The Budget will provide more than £1 billion for social and affordable housing and give England’s mayors and regional leaders greater powers and funding.

The money will take funding for the 10-year social and affordable homes programme to more than £40 billion.

Councils will also be helped to borrow money from the Government to invest in housebuilding by extending the offer of preferential interest rates.

Prime Minister Andy Burnham said local leaders should not have to beg Whitehall for funding (Temilade Adelaja/PA)

PA Wire

A Treasury spokesman said: “For years families have been locked out of a secure and affordable home because we simply haven’t built enough.

“The Prime Minister promised to restore the public housing stock.

“This Budget will go further on that ambition through significant investment in affordable housing and helping councils borrow to build so we can replace what’s been sold and give people a place to live.”

The announcement of more money and more responsibilities for mayors is intended to boost economic growth across the country.

Chancellor John Healey said his plan would make the most of “untapped and wasted” potential in English cities and regions.

Prime Minister Andy Burnham, who has long called for greater devolution from Whitehall, said the move would stop local leaders having to go “cap in hand” to Westminster for investment.

The plans, which will be formally announced in Wednesday’s Budget, will give them more flexibility and authority to make investment decisions.

The Government has allocated an initial £285 million next year, with the move intended to shift away from reliance on different bidding pots managed from Whitehall.

In an effort to address criticism from areas which do not yet have strategic authority status, the Treasury said they will still be able to access a share of the money to support them in the “transitional period”.

The Government will also work with mayors to design a new £1.5 billion borrowing facility from 2028, giving them greater access to capital to invest in projects.

The Chancellor said: “Every community in Britain has potential – for too many it has gone untapped and wasted while money and power has been held in Westminster.

“Mayors and local leaders know what their communities need to grow, which is why we are giving them more money, more power and more capacity to get projects moving, build homes and make the right decisions for their areas.”

Strategic authorities will also get £150 million of funding next year to build their capability to take on the new powers and manage complex projects and investment programmes.

The Prime Minister said: “I’m calling time on local leaders going cap in hand to Westminster.

“That is no way to run a country.

“When I became Prime Minister, I said that if a decision can be made closer to home, it should be.”

Claire Ward, chairwoman of the UK Mayors Network and Labour’s East Midlands mayor, said: “Having the right powers and resources through increased devolution will help us to turn our ambitious plans into reality and deliver real, lasting change for our communities.

“I welcome this commitment from Government and will continue to push for the tools we need to help our regions to thrive.”

Labour’s London Mayor Lord Sadiq Khan said the greater ability to invest could “help unlock transformational infrastructure projects” including the West London Orbital route, the extension of the Bakerloo Underground line and Docklands Light Railway and the development of Stratford International station.

Mr Healey’s Budget preparations suffered a blow on Saturday when the Treasury’s entrepreneurship adviser Alex Depledge announced she was resigning from the role.

She will leave the role on Thursday, the day after Mr Healey sets out his tax and spending plans.

In an interview with The Sunday Times, Ms Depledge said start-ups were treated as a “sideshow” and must not be pushed to the “margins of economic policy”.

“Keeping scale-ups on the fringes underestimates the contribution of our greatest companies, and we need to support and develop them on British shores at all costs,” she said.

Meanwhile the Tories said Mr Healey should quit as Chancellor unless he uses Wednesday’s statement to show how spending on defence will reach a 3% share of the economy by 2030.

Mr Healey insisted that level of spending was required when he resigned as Sir Keir Starmer’s defence secretary in June, adding to the pressure which led to the former prime minister’s exit from No 10.

Shadow defence secretary James Cartlidge said: “The Chancellor absolutely has to set out his plan for 3% in the Budget – anything less would be a dereliction of duty.”