Spending on affordable housing to rise to £39bn

Rachel Reeves will nearly double government spending on affordable housing today in a major boost to the housebuilding sector that brings the government's targets a step closer.

- Kiran Stacey

The chancellor will announce nearly £40bn worth of grants to be spent over 10 years for local authorities, private developers and housing associations. She will also allow social landlords to raise rents by 1 percentage point above inflation for the same period, another key demand made by housing providers.

The announcement, which the chancellor will make during her long-awaited spending review, will make Angela Rayner and her housing department one of the biggest winners of the drawn-out departmental negotiation process.

It comes as part of a £113bn increase in capital spending across the country, which Reeves will pay for with extra borrowing after changing government fiscal rules this year.

A government source said: "We're turning the tide against the unacceptable housing crisis in this country with the biggest boost to social and affordable housing investment in a generation, delivering on our commitment to get Britain building." There have been protracted and occasionally fraught negotiations between Rayner and Reeves, which ended over the weekend just days before the review.