Local government funding reform will hit the Government’s growth mission and target of building 1.5 million homes, district councils warn
The councils doing most to ensure new homes are built are set to be punished in reforms to local government finance, analysis by the District Councils’ Network (DCN) reveals.
The Government’s Funding Review proposes redistributing money between councils, including by ending the bonus paid to councils when new homes are built and taking away the extra business rates received by councils that do most to grow their local economy.
As a result of the reforms, 41 district councils have been told by the Ministry of Housing, Communities & Local Government (MHCLG) that they are in line for the maximum funding cut – a possible 7% cash reduction in their spending power. Last year, these districts:
- Grew their housing stock 67% faster than the English average.
- Included four of the five councils with the highest proportion of new homes in their overall housing stock, of all tenures.
- Covered 9% of England’s population but 16% of the new homes delivered.
DCN is calling on MHCLG to ensure that no council’s spending power is cut in cash terms as a result of the Fair Funding Review.
Cllr Jeremy Newmark, Finance Spokesperson of the District Councils’ Network (DCN), said:
“District councils play a vital role in getting the homes built that the country needs. Until now, the funding system has rightly rewarded them for doing this.
“The Government is right to see housebuilding as a national priority, but it’s hard to see why councils that have been more successful than most in building new homes and driving growth are getting the worst deal from the funding changes. This seriously risks underming the Government’s own housebuilding targets and growth mission.
“The Government’s approach is short-sighted and could push a set of district councils into financial stress. That would put at risk vital frontline services and value-adding projects and activities that help create local jobs, prevent serious ill health and save money for the NHS. It would be bad news for local residents and taxpayers.
“Extra homes require extra infrastructure, but this does not come cheap. Councils need to be appropriately funded to supply all of the services required to support families when they move to an area – without these services communities are weaker and social problems can arise.”
Cllr Bridget Smith, Leader of South Cambridgeshire District Council, which had the highest percentage growth in its housing stock of any English local authority, said:
“In South Cambridgeshire, we’re proud to have delivered new homes at a faster rate than anywhere else, but growing communities lead to rising costs.
“The Government should recognise that new homes and the businesses that spring up alongside them bring new costs to a council: extra bin rounds, new roads to sweep and more leisure centre users.
“Either councils covering the fastest growing areas are properly compensated for these costs, or it’s a gift to those who want to turn local residents against building the new homes the country needs.”
Council areas with fastest housing growth
| Rank | Name | New dwellings as a share of total dwellings | One of the 41 districts covered by weaker transitional protection arrangements?1 |
| 1 | South Cambridgeshire | 2.1% | Yes |
| 2 | East Hertfordshire | 1.9% | No |
| 3 | South Derbyshire | 1.9% | Yes |
| 4 | Tewkesbury | 1.9% | Yes |
| 5 | Rushcliffe | 1.8% | Yes |
| 6 | Babergh | 1.7% | No |
| 7 | Huntingdonshire | 1.7% | No |
| 8 | Mid Suffolk | 1.7% | Yes |
| 9 | Milton Keynes | 1.6% | No |
| 10 | Preston | 1.6% | No |
| 11 | Stratford-on-Avon | 1.6% | Yes |
| 12 | East Cambridgeshire | 1.5% | Yes |
| 13 | Melton | 1.5% | No |
| 14 | South Norfolk | 1.5% | Yes |
| 15 | Uttlesford | 1.5% | Yes |
| 16 | Bassetlaw | 1.4% | Yes |
| 17 | Braintree | 1.4% | No |
| 18 | Dartford | 1.4% | Yes |
| 19 | Mid Devon | 1.4% | Yes |
| 20 | Rugby | 1.4% | Yes |
1 Please see section below for an explanation of transitional funding arrangements
