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The New Homes Bonus scheme, the incentive the Government says will ensure local authorities do not stop building, has come under criticism from a group of 21 top-tier authorities.
The councils, part of the South-East Strategic Leaders (SESL) group, have written to the Government to express "serious concerns" over the scheme.
The New Homes Bonus is designed to compensate authorities for developing by match-funding council tax receipts on new builds for the first six years. The Government has trumpeted it as a scheme that will ensure house-building does not come to a stand-still with the Localism Bill.
But members of the SESL expressed concern that it would not boost house-building in the south east.
Dr Andrew Povey, leader of Surrey County Council and SESL chairman, said: "It is not clear to us that the outlined approach provides enough of an incentive to communities for them to welcome development."
The £350 additional payment for affordable homes was also criticised; Povey suggested that it should instead be calculated "as a percentage of the standard bonus rather than [given as] a flat rate."
Consultation on the New Homes Bonus scheme closed on Christmas Eve. In the consultation paper, it was proposed that 80% would go to the lower-tier (the district council) and 20% to the upper tier (the county council).
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