Out-Law News 1 min. read
27 Mar 2013, 4:47 pm
The report (45-page / 528KB PDF) found that the estimate had been produced using "very limited evidence" and that it contained an error which "significantly increased" estimated construction rates.
The NAO said that the correct calculation for the increase in housing supply would be between 6% and 11%, amounting to 108,000 homes, as opposed to the Government's estimate of between 8% and 13%.
The Department for Communities and Local Government (DCLG) is planning to carry out a review of the programme in 2013-14. However, the NAO said that the DCLG has not decided upon the scope and methodology of the review. It said that the review was "essential" and called for it to be carried out "urgently".
The NAO said that the programme was mainly funded by redistributing the Government's core funding for local authorities and that some local authorities would face losing "large amounts" of their funding from central Government. It said that these authorities could face growing financial risk, including to future service delivery.
“Some local authorities could face significant cuts in their funding as a result of the New Homes Bonus scheme," said head of NAO Amyas Morse in a statement. "While it is too early for the scheme to have had a discernible impact on the number of new homes, the signs are not encouraging".
“The DCLG must now urgently carry out its proposed review of the scheme to ensure that it successfully encourages the construction of much-needed new homes,” Morse said.
The New Homes Bonus was launched by DCLG in April 2011. Under the programme, the Government pays a bonus to local authorities for every home added to their council tax register, after demolitions have been deducted. Qualifying homes may be newly built or empty homes returned to use.
