Threat to council funding from new homes incentive (From Echo)

Threat to council funding from new homes incentive

10:10am Tuesday 21st December 2010 in Local News By Steve Hackwell

BASIC funding could be cut for councils in Essex if they refuse to accept money to build new homes, it has been claimed.

Under the Government's new homes bonus scheme, payments worth millions of pounds will be handed to authorities which agree to grant planning permission to developers.

But council leaders who turn down the opportunity could find their annual grants from Whitehall shrink as the Government diverts extra cash to compliant town hall chiefs. Nigel Holdcroft, Tory Southend Council leader, said the system favoured authorities with large open spaces ripe for development.

He added: “I don’t have any problem with the principle of giving an incentive to build housing, but it will be a concern if we, as an authority with little space for new housing, are financially prejudiced because of it.”

Norman Smith, Tory councillor for economic development at Castle Point Council, said: “We do need to build more housing, but we will do it on our terms.

“We won’t make any decisions based on getting extra money.”

Under the scheme, Whitehall has promised grants equivalent to the council tax charged on a new home, with the money coming in for six years after it is built.

The cash will be split 80-20 between the district council which granted planning permission and Essex County Council, although as a unitary authority Southend will keep all of the bonus.

If Basildon Council grants permission for the same amount of homes as it did in 2009/10 when the system is introduced in April, it will rake in £4.47million over the next six years.

That figure is £1.28million in Southend, £1.12million in Castle Point and £847,000 in Rochford district.

However, Whitehall has only set aside £200million to fund the scheme throughout the country in 2011/12. If this cash pot is exhausted, the Government will siphon off money from annual grants given to local authorities to make up the shortfall.

That means councils which do not top up their income through the new homes bonus could lose out overall if their counterparts launch major home-building programmes.

However, green belt campaigners fear the move could spark a flurry of planning application approvals from cash-strapped council bosses.