We are now 2 years on since the first New Homes Bonus payment was made to local authorities. The payment is non-ring fenced and its main objective is to incentivise local authorities to encourage new homes locally, bearing in mind the abolition of housing targets. For each new home (recent demolitions are deducted), an amount equivalent to the national average for that home’s council tax band is paid for 6 years.

The National Audit Office published a report at the end of last month, looking at how effective the Bonus has been. Whilst there are references to success stories (Sheffield City has set up an empty-homes team, South Oxfordshire District gave £250k to a Parish Council  towards new community facilities to be used by a new housing development, others are using the funds to work with developers on the viability of specific projects…), the report concludes that little evidence was found “that the influence of the Bonus is reflected in increased planning approvals for housing”. Rather, the payments seem to have rewarded home creation that was not incentivised by the Bonus.

As the report comments, to calculate with any certainty how far the Bonus is responsible for changes in the rate of new home completions must be an impossible task. Many other policies, funding issues and other factors will play a part.

A significant concern is that the Bonus is part funded from a deduction in a grant which replaced the Housing and Planning Delivery Grant, so many authorities are actually seeing an “overall reducing effect of the Bonus on their funding”.

Does this mean that the Bonus has not (yet) been a success? We’d be interested in any feedback from local authorities on this point.

CLG is to review the Bonus in 2013/2014.