Monday, 16 January 2017

The District Council loses its New Homes Bonus - and so its finances 'are starting to unravel'

When it was introduced, the New Homes Bonus was fraught with controversy - even within local government:
Futures Forum: District Council to protest about 'planning bribes' ... "Intimidating councils into allowing consent to build on inappropriate sites for fear of losing at appeal and then not receiving the New Homes Bonus."

The problem is, though, that councils have grown to rely on the NHB:
Futures Forum: Redeveloping East Devon >>> of 'income streams' and 'regeneration'

Meanwhile, councils are losing other 'income streams' - and will have to do something about it:
Futures Forum: The District Council is trying to "achieve savings/ efficiencies and to continue to protect front line services" - which will probably mean "huge increases in Council Tax whilst rampant developments start to cover our beautiful countryside and Exeter grows exponentially in order to meet the huge Local Plan targets for new homes."

With not much scrutiny of finances happening either:
Tory councillors refuse spending scrutiny role and trust (vastly overspent) officers | East Devon Watch

It now looks as though the District Council will be losing the income stream of the NHB:
Districts protest changes to New Homes Bonus in settlement response | Public Finance

As the East Devon Watch blog reports - together with scathing comment - things do not look good:


16 JAN 2017

EDDC has been relying on the New Homes Bonus ( which can be spent on anything) to partly fund their relocation expenditure:

“Planned changes to the New Homes Bonus will have an adverse effect on communities, shrinking funding and reducing the incentive for new housebuilding, the District Councils Network has warned.

Responding to the provisional local government finance settlement for 2017-18, the DCN said its members will see a 5.2% cut to core spending power. This is compared with average cuts of 1.1% across local government, it stated.

Introduced by the coalition government, the New Homes Bonus aims to encourage local authorities to grant planning permissions for new housing in return for additional revenue.

In the settlement, the government outlined plans to divert funding from the NHB scheme to upper-tier councils to fund a growing crisis in adult social care.

DCN chair Neil Clarke said the plan essentially “robbing Peter to pay Paul”. It will strip out £75m from district council revenues and “risk destroying the link between economic growth and the funding of local public services”, he said.

Clarke added: “It is clear that district councils are taking the largest hit in spending power reductions between 2016/17 and 2017/18.”

Government plans will see a 0.4% baseline for housing growth introduced, under which councils will not receive any NHB. Clarke called this “unfair” because the idea had not been included in the original consultation on the bonus and “could not have been predicted”.

One thought on “EDDC to see drop in income which may affect relocation funding”

Paul F says:
16 Jan 2017 at 10:13am

As far as I have been able to tell, the entire EDDC financial strategy was predicated on using the New Homes Bribe to avoid raising council tax. And my guess is that it was this strategy that led to the Local Plan having such HUGE housing growth numbers (growth of almost a third in the number of homes in East Devon!!!).

But of course, it is obvious to anyone with any finance acumen that using one-off payments (or as the finance folks would call them “Capital Receipts”) from the NHB to fund ongoing services (or in finance lingo “Revenue Expenditure”) is not a good long-term approach, particularly as the NHB could be terminated by the government at any time – and now it has been terminated, as I predicted over a year ago the council’s finances are starting to unravel.

EDDC to see drop in income which may affect relocation funding | East Devon Watch

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