Rachel Reeves has announced a £2 billion investment in affordable housing as part of efforts to soften the impact of upcoming spending cuts to be detailed in the spring statement. This new funding, which will support the construction of 18,000 affordable and social homes, is part of the broader Labour government target to build 1.5 million homes over the course of the parliament.

The move by the Chancellor to earmark funds for housing comes as the Bank of England’s Governor, Andrew Bailey, cautioned about significant obstacles to reviving Britain’s economic growth. Despite these headwinds, the Chancellor underscores a commitment to maintaining economic stability, pushing for investment, and reforming public services, with specific reforms including a focus on administrative cost-cutting and potential job reductions in Whitehall.

Reeves will also aim to restore the government’s budget buffer, but the margin will be notably tight, indicating a challenging fiscal landscape. Nevertheless, she firmly contests comparisons to previous austerity measures, framing current spending cuts as essential reforms designed to address inefficiencies and enhance service delivery.

The government’s strategy involves repurposing some foreign aid funds to bolster defense spending, which can be classified as capital investment and thus exempt from fiscal rules, thereby freeing up additional financial resources. Meanwhile, the Treasury is actively seeking ways to increase tax revenue, including through enhanced efforts in tax collection.

The exact details of the departmental cuts aimed at bringing the budget back into balance are yet to be fully disclosed and will be clearer following the June spending review. However, Reeves and her team have denied any intention to cut funding for vital services like free school meals for disadvantaged children, emphasizing a defiant stance against any such proposals.

Source: https://www.theguardian.com/uk-news/2025/mar/25/reeves-to-put-2bn-into-affordable-housing-to-sweeten-the-pill-of-cuts