New Homes Bonus scheme falls flat, says ex housing minister

The Government’s flagship £3.3bn New Homes Bonus scheme to encourage councils to deliver more housing has so far failed, according to research by a former housing minister.

The scheme rewards councils through grant funding for delivering new housing projects in their area.

Labour’s Nick Raynsford MP has claimed the £1.3bn of grants already provided by the scheme appear to be going to councils where homes would have been built anyway.

Labour’s Nick Raynsford suggested the NHB might be having no positive effect on house building.

Government figures also suggest approvals for new housing projects have fallen in the areas that have received most from the scheme.

According to parliamentary answers from ministers, 17 regional cities and London boroughs each received more than £10m under the scheme.

Between 2010-11 and 2011-12 in the 15 councils for which comparable data exist, approvals for big schemes dropped by 565 to 531 – far below the 900 approved each year by the same authorities before the recession.

Mr Raynsford told The Financial Times the ‘shocking’ truth was that the evidence suggested the scheme had had no real positive effect on house building.

Housing minister Mark Prisk told Parliament last month that 400,000 homes had been delivered as a ‘direct result’ of the bonus over the previous few years.

He also said Mr Raynsford was 'wrong' and that the coalition’s system was much better than Labour’s ‘top-down housing targets’ under which building fell to its lowest level since the 19020s.

In total the New Homes Bonus is worth £3.3bn over its first six years and is distributed unevenly among local authorities.