GBSLEP could pocket £4.5m from West Midlands house building drive
The small print of the Government’s Local Growth Deal consultation paper sheds light on a move to deliver substantial additional funding to Local Enterprise Partnerships, and the idea has predictably attracted the wrath of some council leaders.
The proposal involves changes to the way the New Homes Bonus – a grant paid to local authorities for every new house built in their area – is distributed in future.
It’s being suggested that about a third of the annual bonus, some £400 million, should go directly to the LEPs rather than to councils.
Greater Birmingham and Solihull LEP (GBSLEP) could find itself more than £4 million better off as a result, with most of the cash coming from Birmingham City Council.
One option would see all councils hand over 35 per cent of their annual New Homes Bonus to the local LEP. An alternative scheme would see county councils lose their entire bonus while district councils could lose 19 per cent of the payment.
In Birmingham’s case, where the bonus totalled £10.2 million last year, the council would have to transfer more than £3 million to the GBSLEP. The money might or might not be reinvested in Birmingham.
Based on last year’s figures, GBSLEP would pocket about £4.5 million when the New Homes Bonus paid to its other councils is taken into account, although the figure will be higher if, as Ministers hope, substantially more homes are built in the future.
The BIS consultation suggests that the money will be handed to LEPs with no restrictions on how it can be spent, although there will be “an expectation that they should involve engagement with all local authorities and other partners”.
The consultation paper states: “New Homes Bonus will continue to be allocated to councils on the basis of the number of new homes delivered but will include a requirement that resources are pooled to support LEP growth plans. We see the pooling locally of the New Homes Bonus as a positive means of supporting strategic housing delivery.”
Business Secretary Vince Cable has received letters of protest from council leaders who claim that it is “undemocratic” to hand over millions of pounds to the LEPs.
There are concerns about accountability issues. Councillors are in a minority on LEP boards which must have a majority of business leaders under Government rules.
The local authorities in GBSLEP are proposing a supervisory board consisting of council leaders, which would oversee performance and set broad policy. But is it unclear if the board could block LEP spending plans, or whether this would be acceptable to the Government.
Mr Cable has defended the policy, pointing to the consultation paper which states: “We hope it will encourage local authorities to work together on new developments which might cross council boundaries, and to help unlock the provision of cross-local authority infrastructure.”
The move towards a more strategic approach with neighbouring authorities working together could suit Birmingham, where the city council says it is proving impossible to find sufficient land to build the 80,000 new homes required by the government.
Council leader Sir Albert Bore said space for a maximum of 50,000 homes had been identified in Birmingham, mostly on brownfield sites. The remaining 30,000 homes will have to be built on green field and green belt land in Sutton Coldfield and across the city border in Worcestershire, Staffordshire and Warwickshire, he added.
Negotiations are taking place between Birmingham and district councils including Redditch, Stratford and Lichfield. Proposals for house building will be published in the Birmingham Development Plan.
Sir Albert called for a “trade off” where Birmingham would provide employment land and new jobs for people living across the city border, while neighbouring authorities would earmark land for homes for Birmingham residents.
When it is finally published, the Birmingham Development Plan is likely to provoke the bitterest green belt battles for decades, particularly in Sutton Coldfield where MP Andrew Mitchell is leading the fight against development.
