The final scheme design for the New Homes Bonus has been published on DCLG's website. Very little has changed from the consultation version, but what is interesting is the Government's response to concern over the way in which NHB might influence planning decisions particularly given the message that the bonus will be "powerful" and an "effective fiscal incentive". This response is not within the final scheme document - but in the published summary of responses to the consultation (on the same link). The Government stresses that the NHB should not encourage development which would otherwise be inappropriate. However, the view taken is that NHB can be material in planning decisions in some cases where there is a "direct connection" between the intended use of the bonus and the proposed development.
Part of the power of this incentive is that the NHB is to be "unringfenced" with councils being able to apply it at their discretion. But the examples given in the scheme include "council tax discounts" and "supporting front line services like bin collections" - neither of which leap out as the obvious candidates for that direct connection!
Also, the examples given of cases where there may be a sufficient connection between the development and the NHB (so that it would be appropriate to take the NHB into account), include expenditure on replacement open space where existing open space is taken up by the development. So is that not to be something to be paid for by the development and dealt with under a 106?
This issue looks set to be one which third parties will latch on to as a potential challenge opportunity - local authorities will need to give early consideration to these issues and could do worse than start with a clear position on exactly where and how NHB will be applied in their area.
Local residents may see the advantage of influencing the spending of NHB if this is open to them, and this may have a bearing on the position they take on whether or not to object to a development.
The final point to note is - if the NHB is to be properly taken into account in a particular decision (there being sufficient connection) what is the guarantee this will in fact happen? For example, if, as the scheme suggests, NHB can be used as mitigation, no doubt the developer will seek assurance from the authority that the mitigation will be forthcoming at the right time. In the replacement open space example, I would expect to see some restriction on the development pending reprovision - if NHB is to fund that, how can the developer be sure it will be done in time?