Housing drive 'will hit council budgets in Yorkshire'

Shadow Housing Minister John Healey said the coalition's "new homes bonus" will cause chaos in the council tax system and leave millions facing higher bills to plug a black hole in funding.

Big cities including Sheffield and Bradford will be among those hardest hit by the scheme, under which the Government would give cash incentives to councils for every new home built in their area, he said.

Mr Healey admitted some areas would also be better off under the Government's plans but warned the scheme would only be funded by cutting the general grant given to local authorities and many councils would lose out unless they build thousands more homes.

"Those councils that see new homes built will win but those that won't or can't build will lose out, and lose big," said Mr Healey, MP for Wentworth. "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 to see new homes built. This isn't it."

The new homes bonus is the coalition's flagship scheme to increase the number of homes being built after Ministers scrapped Labour's system of imposing targets for house-building in every region.

For every new home built, the Government has pledged to match the amount of council tax raised for six years, giving local authorities and communities a financial incentive to approve developments. For affordable homes, the incentive would be even greater.

But Mr Healey claimed it would cost an estimated 250m in the first year – which is expected to be sliced off the overall grant for councils.

According to his analysis, based on the number of homes built last year, 222 councils stand to benefit by an average of 400,000 – but 103 authorities would see funding cut by an average 2million each.

Sheffield would lose out on 4.3m, Bradford by 2.4m and Hull by just over 2m, he claimed. But Leeds would be among the areas to benefit.

Mr Healey claims it will be much easier for big cities to break even, because they would have to build far more homes than rural authorities to benefit.

Housing Minister Grant Shapps said: "Under Labour's watch, house-building fell to its lowest peacetime rate since 1924 and the number of first time buyers was the lowest since records began. We should take no lessons on housing, given their irresponsible spending spree threatened to bankrupt the country and send interest rates soaring."

SOUTH SURGES AS NORTH STALLS

Northern regions, such as Doncaster, saw the slowest recovery in property transaction levels in the country during the first half of the year, figures have revealed.

Research has revealed that a two-speed housing market is developing, as sales race ahead in southern regions but remain sluggish in many parts of the north.

Areas such as Newcastle Upon Tyne, Walsall, Wolverhampton, Worcester and Doncaster have all seen increases of 10 per cent or less in the number of homes changing hands.