Whose bonus is it anyway?
Councils in England received £200 million in new homes bonuses last year but an Inside Housing survey reveals less than a quarter will plough the money back into housing. So where is the cash being spent and are communities having their say? Rhiannon Bury investigates.
Nothing shouts localism quite as loudly as the new homes bonus.
Billed as the ‘power to the people’ fund that would provide communities with a real incentive to support the development of new homes in their area, it was launched with great fanfare by the government in February last year.
Ministers promised councils in England would receive a bonus in the form of a payment equal to the council tax on any new properties for the first six years. In April last year it made good on that pledge by handing out some £200 million for local authorities to spend in 2011/12.
Housing minister Grant Shapps made it clear that while local authorities would receive the money directly, communities should be given a real say about how it is spent.
‘I would urge all councils expecting to receive funding to speak to their residents about how they would like to see it spent locally,’ he said last October. ‘New homes bonus funding can be used however communities see fit to improve their local area.’
Through its Get On Our Land campaign Inside Housing is pushing for land to be freed up for housing development and the new homes bonus looked set to help this process along.
The message was clear - residents would be incentivised to agree to new housing because there would be financial benefits over which they would have some control. But is this what has happened?
Now, for the first time, Inside Housing can reveal precisely how more than 300 councils in England have spent their share of the £200 million. Our exclusive survey, compiled following freedom of information requests, reveals that in the vast majority of cases the money is either disappearing into council coffers or, worryingly, not being used at all (see table, below for the top 20 allocations).
Of the 349 councils which received money through the scheme, 331 responded to the survey. Of those, 17 were county authorities which had passed responsiblity for spending the money to district councils, so we have not included them in our calculations in this article.
As of 1 December 2011, just one in five (21 per cent) said a proportion of the money was going back into supporting housing development, either through housing, infrastructure or planning projects.
One area in which new homes bonus money looks set to quickly disappear is in prime minister David Cameron’s constituency - Witney, in West Oxfordshire.
In its response to our FOI request, West Oxfordshire Council, cited cuts from central government as the reason its £342,342 bonus money was put into general council spending. Is that how the PM’s own voters would have wanted the money to be spent? There are around 2,000 households on the West Oxfordshire housing waiting list, with Witney being the main area for new development. Inside Housing travelled to a newly built housing estate there and asked residents themselves (see individual photos). West Oxfordshire Council was unavailable for comment.
Mr Cameron’s constituents are not alone in being unable to pinpoint exactly where the extra cash has gone. Just 8 per cent of local authorities we surveyed said new homes bonus funding was going to specific projects to benefit the community, and in most cases these were not directly related to housing. More than half (54 per cent) of councils said the money was going straight into their general fund or capital spending programme to be spent where it is needed at a later date.
Twenty-one of the 168 councils that said money was going into their general spending pots said the decision was made because the funds were needed to support services where the government has made cuts. Local authorities saw an average of 4.4 per cent cut in government grant in January 2011.
Bradford Council, for example, re-ceived £2.76 million in the first allocation round of the new homes bonus, the fourth highest of any local authority. The council’s medium-term financial plan states: ‘The new homes bonus grant has been used to offset the shortfall in overall government funding.’
Val Slater, executive member for housing and planning, says the council’s £492 million budget in 2011/12 was 8.8 per cent lower than the previous year. ‘Keeping [the new homes bonus] in the central pot allows different departments to call on it when they need it,’ she explains.
Newham Council, in east London, which received a new homes bonus allocation of £1.58 million in April, was similarly minded. A spokesperson for the local authority said: ‘The funding pressure on the council as a result of the comprehensive spending review combined with the underestimate of the borough population have left the council facing spending reductions across a range of services.
‘The new homes bonus has been included within the resources required to meet the council’s general fund to mitigate this.’
But if councils have enjoyed receiving the new homes bonus there is only one way they will get their hands on more - by building new homes. Some councils at least have decided that the money is best spent by being ploughed back into their housing budgets.
Mark Kaczmarek, cabinet member for housing and planning at Cornwall Council, which received nearly £2 million in the 2011 allocation, says the council is spending the money on building new affordable housing to increase its windfall in future years: ‘It makes sense to use the new homes bonus to help deliver [council] priorities which will also help us to access similar or greater amounts in the future as the number of homes made available increases,’ he added.
The controversial housing market renewal programme to tackle empty homes in the north and midlands, much criticised by the Conservative Party, will also live on (albeit in a greatly reduced form) thanks to the new homes bonus. Six councils - Rotherham, Middlesbrough, Redcar and Cleveland, Sefton, Hartlepool and Gateshead - said their money would be spent on housing market renewal areas. The programme, which received £2.2 billion of funding before it was axed in March 2010, enabled the refurbishment of 108,000 homes and the demolition of 20,000 homes.
‘We acknowledge the grant will not complete the clearance but it will help the most vulnerable tenants move out of the area and enable further clearance work to take place,’ a statement from Rotherham Council says. ‘Once we have achieved a cleared site, new improved housing will be constructed in future years.’
Many of these councils consult residents over how to prioritise spending - but have not had specific conversations about the new homes bonus. Others, however, fulfilled Mr Shapps’ wishes and have gathered residents’ views on how the money should be put to use. Wiltshire Council asked local people where they thought its spending should be prioritised and says provisions for care for older people was top of the list. So the
£1.84 million bonus money the council received last April has gone into the adult care budget.
John Thompson, deputy leader of the council, says: ‘We were looking at the anticipated demographic changes up to 2020 and the number of older people is going to go up: the number of people over 65 will rise from 78,000 to 128,000 [in Wiltshire]. There are big challenges to provide care across Wiltshire - we have committed to spending an extra £52 million over the next four years on elderly care.’
Cumbria Council decided to spend two thirds of its £150,000 new homes bonus allocation on environmental projects and improving its adult services, but it chose to give £50,000 to an independent charity delivering music therapy to people of all ages across Cumbria. Other community projects to benefit from bonus money across England include a broadband scheme in Surrey and a culture fund to drive jobs in East Lindsey, Lincolnshire.
Somewhat surprisingly, given the current financial environment, 18 per cent of local authorities that responded to our survey hadn’t made any decision at the time of the survey on where the new homes bonus should be spent. This means there are millions of pounds of funding sitting unused in council coffers. The east London borough of Tower Hamlets, which received the largest settlement in 2011 at £4.29 million, says any decision for spending the money will need to be agreed by full council later in the year.
In South Yorkshire Alison Brelsford, a Liberal Democrat councillor in Labour-controlled Sheffield, says she is frustrated that no decision has been made on her council’s £1.96 million allocation. ‘There are homes that are standing empty that the new homes bonus could be used on, and then they could be used by families. I can’t understand why the money isn’t being used - the council said they would do a cabinet report, but the report just said they were thinking about it.’
Sheffield Council’s Labour group was unavailable for comment.
Of course the idea of paying a bonus for development still has the power to cause controversy - witness Daily Mail headlines about ‘bribes’ for new housing. A clause in the final Localism Act has also drawn criticism from campaign groups which say councils are being paid to grant planning permission for unsuitable developments.
Clause 143 of the act states councils must consider ‘any local finance considerations’ - such as the new homes bonus - as ‘material’ to any planning applications. Richard Summers, president of the Royal Town Planning Institute, believes the clause will ‘only increase public suspicion and cynicism about the planning process.’
A spokesperson for the Communities and Local Government department says: ‘The new homes bonus scheme gives real financial incentives for councils to build the homes, including affordable homes, that families and first-time buyers so desperately need. It is for councils to decide how they spend this money.’
Jamie Sullivan, senior planner at planning consultancy Tetlow King, says that anecdotally there are already concerns that the bonus is being swallowed up by councils - without communities getting so much as a sniff of it.
‘We know that when we speak to councils, planning officers don’t know what the new homes bonus is being spent on,’ he says. ‘It’s just funding the cuts, and we’ve got to ask whether that’s a real incentive [for communities to agree to future development].’
Hugh Ellis, chief planner at the Town and Country Planning Association, adds: ‘This link with the community was always tenuous, and now it’s broken. It’s not going to be an incentive if there’s no ring fence, and that would be against localism.’
The findings of Inside Housing’s survey certainly suggest that, so far, communities have been given little say about how the bonus is spent as, by and large, it disappears immediately into the council coffers.
Lucy Hill, one of Mr Cameron’s constituents must speak for many when she wonders why local people would be inclined to support new development on the back of the new homes bonus. ‘If the council is going to plonk 1,000 homes somewhere then I’d want to know that the local infrastructure could support it. That would make me more likely to accept development,’ she says.
While the funding might be viewed as a success in terms of its contribution to council budgets, if residents like Ms Hill decide the money has not benefitted them directly - and they have little say about where it ends up - they are not going to see any reason to back new homes being built in future.
Top 20 new homes bonus allocations
|LOCAL AUTHORITY||NEW HOMES BONUS RECEIVED||HOW NEW HOMES BONUS WILL BE SPENT|
|Tower Hamlets||£4.29 million||no decision|
|Islington||£3.71 million||mostly housing|
|Birmingham||£3.2 million||general fund|
|Bradford||£2.76 million||offset shortfall in government funding|
|Leeds||£2.73 million||general fund, to shore up budget|
|Manchester||£2.62 million||housing investment|
|Southwark||£2.59 million||revenue and capital|
|Milton Keynes||£2.51 million||regeneration and land transfer|
|Hackney||£2.33 million||general fund|
|Bristol||£2.28 million||housing investment|
|Croydon||£2.2 million||no decision|
|Salford||£2.02 million||general fund|
|Cornwall||£2 million||housing investment|
|Lambeth||£1.97 million||no decision|
|Sheffield||£1.96 million||ring-fenced local growth fund|
|Hillingdon||£1.85 million||general fund|
|Wiltshire||£1.84 million||adult care|
|Shropshire||£1.8 million||community projects|
|Camden||£1.77 million||revenue budget|
|Westminster||£1.64 million||general fund|