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News: No credible data to show New Homes Bonus is working

Sat, 02 Nov 13

There is “no credible data” to show that the New Homes Bonus is working as intended, the Committee of Public Accounts has declared.

The Government estimates that 232,000 extra households will need homes each year to 2033 but in 2012 only 115,600 new homes were built in England. The New Homes Bonus is a non-ring-fenced payment the Department has made to local authorities since April 2011 for every home added to the council tax register.

The Rt. Hon. Margaret Hodge MP, Chair of the Committee of Public Accounts, explained: “The New Homes Bonus was introduced as a financial incentive for local authorities to encourage the building of new homes.

 “The scheme is funded from existing local authority grants. £7.5 billion will have been redistributed between councils by 2018-19, so there is a lot of money at stake. It is clearly vital that the incentives work and the Government achieves its aim.”

The Department has not yet started its planned evaluation of the scheme’s success, though, and does not aim to complete it until Easter 2014.

 “So far the areas which have gained most money tend to be the areas where housing need is lowest,” added Hodge. “The areas that have lost most tend to be those where needs are greatest.

 “The Department has yet to demonstrate whether the New Homes Bonus works. Is it helping to create more new homes than would have been built anyway? Is it the best way for Government to use its limited resources to create more homes where they are needed most?

“Its planned evaluation of the Bonus scheme is now urgent.”

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