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31.10.13

DCLG ‘yet to demonstrate’ New Homes Bonus works

New Homes Bonus tends to fund areas where “housing need is lowest”, the Public Accounts Committee has warned in a new report.

The government scheme is an incentive for local authorities to increase the number of homes in their area. But an evaluation for the scheme will only be undertaken by next spring, creating concerns that it is not working to achieve its aims.

PAC called on the Department for Communities & Local Government (DCLG) to set out its evaluation plans now; to work with local government to develop a better understanding of the impact of the scheme; to ensure consistent, comparative information on local authorities’ progress in creating new homes is available; and to examine the scope for adjustments it could make to the scheme to complement other initiatives.

Committee chair Margaret Hodge MP said: “£7.5bn will have been redistributed between councils by 2018-19, so there is a lot of money at stake. It is clearly vital that the incentives work and the Government achieves its aim.

“It is therefore disappointing that after more than two years of the scheme being up and running, no evaluation is in place and no credible data is available to show whether the scheme is working or not.

“So far the areas which have gained most money tend to be the areas where housing need is lowest. The areas that have lost most tend to be those where needs are greatest.

“The Department has yet to demonstrate whether the New Homes Bonus works. Is it helping to create more new homes than would have been built anyway? Is it the best way for Government to use its limited resources to create more homes where they are needed most? Its planned evaluation of the Bonus scheme is now urgent.”

Sir Bob Kerslake, permanent secretary at the DCLG, said: “We have made very clear that our review of the New Homes Bonus is underway and will be completed by easter 2014 as we have always promised.

“The whole point of the New Homes Bonus – which the committee fails to recognise – is to recognise housing growth where it occurs, with money going where those homes are needed most.

“That's why we've committed £1.2bn over five years towards this scheme, which the National Audit Office themselves found has the potential to deliver up to 100,000 additional homes over 10 years.”

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