A £500 million Budget cash injection will pay for 5,000 affordable houses to be built, Rachel Reeves has announced.

The money for the Affordable Homes Programme will be part of a planned £5 billion investment designed to deliver on Labour’s house building pledge to build 1.5 million new homes.

The Treasury also confirmed that Right to Buy discounts will be slashed in an unprecedented attempt to stop council house tenants from buying their own homes and keep the stock in local authorities’ hands.

Under plans to be announced in Wednesday’s Budget, the discount of 70 per cent available to those seeking to buy their council house would be cut to about 25 per cent.

Councils will also be able to keep 100 per cent of the receipts from sales to reinvest in new social housing.

Social housing rent cap

Ministers also propose a new five-year social housing rent cap – set at inflation plus 1 per cent – to give the sector more long-term certainty on funding and allow it to invest in thousands of new homes.

Ms Reeves said: “We need to fix the housing crisis in this country. It’s created a generation locked out of the property market, torn apart communities and put the brakes on economic growth.

“We are rebuilding Britain by ramping up house building and delivering the 1.5 million new homes we so badly need.”

Angela Rayner, the Deputy Prime Minister and Housing Secretary, said: “This is a further significant step in our plan to get Britain building again, backing the sector, so they can help us deliver a social and affordable housing boom, supporting millions of people up and down the country into a safe, affordable and decent home they can be proud of.”

Some £128 million will be earmarked for new housing projects including up to 28,000 new builds currently blocked by river pollution where clean-ups will now go ahead; 3,000 energy efficient homes across the country and 2,000 new homes in North Liverpool.

A £56 million investment at Liverpool Central Docks will also deliver office, retail, leisure and hotel facilities alongside the new homes as part of a brownfield-first approach.

‘Vital injection of funding’

Kate Henderson, chief executive of the National Housing Federation, said: “We strongly welcome the £500 million top-up to the affordable homes programme. This vital injection of funding, which we’ve been urgently calling for, will support housing associations to continue to deliver much needed affordable homes in the immediate term and prevent a collapse in delivery.

“We share the government’s ambition to build 1.5 million homes over this parliament and stand ready to deliver the social homes needed, which is why we welcome a consultation on a new rent settlement.

“This will provide both transparency for residents and long term certainty and financial stability for social housing providers. We also support the government’s decision to review Right to Buy discounts.”