Chancellor Rachel Reeves says she will raise rents for social housing by more than inflation over the next five or 10 years.

In a statement over the weekend the Treasury admitted she intends to introduce a formula in Wednesday’s Budget that will increase annual rents in England by the consumer price index measure of inflation — currently 1.7% — plus an additional 1%. 

The government sets rent levels in subsidised social housing on the basis of a national formula. And there will be a formal consultation to establish this as a long-term settlement, not a one-off. 

The Treasury says this will initially be a five year deal but “the consultation will also seek views on other potential options to give greater certainty, such as providing a 10-year settlement.” 

Increased and guaranteed long term rental income was a demand of 20 large local councils when Labour came to power over the summer.

However it risks provoking a backlash from millions of tenants while landing the government with a much higher benefits bill.