By Richard Johnstone| 5 November 2013
Ministers are under renewed pressure to halt the proposed cut to the New Homes Bonus after councils again warned the ‘flawed’ plan would hit critical services.
The Department for Communities and Local Government is expected to set out shortly how the NHB, which is provided to councils that approve the construction of extra homes, will be top-sliced. This will contribute £400m to the £2bn Single Local Growth Fund for Local Enterprise Partnerships from 2015/16.
The decision, which was first announced in June’s Spending Review, has led to concerns from local authorities that projects to boost economic growth, such as improving rural broadband services, would be put at risk.
However, DCLG permanent secretary Sir Bob Kerslake defended the plan. Speaking to MPs on October 14, Kerslake insisted the money would not necessarily be lost to councils as they could influence the proposals being developed by LEPs.
This prompted David Hodge, chair of the County Councils Network, to hit out at government’s ‘single-minded commitment’ to the policy, which he said could hit growth. In strongly worded comments to Public Finance, Hodge said the government’s refusal to revisit the top-slice was ‘regrettable’.
He added: ‘CCN’s research has already highlighted how LEPs cannot replace all the strategic growth functions performed by county councils. Crucial projects, like driving rural broadband delivery, risk being derailed through lack of funds because of these proposals.
‘The department needs to acknowledge the negative impact on growth that pooling would create and think again.’
District councils also urged the government to alter the proposal, stating that alternative funding could be found from the centrally retained portion of local business rates.
Neil Clarke, District Councils’ Network chair, said formal talks between local government and Whitehall were needed. ‘The government should reassess where they actually get that funding from, and one of the areas they should look at is business rates.
‘We really would relish the opportunity to sit down together and have a mature discussion to support the government in finding a different way of calculating that funding.’
See David Hodge’s comment on County Deals.
