Star fund manager Richard Buxton has warned that the housing crisis is strengthening Labour’s chances of winning power in the next general election.

According to Mr Buxton, the boss of Old Mutual Global Investors, capitalism is failing the younger generation because they cannot afford to buy a home. And if capitalism is not working, the under-40s will turn to socialism, sweeping Labour to power, he added.

“It is appalling that in 21st century Britain, the younger generation face being worse off than their parents,” Mr Buxton said.

Writing exclusively for The Sunday Telegraph, Mr Buxton, who manages the £2.3bn Old Mutual UK Alpha fund, urged the Conservatives to get to grips with the shortage of affordable homes – even if it means paving over swathes of, until now, sacrosanct countryside.

“Unless the Government confronts the uncomfortable truth that we have to build thousands of new houses on green belt land, then the prospect of a fiercely redistributive socialist government is firmly on the horizon,” he said.

“Look at speeding up planning processes, threaten to tax housebuilders for sitting on land banks – the market has heard it all before and nothing changes.”

He noted the stock market had “dismissed” Budget pledges to build 300,000 new homes, with housebuilders’ shares barely reacting.