Out-Law News 1 min. read

New Homes Bonus proposals could cost councils struggling to put local plans in place


Several local authorities in England are set to lose out on £1 million or more in New Homes Bonus (NHB) payments if the government goes ahead with proposed changes to the scheme.

According to proposals currently under consultation (25-page / 583 KB PDF), the government is considering withholding NHB payments from 2017-18 where local authorities have failed to submit a local plan for examination.

Research conducted by Planning Magazine estimated that the proposed change would result in eight councils each missing out on at least £1m under the scheme, which awards sums based on the amount of council tax a council raises from new homes or homes brought back into use.

The research estimated that Salford City Council would suffer most under the amended NHB scheme, potentially missing out on around £1.8m that would otherwise be paid in 2017/18. The council has renovated hundreds of homes and granted planning permission for thousands more in recent years, but it does not propose to submit a draft local plan for examination until January 2017.

Liverpool City Council, Kirklees Council, Aylesbury Vale District Council and Medway Council have each withdrawn their emerging local plans from examination and are each estimated to face losses of between £1.24m and £1.54m, according to the research.

Like Salford City Council, the London Borough of Bromley is yet to produce a draft local plan. Its potential loss of NHB payments was estimated at £1.23m.

Coventry City Council, which could lose £1.57m in payments, and Northumberland County Council, which could miss out on £1.1m, are both further along with their local planning process and have published draft plans.

Planning expert Ben Mansell of Pinsent Masons, the law firm behind Out-Law.com, said: "The number of local authorities who would be affected by this proposal is low, with 78% of local authorities having already submitted a local plan for examination and many more due before 2017/18."

"A ‘stick’ rather than ‘carrot’ approach has been favoured; whether this has the desired effect remains to be seen," said Mansell. "Local authorities might argue that they would welcome greater assistance from the Planning Inspectorate in producing a local plan rather than having payments withdrawn."

"Salford City Council may feel particularly aggrieved. The local authority has granted planning permission for almost 18,000 houses in the past five years, yet would be penalised for not implementing a local plan. On the other hand, local authorities have had ample time to implement a local plan and this proposal would provide impetus for senior figures at the local authority to speed up the process,” Mansell said.

The consultation closes on 10 March.

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