The Chancellor insisted she was within ‘touching distance’ of hitting the 1.5million target being spearheaded by Angela Rayner

The Office for Budget Responsibility (OBR) forecast 1.3million homes would be built by the 2029-30 financial year.

The economic watchdog also forecast that mortgage rates will increase over the course of Labour’s term in office, peaking at an average of 4.7 per cent in 2028 and staying at that rate for the rest of the decade.

Ms Reeves said: ‘The OBR have today concluded that these reforms will permanently increase the level of real GDP by 0.2 per cent by 2029-30, an additional £6.8bn in our economy and by 0.4 per cent of GDP within the next 10 years an additional £15.1bn in our economy.

‘That is the biggest positive growth impact that the OBR have ever reflected in their forecast, for a policy with no fiscal cost.

‘And taken together with our plans to increase capital spending this Government’s policies will increase the level of real GDP by 0.6 per cent in the next 10 years.’

The updated national planning policy framework (NPPF) commits to a ‘brownfield first’ strategy, with disused sites that have already been developed in the past prioritised for new buildings.

The default answer when a developer seeks to build on brownfield sites will be ‘yes’, but the Government says these sites will not be enough for the number of homes needed.

Councils will be ordered to review their greenbelt boundaries to meet targets by identifying lower quality ‘grey belt’ land that could be built on.

The framework defines the grey belt for the first time as green belt land that ‘does not strongly contribute to green belt purposes’.

Those purposes include limiting urban sprawl, stopping neighbouring towns merging into each other and preserving the special character of historic towns.

Safeguarding the countryside from encroachment and assisting in urban regeneration are no longer included as green belt purposes.

Rachel Reeves told MPs: ‘The planning system that we inherited was far too slow. The OBR have concluded that our reforms will lead to housebuilding reaching a 40-year high of 305,000 by the end of the forecast period.

‘And changes to the national planning policy framework alone will help build over 1.3 million homes in the UK over the next five years taking us within touching distance of delivering on our manifesto promise to build 1.5 million homes in England this parliament.’

UK households will have more disposable income over the next few years, but living standards will stall as businesses pass on higher taxes through lower wages and welfare measures are cut, new forecasts show.

New OBR projections show real household disposable income (RHDI) per person will grow at about 0.5 per cent on average each year between 2025 and 2030.

Stronger wage growth means this is higher than the last forecast, which was published in October alongside the autumn Budget statement.

However, the OBR cautioned that disposable income growth will vary significantly around the five-year average.

It is set to drop sharply from about 2.5 per cent in 2024-25, to almost zero growth in 2027-28.

This will be driven by several factors, the forecasters found, including lower wage growth as firms rebuild their profit margins.

Wages will also be hit by businesses passing on higher employer national insurance contributions to staff, while many workers will also be impacted by so-called ‘fiscal drag’.

This is when people are dragged into a higher tax bracket if their salaries rise, but thresholds for tax rates stay the same.

Furthermore, living standards will be affected by a rising state pension age and new welfare measures, the OBR found.