New Homes Bonus

Lord Stunell Excerpts

Tuesday 15th March 2011 Westminster Hall

[The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell)]

It is a pleasure to serve under your chairmanship, Mr Williams, and I congratulate my hon. Friend the Member for Meon Valley (George Hollingbery), his hon. Friends and the hon. Member for Hyndburn (Graham Jones) on their contributions to the debate.

My hon. Friend the Member for Meon Valley fairly set out the problem that the new homes bonus is intended to address. For decades house building has failed to keep up with people’s needs, and a combination of the recession and the regional spatial strategies targets that generated a bow-wave of opposition in many areas, led to a steep decline in the number of new homes provided. The year 2009 saw the lowest level of house building in England and Wales in peacetime since 1923, and the cost of a new home doubled in real terms between 1997 and 2007.

There is no doubt that housing is central to economic success as well as to personal well-being. We need to make building homes a motor for growth again. The new homes bonus will do exactly that. It has localism at its heart; it will re-energise communities; it will give them an incentive to say yes rather than no, which was the consequence of the top-down, target-driven scheme that it partly replaces.

[Graham Jones]

I welcome the Minister’s comments that this is a positive policy to encourage growth, and his assertion that it will create growth. However, what is the incentive to build houses in light of the following two factors? The hon. Member for Pendle (Andrew Stephenson) touched on them. The first is population decline, and the second is the existence of too many houses already.

[Andrew Stunell]

I suggest that the hon. Gentleman look at the empty homes element of the new homes bonus as particularly appropriate for the communities of east Lancashire. My hon. Friend the Member for Pendle (Andrew Stephenson) made exactly that point. It is an important way of providing a market signal to those who own empty homes, to encourage them to invest in them and bring them back into use.

[Graham Jones]

I accept the Minister’s point that long-term voids are not on the council tax base, but short-term voids are. There will be a mix when a row of terraced houses is demolished: there will be short-term empties, occupied houses and long-term voids. Some houses will be deducted, so short-term voids are included in the net figures for the new homes bonus. Will the Minister comment on that?

In describing his policies the Minister talks about regeneration, but also about two-into-one and three-into-one schemes. The hon. Member for Pendle has some of those schemes in his constituency which, I know, are very successful and are selling well. There will be net reductions in the new homes bonus available for constituencies such as Pendle. Surely, the two-into-one and three-into-one schemes and short-term voids should not be part of the new homes bonus. We need to add to the council tax base process an element that includes those that are on the council tax base, and not just talk about long-term voids that are not. Will the Minister accept those points?

[Andrew Stunell]

I notice that Pendle is credited with 107 new homes, so it will be getting the new homes bonus. It is only fair to my hon. Friend the Member for Meon Valley, who initiated the debate, to turn to his points.

It should be clear that the Department for Communities and Local Government has set aside almost £1 billion for the scheme over the spending review period, including £200 million in 2011-12. That funding for 2011-12, contrary to the assertion of the hon. Member for Hyndburn, is additional money outside of the grant formula.

The balance between market and affordable homes is also crucial and, therefore, there is an additional £350 payable for each affordable home for the following six years, on top of the new homes bonus for homes in general. That means that local authorities could receive up to £9,000 for each affordable home over the next six years.

[Gavin Barwell (Croydon Central) (Con)]

I thank the Minister for giving way. I served with him on the Localism Bill Committee, and we had long debates about the benefits of incentives versus coercion. Does he agree that it is important that the Government should constantly review the level of the bonus, for both normal and affordable housing, to ensure that the incentive is sufficient to generate the necessary level of house building?

[Andrew Stunell]

I will shortly be speaking about some of the other incentives that are in place, but I agree with my hon. Friend that if we had more money we could have bigger incentives. Nevertheless, it might be wise to wait for the scheme to bed in before starting that revision.

The scheme will pay grant equal to the national average for the council tax band concerned on each additional property, and it will be paid for the following six years as an un-ring-fenced grant. I stress that it is not ring-fenced; the Government make no prescription and give no advice to local authorities on how they might spend the money. It is entirely a matter for the recipient authorities. That brings me to who are the recipient authorities.

My hon. Friend the Member for Meon Valley asked me to say something about the split between the county and district tiers in two-tier areas. First, I should say that in single-tier areas, 100% goes to the principal local authority; in county areas, 80% goes to the district planning authority, and 20% to the county council. When I say “it goes”, that is the default position, but it is open to each of those authorities to consider whether they want that to be the case in all circumstances. For instance—this is an example; it is not intended to be a Government directive—if the tipping point for the creation of a new primary school were involved, there might well be some other consideration than 80:20. I remind the House that when it comes to local authority spending, it is generally the case that 80% is spent by the county and 20% by the district, so we are inverting that ratio.

Every development is different and will need different services to support it, and different local concerns will drive the choice on how to spend the new homes bonus. Local authorities and local communities are best placed to negotiate those choices in meeting the needs of local neighbourhoods. My hon. Friend spoke of local communities having the loudest voice. I certainly agree with him on that, hence the 80%, but there are also parish and town councils; and in many unparished areas there will be residents’ and community groups. I would expect sensible local authorities, in working through the new local planning arrangements with neighbourhood plans, to see the bonus as a vital part of negotiating effectively with those communities on how the new homes bonus should apply in those areas.

My hon. Friend also asked how the boundaries question would be dealt with, and gave the example of Whiteley. That may be seen as pulling in the opposite direction to his point about county and district investment, because both of the areas that he spoke of are in Hampshire. The county council will benefit by just over £1 million from the new homes bonus—that will be its 20% for the coming year—and it is a provider of services across both of the areas mentioned. In such situations, the fact that there is a top-tier section of the new homes bonus may be to everyone’s advantage. In addition, the Localism Bill introduces a duty for local authorities to co-operate, which is relevant in establishing plans, taking decisions about how things such as the new homes bonus should be spent, and how some common objectives can be met.

My hon. Friend the Member for Colne Valley (Jason McCartney) asked about the possibility of adapting the new homes bonus to give preference to approvals on certain types of land. That is not part of the scheme; nor, as things stand, do I foresee it happening in future. However, the introduction of the neighbourhood planning system will give local communities and local neighbourhoods a much firmer grasp of such decisions as they build up their neighbourhood plans under the district plan, which is subject to the national planning policy framework. I hope that my hon. Friends are satisfied to hear that.

If I may, Mr Williams, I shall use the rest of my time speaking about the different streams of money that support the Government’s intention to see vigorous, sustainable development across the country. My hon. Friend the Member for Meon Valley asked about open spaces funding. The Department has set aside £11.2 million for community green spaces funding for the coming year. That goes principally to supporting groundwork for the green flag award accreditation scheme, and the federation of city farms and community gardens partnership work programme. Those programmes continue on a comparatively modest scale, but the amount that local authorities choose to allocate for parks and other green spaces is rightly a matter for them.

[George Hollingbery]

Do I take the Minister to mean that open spaces funding will not be levied on developments from now on?

[Andrew Stunell]

I am sorry to say that I did not catch what my hon. Friend said.

[George Hollingbery]

I apologise. Am I to take his comments to mean that local authorities will no longer be levying an open spaces fund—a charge for open spaces?

[Andrew Stunell]

I shall take note of that question and write to my hon. Friend, so that I do not give a misleading response.

The Government have given communities the opportunity to participate much more strongly in the process of protecting spaces through the community assets list, the community right to reclaim land and the community right to bid and challenge. Local communities that are concerned about these matters therefore have a number of opportunities to become directly involved.

As well as the new homes bonus there is, as my hon. Friend said, the community infrastructure levy and section 106 agreements. Both are specifically directed to infrastructure investment and planning outcomes. They are different from the new homes bonus; they are not ring-fenced and there is no obligation for the money to be spent on infrastructure or related matters.

Local authorities will have the opportunity to introduce a community infrastructure levy. I note the concerns that my hon. Friend passes on from Hampshire, but it is important that we get these incentives in place quickly. If my hon. Friend lets me have that correspondence, the Department will give some thought to those matters.

Section 106 will be scaled back so that it is specifically directed to deal with the impact of particular developments. Statutory tests were introduced in 2010 to ensure that obligations are directly related to proposed developments. Regulations prevent section 106 agreements and the community infrastructure levy being collected for the same piece of infrastructure. After 2014, tariff-style planning and obligations will not be permitted. The characteristic level at which the community infrastructure levy is likely to fall would be between £5,000 and £10,000 per home. Taken with the new homes bonus, it is a really powerful incentive for communities to agree to new developments.