NHC update on the Spring Forecast 2026 speech

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On 3 March 2026, the Office for Budget Responsibility (OBR) published new forecasts for the economy and public finances. The Chancellor responded to the forecast in her Spring Statement but as expected, there were no major policy announcements.

The Government resolved to make major tax and spending announcements once a year, at the Budget, which is expected to be held in the autumn. They made a virtue of the ‘stability’ from having only one fiscal event a year and today – taxes are not changing and neither is spending.

So, despite it being a low-key event, it is still important in showing what effect the last Budget and the Government’s policies have had.

The Chancellor referenced the current global instability, but the OBR forecasts do not take into account any potential impact from a jump in energy prices triggered by the conflict in the Middle East. The OBR states it “could have very significant impacts on the global and UK economies.”

In the Chancellor’s speech she also referenced the importance of “…building growth…in every part of Britain…” and “…creating capacity in our economy through affordable housing…”.

The Chancellor stated that the forecast shows the Government’s plan is the right one, stating “Inflation is down, borrowing is down, living standards are up and the economy is growing.”

Her speech stated that there have been six interest rate cuts since the last general election.

The OBR projects that inflation will fall from 3.4% in 2025 to 2.3% in 2026, and then again to 2% from 2027 onwards. The OBR forecast that the 2% target for the UK inflation rate will be met in ‘late 2026’. The chancellor predicted that people will be more than £1,000 a year better off by the next election, after accounting for inflation.

She cited discounts on energy costs, trade deals, investment in infrastructure and skills, funding for further education and planning reforms as contributing to building growth in the economy.

  • The housing market – OBR forecast that house price inflation will average just over 2.5% over the rest of the forecast period, broadly in line with growth in average incomes. Net additions to housing stock are expected to fall from an average of 260,000 a year in the early 2020s to a low of 220,000 in 2026-27, as recent muted housing starts feed through. It is then expected that net additions could rise sharply to just over 305,000 by 2030-31, reflecting the impact of planning reforms.
  • Planning reforms – the forecast has a positive view of the Government’s planning reforms which are expected to boost housing supply, but the reforms’ impact on net additions has yet to meaningfully materialise. Progress will be evaluated again in the Autumn.
  • Local authority finance – The latest 2024-25 estimate of local authority borrowing is £8 billion higher relative to the March 2025 forecast.
    • Net borrowing this year could be around 8% higher than 2024-25.
    • The forecast confirms that the financial positions of many Housing Revenue Accounts (HRAs) have deteriorated sharply.
    • HRA spending on repairs and maintenance increased by 56% between 2019‑20 and 2025‑26, while rental income increased by only 29% over the same period.
    • The OBR highlights that many HRAs are “effectively loss‑making” and many councils have been required to sell housing stock or borrow to remain compliant with the legal requirement not to run a long-run deficit on the HRA.
    • The forecast confirmed that rising demand for statutory services – such as temporary accommodation, asylum accommodation and social care – continues to present a significant risk to local authority finances.
    • “Together, housing services and social care for both adults and children now make up around 30 per cent of local authority service expenditure in England, compared to around 20 per cent in 2015-16.” OBR March 2026 Economic & Fiscal Outlook
  • Unlocking investment in urban areas – the Chancellor’s speech referenced the changes to the Green Book, which are expected to unlock investment in urban, rural and coastal communities as well as Pride in Place investment.
  • Energy Prices – the Chancellor repeated the pledge from last year to cut energy bills by £150 in April.
  • Welfare Spending – Welfare spending is forecast to rise this year by £18 billion (5.8%) to £333 billion or 10.9% of GDP. The Chancellor stated the Government will achieve the “biggest reduction in child poverty since records began” and cited scrapping the two-child limit.
  • Unemployment – the unemployment rate is expected to peak at 5.3% this year and then fall gradually to 4.1% by 2030. The Chancellor stated the Government is already taking action, reforming apprenticeships through its youth guarantee with more plans to be set out in the coming weeks. 

 

NHC Reaction

Following the Spending Review in June 2025, which delivered transformative announcements for the social housing sector – including a £39 billion investment into a ten-year Social and Affordable Homes Programme – what the sector needs now is stability and support to deliver. So, the statement which leaves current policy in place to be delivered is welcome, as is the recognition of the importance of place-making and of affordable housing for growth.

 

Further reading

The Government has recently made several significant housing policy announcements including launching the Decent Homes Standard and the Warm Homes Plan, confirmation of rent convergence, and an update on Minimum Energy Efficiency Standards. For detail about how these announcements impact housing in the North you can read our member briefing.

In addition, bidding opened through Homes England on 24 February for the new £39 billion Social and Affordable Homes Programme. The NHC warmly welcomes the new programme, which will enable members to plan the development of new homes with confidence and deliver the social and affordable homes that our communities desperately need. You can read our update on the bidding process here.