Tory shadow housing minister Grant Shapps this week pledged to take money away from “Nimby” councils in order to fund incentives for local authorities that want housing growth

Speaking at a hustings event in Westminster organised by Building and sister title Property Week, Shapps defended his policy of allowing councils to set their own housing targets, which housebuilders fear will lead to a hiatus in construction.

Shapps has previously outlined his policy of giving councils six years’ worth of council tax for every home built, thereby providing an incentive to allow more housing development.

Responding to a challenge by Labour MP and former housing minister Nick Raynsford that the policy was unfunded and would cost the Treasury billions, Shapps said: “What the policy clearly says is the money comes from the overall council settlement, which is about £30bn. It’s very simple. By definition areas that decide not to expand will find life tougher, and may have to raise council tax on their residents. It’s a really strong incentive.”

Frankly, you won’t ever be allowed by the Treasury to do this

Nick Raynsford

Shapps then confirmed the policy would punish “Nimby” councils, many of which are in traditional Conservative regions in the South-east.

His statement comes despite last September’s conference pledge by shadow chancellor George Osborne that council tax would be frozen for the first two years of a Tory government.

Raynsford said: “You only have to do the figures to see that your scheme would cost billions of pounds, but you say there isn’t any money available. It’s completely non-credible and you frankly won’t ever be allowed by the Treasury to do it.”