Coalition home bonus scheme is a con

The government's 'New Homes Bonus' scheme, which will match the council tax raised on each new house for six years, was slammed by shadow housing minister John Healey for being an expensive con, with the money coming mostly from existing local authority support grants - as revealed in a pre-election Tory green paper.

The government’s ‘New Homes Bonus’ scheme, which will match the council tax raised on each new house for six years, was today slammed by shadow housing minister John Healey for being an expensive con, with the money coming mostly from existing local authority support grants – as revealed in a pre-election Tory green paper.

The ‘Control Shift: Returning power to local communities’ February 2009 policy paper says that to achieve this they will:

“…add a further £250m to the Matching Fund in each of the succeeding four years (to take the total to £1,250m million per year in 2014-15), by taking £250m per year off what would otherwise be the overall increase in formula grant to councils in each of those years.

Adding the footnote:

“If, and to the extent that, the Matching Fund is successful in encouraging the building of more homes, the top-slicing of the formula grant will be gradually increased to preserve the matching principle.”

ie. There is no new money for this, and any incentive money given to councils will come from other councils. The policy also appears in the Tories’ subsequent ‘Strong foundations: Building homes and communities’ and ‘Open source planning’ policy green papers of April 2009 and February 2010 respectively.

Today’s news is the latest calamity to befall the coalition’s housing policy, following Simon Hughes’s attack on David Cameron over social housing last Wednesday – suggesting the prime minister wasn’t speaking for the government but merely for himself – and the slaying of the housing ‘black hole’ myth put about by Tory ministers who falsely claimed the previous government had pledged money for housing that was not banked.

John Healey today said:

“Not content with misleading the public about a ‘black hole’ in funding for housing, the LibCon Government is now set on conning councils with a home builders ‘bonus’. The cost will run into billions, met mainly – as Tory proposals indicated before the election – by existing grants to local councils.

“Given the potential impact on essential local services, we could quite literally see government robbing Peterborough to pay Poole.”

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