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New Homes diversion ‘hugely disappointing’

Diverting funds from a housing programme to LEPs’ Local Growth Fund could risk progress on housing development, the Local Government Association has warned.

The Government announced that £400m of the New Homes Bonus, an incentive for local authorities to accept new homes into their area, will be pooled within LEP areas in 2015/16.

The LGA said this could reduce the effectiveness of the housing incentive.

Cllr Mike Jones, chair of the LGA's Environment and Housing Board, said: “The removal of funding breaks the promise Government made to give councils freedom over how funding could be used. This threatens councils' plans to devolve funds to local communities, support local services and invest in housing and regeneration projects.

“Councils have already committed income expected from the New Homes Bonus to vital long-term investment projects to pay for local services and support new housing and economic growth.

“It is hugely disappointing that Government fails to recognise that redistributing this money will make it more difficult for councils to keep paying for local services and significantly undermine the reward to communities who accept new housing developments.

“Local authorities strongly support the principle of a Local Growth Fund but firmly believe they should be funded through devolution of budgets from Whitehall, such as from the centralised business rates pot, and not through reallocating funding that councils have already committed to spend.”

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