Yorkshire could lose millions in housing shake-up

Leeds City Council is the country’s biggest potential loser from the New Homes Bonus – which will reward councils financially for each home they build – according to research by the House Builders’ Federation.

Sheffield, East Riding and Hull also stand to be losing £10m or more each year by 2017.

In contrast, a clutch of southern councils are on course to be millions of pounds better off, sparking warnings of a North-South divide. Councils who miss out on the bonus payments will be doubly penalised because in future the scheme will be funded by cutting the core grant paid to authorities.

Labour seized on the figures to claim that the policy was “unfair” and would encourage greenfield development rather than inner-city regeneration.

But last night councillors warned against making “bleak speculations and assumptions” about future housebuilding levels given building in recent years has been artificially low because of the recession. Ministers claim the new policy will lead to more homes being built after Labour’s system of imposing targets on councils led to resentment among politicians and local communities.

Housing Minister Grant Shapps said: “For too long communities have resisted development because they can’t see how it does anything to improve their lives. The New Homes Bonus ensures that local communities now have a reason to say yes to new homes, because they will benefit from better local services.”

The scheme was thought up by the Tories in the hope that councils and local people will back developments given a financial incentive for doing so.

The Government will match the council tax on new properties for six years, giving councils thousands of pounds to improve facilities in the neighbourhood or spend as they wish.

But the House Builders’ Federation (HBF) – which has an interest in persuading local authorities to back developments – has calculated that Yorkshire councils stand to miss out on vast sums unless construction levels rise significantly.

Leeds City Council, which is already furious that developers are forcing through plans for greenfield building while brownfield sites sit undeveloped, would be the biggest loser.

It built just 1,200 homes in 2009/10, but the HBF claimed that Government projections suggest more than 5,000 are needed – which would have netted an extra £4.5m. Because the Government matches council tax for six years, the amount the council misses out on will rise each year, hitting £27m by 2017.

Over six years, Sheffield could miss out on £18.6m, East Riding by £12.5m, Hull by £9.8m and Kirklees – another greenfield battleground – by £7.8m, compared with projected need, says the HBF.

The federation said councils could be earning “invaluable” money at a time when budgets are being cut. But Penny Baker, Sheffield City Council’s Cabinet Member for Housing, said: “At the moment we are 40 per cent ahead of our target in the Sheffield Development Framework for building new homes, so we want to avoid making bleak speculations and assumptions about what the future holds.”

Richard Lewis, executive member for city development in Leeds, blamed the recession for low building levels.

“We fully appreciate the difficult market conditions that housing developers are currently dealing in, but despite these challenges we are committed to providing as many new and affordable homes as possible for Leeds,” he said.