By Tom Rayner, Political Correspondent
A Government plan to wipe about £60bn of housing association debt off the public balance sheet is more about manipulating numbers than housebuilding, the shadow chancellor has claimed.
John McDonnell made the caution ahead of a speech by Communities Secretary Sajid Javid, who announced the reclassification of housing associations as private rather than public bodies.
The move will likely give them greater freedom to secure finance for housebuilding, but will also result in billions disappearing from the calculation of the national debt.
Speaking to Sky News, Mr McDonnell said: "I think the issue around taking debt off balance sheets is more about meeting their targets than delivery.
"I welcome anything that will deliver new homes and new build, but it's got to be on the right scale, and from what we've seen so far from the Government, it goes nowhere near.
"When I hear Conservative Cabinet ministers endorsing our policies, for example on borrowing to invest in housing on a significant scale, when I hear Conservative backbenchers saying 'you've got to end austerity' to Philip Hammond, I think the message is there.
"There's a growing consensus austerity has to end and we have to invest for the future."
It comes after the Prime Minister vowed to take "personal charge" of Government efforts to increase housebuilding across the UK.
In a statement on Wednesday, Theresa May acknowledged there had been failures in housing policy, and that it would "take time" to "fix the broken market".
"For decades we simply have not been building enough homes, nor have we been building them quickly enough, and we have seen prices rise", she said.
"The number of new homes being delivered each year has been increasing since 2010, but there is more we can do. We must get back into the business of building the good quality new homes for people who need them most.
"That is why I have made it my mission to build the homes the country needs and take personal charge of the Government's response."
Chancellor Philip Hammond is facing growing pressure from some on the Conservative backbenches and from some in Cabinet to include radical housing policy proposals in his Budget next week.
But in an interview on Wednesday afternoon he warned that solving the crisis would not be straightforward.
"There is no silver bullet, there isn't a single thing that solves the challenge of affordability in the housing market – we are a crowded island and this is a very complex challenge," Mr Hammond said.
Mr Javid is one of those who has suggested the Chancellor should consider borrowing more money to invest in new housebuilding.
He said at a speech in Bristol: "Without affordable, secure, safe housing we risk creating a rootless generation, drifting from one short-term tenancy to the next, never staying long enough to play a role in their community."
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