Agenda item

(Director of Planning and Economic Development) To consider the attached report.

The Panel received a report from Mr I White, Forward Planning Manager, regarding the Communities and Local Government Consultation on the New Homes Bonus (NHB). The consultation was the Coalition Government’s approach to incentivising local authorities to increase housing supply and it ran from 12 November to 24 December 2010.

 

The consultation contained the following questions:

 

1.         Level of Bonus

 

For each new home built in a specified period within a year, the Council would receive the “Bonus,” equal to the national average for the appropriate Council Tax band. This would be paid for each new property for the following six years as an un-ringfenced grant. The first consultation question was:

 

(a)  Do you agree with CLG’s proposal to link the level of grant for each additional dwelling to the national average of the Council Tax band?

 

Response:

 

There were many other current and complex changes underway to local government financing which would lead to a reduction in Revenue Support Grant. The Housing and Planning Delivery Grant had also been abolished so, unless new housing was built, the Council would be receiving significantly less money from central government. Conversely, local authorities that allocated significant land for housing through the Local Development Framework would receive much more. In the last 5 years an annual average of 158 new houses had been built in the district.

 

Members asked if there would be a maximum amount of bonus that could be paid to a Council in any one year, and would the scheme be retrospective when it started. Officers were requested to prepare scenarios of different annual building numbers to provide members with some feeling for the potential financial implications.

 

2.                  Affordable Housing Enhancement

 

The document proposed an additional £350 for each of the six years for every new affordable unit. This was described as “about 25% of the current average Band D Council Tax.” The second question asked:

 

(b)   What do you think the enhancement should be?

 

Response:

 

An annual average of 43 new affordable houses were built in the last 5 years. Since the Council recognised the importance of, and need for, affordable housing, it was felt that an enhancement would be beneficial. In recent years, permission for 80-100% affordable housing, on some Green Belt sites, had been granted for very special reasons.

 

Members felt that the enhancement should be a percentage rather than a flat fee.

 

3.         Definition of Affordable Housing

 

The definition should include social rented and intermediate housing. In addition pitches on Gypsy and Traveller sites in public ownership were considered to contribute to the supply of affordable homes. While this Council had made significant progress in increasing the number of authorised pitches in the last couple of years, these have all been on privately owned sites. Any further provision in the district was most likely to be on non-public land, so, with this definition of “affordable” the Council would not gain any NHB enhancement from increased number of Gypsy and Traveller pitches. The third question asked:

 

(c)   Do you agree to use PPS3 and publicly owned Gypsy and Traveller sites to define affordable homes?

 

Response:

 

As part of the Comprehensive Spending Review, the Government announced its proposed introduction of “affordable rented” properties replacing the social rented tenure of new housing association homes. These would be at rents of up to 80% of private rents. Members agreed that the definition of “affordable housing” should include affordable rented housing as introduced in the recent Comprehensive Spending Review.

 

 

The Panel concluded that it was appropriate for the Bonus to apply to each new Gypsy and Traveller pitch. However the enhancement should not apply, as these sites were not considered to be affordable housing. The total number of pitches granted planning permission since 2008, now stood at 34, the target for 2011 set in the East of England Plan Single Issue Review.

 

4.         Empty Homes

 

The consultation document was not entirely specific about the details, merely saying that it proposed “to reward local authorities for bringing empty properties back into use through the NHB.” There were two questions associated with this:

 

(d)   Do you agree with the proposal of reward?; and

 

(e)   Are there any practical constraints?

 

Response:

 

While initiatives to incentivise and reward local authorities for bringing empty properties back into use would be welcomed, the consultation was not sufficiently detailed to assess how the NHB would work.

 

Members supported the principle of renewal but agreed that there was insufficient information in the consultation document. Clarity was needed around the renewal applying to house sub-divisions. No firm conclusions were drawn about houses in multiple occupation.

 

5.         Tier Split of Bonus

 

The document recognised that “for the incentive to be most powerful, it must be strongest where the planning decision sits.” It therefore proposed an 80:20 split “as a starting point for local negotiation.” There was also discussion of the pooling of funding with other local service providers, and with Local Enterprise partnerships, but these cases would depend upon individual circumstances, and the Government stated again that “local authorities were best placed to negotiate to meet the needs of local neighbourhoods and communities.” Two questions flowed from this proposal:

 

(f)     Do you agree to the 80:20 split between lower and higher tier authorities, as a starting point for local negotiation?; and

 

(g)   If not, what would the appropriate split be, and why?

 

Response:

 

Local authorities would be free to spend the grant in line with community wishes. However this could lead to disagreement between local communities.

 

As RSG would be reduced to assist with funding the NHB, officers believed that RSGs to upper tier authorities should be similarly reduced. They proposed that if there were no infrastructure costs to upper tier authorities, the proportion of NHB should be nil. The members asked who would be the arbiter if there was disagreement between the district and county councils about the split of the bonus. The split should be prescribed in legislation and should not be a matter of local negotiation. It was felt that the split should be 90:10 in favour of the District Council. It was suggested that there should be a Memorandum of Understanding with the County Council to ensure that the bonus was spent within the district.

 

6.         Basis of Calculation

 

This section discussed sources of data minimising additional burdens on authorities, and the timing of grant allocations and payments. Six questions were posed:

 

         (h)       Do you agree to use data collected on the Council Tax base form as at October to track net additions and empty homes?

 

         (i)         Do you agree with one annual allocation based on the previous year’s Council Tax Base form, and paid the following April?

 

         (j)         Do you agree that allocations should be announced alongside the local government finance timetable?

 

(k)           Do you agree that local authorities should be rewarded for affordable homes using data reported through the official statistics on gross additional affordable supply?

 

(l)                       How significant are demolitions?

 

(m)          Is there a proportionate method of collecting demolitions data at local authority level?

 

Response:

 

Officers agreed with the first four questions with the proviso that the definition of affordable homes should be expanded. Demolitions were not considered to be significant in this district and the information was already collected as part of the Annual Monitoring Report for the LDF. Members asked that the issue of local authority boundary changes should be brought up in the response to the consultation.

 

7.         Additional Issues

 

This covered equalities impacts and “consultation stage impact assessment.” CLG’s view was that the NHB was fair as all relevant local authorities were able to access the scheme funds. The bonus was not ringfenced, so authorities could spend the grant as they see fit – and they would be subject to equality legislation in making those decisions.

 

Two questions were asked:

 

(n)   Do you think the proposed scheme would impact any groups with protected characteristics?; and

 

(o)   Do you agree with the methodology used in the impact assessment?

 

Response:

 

The first question raised potentially controversial issues, where perhaps a perception may arise that permissions had been granted for financial reasons.

 

Members asked that their concern about the shortness of the consultation period should form part of the response. It was also suggested that “transitional arrangements” were needed as enough was not known at this stage about the impact on local government financing.

 

Wider Views

 

The document asked for other comments, particularly where there were issues that had not been addressed.

 

The district was entirely within the Green Belt with only towns and larger villages excluded by tightly drawn boundaries. How would “incentivisation” sit with the strategic aim of growth restraint, and with the Government committed to protecting the Green Belt?

 

Members were sceptical about the statement on “Rural Proofing” in the “Specific Impact Tests” section of the appendices of the consultation document. There was concern that a potential increase in development could impact adversely on rural areas. The document suggested that the risks were mitigated given that local authorities determined the quantity, type and location of housing development.

 

It was unclear how the existence of the bonus should be treated in considering the planning merits of such schemes. There was concern that some residents, or other observers, would argue that some permissions had been “sold.” Members were advised of “The Planning System: General Principles” (2005), that the “use of planning obligations must be governed by the fundamental principle that planning permission may not be bought or sold.” It was therefore “not legitimate for unacceptable development to be permitted because of benefits or inducements offered by a developer.”

 

The Government intended that the scheme would become a permanent feature of local government funding. There was concern about the medium and long-term effects this would have on settlements such as Harlow which had very little land left for new housing. This may lead to increased pressure for boundary reviews and loss of Green Belt.

 

Similar issues applied to any urban extensions in Harlow. This could increase pressure for early boundary changes which could mean the Council losing nomination rights for any affordable housing included in such schemes. It was believed that the Council permitting the housing should retain the NHB, irrespective of boundary changes. The example of Church Langley was mentioned where permission was granted when the land was within Epping Forest, but a boundary change meant that all the housing was now in Harlow. It was felt that the latter could argue that the NHB should rightly be paid to the authority which was picking up the service costs created by the households.

 

Members felt that the timescale of the consultation was far too short. The scheme was being introduced on 1 April 2011, therefore it was difficult to ascertain how the Communities and Local Government (CLG) could take on board all the responses during this period of time. Although the consultation was being put before the Council on 14 December 2010, it was felt that members should be given advanced warning of its potential impact before the meeting. Members requested that the three M.P.s representing the district area should be advised of the Council’s response to the consultation.

 

RECOMMENDED:

 

That a report be submitted to the Council recommending that the annotated version of the report by the Director of Planning and Economic Development containing suggested responses and recommendations on the comments to be made be approved.