New Homes Bonus restricted to pay for social care


Communities secretary Sajid Javid has announced plans to restrict payments of the New Homes Bonus in an effort to release cash to tackle the adult social care crisis.

Alongside this the secretary's local government finance settlement also confirmed England's 152 social care authorities can increase council tax by 3% in both 2017/18 and 2018/19 under the Social Care Precept.

Communities secretary Sajid Javid

Overall the moves will give local authorities an extra £900m to spend on social care over the next two years, Mr Javid suggested.

Communities secretary Sajid Javid told MPs on Thursday that from 2017/18 the Government will only pay the New Homes Bonus to local authorities who show a minimum of 0.4% housing growth.

He also said the Government would consider other restrictions including witholding cash from houses built after appeal and from those councils not 'planning effectively', raising the possibility of taking cash away from those authorities without a Local Plan as was suggested in a previous consultation.

Mr Javid told the Commons: 'Since its introduction on 2011 over £6bn has been spent to reward housing supply and 1.2m homes have been delivered but for all its successes the system can be improved. 

'I can confirm today we will introduce a national baseline for housing growth of 0.4% below this the New Homes Bonus will not be paid. This will help ensure the money is used to reward additional housing rather than just normal growth.

'Form 2018/19 we will consider withholding New Homes Bonus payments from local authorities that are not planning effectively by making positive decisions on planning applications and delivering housing growth to encourage more effective planning. We will also consider witholding payments for homes built following an appeal. A consultation on this will take place in due course.

'We will also implement our preferred option in the consultation to reduce the number of years for which payments are made from six years to five years for 2017-18 and to four years for 2018/19.'

Mr Javid pledged that the savings achieved by these measures would be retained in full within local government and announced an adult social care support grant worth £240m next year, to be shared across authorities.

Councils will not be able to increase Council Tax under the precept in 2019/20, keeping the overall increase over the three years to the planned 6%.

Mr Javid told MPs that this would make an additional £208m available for social care in 2017/18 and £444m in 2018/19.

The New Homes Bonus (NHB) was introduced by the Coalition Government with the aim of encouraging local authorities to grant planning permissions for the building of new houses in return for additional revenue.

The Bonus is not ring-fenced. In two-tier areas payments are split between both county (20%) and district (80%) authorities.

Lord Porter, chairman of the Local Government Association, said: 'Today’s announcement of funding for social care from New Homes Bonus reforms is not new money but a redistribution of funding already promised to councils. It is wrong to present this as a solution, given the scale of the funding crisis.

'This is money which was taken from councils in the first place and this move will see money taken away from councils which is designed to incentivise new homes at a time when the Government has made boosting housebuilding a clear priority.'

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