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Does the New Homes Bonus work well with our planning system?

New rural housing / Shutterstock_425872609

The New Homes Bonus, currently being reviewed, needs a comprehensive overhaul if it's to deliver good quality development supported by communites, says the CPRE's Paul Miner

The New Homes Bonus was introduced in 2011 by the coalition government following political pledges to allow communities to gain more benefit from new development. Since then £3.4 billion of funding has been allocated under the scheme, with a further £1.46 billion to be spent in 2016/17.

Its flaws start from the current method for calculating bonus payments. Payments are made when new houses are built and match the level of council tax raised for a period of six years. This has favoured areas with higher house prices, as calculations use the national average council

tax for properties within the relevant council tax band, with both the tax and bonus payments rising in line with property values.

A frequent criticism is that the bonus has been funded by money formerly given to local government through centrally devised funding formulae considering issues such as social need in the local authority area. In July 2014 a Financial Times probe said the scheme has been geographically and socially regressive in its distribution. It said:

  • London, the South-East, the South-West and East Anglia have reaped £177 million more than they would have done without the bonus – to the detriment of authorities in the Midlands and the North; and
  • The 50 most deprived councils have lost out on £111 million – the 50 least deprived have gained £96m.

The bonus works against government pledges to create a Northern Powerhouse and to prioritise reuse of brownfield sites. Many such sites are in the North and need investment to make development economically viable.

Conversely it appears to encourage councils such as Bedfordshire, Coventry and Durham to plan for large-scale housing in the green belt, undermining the government’s pledge to protect it.

“The 50 most deprived councils have lost out on £111m – the 50 least deprived gained £96m”

Ministers are considering proposals for reform published in December, but the changes needed are far more fundamental. Some current elements such as specific support for affordable housing and reuse of empty homes could be broadly retained.

Greater priority should be given, with support from other government schemes, to delivering brownfield site regeneration and genuinely affordable social housing. Otherwise, the scheme should only support schemes that accord with an agreed local or neighbourhood plan.

The New Homes Bonus should continue to encourage house building but only when it is good-quality development supported by the local community.

Paul Miner is planning campaign manager at the Campaign to Protect Rural England (CPRE)


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