Andy Burnham’s council house-building pledge faces significant financial challenges that could limit the number of new homes delivered each year, according to recent analyses. The prime minister has pledged the largest construction program since the postwar era to address the country’s ongoing housing crisis. However, experts warn that an annual funding shortfall of approximately £800 million could result in 5,000 fewer homes being built annually.

Current government plans have allocated £39 billion to the social and affordable homes programme (SAHP), which aims to deliver 300,000 homes by 2036. Within this target, 60 percent are intended to be social housing. Burnham has emphasized a preference for these homes to be council houses, constructed by local authorities rather than housing associations or private developers. Presently, SAHP funds are distributed among various entities, including housing associations and private sector firms.

A report by the Resolution Foundation highlights the financial implications of focusing exclusively on social housing, often synonymous with council housing. Social rent homes charge tenants about half of local market rents, necessitating higher upfront government subsidies compared to affordable rent or shared ownership models, where tenants pay a larger share of market rates. The analysis suggests that meeting the 300,000-home target solely with social rent properties would require increasing the current budget to approximately £47 billion. Without this increase, around 51,000 fewer homes would be built by 2036, equivalent to about 5,000 fewer annually.

The report notes that while under the existing £39 billion investment just under 250,000 social rent homes could be built—a number above recent annual output but below levels seen in the mid-1990s—such a strategy would reduce overall affordable housing completions by 50,000. To bridge this gap, an additional £800 million in annual government funding would be necessary.

Angela Rayner, who recently returned to the role of housing secretary, is reportedly engaged in discussions regarding funding allocations within SAHP. The program currently designates 20 percent of homes for affordable rent (typically up to 80 percent of market rent) and another 20 percent for shared ownership. This diversified approach aims to balance supply across housing types.

Concerns have also been raised about local authorities’ capacity to significantly increase council housebuilding, as many have not built homes since the 1970s. Data indicates councils have averaged only about 2,000 new homes per year over the five years ending in 2025, with most new social housing delivered through housing associations.

When questioned about aspirations for the biggest housebuilding drive since the postwar period, Rayner acknowledged the stark differences between today’s environment and the 1950s, when councils were building around 200,000 homes annually. She affirmed government commitment to increased investment while stopping short of setting specific construction targets.

The Resolution Foundation suggests some of the funding shortfall could be mitigated by loosening restrictions to allow private developers greater involvement in affordable rent housing and by leveraging existing resources such as the £2.5 billion low-cost loan facility managed by the National Housing Bank, a new public finance institution. Hannah Aldridge, the think tank’s senior research and policy analyst, emphasized that combining SAHP funds with private sector contributions and public loans could help increase social rent housing supply while expanding overall affordable housing stock.