- A partial reversal of cuts to winter fuel payments, costing £1.2 billion. Over 75% of pensioners will now benefit from the scheme.
Defence
- Defence spending to rise by £11 billion, increasing from 2.3% to 2.6% of GDP by April 2027. A long-term goal to reach 3% of GDP remains on the table, though no specific timeline has been set.
Immigration and border control
- Hotels will no longer be used to house asylum seekers by the end of the current Parliament in 2029.
- £280 million will be directed toward enhanced border controls.
Education
- An additional £4.5 billion per year for schools, half of which is earmarked for repairing aging infrastructure.
- Free school meals will be expanded to 500,000 more children whose parents receive Universal Credit.
Energy and nuclear
- £14.2 billion invested in building the Sizewell C nuclear plant, with additional funding for small modular reactors.
Transport
- £15.6 billion to improve public transport in regions such as Greater Manchester, the Midlands, Tyne-and-Wear, and the Oxford–Cambridge corridor.
- Bus fares outside London to be capped at £3 until at least spring 2027.
Science and innovation
- £86 billion to be invested in scientific research, with a focus on drug development and sustainable battery technology.
A vision for long-term growth
Reeves concluded her statement by reaffirming her commitment to improving the lives of working people. “My driving purpose since becoming Chancellor is to make working people, in all parts of our country, better off,” she said.
She claims that departmental budgets will rise by 2.3% in real terms and highlighted that her government will allocate an additional £190 billion for the day-to-day operation of public services compared to the previous government’s plans.
As the government prepares to implement these sweeping changes, the renewed focus on housing and long-term infrastructure investment signals a shift toward reshaping the UK’s economic foundations.




