New Homes Bonus may not be doing what it says on the tin
0The House of Commons Committee of Public Accounts (PAC) has called on the government to urgently establish whether the New Homes Bonus is achieving its objectives.
In a highly critical report published this week, the committee sets out three criteria by which, it argues, the scheme should have already been evaluated. The success of the bonus, PAC argues, should be measured against whether:
a) local authorities encourage more homes to be built if they are incentivised by the prospect of receiving New Homes Bonus payments;
b) the prospect of losing formula funding changes their behaviour if they do not; and
c) it simply rewards a local authority for what they would have done anyway.
The Rt Hon Margaret Hodge MP, Chair of the committee, said: “So far the areas which have gained most money tend to be the areas where housing need is lowest. The areas that have lost most tend to be those where needs are greatest.”
The Department for Communities and Local Government introduced the New Homes Bonus, a non-ring-fenced funding stream, in April 2011, to follow through on a policy commitment which sought to compensate authorities that were not benefiting from local increases in council tax. The scheme has come under withering criticism, however, for effectively redistributing funding from struggling regions to those that are already enjoying thriving housing economies.
PAC’s key observation is that: “after more than two years of the scheme being up and running, no evaluation is in place and no credible data is available to show whether the scheme is working or not.”
PAC has recommended the following measures:
– DCLG should set out its evaluation plans now, including methods, data sources, indicators of success, and how it will seek to isolate the specific impact of the scheme from other factors.
– When DCLG makes and reports its assessment of the cumulative impact of changes affecting local authority funding, it should work with local government to develop a better understanding of major funding movements and impacts, including those resulting from the New Homes Bonus.
– DCLG should ensure that consistent, comparative information on local authorities’ progress in creating new homes and meeting housing need is readily available.
– DCLG should examine the scope for straightforward adjustments it could make to the New Homes Bonus to complement other government initiatives, such as energy efficient homes.
