Northern Councils 'To Fund Southern Homes'

Northern councils are facing cuts of up to £100 million a year to fund the new homes bonus in the south, new research claims. The National Housing Federation said the scheme, which rewards councils for building new homes with a bonus worth six years of the council tax paid on the property, will favour local authorities in the south because of the higher value of homes in their areas. Ministers plan to make up the funding shortfall caused by the £1 billion bonus scheme using money from local authority formula grant. The NHF estimates that councils in the north will lose around £104 million, while authorities in the south will see a net gain of £324 million. The NHF also claims the bonus will discriminate against social housing, as this tends to be worth less than the average private sector home, usually sitting within council tax bands A and B. The government will award a flat rate £350 enhancement for affordable homes, but the federation says that will not make up for the fact they inevitably fall within the lower bands. David Orr, chief executive of the NHF, said a flat rate should be paid on each home rather than calculating the bonus according to value and house size. Read more on Inside Housing.