New Homes Bonus

Graham P Jones Excerpts

Tuesday 15th March 2011 Westminster Hall

[George Hollingbery]

I thank my hon. Friend for that timely intervention. I absolutely agree with what he says. In a moment or two, I want to develop this argument a little further, because there is some confusion about where infrastructure comes from.

[Graham Jones (Hyndburn) (Lab)]

It is a pleasure to serve under you, Mr Williams. My area is in a two-tier district. Does the hon. Gentleman accept that the funding for the new homes bonus comes from reductions in the formula grant, which affect the county council? According to the hon. Gentleman’s argument, the reduction in Lancashire county council’s formula grant will be redistributed only to the district authorities, which, in my area, is Hyndburn borough council. Does he not accept that that argument is flawed and that the Minister should not adjust the formula grants for shire authorities if they will not receive any of the bonus at the end of the year?

[George Hollingbery]

I thank the hon. Gentleman for his intervention. He makes some cogent points, which the Minister will want to respond to in a moment.

There is a danger here. We are clearly channelling payments down to a community for its loss of amenity, but it is dangerous for us to confuse that with the provision of infrastructure. Let me develop that argument a little more. Page 11 of “New Homes Bonus: final scheme design” states:

“Local authorities will have flexibility on how to spend the unringfenced grant…In many cases this will involve advanced planning with other local service providers to ensure that there is timely delivery of infrastructure for the new development. For example, local authorities can pool funding to deliver infrastructure.”

I hope that that will not be read as an invitation to spend the new homes bonus on infrastructure that would be provided by the community infrastructure levy or other agencies in any event. There is a dangerous blurring of the margins here, and I seek some reassurance from the Minister that the new homes bonus will be focused on local communities.

There is a further confusion. The community infrastructure levy is coming through. Section 106 will be narrowed to deal only with site-specific issues. On top of that, there is open spaces funding—I think it will still exist, although I am not 100% certain—and the new homes bonus. There will, therefore, be three potential ways of providing infrastructure, and I would like some reassurance from the Minister on the potential confusion about them. I have had evidence on the issue from local parishes in my area, and particularly from West Meon parish council, which I met recently. Its members were very confused about where open spaces funding would sit in the new matrix.

Just yesterday I received a letter from Hampshire county council, which is particularly worried about the timing of the community infrastructure levy. It says:

“We believe the arbitrary date of April 2014 will cause serious problems both for ourselves and the district councils and risks triggering a growing infrastructure deficit.”

It goes on to request that only local planning authorities with robust policies in place for CIL should be subject to the changes by April 2014. That causes me to worry that there is going to be yet more impetus for the new homes bonus to be spent on infrastructure that should otherwise be provided by different mechanisms.

--- Later in debate ---

[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.