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15.12.16

Districts urge Javid to reduce 0.4% growth baseline for New Homes Bonus

The communities secretary Sajid Javid has announced major changes to the New Homes Bonus following a government consultation, introducing a new 0.4% national baseline for housing growth and the eventual pay-out of the scheme over four years rather than six.

In his local government finance settlement speech in the Commons yesterday, Javid confirmed that below the 0.4% rate the bonus will not be paid and may be withheld from local authorities who are not handling planning applications effectively.

In addition, the savings from the reforms to the bonus will be used to give a much needed boost to adult social care which is currently facing intense pressure due to increased demand.

“Today I can confirm that savings from reforms to the New Homes Bonus will be retained in full by local government to contribute towards adult social care,” Javid told the house in his statement.

“I can tell the House that we will use these funds to provide a new dedicated £240m Adult Social Care Support Grant in 2017 to 2018, to be distributed fairly according to relative need.”

Javid also announced that the government will consider paying the bonus to homes that are built following an appeal in order to encourage more effective local planning.

The government will now implement its preferred option in the consultation to reduce the number of years for which New Homes Bonus payments are made from six to five years starting next April, and down to four years from 2018-2019.

Since the introduction of the New Homes Bonus in 2011, the government claims that over £6bn has been paid to reward housing supply and over 1.2 million homes have been delivered.

The District Councils’ Network (DCN) said that the New Homes Bonus has provided a “powerful and popular growth incentive” to local authorities, enabling them to make development more acceptable to local communities.

However, it expressed its concern that the introduction of the “arbitrary” baseline of 0.4% is at a higher figure than was proposed in the consultation, potentially leaving some district councils with no access to the bonus at all, contrary to the government’s aspiration of encouraging growth.

Cllr Neil Clarke, chairman of the DCN, called on the government to reduce the level of the baseline so as not to have a detrimental effect on councils.

“A significant reduction in New Homes Bonus revenues will not only reduce the incentive for communities to embrace growth, but will inevitably reduce the number of capital and revenue projects that improve the health and wellbeing of residents, and which, furthermore, reduce the burden of demand on adult social care,” Clarke said.

Cllr Clarke added that the government’s use of “sticking plaster solutions” when it comes to adult social care does not address the need for a more sustainable long-term funding plan, along with a greater emphasis on preventing demand.

It is understood that the DCN will continue to argue for the introduction of a 2% ‘prevention’ council tax precept to encourage councils to reduce demand for social care rather than the now 3% precept which is used for services.

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