News Minister Unveils £900m New Homes Bonus Allocations

The Government has announced more than £900 million for this year’s New Homes Bonus (NHB) payments to councils.

Housing minister Kris Hopkins said that since the policy was introduced in 2011, local authorities will have received funding for more than 550,000 new homes and conversions, including 160,000 affordable homes and 93,000 empty properties brought back into use.

The allocations for this year will bring the total paid out under the NHB to £2bn.

Under the NHB scheme, councils receive a grant based on the amount of extra council tax generated by new build homes, conversions and empty houses brought back into use. The grant is paid annually for six years and councils are free to spend the money on local priorities.

The policy has proved controversial because it has been increasingly backed by “top-slicing” central funding for local government. Last year, the Local Government Association’s (LGA) Special Interest Group of Municipal Authorities (SIGOMA), which represents 45 urban authorities outside London, forecast that the NHB will reduce the central grant by £300 million in 2014-15 and its members will lose £74 million as the policy effectively funnels cash to areas with buoyant housing markets where developers are looking to build anyway.

Elsewhere, London Councils has criticised the Government’s decision to allocate NHB funding to the London Local Enterprise Panel from 2015, saying this effectively amounts to a £70 million cut for the capital’s councils.

The National Audit Office (NAO) has also highlighted the uneven impact of the NHB, saying some councils face losing “large amounts” of their central funding because of the scheme.

The NAO added that the Government’s estimate of the number of new homes the NHB would deliver was based on “very limited evidence” and was partly influenced by an arithmetical error that substantially increased construction rates.

Then-housing minister Mark Prisk called the NAO’s criticisms “unduly negative and unfair”.

And announcing this year’s final allocations, Hopkins said the NHB has helped to push house building to the highest levels since 2007.

He added that recent figures from the National House-Building Council showed the housing supply increased by 28% year-on-year in 2013.

“The New Homes Bonus lets local people share in the benefits of development, with councils free to spend the money to benefit their local area,” the minister said.

“And getting Britain building in this way is critical to our long-term economic plan, not only building the homes communities need, but creating thousands of new jobs and apprenticeships across the country.

“We will continue to pay the bonus in the future to ensure that places that have built houses are properly rewarded for doing so.”

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