Sajid Javid pledges £600m for 50,000 new homes but fails to say where money is coming from

First housing announcement since Boris Johnson reached No 10 – with government miles from its target of 300,000 annual starts

Money will pay for projects in ‘high demand areas’ in London, Bedfordshire and Essex (Reuters)

Up to 50,000 new homes will be built through a £600m government investment, as part of Boris Johnson’s first housing announcement since reaching No 10.

Projects in five “high demand areas” in London, Bedfordshire and Essex will be paid for with the money, and “the infrastructure and public services to match” put in place, ministers pledged.

The Treasury insisted the investment was new funding but was unable to say where the money was coming from ahead of the autumn Budget.

Sajid Javid, the chancellor, said the new £600m would be delivered through the housing infrastructure fund, in addition to the £1.3bn already allocated to deliver up to 76,500 homes.

The prime minister has been criticised for turning to “the magic money tree” to pay for a string of costly voter-friendly announcements, which appear to indicate a snap general election.

On the back of the spending spree, suggestions have been raised that the new government will have to increase borrowing, or loosen its deficit reduction rules, later this year.

“We need the roads, rail links and schools to support the families living in those homes, which is why I set up a fund to put in place the infrastructure to unlock new homes in these areas,” said the chancellor.

“And today I’m announcing hundreds of millions in new investment, helping more people get on the property ladder and allowing more communities to flourish.”

The cash comes as there is uncertainty about Mr Johnson’s plans for housing, with few clues dropped before or since he succeeded Theresa May last month.

He has pledged to give “millions of young people the chance to own their own home”, but appeared to relegate that as a priority behind the NHS, social care, education funding and more police.

Meanwhile, the number of new homes being built has slowed again, dropping 9 per cent in the first quarter of 2019.

The government remains miles away from its target of 300,000 starts each year, despite an improvement to 222,000 in the financial year 2017-18.

There are also fears Mr Johnson could dump the proposed ban on “revenge evictions” of private tenants, which was pledged by Ms May in her final months in office.

The £600m will be spent on two projects in Essex (about £200m and £100m), in Enfield, north London (more than £150m), in central Bedfordshire (£70m) and east London (over £80m).

The announcement came after Mr Javid used his first interview as chancellor to propose a simpler tax system, and described himself as a “low-tax guy”.

He dangled the prospect of tax cuts for high earners, which follows Mr Johnson’s controversial plan to hike the threshold for the 40p income tax to £80,000 from £50,000 during his leadership campaign.

“We want to set them [taxes] at a rate where we are trying to maximise revenue, and that doesn’t always mean that you have the highest tax rate possible,” Mr Javid told The Times.