Reward district councils for role in building homes

The District Councils’ Network has urged for the government to reward and not punish district councils for delivering more homes amid large cuts in their spending power.

With district councils having seen a near 14 per cent cut in their spending power, the DCN has responded to the 2019/20 Local Government Finance Settlement Technical Consultation by arguing that the New Homes Bonus (NHB) baseline should be scrapped and that decisions on council tax should be set locally.

Plans to increase the NHB baseline has been labelled a ‘perverse’ incentive by councils, that will see reduced rewards for those local communities that have embraced additional new homes. The introduction of the 0.4 per cent baseline threshold for the NHB removed more than £70 million in funding from district councils in 2017/18 and this could increase if the baseline if further extended.

Allowing greater flexibility on local revenue-raising powers, district leaders are also calling for a three per cent prevention precept to reflect the role that districts play in reducing demand on adult social care and primary health services. This precept could raise an extra £42 million for district councils to help keep people from needing to access acute social care and the NHS by reducing demand for these services.

Sharon Taylor, lead for Sustainable Finance at DCN, said: “Of all councils, Districts have had their core spending power reduced the most. Due to the demands on the social care system in particular, it is crucial that the system is not further destabilised by more reductions in funding to district councils that would undermine their ability to do work on prevention that saves money for both social care and the NHS.

“New Homes Bonus has been a powerful driver for housing growth, but increasing the baseline would be a perverse incentive because it would penalise the very councils which have succeeded in meeting Government’s housing targets. We are against the proposal to increase the baseline, which instead should be scrapped.

“It is paramount for Districts to be given more financial flexibilities that will help them not only to deliver on both their prevention role, but also further succeed in delivering new homes to tackle the housing crisis, providing homes people desperately need. As highlighted by the APPG inquiry into District Council Finances, further measures are needed to empower Districts to help achieve the government’s housing targets, such as lifting the borrowing cap and allowing councils to retain Right to Buy receipts for much longer.”