MPs pour scorn on £7bn home building handouts

SENIOR MPs have savaged a £7bn Government scheme designed to kick-start house-building across England, raising serious question marks about its impact and warning it may be widening the North-South divide.
MPs have savaged a government scheme to kick-start housebuildingMPs have savaged a government scheme to kick-start housebuilding
MPs have savaged a government scheme to kick-start housebuilding

Margaret Hodge, chair of the powerful Commons public accounts committee (PAC), said there were “really big questions” over the effectiveness of the Government’s “New Homes Bonus” scheme, and described the lack of oversight by senior Whitehall officials as “completely bonkers”.

Launched by the coalition in 2011, the New Homes Bonus offers direct financial incentives to councils for the level of house-building which takes place in their local area, using billions of pounds previously handed out directly in local authority grants.

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Yorkshire’s 22 local councils received more than £50m from Whitehall last year in payments for the thousands of new homes either built or brought back into use across the region.

But Labour MPs on the PAC are warning the majority the funding has so far gone to wealthier councils in the south of England, where developers are already embroiled in large-scale housing projects.

Indeed, Ms Hodge said there was no real evidence to show house-building has increased as a result of the incentives, and that Ministers have made no real effort to evaluate the scheme’s effectiveness two years in.

“What we have here is a more than £7bn investment, with a really big question as to whether it leads to the development of more homes than might otherwise have been built,” she said.

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Ms Hodge warned there was simply “no evidence” that the house-building which has taken place across England since 2011 has in any way been a result of the financial incentives being offered to local authorities.

Referring to her own local council in Barking, she added: “My authority is one of the authorities that benefits from it – but that has not changed its behaviour and led to it building more homes that it would otherwise have done.”

Grimsby MP Austin Mitchell said the Government should have realised the scheme would inevitably lead to funds pouring into wealthier areas, where house-building was already booming.

“The scheme is shovelling money into the South – on the principle of ‘to them that have, shall be given’, I suppose – and far less into the North,” Mr Mitchell said.

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“We need to stimulate development evenly over the whole country to bridge the North-South gap, and housing is a stimulus to the economy, so why is the South getting so much more?

“Why was the policy not directed in the first place at areas that have the greatest housing need and the biggest household formation rates?”

Sir Bob Kerslake, the former Sheffield City Council chief executive who is now head of the civil service in Whitehall, admitted there was no “direct evidence” the scheme is having an impact, but that a major evaluation would be undertaken this year.

He insisted councils were widely consulted before the scheme was launched, and that it was clear local opposition to new housing was one of the key reasons planning permission is not always granted.

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“The reaction of local people is often down to the facilities they feel are needed to support the creation of new communities,” he said. “So it is a perfectly legitimate argument to say there were known barriers to new housing, which could be at least partially overcome through a financial incentive of the kind of the New Homes Bonus.”

He said the Government has other schemes, such as the Regional Growth Fund, which target money at the North.