Dozens of councils across the country, led by both Labour and the Tories, have signed an open letter vowing to use new powers to borrow more money to build a new generation of properties. It has led to hopes of the biggest council house-building programme since the 1970s.

However, it leaves Philip Hammond with a major headache ahead of his budget later this month. The extra borrowing could add £1bn to the deficit and further constrain his room for manoeuvre, as he already needs to find money to fund the NHS. Tory MPs also believe they have won a battle for help to be handed to benefit claimants set to lose out under universal credit.

Reducing a popular jobs incentive, imposing a new digital services tax and curbing pension tax relief are all being examined as ways to raise funds. Hammond is attempting to deal with a shortfall in the public finances set to hit about £100bn over five years.

A major chunk of the shortfall comes from measures favoured by No 10 and imposed on the chancellor, who had been keen to keep his budget as unspectacular as possible due to the uncertainty ahead created by the Brexit negotiations.