By Richard Johnstone | 31 October 2013
The government does not know whether the New Homes Bonus paid to councils when they approve housing developments is effective and there is an urgent need to examine the scheme properly, MPs have said today.
The Public Accounts Committee said the lack of an evaluation of the NHB, which matches the council tax raised on new homes until 2016/17, meant ministers were unable to know if the incentive to boost construction worked.
PAC chair Margaret Hodge said: ‘Is [the NHB] 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.’
The scheme is being financed from within the Department for Communities and Local Government’s main funding for local authorities. Hodge said it would see £7.5bn redistributed between councils by 2018/19.
As a result, it was ‘vital’ that the programme had the desired impact.
She added: ‘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.’
As it was ‘challenging’ to disentangle the direct impact of the scheme from the effects of other interventions, such as the Help to Buy scheme, the committee called on the department to set out how it plans to judge the policy. A full evaluation by the department will be completed next spring.
The MPs also called on DCLG to work more closely with local government to assess the cumulative impact of policy changes on local government finances. Action should also be taken to ensure that consistent, comparative information on local authorities’ progress in creating new homes, and meeting local housing need, was available.
‘Some local communities do not have relevant information in a form that enables them to judge their local authorities’ progress in meeting local need for housing and attracting funding through the New Homes Bonus,’ the PAC concluded.
Responding to the report, DCLG permanent secretary Sir Bob Kerslake said he had ‘some significant disagreements’ with the committee’s findings.
‘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.’
Funding for the scheme is set to be top-sliced from 2015/16 to pay for the creation of a Single Local Growth Fund, which councils have warned could hit delivery of vital infrastructure projects.
