Speaking yesterday at the National House-Building Council (NHBC) annual lunch, Balls said the country needed a "scale of ambition on housing supply that we’ve not seen for a number of decades".
Balls said a Labour Treasury would make housebuilding "a central economic priority from 2015" and called for a new generation of new towns to help tackle the housing crisis.
He said: "We should draw on the lessons from the past of how the new towns were developed after the second world war by development corporations, which had the powers to acquire, own, manage and dispose of land and property; undertake building operations; provide public utilities; and do anything else necessary to develop the new town".
But he said these powers would not be enough to help fund new towns and called on central government to offer loan guarantees to secure private investment.
"The chancellor has shown himself willing to use the government’s balance sheet to guarantee some housebuilding but mainly to support demand through guaranteeing household mortgages … The government is providing guarantees of up to £12 billion for Help To Buy, the chancellor should now step up to the plate and back the supply of new houses in new towns, providing financial guarantees to develop the corporations we believe could and will be essential to provide backing for large scale growth programmes, provide confidence, reduce risk and give credibility to development".
Balls also said that Labour would push ahead with proposals for the creation of a National Infrastructure Commission, as recommended by a review commissioned by the Labour Party carried out by Sir John Armitt. Armitt's review proposed that an independent National Infrastructure Commission be established to identify the UK’s infrastructure needs over the next 25-30 years, focussing primarily on nationally significant infrastructure projects.
Balls said: "For decades successive governments have ducked big decisions on housing and more widely on Britain’s long-term infrastructure. We are determined to change that. That is why we asked Sir John Armitt to look at how we can better identify and deliver big infrastructure projects for the future and I don’t think we can wait to implement his excellent report which came out a few months ago.
"So today I’ve written to Sir John Armitt and agreed with him that he will produce a draft white paper based on his report which will set out the policy, administrative and legislative steps needed to establish an independent National Infrastructure Commission".
Balls also said the Labour party would prepare draft legislation to establish a National Infrastructure Commission. "We will do all of that by next summer, with Sir John Armitt taking the lead. I think this reform is vital for our ambitions for our economy and on housing", he said.
Separately, the Town and Country Planning Association (TCPA), which has long campaigned for a new generation of garden cities, has said it is to draw up a revised version of the New Towns Act, which established the post-war new towns, "to make it more democratically accountable".
Chief executive Kate Henderson, said: "The TCPA believes the historic development corporation model can be easily strengthened to make it more democratically accountable through allowing local authorities to create, and effectively own, the development corporation, appointing their board and providing the operating brief.
"That is why, in early 2014, the TCPA will be publishing an amended version of the New Towns Act, which remains on statute, to demonstrate how locally based development corporations could become the contractual partner for landowners and infrastructure providers, providing transparency, clarity and greater confidence all round and helping to deliver the homes and jobs that the nation so desperately needs."