Labour to scrap New Homes Bonus

It's no surprise, but the Labour Party has now stated officially that it will abandon the New Homes Bonus if it gets elected at the 2015 general election.

The decision was announced as part of its "Zero-Based Review" which is systematically reviewing where government can save money in order to avoid any increase in public borrowing to fund day-to-day expenditure (hence the "zero"). The latest review (Interim Review No. 3: A New Deal for Communities and Local Government") examines the opportunities to adjust the spending of DCLG.

The key statement about NHB in this latest report reads:

Labour will also end the complex, regressive and ineffective ‘New Homes Bonus’ with the funding reallocated more fairly within local government. The National Audit Office has found no persuasive evidence that the New Homes Bonus is having the effect of incentivising new house building and the Public Accounts Committee has questioned its effectiveness and fairness of its distribution, calling for an urgent review. (p.7).

What next?

The Interim Reports are not the final word: their outputs will eventually be drawn together to inform Labour's manifesto, along with the Spending Review Labour would undertake should it achieve power. But is is unlikely that there will be a u-turn on the abolition of the New Homes Bonus. The recent DCLG evaluation of the measure (an EHN review of which will be forthcoming shortly) does not add any credible evidence to suggest that the NHB is effective as far as incentivising new house building goes--whatever its merits in regard to empty homes work-- and there is a long record of criticism of NHB by senior Labour figures.

For EHN the challenge will be to offer alternatives to NHB in the event that it is abolished. The latest draft of our policy position paper does that by resurrecting an idea we proposed back in 2008 in response to the consultation on Housing and Planning Delivery Grant, namely that the government offer revenue match funding for empty homes officers. As we point out in the draft policy paper, our proposal can be costed at £8million per annum, compared with the current £114million per annum being doled out as New Homes Bonus as a reward for bringing empty homes back into use, little of which is seen by empty homes teams. Our match-funding proposal would on any reasonable view represent a much more effective use of money. The main drawback of our proposal is not inherent to the proposal itself: it is that it cannot address the lack of political will in central government to actually do the kind of governing which ring-fenced, agenda-oriented funding implies.

Empty Homes in the Interim Review

It may be thought disappointing that the Interim Review does not mention empty homes in its brief section on housing (from which the paragraph quoted above is drawn) nor the fact that research does suggest that, if nothing else, New Homes Bonus incentivises local authorities to tackle empty homes. But quite simply, the document seems not to be intended to address that level of detail. Most of the specifics around front-line services and delivery are examples and case studies designed to highlight supposed failures of the current goverment or the best practice of Labour-controlled local authorities.

Interim Review Proposals

The main proposals within the Interim Review are not about delivery but about organisation and structure, with the emphasis on measures to produce efficiency savings through sub-regional organisations and shared services. Amongst other things, the Review mentions

  • more shire unitaries (like Cornwall, Shropshire, Northumberland)
  • "virtual shire unitaries" (separate districts sharing common services across a shire)
  • transferring £30billion of funding over five years to city and county regions
  • "an English Devolution Act pushing power out of Whitehall to Combined Authorities with coterminous LEPs, across areas including transport and housing, business support, skills and employment support"

The inclusion of housing in the last point and the £30billion of funding obviously have the potential to impact how empty homes work is organised. The issue arose previously with the intended top-slice of New Homes Bonus for Local Economic Partnerships, which we identified as a possible opportunity as well as a threat.

It must be said that the message is somewhat woolly in places, as for example the contrasting examples of real and virtual unitaries shows. What will be voluntary and what will be imposed? What should happen and what would happen under a Labour government? Districts "should explore scope [sic] to become 'virtual unitaries'". Yes, but what if they don't want to? What if six out of seven heads of service don't want to lose their jobs and Members don't want to lose the sense of local control? The government is castigated for stopping Norwich and Exeter (population 120,000) becoming unitary authorities when such moves would have been in an entirely different direction from that envisaged by the Interim Report and were largely defeated because of doubts about the savings figures.

The emphasis is fairly clear, however, that changes will be bottom-up not top-down, with central goverment providing incentives for local authorities to work together rather than forcing them to do so whilst welcoming locally-led re-organisations such as happened in Cornwall . The question will then become, in areas where there is no formal re-organisation, whether the incentives are attractive enough to induce change and whether the various alternative structures erected by local authorities at sub-regional level are actually effective and efficient--not to mention democratic.

Some of the proposals come from the Local Government Innovation Task Force - an initiative of the Labour Group of the Local Government Association and if you want more detail then their Final Report is probably the best place to look (downloadable from the Task Force website).

Local Scrutiny

Whilst local authority empty homes practitioners will generally be grateful for the incentive offered by New Homes Bonus, some of us also mourn the demise of the Audit Commission, whose expectations of local empty homes initiatives was often a good bit higher than what they found during their inspections and whose reports therefore often encouraged local authority managers to make sure more was done.

Labour's proposals include a proposal that might address the vacuum created when the Audit Commission was axed, namely the creation of Local Public Accounts Committees. These would scrutinise all devolved funding and the associated services across an area (thus including funding outside of current local authority budgets such as health spending). These would involve elected Members (thus mirroring the Public Accounts Committee in Parliament rather than the National Audit Office). Such a proposal, if implemented, might start to address the postcode lottery of empty homes work and would imply the production of more guidance around assessing services than currently exists now that Audit Commission "key lines of enquiry" approach is defunct.

Tough times, tough people

Labour is keen to challenge the perception that it is profligate with public money. The report refers to a Labour government "ruthlessly prioritising public spending". The Foreword warns us that

"In tough times Labour knows we will have to make tough decisions in a tough financial environment".

That's a heck of a lot of toughness. Sure, there is plenty of talk about "communities", but clearly this is a pretty mean bunch of hombres for whom "cross cutting efficiency reviews" might just mean spraying a room full of highly-paid local authority chief executives with a couple of bursts from an Uzi sub-machinegun. In the spirit of Christmas, let us hope that should Labour be elected Ed will not have ready access to firearms, machetes or crack cocaine.

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