Government grant shifts scarce resources from north to south

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A new study by UNISON, the UKs largest union, has revealed that the Governments New Homes Bonus Scheme is draining scarce resources away from the recession hit north, to wealthier parts of the country in the south.

Money for the new homes scheme is deducted from local council grants and then redistributed – not on the basis of need or population – but to areas where most new homes are built which largely depends on decisions made by private developers. Building firms meanwhile are unsurprisingly shying away from poorer areas that have been hit hardest by the recession and choosing to build in areas where the profit potential is greatest.

The union is demanding that the Government puts a stop to deprived areas being penalised in this way.

A table of individual councils across England shows the scale of the loss with more than 60 per cent of the money spread between London, the South East, East of England and South West. Among the top of the losers list are Oldham, Knowsley, Liverpool, Wirral. South Tyneside, Gateshead and Newcastle.

Oldham (loses £1 and gets back 0.11p) and Knowsley (loses £1 and gets back 15p), while the biggest winners are Uttlesford (gets back £19.34 for every £1 lost), Basingstoke and Deane (gets back £18.70 for every £1 lost) and Forest Heath (gets back £15.80 for every £1 lost).

Dave Prentis, General Secretary of UNISON, said:

It is grossly unfair that the Government is using its New Homes Bonus scheme to shift scarce resources from the hard hit north to wealthier parts of the south. Over 60 per cent of money is spread between London, the South East, East of England and South West. It cannot be a coincidence that the Tory heartland is where most money is being directed.

To most people it is obvious that private developers will be slow to build new homes in areas where the recession is biting deepest. What is less obvious is that the money for New Homes Bonus is deducted from the money that councils are supposed to get from the Government. It is being top-sliced from the formula grant and redistributed via the New Homes Bonus. And because it is distributed differently – not on the basis of need or population – councils in the south are getting much more than their fair share.

(The New Homes Bonus is a general grant paid to local authorities and is paid annually for a period of 6 years. The amount that a local authority receives depends on the number of new homes that have been built in the local authority area during the previous year).

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