In a speech today to the Labour Party conference, John Healey set out a detailed critique of the Coalition’s ‘New Homes Bonus’ scheme. He argued it will “blow out of the water” George Osbourne’s promise of a council tax freeze in many areas.
Mr Healey initially expressed disagreement with the scheme when it was announced in August, but today’s speech and an accompanying press release represents his first in depth denunciation. The scheme – put forward by housing minister Grant Schapps – promises to match council tax raised on every new home built for six years.
Healey likes the intention, but seriously disagrees with the proposed execution of the plan. As he told the conference this morning:
“They’re right to want a strong incentive system for councils and communities ready to see new homes built in their area. But this isn’t it.”
The reason “this isn’t it”, in the shadow housing minister’s view, is that it is financially irresponsible - it will mean housing takes up an excessive proportion of local authority budget, with the result being an increase in council tax. The cost in the first year alone is expected to be £250 million. And this is not new money. The sums paid to councils will be cut from the total local government grant.
Furthermore, some councils will be effectively forced to pay the bills of others. Healey’s analysis finds that 103 councils will suffer a fund-cut of on average £2 million each, helping to pay for the 222 councils who will gain by £400,000. Bigger towns are likely to lose out most, with Birmingham needing 8,500 homes a year built to avoid losing its grant, while Blaby in Leicestershire needs just 70.
In the speech Healey also attacked several other Coalition policies relating to housing including changes to the planning system which requirements for new home building, cutbacks in support for housing costs, and plans to allow local landlords to set their own tenancy terms in public housing.