New Homes Bonus payments to fall for second year running

The total amount paid to English councils under the New Homes Bonus scheme is set to be £10 million lower in 2020-21 than in the current financial year, according to government projections, the second year in a row in which allocations under the programme have fallen.

New provisional local government settlement: the MHCLG headquarters in Marsham Street, London. Pic: Steve Cadman
New provisional local government settlement: the MHCLG headquarters in Marsham Street, London. Pic: Steve Cadman

Provisional allocations newly published by the MInistry of Housing, Communities and Local Government (MHCLG) reveal that payments to councils are expected to total £907.3 million next year, 1.1 per cent less than the £917.9 million paid in 2019-20

The current year’s total payment is itself three per cent lower than the £946.2 million paid out under the New Homes Bonus scheme in 2018-19.

The bonus figures for 2020-21 are based on the number of units added between October 2018 and October 2019, plus legacy payments for homes completed in the last four years.

A national "baseline" of 0.4 per cent housing growth, introduced in 2017 and below which New Homes Bonus payments are not paid, remains unchanged in the coming financial year.

The government forecast for bonus payments in 2020-21, relating to new units completed between October 2018 and October 2019, is £284 million. Legacy payments for homes completed in previous years brings the total payment to £907 million.

According to the government, a total of £8.8 billion has been paid to councils under the scheme since it was introduced in 2011.

Tower Hamlets Council has again topped the table for the highest projected bonus payment, with a provisional allocation of £22 million.

Newham Council takes second place, rising from eighth last year, with a payment of £15 million, while Southwark Council remains in third place with an allocation of £14.4 million.

While the top three highest provisional allocations are set to go to councils in the capital in the coming financial year, payments to local authorities outside London are increasing. 

London boroughs represent seven of the top 20 councils with the highest allocations, compared to ten in the current financial year.

The New Homes Bonus figures form part of Whitehall's provisional local government funding settlement for 2020-21, published by the MHCLG on Friday.

The MHCLG said local authorities would receive a share of £49.1 billion in funding, which represented "an increase of almost £3 billion in core spending power" for councils. 

Last year, the MHCLG said councils would be provided £46.4 billion for 2019-20.

The provisional settlement is subject to approval by the House of Commons.


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