Labour unveils £5bn plan to build 150,000 new homes funded by Help to Buy ISA scheme

A £5bn plan to build 150,000 homes by 2020 will be unveiled by Ed Miliband today, as Labour puts housing for first-time buyers at the top of the party’s agenda.

A Labour government would order banks and building societies to put money into a new “future homes investment fund”, with the money coming from savings they hold under the “Help to Buy ISA” scheme announced by George Osborne in last month’s Budget.

The Chancellor pledged to top up the savings of first-time buyers trying to raise a deposit, giving them £50 for every £200 they save up to a maximum £3,000 of state support. But some experts warned that his plan would do nothing to boost the supply of housing and could push up prices.

Mr Miliband will argue that the only way to tackle the chronic shortage of housing is to build more homes. Labour would keep Mr Osborne’s top-ups and any financial institution offering these ISAs would have to invest in housing. A Labour government would underwrite every pound of the ISA investments if banks and building societies put the money into the “future homes investment fund”.

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Labour said the £5bn plan would not require any extra spending or borrowing as it would be funded by the Chancellor’s scheme. The party would ensure homes are built in “housing growth areas” in towns and cities, where first-time buyers who have lived in the area for three years would get priority. The 150,000 new homes would help Labour achieve its target to provide an extra 200,000 a year by 2020.

Mr Miliband will tell a Labour rally in Warrington today: “We’ll get Britain building again. Our plan is the first real plan for house building in a generation.

“There’s nothing more British,” he will add, “than the dream of homeownership. But for so many young people today, that dream is disappearing into the distance.”

Last night, Labour launched a pre-emptive strike against the Conservatives and Liberal Democrats as they prepared to trumpet the Coalition’s decision to raise the personal tax allowance from £10,000 to £10,600 on Monday. Ed Balls, the shadow Chancellor, released new figures claiming that a two-earner couple with two children on average earnings will be £1,700 worse off than in 2010, and a two-earner couple on the minimum wage £1,500 worse off.

Mr Balls will say today: “George Osborne and David Cameron have raised VAT and cut the tax credits of working people, but given millionaires a huge tax cut. And our new figures today show how families with children have been hit hardest of all.”

But Priti Patel, a Conservative Treasury minister, replied: “Ed Miliband’s tax rises will cut the average working family’s pay packet by £3,028, and Labour’s debt and borrowing will cause economic chaos. The independent experts at both the Institute for Fiscal Studies and the Office for Budget Responsibility show that living standards are set to be higher in 2015 than they were in 2010.”