Money from the New Homes Bonus will be diverted to upper-tier councils to fund adult social care, the Government has announced.
Communities secretary Sajid Javid said that since it was introduced in 2011, the New Homes Bonus has generated more than £66bn for councils.
However he said the scheme needed improvements and a new national baseline of 0.4% would be introduced to ensure councils were not rewarded for natural housing growth.
The Government will also consider withholding payments to councils that fail to meet planning targets from 2018/19.
Mr Javid said the changes would create a £240m adult social care support fund.
However, Jo Miller, president of Solace and chief executive of Doncaster Metropolitan Borough Council, warned the move risked ‘robbing Peter to pay Paul’.
She said: ‘Whilst increasing the social care precept will give short term relief to a few local authorities, ultimately, relying on a regressive taxation system is not a long term solution to tackling the long term sustainability challenge our health and social care system faces.
‘Likewise, taking money from the New Homes Bonus may alleviate short term pressures, but simply robbing Peter to pay Paul will not tackle a systemic funding problem. This needs a long term national solution that does not simply exacerbate existing imbalances.’