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Revealed: Third of top-tier net losers under homes bonus change

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A third of top tier councils stand to be net losers under the redirection of some new homes bonus to adult social care, LGC analysis has found.

All county councils stand to gain as a result of the changes, announced by communities secretary Sajid Javid today, while around two thirds of London boroughs and around half of unitaries will lose out.

Mr Javid announced today that new homes bonus payments would be reduced from six years to five years in 2017-18 while he was also introducing a 0.4% growth target in 2017-18 so local authorities will only receive new homes bonus payments on new homes in their area above that baseline.

The Department for Communities & Local Government has estimated the two policies combined will reduce new homes bonus payments to councils by £241m next year in comparison to the indicative figures released in February. That money will be used to fund social care services instead and will be distributed on the basis of need.

LGC has analysed the revised new homes bonus payments in comparison to what councils had anticipated to receive when projections were announced at the beginning of the year. This analysis also used government data published today to show where new homes bonus funding will be redirected to social care services.

Overall 52 councils will receive less from the new adult social fund than they would lose in new homes bonus. County councils overall stand to gain about £73m, and metropolitan councils about £12.8m.

On the flip side London boroughs stand to lose about £10.7m and unitary councils £0.5m.

Districts, by virtue of the fact they will not receive funding for social care services, lose the most – about £75m compared to what they had anticipated to receive in 2017-18.

Looking at the biggest losers, LGC’s analysis shows five out of the bottom 10 are London boroughs – Tower Hamlets LBC (-£3.4m), Westminster City Council (-£2.2m), Islington LBC (-£2.1m), Southwark LBC (-£2m), and Croydon LBC (-£1.9m).

Nine out of the 10 biggest winners are county councils. Lancashire CC stands to gain the most overall with an extra £5.3m, followed by Essex CC (£4.8m) and Kent CC (£4.6m).

Liverpool City Council, a metropolitan council, is the only local authority which is not a county council to feature in the top 10 winners. Liverpool stands to receive an extra £3.1m next year.

LGC reported earlier how Lord Porter (Con), chair of the Local Government Association, said it was “wrong” to present the funding of social care from new homes bonus as a “solution” to the social care funding crisis, and pointed out that money for the new homes bonus was already top-sliced from central government funding for councils.

He said: “This is money which was taken from councils in the first place and this move will see money taken away from councils which is designed to incentivise new homes at a time when the government has made boosting housebuilding a clear priority.”

DCN chair Neil Clarke (Con) said he was “extremely concerned” about the “substantial reduction in funding for new homes bonus for all councils”. He said the introduction of a “deadweight baseline of 0.4%” would have a “detrimental effect on acceptable growth…at a time when housing growth is the number one priority for the Department for Communities and Local Government”.



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