Scheme ‘robs North to pay South’

The initiative is designed to encourage house building by giving councils a financial reward for each new house constructed, but Unison claims it is being funded by stripping cash from councils’ main source of Government funding – and is being done so on a formula that favours Southern councils at the expense of their Northern counterparts.

According to Unison, £230m a year for the next four years will be taken from the formula grant – councils’ biggest source of Government funding, which they can spend how they wish – to finance the new scheme.

How much an authority gets will depend on how many new homes were built in the previous year, creating large discrepancies.

The union said that most local authorities in Yorkshire and the Humber region would get back only a fraction of every pound taken from the formula grant. According to Unison’s figures, the region’s worst affected area will be Scarborough, which would get only 7p from every pound taken from the formula grant.

Doncaster and Hull would each get 29p per pound, Rotherham would get 43p per pound and Leeds 90p, although some would benefit, with East Riding getting £1.09, York £1.48, Harrogate £3.33, right up to the region’s biggest winner, Selby, which would receive £8.76 per pound.

But even those Yorkshire councils set to gain would, according to Unison’s calculations, fare much worse than authorities in the South.

It said the biggest winners would be Uttlesford (£23.02 per pound), followed by Basingstoke and Dean (£20.63), and South Cambridgeshire (£14.90).

Unison general secretary Dave Prentis called on Ministers to rethink the scheme, and said: “The Government is robbing the North to pay the South and robbing cities to pay the shires.

“If they want to push ahead with this New Homes Bonus they should add new money, not rip it out of existing budgets that councils rely on to pay for services like home care. This will be another blow for local communities at a time when vital services are being hit.”

Scarborough and Whitby MP Robert Goodwill questioned Unison’s figures and said the important thing was to ensure new homes were built.

He said: “As far as I can see if we get new homes built in Scarborough, like the Middle Deepdale development, there’s the potential for creating 5,000 jobs and there’s likely to be more money for housing in Scarborough. This is going to mean more money for local authorities to build schools and infrastructure.

“I wonder how they have done their arithmetic. If we are getting new houses built it may be that they are at the high end of the council tax bands. There are a lot of lower banded properties and second homes in Scarborough and it would be a mistake to read across that average council tax when it will actually increase if we get new development, some of it fairly large properties.”

The Department for Communities and Local Government said new money was being pumped into the scheme. A spokesman said: “Unison’s claim that there is no new money is simply wrong. The New Homes Bonus scheme is fully funded with new money in the first year and will receive almost £1bn of new money over the next four years.

“Under the New Homes Bonus, three out of the five top earners this year are in the North or Midlands. This is in part because the extra cash is not only going towards building new homes, but also encouraging councils to bring old homes back into use.

“The Government is committed to ensuring that local authorities have strong incentives to support growth and that they receive the benefits not just the costs.”