Autumn Budget Archives

The Prime Minister has made clear his ambition: to “oversee the biggest council house building programme since the post-war period”. This is a hugely positive step forward for the Government’s housing policy; it marks a generational break with 45 years of housing policy that failed to articulate a clear aim beyond merely maximising overall output – with little regard to affordability for people on low incomes or at risk of homelessness. And, crucially, it will help to capitalise on councils’ knowledge of local housing need, significant land value capture powers, and masterplanning capabilities.

Yet the decline of council housing was driven not only by housing policy, but by the rise of restrictive fiscal policy that actively constrains government investment in social homes and has pushed Housing Revenue Accounts (HRAs) into existential financial jeopardy. Despite being justified under the guise of ‘fiscal responsibility’, debt-to-GDP spiked sharply during austerity while investment in public assets like social housing collapsed and vital services were cut – demonstrably impoverishing both people and the state.

At the Autumn Budget, to realise its ambitions on council housebuilding, the Government must reconnect political ends with economic means and drive a change in economic consensus that places social housing investment at the centre of national renewal. In an upcoming report on council house building, we argue the Budget marks a clear opportunity for the Government to cancel £31.8bn in HRA debt to unlock councils’ capacity to build, covered in detail here, and do more to bring forward and increase funding – ensuring its fiscal framework supports rather than hinders greater investment in council and social homes.

The financial and economic case for cancelling HRA debt and increasing investment

Modelling commissioned by Shelter and undertaken by Pragmatix sets out an ambitious scenario for the Government to cancel HRA debt and provide the necessary investment to deliver 284,000 social rent homes within a 10-year trajectory – in addition to those already expected to be delivered through the Social and Affordable Homes Programme. Pragmatix estimates that the economic benefits of the policy would outweigh its costs within twenty years, around a decade after the final homes are built. Over the report’s 60-year appraisal period, the modelling estimates a net economic benefit of £141.5 billion, including substantial savings to the public sector from reducing reliance on more expensive forms of housing. Government departments are estimated to save £64.7 billion over the period, including £26.3 billion for the Department for Work and Pensions, while savings to councils from reducing the number of households in temporary accommodation eventually reach £672 million a year.

Cancelling HRA debt is broadly fiscally neutral; the majority of debt is owed to Treasury, meaning it is largely a series of inter-government transfers, involving cancelling debt that the public sector owes to itself.

The fiscal framework should support rather than hinder investment

Within this Parliament, debt cancellation and delivery, as outlined above, is also compliant with the Government’s ‘investment rule’, using around 56% of the current ‘headroom’ as of the OBR’s 2026 spring forecast. While council and social housing is a more-than-worthy use of investment ‘headroom’, this self-imposed restraint on public investment creates artificial trade-offs with other policy areas and reduces the Government’s appetite to increase funding. More flexibility is therefore needed within the fiscal framework to ensure that the long-term economic net benefit of investing in social housing is recognised.

The Government’s fiscal framework disincentivises social housing investment

The narrow and short-term focus of the current fiscal framework discourages social housing investment and hinders the Government’s aim of delivering a council housing revolution. Firstly, the Government’s rolling target (the ‘investment rule’) requires its chosen debt measure to be falling as a share of GDP in the third year of the OBR’s forecast period – but this disregards the longer-term savings and additional revenue social housing generates.

Secondly, the Government’s chosen debt measure – Public Sector Net Financial Liabilities (PSNFL) – fails to value the physical asset created on the Government’s balance sheet when it funds a new social home.

Thirdly, PSNFL creates a two-tier fiscal system that favours social housing delivery through housing associations and for-profit registered providers over public-led social housebuilding from councils and development corporations. Unlike most EU countries that use a general government debt measure, PSNFL includes the entire public sector. It means that our fiscal rules include the debt of our public social housing providers, even though their debts are paid for by rents and other independent income as opposed to taxation or wider government expenditure – i.e. they are classed by the ONS as ‘market producing’.

Finally, because of this public-sector focus in the debt measure, the central government financial asset recorded under PSNFL when investing in council housing (created by loaning money to HRAs via the Public Works Loan Board) is actually netted off by the liability held by the loan recipient (the council or development corporation) in the national accounts. This leaves only the liability on the Government’s balance sheet created from the borrowing it undertook to ‘fund’ the loan. In contrast, liabilities held by private registered providers to pay back loans to central government are excluded from PSNFL, making these loans more fiscally attractive for central government: the asset (the loan) and liability (borrowing to ‘fund’ the loan) held by central government cancel each other out.

The consequences for social and council housebuilding are stark

Rather than seeing good growth and healthy public finances as the outcome of social housing investment, the current framework forces housing policy towards day-to-day spending on housing benefit and expensive temporary accommodation – which flows outwards from the public sector to private landlords. Investment remains far below what is needed:

Social and Affordable Homes Programme grant, while welcome, only enables the delivery of 18,000 social rent homes a year on average – we need to deliver 90,000 a year for 10 years to end the housing emergency.
Interest rates from the Public Works Loan Board available to HRAs remain far too high with 50-year maturity lending at around 6%.
HRAs and public development corporations are excluded from £2.5 billion in 0.1% interest loans recently provided to housing associations and for-profit providers, a distinction that reflects their different treatment within the fiscal framework.

Fiscal reform is needed to support the scaling up of council housing delivery

To deliver its promise of a council housing revolution, the Government must scale up current grant funding and available low-cost finance to much higher levels. In doing so, it must ensure that councils and development corporations, who were the key players of the post-war social housing boom, are empowered to support the Government’s social housing ambition. In an upcoming report later this month, we argue that, if the Government remains committed to not change the current fiscal rules, it should instead exclude HRAs and development corporations from PSNFL. This would finally end central government incentives to limit their borrowing, devolving power to HRAs and development corporations, and support the Government to provide them with the low-cost loans needed to deliver social housing at scale.

Email your councillor today and ask them to add their name to a letter to the chancellor, urging him to knock down the barriers to getting councils social homes again. https://campaigns.shelter.org.uk/tell-your-cllr-fight-for-social-homes

Would you like to write for Red Brick? Email rose.grayston@gmail.com to pitch your piece (c.600-900 words)

This year’s Autumn Budget comes at a pivotal moment for housing. The government’s Spending Review made welcome commitments to boost social and affordable housing supply – with a £39 billion, 10-year investment programme that gives the sector much-needed certainty – particularly now that the Social and Affordable Homes Programme (SAHP) prospectus has been published. And the recently passed Renters’ Rights Act marks a turning point for the experience of private renters. But while these lay the groundwork for progress in the years ahead, the pressures facing millions of households right now are urgent and growing.

Homelessness is at record levels. More than 131,000 households – including 170,000 children – are trapped in temporary accommodation, often for years. Supported housing is at breaking point, squeezed by rising costs and shrinking funding. Meanwhile, one in five private rented homes still fail to meet basic standards, and many housing providers are struggling to balance investment in their existing homes with plans for new supply.

Against this backdrop, CIH is calling on the government to use the Autumn Budget to back a long-term plan for a sustainable, fair and healthy housing system.

1. Invest in supported housing and housing-related support

Supported housing enables more than 600,000 people – from older residents to those recovering from homelessness or domestic abuse – to live safely and independently. It saves the NHS and social care system millions by preventing hospital admissions, supporting discharge, and reducing pressure on overstretched services.

Yet this vital sub-sector is under severe threat. Six in ten supported housing providers have closed services in the past year, and many more warn they could follow without sustainable funding. CIH, alongside sector partners, is calling for an emergency fund to prevent further closures, together with a dedicated, long-term funding stream for housing-related support, similar in ambition to the former Supporting People programme.

2. Reform welfare to prevent homelessness

Far too many people are being pushed into homelessness simply because they can’t afford their rent. Frozen local housing allowance (LHA) rates are leaving fewer than three in 100 private homes affordable to those on housing benefit. Councils spent £2.8 billion on temporary accommodation last year – a 25% rise in 12 months – while nearly half of private renters on universal credit now face rent shortfalls.

Restoring LHA rates to cover at least the 30th percentile of local rents from 2026/27 would prevent thousands from losing their homes and save public money in the long term – a call echoed by housing organisations and charities across the UK.

We’re also urging government to scrap the shared accommodation rate for young people and care leavers, review the benefit cap, and remove the two-child limit, which pushes hundreds of thousands of children into poverty and overcrowded housing.

Alongside this, extending energy bill support beyond winter 2025/26 is critical to protect low-income households from rising costs and prevent a further wave of fuel poverty.

3. Confront the homelessness emergency

Whilst new supply is on the horizon, right now homelessness services are overwhelmed: record numbers of families are stuck in unsuitable temporary accommodation, while frontline charities and councils warn of a funding cliff edge. The latest Homeless Monitor England highlights the scale of the challenge.

CIH is calling for a multi-year, ringfenced homelessness strategy, backed by sustainable funding and reform of the temporary accommodation subsidy system – unchanged since 2011. Uprating the subsidy to reflect current market rents would provide councils with breathing space and reduce the risk of bankruptcy.

We argue the government should also scale up Housing First as the default offer for people with complex needs. Evidence from pilots in Greater Manchester, Liverpool City Region and the West Midlands show tenancy sustainment rates above 80% and substantial savings to public services.

A cross-departmental approach is vital too – bringing housing, health, and immigration policy together to end the use of costly and unsuitable “asylum hotels” and ensure local authorities have the resources to provide sustainable accommodation.

4. Drive up the quality of existing homes

The government’s proposed new Decent Homes Standard and its long-term rent policy mark real progress. But without the right investment and social rent convergence set at an appropriate level, landlords will struggle to deliver the improvements required.

Social landlords face competing demands: decency, net zero, damp and mould remediation under Awaab’s Law, building safety and wider compliance duties – all while managing significant financial pressure, most notably for local authorities given deficits in over a third of Housing Revenue Accounts. The financial squeeze risks forcing councils and housing associations to divert funds from new development to meet minimum standards.

We’re urging ministers to establish a long-term, modernised Decent Homes Programme, bringing together quality and safety into a single funded framework. Investment in existing homes is not just about compliance – it’s a matter of public health and economic value. Poor housing costs the NHS £1.4 billion each year. Warmer, safer homes would improve wellbeing, cut bills, and support the transition to net zero.

5. Make housing taxation fairer

Finally, we’re calling for a comprehensive review of the tax system related to housing, to be more progressive and effective.

The current system entrenches inequality and distorts the market. Council tax remains based on property values from 1991, making it regressive and regionally unbalanced. Stamp duty discourages mobility and downsizing. Meanwhile, recent tax changes to curb buy-to-let activity have had a positive impact on first-time buyer access – demonstrating that fiscal levers can be used strategically to rebalance the market.

It’s time for a fundamental redesign of property taxation that supports fairness, efficient use of housing, and long-term affordability.

A moment for leadership

The government’s long-term ambition to build 1.5 million homes and boost economic and social growth is to be lauded, but will not be achieved through new supply alone, as our recent UK Housing Review briefing demonstrates. Without tackling homelessness, investing in existing homes, and reforming welfare and taxation, we will continue to treat the symptoms of the housing crisis rather than its causes.

This Autumn Budget and the promised long-term housing and homelessness strategies are a chance to act decisively – to protect vital supported housing, lift families out of poverty, and create the conditions for a sustainable housing system that supports health, growth, and opportunity; now and for decades to come.