Archived press release: "Smoke and Mirrors" over New Homes Bonus

Following yesterday's announcement by the Government on capital investment, Cllr Keith House, Lib Dem spokesman on Housing and Environment, has criticised the "smoke and mirrors" trick which will see £400 million of existing funding for councils being removed from councils as part of the Single Local Growth Fund.

New Homes Bonus is funded by money top-sliced from all councils. Diverting £400 million from the New Homes Bonus means that those councils that benefited from the scheme will now be forced to pool money which they were previously able to use directly to fund local services which matter most to their local areas", Cllr House said.

He added: "After a further 10% cut, this will hit district councils especially badly and in particular those areas that have been promoting growth. It's somewhat perverse from a government saying it is committed to localism in that New Homes Bonus cash will be siphoned off and then controlled by bodies that have very little democratic accountability.

"And for those areas that have put some of this funding back into the provision of affordable housing: that will clearly cease. "It directly pulls the rug out from under substantial capital projects based on an assumption that government would actually follow through on its own policy. Many of us were worried that a future government would collapse New Homes Bonus, but for this government to do so makes a mockery of dialogue and trust."


1. The Treasury has announced that £400m of New Homes Bonus (NHB) will be pooled within the Local Enterprise Partnership (LEP) areas "to support strategic housing and economic development priorities". This is a significant proportion of the funding that is allocated through NHB – annual growth in NHB is about £200m – so it is a very important decision for those authorities who expect to receive NHB and who have built it into their budgeting plans. This is going into the Single Local Growth Fund for 2015-16.

2. The overall pot for NHB will remain the same but that NHB allocations to individual authorities would then be partly pooled with the LEP. This would in effect be a cut that is additional to the 10% real terms cut in overall funding because it would reduce the funding that local authorities can use at their own discretion.

3. The Government is going to consult on the mechanism for requiring that a proportion of this funding is pooled by Local Authorities.

9 November 2016