If the name Steve Reed means little to you, rest assured that is a pothole he is eager to fill. Having replaced Angela Rayner as housing secretary, he bounded around Labour conference last month dishing out Maga-red caps stamped with his credo “Build Baby Build!”. Headgear and slogan have both been filched from that very rightwing guy in the White House – because, like Robert Jenrick, Steve Reed is what happens when self-identified centrists turn populist.

Imagine Donald Trump had, years ago, swerved TV fame to become instead ward councillor for Brixton Hill. Imagine if Trump had no towers, but knew his way round a Travelodge. Most of all, imagine this scene from the conference fringe, recounted by Inside Housing magazine:

“Steve Reed skipped into the room only once the well-orchestrated chanting by his party faithful was deemed loud enough to the tune of We Built This City by Starship. He then took to the stage and proceeded to throw more signed and branded merchandise into the crowd, before cracking open a bottle of alcohol because ‘all builders need a beer’.

“One sector professional’s response to the proceedings was ‘dear God’.”

Steve Reed: he built this city, he built this city on rock’n’roll.

Except there is no building, baby. Labour was elected last year on a pledge of 1.5m new homes by the end of this parliament, yet in private, Reed’s officials already accept they will end up breaking that promise. Take London, where the government wants 88,000 homes finished before January. That goal was always a huge stretch but now it looks like a joke: so far this year ground has broken on just 3,248 new units. The figure comes from the consultancy Molior, which says that one in every six major housing projects is frozen: “schemes are halted, with the gates padlocked”.

The shortfall is so vast as to sow panic in government and to push No 10 into a war-room exercise over a recent weekend where a team worked on a rescue package. The results will be public as soon as next week, when Reed unveils an emergency scheme, billed as getting London building again.

I have seen a private memo circulated within the Ministry of Housing that reveals the measures and the thinking behind the measures. While they may help the big property developers on whom ministers rely, they will almost certainly heighten the very crisis in affordable housing that Labour vowed to fix. London is already infamous around the world for its inability to house ordinary Londoners, and this plan will add to the chaos already inflicted on families and local authorities.

Sent last week, the memo details extensive discussions with senior executives at Barratt, Vistry and Berkeley – among other major housebuilders – for whom government officials rehearsed their plans. This privileged access appears to have been reserved almost exclusively for the property industry, with representatives of housing associations invited in further down the road while groups representing ordinary tenants, and even London councils, do not seem to have been involved at all.

That fits with the logic of the plan, which centres on watering down builders’ commitments to provide affordable and social housing. When he was first elected as the capital’s mayor in 2016, Labour’s Sadiq Khan promised he would build homes for Londoners, not “gold bricks for overseas investors”. As a first step, he introduced a threshold: if builders reserved 35% of a development for affordable homes, their application would be fast-tracked. Affordable was loosely defined (technically, any housing at up to 80% of market value counts as “affordable”). Neither a target nor an obligation, it had the hallmark of New Labour compromise – an incentive for the market to do its bit.

Yet under Keir Starmer, even New Labour can seem dangerously statist, and Reed’s department is seriously considering slashing that threshold to just 20% affordable homes, making building in London far more profitable. If that isn’t enough of a sweetener, half will be paid for out of public money, so the cash local authorities receive from the sale of council houses will now go into padding out developers’ profit margins.

Reed plans other sweeteners, such as suspending the community levy developers have long paid for amenities such as a new GP surgery or a school. Looking at government calculations, that one giveaway alone could put around £1bn back in the pockets of wealthy developers. Not all these proposals may make it into final programme, but the direction is clear.

“The key test is that developers welcome the package strongly on the day,” says the memo. The same industry that, as recently as the pandemic were raking in billions in profit, is now being ushered to the front of the queue by a Labour government that just last year promised “the biggest increase in social and affordable housebuilding in a generation” – another promise for the dustbin.

One former insider at the department recalls sustained pressure from No 10 and the Treasury to bin the emphasis on social housing, which was always successfully resisted by Angela Rayner – who wielded the combined authority of deputy prime minister and deputy leader – and her housing minister Matthew Pennycook. Until the government’s personnel changed abruptly last month, that is.

So much for high politics; the ground reality is of a housing crisis that just keeps getting bigger. Over 13,000 people slept rough in London in 2024-25, four times the number before David Cameron’s austerity regime. At the start of this year, 73,000 households across the capital were in temporary accommodation, including 90,000 children – so that on average at least one child in every classroom in London is homeless. The capital’s councils pay out £5.5m every day just to put them up in rooms that are too often cramped, ridden with mould and worse.

None of this will be improved by these measures, as laid out here. More than one source believes developers will halt projects already under way, arguing they should be allowed to divert into more profitable housing. A source at the Greater London Authority estimates that up to 20,000 affordable homes already planned, some even part-built, could rapidly disappear. Over the longer term, says Duncan Bowie, a key architect of the London Plan under Ken Livingstone, the memo will take Londoners back to the housing policies of Boris Johnson. Think infinity pools in the sky, while thanks to the housing-welfare cuts brought in by George Osborne and not reversed by Rachel Reeves, lower-income Londoners are exiled hundreds of miles away from family and friends.

In response to my questions, the housing ministry issued a short statement that reads in part: “We do not comment on leaks. No decisions have been made.”

Ministers will probably argue that 20% of something is better than 35% of nothing – except London’s housing problem today is not primarily about over-regulation – it’s about the lack of demand. Wages are barely rising, interest rates are way off their post-crisis lows and house prices remain untenably high. As Molior put it: “No buyers = no construction starts”.

Just a few months before council elections in London and elsewhere, a Labour government is about to unveil a scheme that shows who it values most – and it doesn’t look like ordinary Londoners. As Aydin Dikerdem, cabinet member for housing at Wandsworth’s Labour council, puts it: “This is rolling over for developers.”

It’s not just Steve Reed’s baseball caps that look Trumpian.

• Aditya Chakrabortty is a Guardian columnist

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