Housing plan will ‘cost Oldham £27m’

OLDHAM will be “robbed” of almost £27 million because Government plans to revive house-building disguise a massive funding cut, Labour has claimed.

John Healey, the party’s housing spokesman, raised the alarm over a promised New Homes Bonus, designed to use cash incentives — rather than top-down targets — to boost construction.

Under the £1 billion scheme, local authorities will receive double the rate of council tax for new properties, with the Government matching the annual amount paid by owners.

An even bigger reward has been promised for councils approving affordable homes — 125 per cent of the council tax paid — under the six-year deal.

But Mr Healey said the promise was a mirage because the money would be taken from the existing core Government grant to town halls.

Assuming the same number of homes built last year are built in future years, some 103 councils would lose funds, including Oldham, he said.

The estimated net losses to the town, which gained an additional 401 homes in 2008-9, would be £1.2 million in the first year of the scheme — and £26.9 million over six years. The only way it could break even — receiving the same amount of funding as before — would be to build 1,245 homes each year, Labour claimed.

Mr Healey said: “Those councils that see new homes built will win, but those that won’t or can’t build will lose out,. This scheme robs some councils to pay others.

“It will cause chaos in the council tax system, because it blows out of the water Chancellor George Osborne’s promise to freeze council tax and adds extra pressure on council tax bills.

“Many councils will have to hike council tax to cover the costs. Millions will face bigger bills as a result of this scheme.”

Mr Healey said 222 councils would gain, but only by an average of £400,000 — while the losers would see an average of £2 million of funding disappear.

Housing Minister Grant Shapps hit back, saying: “Under Labour’s watch, house building fell to its lowest peacetime rate since 1924 and the number of first-time buyers was the lowest since records began.

“John Healey hates the idea of giving councils incentives to build new homes because it just highlights how his top-down regional strategies were a complete and total failure.”