Headlines: July 26th, 2006

Consultations have begun on planning and housing incentives designed to help local authorities to respond to the need for new homes in their communities. The new ideas have been announced by the Minister for Housing and Planning, Yvette Cooper, as the Government wants councils to benefit when they respond to local demand.Under the current framework local authorities get only limited and short-term incentives. Official figures show more than 200,000 new households are being formed each year. This is because Britain’s growing and ageing population means more people now live alone. Alongside that statistic stands the fact that only about 160,000 additional homes are being built each year. Ministers believe one reason for the short fall is that local councils do not have sufficient incentives to meet local need.

The proposal now out for consultation is for a new housing delivery grant and reforms to the existing planning delivery grant. Funding for the changes would be made available in addition to local infrastructure investment and would give local authorities the flexibility to invest in their areas. The proposal is based on a recommendation in the Barker Review to allow authorities to keep additional council tax receipts for new homes.

The review identified a significant shortfall in the number of new homes and the Government subsequently made a commitment to improving housing affordability by increasing building to 200,000 homes a year by 2016. It believes that to achieve that, bodies involved in the delivery of housing will need to be supported to meet demand in their communities.

Yvette Cooper said, “We need new homes for the next generation, but councils with high levels of demand also need more support and more incentives to meet local needs. Local authorities who are planning for the homes their communities need should benefit as a result. This consultation will give councils the opportunity to give their views on proposals which would give them extra investment to help deliver more new housing.”

The Government has also launched a consultation on the criteria to allocate 120 million pounds of Planning Delivery Grant for the next financial year.