Conservative plan is financially sound
I was disappointed to see Nick Raynsford’s criticism our plans to build more homes (Inside Housing, 15 January). Since 1997 Labour’s centrist housing targets have comprehensively failed. It only takes a quick glance at the low levels of house building, even during the boom years, and the all time high social housing waiting list to confirm that taking power away from communities has been catastrophic.
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By contrast our housing policy is progressive and designed to deliver. Instead of top-down targets, we believe in localism - giving power back to communities but, crucially, incentivising them to build.
Our key house building incentive is to match the council tax on each new home for a six-year period. This policy sends a clear pro-development message, is fully funded and fiscally neutral. However, in attempting to analyse our policy, Mr Raynsford has got himself in a terrible muddle.
First he has overestimated the cost of the incentive. In a recent Inside Housing article, Mr Raynsford claimed the cost of the incentive in the first year as £157million. Taking his starting point, and even allowing for rises in council tax, by the end of the sixth year the money going to councils to reward them for building homes would be around £1 billion per annum - nowhere near the various multi-billion figures quoted by Mr Raynsford. Of course a billion pounds is no small sum of money - it is after all meant to be large enough to get more homes built, but it does represent a small proportion of the overall local government finance settlement.
More importantly, Mr Raynsford has failed to understand how the council tax incentive works as he stated that the incentive amounted to an unfunded spending commitment. Having realised his error, he subsequently changed tack and is suggesting that the money paid out under the incentive scheme will represent a cut for local authorities as a whole. This one-sided analysis conveniently ignores the fact that the very same sum of revenue support grant will, by definition, be paid to the same group of councils, but now with a proportion progressively matching their ambition to develop their communities.
Our decentralisation paper Control shift, published in February 2009, spells out how our council tax incentive would be funded. The retrospective housing and planning delivery grant would be scrapped and the proceeds used to contribute towards the incentive. We anticipate the council tax incentive scheme would start in 2010/11 and during this year the HPDG allocation would be £200 million - not the £135m that
Mr Raynsford incorrectly claims. The remainder of the cost of the incentive will be met by top-slicing government grant to councils.
With house building at record lows, no one can deny that this government has failed to build the homes the country needs. Our policy will reverse the trend by empowering local communities to take responsibility and control for their own destiny.
Grant Shapps, shadow housing minister