The review both confirmed earlier affordable housing commitments and established new ones
The Labour spending review made announcements for infrastructure, energy, skills, and housing.
Among the commitments was the confirmation of £39bn being invested into affordable homes, as detailed earlier today.
A rise in social rents
The review also confirmed the allowance for social landlords to raise rents one percentage point above inflation.
Other highlights of the spending review include:
- Further investment in Great British Energy (unspecified)
- A 10 year infrastructure strategy to come in the next few weeks
- £1.2bn per year put towards training and upskilling one million young people, including construction skills
- A four fold increase in local transport grants
- A £3.5bn investment in TransPennine Rail
- Investments into Northern Powerhouse Rail in the next few weeks
- Investment of £2.5bn into East-West Rail
- Delivery of the Midlands Rail Hub
- £445m for railways in Wales over the next ten years
- Establishment of a Growth Mission Fund for local town regeneration projects
- The publication of the Treasury Greenbook review of town regeneration spending today
- Expansion of the Warm Homes Plan
- £2.3bn per year to fix crumbling schools, and £2.4bn for other school rebuilding works
Industry reacts to the Labour spending review
Places for People Group CEO, Greg Reed
“Government has made real progress on housebuilding over the past year and today marks a major moment in our sector’s recent history. The bold package announced by Treasury on Wednesday will be truly transformative for Customers and Communities.
“A decade-long rent settlement brings much-needed certainty for our sector, encouraging long-term investment and enabling sustainable financial planning. Alongside a new expanded Affordable Homes Programme, this will drive real momentum to meet Government’s 1.5m homes target.
“We also welcome Government’s consultation on social rent convergence and believe that even more can be done to further strengthen the sector’s financial capacity.
“As a trusted partner of Homes England, last year we delivered over 2,000 affordable homes and are committed to maintaining this momentum. These new measures show that Government recognises our sector’s vital role in its Plan for Change, and we’re ready to deliver.”
Gordon Miller, UK built environment programme manager, Institute for Human Rights and Business
“Reports of an additional £39bn grant funding for housing are welcome – access to safe and affordable housing is a fundamental right that has been unattainable for too many for too long.
“However, affordable housing won’t be delivered by money alone – it needs builders receiving a fair wage for their work, robust legislation to protect tenants, and a green policy that ensures the costs of decarbonisation do not fall on low-income households. Progress on the Renters’ Reform Bill and Vagrancy Act, for example, would make a significant difference to reducing inequality in this country.
“A human rights-based approach to affordable housing would provide cohesion between these policies, to deliver safe and secure housing that supports the creation of decent jobs, thriving communities and a sustainable path to net zero.”
Elle Cass, chartered town planner and head of strategic built environment growth at SLR Consulting
“£39bn is no small fee, it’s the single biggest commitment in today’s Spending Review and marks a clear shift in tone from the government. Compared to the last administration, this represents almost a 50% uplift in annual affordable housing investment. It shows real intent, a willingness to borrow for growth, and an understanding that stimulus is essential, something the US proved in the wake of the last financial crisis.
“But while the funding headline is positive, there are clear gaps. There’s still no dedicated social housing grant to allow registered providers to acquire or build genuinely affordable homes. That’s a missed opportunity. We urgently need a national housebuilding programme, led by council housing, to meet demand, just as we did post-war. That requires structural reform, including serious investment in planning skills. Scrapping funding for Level 7 planning apprenticeships, for example, is a backwards step at exactly the wrong time.
“Raising social rents by 1% above inflation, as reported, is also deeply concerning. At a time when private rents are already unaffordable for many, that kind of increase risks pushing more people into hardship.
“This is a major investment and a welcome signal of intent, but without structural changes, council-led delivery, and proper workforce planning, it risks falling short. We can’t just pump money in, we need the system ready to deliver. And we mustn’t forget industrial and logistics infrastructure either, they’re the foundation of a resilient economy and must be part of the conversation.”
Jonny Clark, Global Energy Sector director at SLR Consulting
“While clarity on long-term investment in the energy sector is welcome, urgent attention is needed to address short and medium term challenges arising from current grid reforms, including uncertainties around locational pricing that affect investor confidence.
“Government backing for Sizewell C brings the UK closer to delivering much needed baseload generation, reducing reliance on imports and gas-fired power. However, it is crucial that lessons from Hinkley Point are fully considered, especially regarding cost and programme controls.
“Further clarity is also needed on the investment terms agreed with EDF and joint venture partners for Sizewell C’s long-term energy price underwriting. Given Hinkley’s power purchase agreement was set at £92.50/MWh based on 2012 prices, there are concerns about how future electricity prices will be impacted and what this means for maintaining the UK’s position as a “safe haven” for renewable investment – particularly in light of previous CfD auction outcomes that depressed offshore wind prices.”
Sean Keyes, CEO of Sutcliffe
“Following the Spending Review, it’s evident that planning delays, escalating costs, and ongoing labour shortages continue to hinder progress across the UK construction industry. While infrastructure investment has been promised today, the lack of clarity around long-term delivery is causing widespread hesitation—putting the government’s 1.5 million homes target at real risk.
“Nevertheless, Rachel Reeves’ £40bn pledge of grants and commitment to affordable housing is a bold and encouraging step. Doubling investment signals serious intent to tackle the housing shortage and support communities. There’s no denying that it’s a major boost for the sector, however the approach must go further: either by ensuring local authorities and developers can turn funding into real homes or setting out a new, realistic pipeline underpinned by a clear placemaking framework—something Homes England has long championed.
“The industry urgently needs certainty and sustained commitment. While Labour’s plans are ambitious, questions remain over whether the party can stay the course amid mounting political pressure on spending. And while the direction is promising, whether the government hits its 1.5m homes target remains uncertain and will likely go down to the wire.”
Dave Seed, managing director of Qube Residential
“Rachel Reeves’ Spending Review brings a mix of challenges and cautious opportunities for landlords. Regulatory changes and potential tax adjustments, such as those proposed in the Renters’ Rights Bill, are increasing pressure, while rising costs continue to squeeze already tight margins.
“Now more than ever, a strategic and forward-thinking approach is essential. Landlords must strike a difficult balance—maintaining property standards, supporting tenants, and protecting profitability. While the outlook remains uncertain, targeted infrastructure investment and progress towards the proposed 1.5 million new homes could open up areas of growth.
“We remain committed to helping landlords navigate an increasingly volatile market—one that faces yet another shift, despite earlier assurances from Keir Starmer that there would be no additional budget announcements. That said, allowing social landlords to raise rents 1% above inflation is a sensible move. It reflects economic reality, supports long-term viability, and gives landlords confidence to invest in building and maintaining homes.”
Nexus Planning executive director, Peter Tooher
“The near doubling of the Affordable Housing Programme, and the commitment to a 10-year programme, will go a long way to addressing the core viability and confidence concerns that have hampered affordable housing delivery in recent years. The industry needs to make this work, and drive up the delivery of all homes of all types that is hampering sustainable growth and the life chances of many young people.
“It will be interesting to see how the emphasis on social rent will influence the shape and location of affordable delivery. The planning sector will need to step up and work with affordable housing partners to take on this challenge of comparative riches, using the new tools at its disposal to create a long term pipeline of mixed housing sites – in towns, cities and the grey belt.”
Jonathan Pearson, director at Residentially
“This new funding delivers the clearest signal yet that the Government understands the scale of the challenge facing the country’s affordable housing providers. The housing associations I work with have always stressed that they stood ready to scale up their efforts in line with the Government’s own ambitions, but they first needed to know how much money was available and how it would be allocated. Today’s announcement goes a long way towards answering that call.
“While we’re still awaiting further clarity around how and when this funding will be allocated, they can at least begin to plan multi-phase schemes, secure land, and mobilise supply chains with confidence and at the pace required to help meet the 1.5 million-homes target. Not-for-profit housing associations are also forced to make every penny count when it comes to the number of new homes they can afford to take on, so longer-term certainty on rent is also going to be important when it comes to their developing their plans.”
Mike Haywood, CEO of Property Sense, said: “Understandably, there appears to be a revitalised focus on affordable housing in the Chancellor’s Spending Review, but that should not take away from the vital role that BTR continues to play in addressing the UK’s housing challenges.
“BTR delivers professionally managed rental homes designed to meet the needs of today’s renters – offering stability, community, and modern living standards. There must be investment and incentives for BTR developments, not just for owner-occupied housing. This is the only way to build back a balanced housing market that offers secure, high-quality rental options, particularly given these properties are in greater demand than ever before.
“Ultimately, it’s about giving people real, viable options for secure housing – whether that’s buying or renting – and building a housing ecosystem that works for everyone.”
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