New Homes Bonus Update

Dear Mrs Jean Dutton,
You will no doubt be aware that the Council considered the future use of the New Homes Bonus community fund as part of its budget debate.

The Council considered the feedback received when it consulted on a budget gap of some £47m. Unfortunately during the consultation period the Government sought fit to make changes which increased the Council's gap to £57.2m.

The Chancellor has recently published a consultation document on the New Homes Bonus grant, setting out proposals to achieve savings of £800m nationally by 2019-20. These include: withholding the Bonus from areas where an authority does not have a Local Plan in place; a reduction in the number of years for which the Bonus is paid from the current 6 years to 4, 3, or even 2 years; and adjusting the Bonus to ensure payments are more focused on local authorities demonstrating a stronger than average commitment to growth.

I would estimate this could have a minimum impact of reducing the overall NHB allocation by at least 33% (£3m) to the Council and could be as high as 66% (£6m) on existing New Homes Bonus allocations, let alone reducing income from future housing growth.

Given the context, I am writing to inform you that at our full Council meeting last night, it was resolved that the Council will no longer set aside 20% of the New Homes Bonus that it receives into a Community Fund. Your Council will therefore no longer receive its annual allocation.

The Council has made this decision, with some regret, but it is a crucial part of the Council's plans to recover the £57.2m funding gap it faces.

Given the assumed reduction in funding going forward, the Council will be looking at ways of working with communities on a sustainable basis to achieve desired shared outcomes. To this end we have set aside some money in reserves to facilitate the start of the process illustratively:

£1m per year to address inequalities and under investment across the borough

£3m in a reserve for delivery of priority outcomes

I would welcome a conversation as to how our organisation can work further together going forward to provide quality services to our residents.