John Healey, the housing minister, will tomorrow unveil a £245m funding package to build 3,400 new affordable homes and create more than 5,000 jobs.
The money will go to 90 housing associations. The move follows today's announcement by Healey of a £127m pot of government money for local authorities to build 2,000 new council homes, which he described as the "biggest council house building programme for almost two decades". The £127m will go to 47 local authorities who will be expected to match government money.
Healey said Labour's policy of investing during the recession was demonstrated by its housing strategy. He added that it contrasted starkly with recent edicts by Caroline Spelman, the shadow communities and local government secretary, to Conservative MPs and councillors advising them to delay major commercial and housing developments until a Tory administration got in to power.
The move proved deeply unpopular with housebuilders and was described as a "grave mistake" by Steven Norris, the former Conservative minister.
The leaked letter said a Conservative government "would not pay a penny of compensation to speculative developers as a consequence of changes in planning policy", giving a licence to authorities to delay developments. "We would advise councils not to rush ahead with implementing the controversial elements of regional spatial strategies," it says.
"The last thing the industry needs at the moment is uncertainty," said Healey. "The Conservatives are throwing a grenade into an industry that is beginning to recover. As much as a third of the entire workforce of the construction industry has been laid off, according to some estimates. That's why there is so little housebuilding. "
Labour's housing announcement is part of the £1.5bn for housebuilding announced in June on top of the £600m committed in the budget in April.
