The Government will help build a ‘new generation of council houses’, Theresa May told the Conservative conference as she announced an extra £2bn for affordable housing.

Speaking in Manchester, the Prime Minister told her party’s conference she would make fixing Britain’s ‘broken housing market’ her ‘personal mission’.

In a speech interspersed by the PM’s coughing and interrupted by a prankster handing her a P45, Mrs May announced for the first time that Whitehall would invest an additional £2bn into affordable housing.

This will increase the Government’s affordable housing budget to £9bn in total.

‘Today, I can announce we will invest an additional £2bn in affordable housing taking the Government’s affordable housing budget to almost £9bn,’ she said.

‘We will encourage councils as well as housing associations to bid for this money.’

The PM also added the Government would allow those parts of the country where need is greatest to build homes for social rent ‘well below market level’.

‘Getting Government back into the business of building houses. A new generation of council houses to help fix our broken housing market,’ she told the conference hall.

Responding to the Prime Minister’s speech, Lord Porter, chairman of the Local Government Association (LGA), said: 'We hope that today’s speech by the Prime Minister signals an important shift in the Government’s housing vision and are pleased that there will be additional funding for affordable homes.

'Councils are working with communities to approve nine in 10 planning applications but it is clear that only an increase of all types of housing – including those for affordable or social rent – will solve the housing crisis.

'A genuine renaissance in council housebuilding would increase housing supply, boost home ownership and reduce homelessness.'

'Every housing market is different and the only way councils will be able to significantly deliver the new homes we need is if they are given genuine powers to invest in housing that meets the needs of communities in every town and city across the country,' Lord Porter continued.

'This means the ability to borrow to invest in new council housing, to keep 100% of Right to Buy receipts to replace sold homes, certainty over future rents, powers to make sure developers build approved homes in a timely fashion, and adequately funded planning departments so that they can cover the cost of processing applications.'

Mrs May’s announcement has drawn sharp criticism from former leader of the Liberal Democrats Tim Farron who questioned the Government’s housing record.

‘Under the Tories, building of both social and affordable housing has plummeted,’ he said.

‘Since 2015, this Conservative Government has overseen the sell-off of over 25,000 council homes and replaced fewer than one in three.

‘Theresa May can announce all the new council homes she wants. But if this Government doesn’t reform the Right to Buy by allowing local authorities to suspend it if they wish, and ensure all homes sold are replaced, this announcement isn’t worth the paper it’s written on.’

Mr Farron added that Mrs May should announce that local authorities and housing associations would be allowed to borrow the money needed to build more social housing.

Bevan Brittan LLP, a law firm with close links to the housing and local government sectors, also raised questions regarding the time frame around the new £2bn affordable housing funding.

‘The PM has left a number of questions still unanswered,’ a spokesperson said.

‘There was no time frame for when councils and housing associations can bid for the extra £2bn.

‘So, developers, authorities and registered providers will be looking for greater certainty and more detail on how her promise to ‘fix the broken housing market’ will play out.’

Concluding her speech, the PM said she wanted to send the ‘clearest possible message to our house builders’.

‘We the Government will make sure the land is available. We’ll make sure you’ll have the skills you need.

‘In return you must do your duty to Britain and build the homes our country needs.’