Any reformed NHB scheme must give councils continued incentive to boost housing growth nationally, writes Cllr Neil Clarke

The New Homes Bonus (NHB) scheme has proved a successful incentive to help deliver housing consents over the past few years – the key issue now is the delivery of those housing consents.

NHB has shown communities the benefits of growth, the proceeds of which have been widely invested in boosting local economies in district council areas.

Whatever changes take place to the current scheme, they need to ensure they are capable of influencing the key decision points if the Government's ambitious national housing targets are to be met.

Districts councils play a key role in facilitating housing and related growth through planning permissions. District Councils' Network (DCN) members approve 70% of housing applications nationally, ensuring the right kind of homes are built in the places that need them.

In responding to the current NHB consultation, the DCN will be highlighting the following:

• We recognise the need for more resources to be put into adult social care at a national level – however we feel that the £800m should have come from a different source rather than from the funding previously earmarked for NHB.
• It is difficult to imagine how the incentive can be ‘sharpened' when about two thirds of the national funding is to be withdrawn. NHB will only remain an incentive for the delivery of housing growth if other changes are made alongside the significant reductions in national funding for the scheme. In our view, this means allowing local authorities to become actively involved in ‘unlocking' some of the half a million consented schemes developers are not currently delivering.
• The DCN wants to work with the Department for Communities and Local Government to consider what other ‘levers' can be introduced to allow local authorities to help unlock consented schemes. By doing so local authorities may be incentivised to help deliver more units – even though the NHB reward for each unit will be significantly lower than before.
• It is important that local authorities responsible for delivering the greatest housing growth over the past few years should not be the ones disadvantaged through any changes. The NHB was (and is) an incentive for the delivery of housing growth – those with the best track records for delivering growth must continue to be proportionately better rewarded for delivery into the future.
• DCN supports the principle of transition measures during the introduction of a reformed NHB and urges officials to consider the legacy impacts any changes might have upon recently consented schemes currently under construction or about to commence development. Local planning authorities that have voted to accept growth in the knowledge they would benefit from NHB funding must be protected by transitional arrangements.
• NHB has been a powerful incentive to housing and economic growth and must remain a vital tool for ensuring community support for housing and establishing a balanced national housing market.

Ultimately, the DCN wants to work with ministers and officials to ensure NHB remains an effective incentive for helping the Government meet its ambitious housebuilding targets.

Cllr Neil Clarke MBE is chairman of the District Councils' Network

There is a danger of some councils becoming over-reliant on NHB rather than investing in growth writes Cllr Paul Carter

When the NHB was included in the Tory Party's manifesto in 2010, it had the right intentions. We now believe there are improvements which could make the policy more equitable and effective, particularly for county councils.

The County Councils Network (CCN)has long called for reform to the policy and welcomed the steps announced by the secretary of state to ‘provide significant resources to address the demographic pressures facing the social care system'.

Government has recognised the need to make savings of £800m to provide funding, through the Better Care Fund (BCF), to upper-tier councils facing demand-led pressures in adult social care. This will be funded by a reduction in the number of years NHB is paid. Given pressures facing county areas including the consequences of the living wage, we believe a further reduction in the number of years should be implemented and accompanied by a fundamental review of the policy and BCF formulae that distributes the savings to councils according to need and demand.

The rationale for such a move is clear. Independent research by LG Futures showed counties face the largest costs from a growing elderly population and have witnessed the most acute increase in service demand. Critically, the research concluded CCN members had witnessed the largest reductions in social care funding, with disproportionate NHB rewards a critical factor in counties being hit hardest.

Disappointingly, one means of correcting this balance is not subject to this consultation – reforming the 80:20 split in two-tier areas.

CCN has the case that this distribution not only draws money away from services facing real demand-led pressures, but fails to recognise the costs associated with the provision of infrastructure. This is then further exacerbated by a disjointed Community Infrastructure Levy (CIL) which needs to be addressed by the current review.

For Kent CC alone the essential infrastructure gap is £2bn over the next 20 years, amounting to £118m a year. Thriving communities cannot exist without roads, school places and adult social care. Unfortunately the policy to date has excessively rewarded planning authorities in the belief more homes would be delivered.

There is a continuing danger of some councils becoming over-reliant on NHB rather than investing in growth. The DCLG's evaluation of NHB found the majority of councils (60%) were using receipts to support their ‘general fund or core services'. This compares to only 10% being directly spent on infrastructure or housebuilding.

The stark reality is that NHB is becoming an increasing proportion of some council's revenue budgets. In 2013/14 NHB provided just 7.6% of an average district's net revenue budget, in 2015/16 this almost doubled to 13.7%. By comparison, NHB contributed only 0.76% of the average county's budget.

Failure not to implement changes before 2017/18 means some parts of the sector are better protected from funding reductions, while county councils face the largest reductions in Revenue Support Grant. Despite the transitional funding secured by CCN, this will inevitably hit growth and infrastructure services at a county level.

Short-term changes in this consultation must be accompanied by longer term reform. The needs-based review and full business rate retention provide the opportunity to consider the distribution of funding but also how the total quantum of funding, including the NHB, can be better utilised in order for councils to promote growth, meet service need and protect the most vulnerable.

Cllr Paul Carter is chairman of the County Councils Network