THE Government has been accused of penalising recession-hit areas of the North after new research showed an initiative to encourage new house building was actually draining public funds away to the wealthier South.
The study by the trade union Unison says deprived areas including cities in Yorkshire are among the biggest losers from the Government’s New Homes Bonus scheme. In England more than 60 per cent of money from the scheme is going to London, the South East, East of England and South West.
Yorkshire and Humberside lost £4.2m this financial year, with Sheffield losing over £1m, Hull close behind at just under £1m and Doncaster £850,000.
The bonus comes from money top-sliced from all councils which is then redistributed to areas where the most new homes are built – which largely depends on decisions made by developers.
Some areas in Yorkshire – including York, Selby and Ryedale – get more from the system than they lose. But their gains are still dwarfed by some councils in the South, including Uttlesford in Essex, which gets back £19.34 for every £1 lost and Basingstoke and Deane in Hampshire (£18.70 for every £1 lost).
At the other end of the scale, Hull receives a meagre 29p for every £1 lost and Doncaster just 31p.
Researcher Pete Challis said: “It is the urban areas that are the losers by and large, Rotherham, Sheffield, Doncaster and Hull.
“There may be 11 winners and losers in Yorkshire and Humberside, but if you look at the South East, 80 per cent of local authorities would be gaining. Some of the big northern cities that are already have high deprivation levels are doubly disadvantaged because as well as cuts in mainstream funding they are also losing through the way the New Homes Bonus grant is redistributing resources they would otherwise get.”
Dave Prentis, General Secretary of Unison, said it was “grossly unfair” the Government was using the scheme to shift “scarce resources” to wealthier parts of the South, which happened to be the Tory heartland.
Coun John Black, who holds the housing portfolio in Hull, said the number of new social houses had plummeted to just 76 this year, at a time when the council was having to demolish hundreds of properties, despite growing demand.
He said: “There has been a progressive and relentless policy by Government to reduce public expenditure in the North and North East. Need is no longer the overriding criteria for housing and has been gradually eroded, despite evidence of demand.”
A growing concern was that because of the financial crisis facing the council, money from the bonus may end up going into the general pot.
He said: “The cost of redeveloping sites within the city is enormous because of new requirements to do with flooding, ground conditions and building regulations and the values don’t produce returns, which is why Government support is required.”
Sheffield MP Clive Betts said: “This is just an element of a massive reduction in resources for northern cities like Sheffield, Leeds and Hull.”
A spokesman for the Department of Communities said: “Every bit of the public sector needs to do its bit to help pay off the inherited budget deficit.
“This is a fair settlement – fair to North and South, fair to rural and urban areas and fair to shires and metropolitan areas.”
He said the New Homes Bonus had provided £1.3bn of funding since 2011, and changes to spending power in northern cities including Sheffield were close or in line with the national average, adding: “To suggest the Bonus favours councils in the South is wrong.”