Government plans for a “new homes bonus” will cause council tax chaos. The full impact of the proposed New Homes Bonus Scheme is laid bare in figures published by Labour’s shadow housing minister John Healey.
The scheme, planned by the Conservatives before the Election and confirmed in August, promises to match council tax raised on every new home built for six years. But money paid to councils under the scheme will be cut from the total local government grant.
The cost in the first year is an estimated £250,000,000 and John Healey has analysed the impact of the plans for each local housing authority based on their figures last year (2009) for new homes built, government grant and average council tax. The research shows 103 councils would see funds cut by an average £2,000,000 each, while 222 councils would gain by an average £400,000.
Stockton Borough Council would lose an estimated £494,000 in the first year alone, rising to £10,384,000 over six years. There would have to be 838 homes built each and every year in Stockton-on-Tees just stop the council losing money under this flawed scheme. Across the North East, estimates show that Councils would lose £291,300,000 over six years under this scheme.
Speaking in Manchester at the Labour conference, John Healey said:
“Those councils that see new homes built will win but those that won’t or can’t build will lose out, and lose big. This scheme robs some councils to pay others. It will cause chaos in the council tax system.”
“It blows out of the water George Osborne’s promise to freeze council tax, and add extra pressure on council tax bills for councils already facing big grant cuts in public spending. Many councils will have to hike up council tax to cover the costs. Millions will face bigger bills as a result of this scheme”.
“The Government is right to want a strong incentive system for councils and communities ready to see new homes built. But this isn’t it.”
Local MP Alex Cunningham said:
“This flawed and ill-thought through incentive scheme will do nothing to build the new homes we need and will leave people in Stockton facing even deeper cuts to public services, and higher rises in their council tax bills.
“The Government should be building a genuine incentive and planning system to build homes, not cutting housing investment, and promoting this con of a policy around the country.”