Fears were growing this week that social housing funding could be cut in half after housing minister Grant Shapps told delegates at the Tory party conference to “prepare for the worst” in this month’s Comprehensive Spending Review

In a marked change in rhetoric ahead of the 20 October review, Shapps repeatedly told delegates that spending would be cut further. He said: “The spending review is going to be tough, I mean really tough. If I have one objective today, beyond anything else, it’s to ensure you leave the room knowing it’s tougher than when you came in.”

It is thought the communities department has now agreed much of its spending cuts with the Treasury. An industry source said: “There are 40% cuts being envisaged across government. But remember the last housing settlement [of £8.4bn from 2008-11] was a huge historic high. We could be looking at cuts of more than half.”

More positive news from the conference came on transport. The Campaign for Better Transport said the Department for Transport intended to raise money for infrastructure investment by allowing train operators to raise their rail fares by 3% above inflation. Director Stephen Joseph said it meant “Crossrail, Thameslink and even electrification projects,” were likely to survive.