Chancellor Puts £1.5bn Behind Council Homes in 'Breathing Space' Budget

Chancellor John Healey has pledged an extra £1.5bn for social and affordable housing in his first Budget, with priority given to social rent and council housing. The money is expected to deliver around 10,000 homes in England and lifts total investment in the Social and Affordable Homes Programme to more than £40bn over 10 years.

Healey framed the package as a "breathing space" Budget. He postponed difficult decisions ahead, made no cuts to welfare spending and relied on a welter of small tax changes that fail to tackle rising Government borrowing.

What changes for housebuilders?

The Chancellor promised no major changes to building regulations for the rest of the parliament, except where needed for safety. That gives builders greater certainty over future requirements.

Smaller housing developments on brownfield land will be exempted from Biodiversity Net Gain requirements, cutting costs and simplifying delivery.

Councils will gain access to cheaper borrowing for housing, while land sold to social housing providers will be freed from VAT.

Private house builders received a further boost through the new Your First Home equity loan scheme, backed by £4.7bn of government lending. The scheme will not come into being until April 2027, threatening to put a brake on first-time buyer sales until that date.

Which projects won funding?

Smaller project investments scattered through the package include:

• £15m to upgrade Leeds College of Building
• £20m to restore Liverpool's Littlewoods Building
• £10m for a new market hall in Stafford
• £10m for Bury's indoor market
• £10m for Bristol's Temple Quarter

The Government also confirmed an extra £200m towards the £300m upgrade of Leeds station by 2030.

What is the British Data Centre Covenant?

Healey set out plans for a new British Data Centre Covenant linking enhanced government support for strategic schemes to benefits for local communities and the wider economy. Projects will be expected to meet tests covering community investment, energy costs, British industry and jobs, and national security.

The package promises faster grid connections and lets data centres start work earlier on power generation projects at sites, alongside requirements to protect local water supplies.

Public procurement will also get a new definition of a British supplier, targeting preferential treatment at businesses creating investment and jobs in the UK.

What else was announced?

Regional mayors will gain new Good Growth funds, with plans to devolve 100% of business rates by the end of the decade. An extra £20.4bn will go to the National Wealth Fund and British Business Bank to support investment.

Energy-intensive manufacturers will receive electricity discounts of 20-25% through the British Industrial Competitiveness Scheme. The scheme will cover 10,000 firms from April 2027, including a back payment for 2026-27.

For business owners, Healey announced founders' relief with a 10% tax rate on qualifying lifetime gains of up to £10m.

The Chancellor confirmed a rise in the National Living Wage to £13.21 an hour, while the minimum wage for 18 to 20-year-olds will increase to £11.27.

Employees and self-employed workers using their own vehicles for business will retain the 55p mileage rate for the first 10,000 miles. The rate above that threshold will rise from 25p to 35p a mile.

For contractors and developers, the durable gains are certainty: a frozen regulatory regime, exempted brownfield sites and cheaper council borrowing. The harder fiscal questions have merely been deferred to the next Budget.