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Labour will call for town halls to be given new powers to cap rent increases and offer mortgages to help ease the housing crisis for local residents.

Shadow chancellor John McDonnell will say local authorities and elected Mayors should be allowed to block spiralling rents and help first-time buyers onto the housing ladder.

“Urban areas are suffering from skyrocketing rents,” Mr McDonnell will say.

“We’ll give local authorities the powers to impose local rent controls where these are needed.”

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Speaking at Labour’s first annual economic forum Mr McDonnell will also set out plans to help young people buy their homes via mortgages backed by local authorities rather than greedy banks and building societies.

“We have to also meet the aspirations of people to own their own home,” he will say.

“Labour would make it a mission to ensure families and young people on ordinary incomes aren’t locked out of home-ownership as they are under the Tories.

“So I want to see local authorities following the example of Manchester, Warrington and Sandwell, offering cheap, local authority-backed mortgages to first-time buyers in particular.”