By Max Clarke

A billion pound fund aimed at incentivising local authorities to build new homes has been blasted by public sector union, UNISON, as a ‘big con’.

The New Homes Bonus, which came into effect on the 4th April, provides £250 million each year for the remainder of the current government’s term is intended to foster a ‘more positive attitude to growth’, by providing additional funds to boost local public services that would otherwise face increased strain as a result of housing growth.

UNISON, however, allege that there is in fact no new money and that the scheme simply strips cash from existing grants, penalising councils in the north of England. The Government, it claims, does not have the money to pay for the New Homes Bonus scheme, so is ripping £176m out of the Formula Grant next year - money councils already get - to pay for it.

“The Government is robbing the north to pay the south and robbing cities to pay the shires,” said UNISON boss Dave Prentis.

“If they want to push ahead with this New Homes Bonus they should add new money not rip it out of existing budgets that councils rely on to pay for services like home care. This will be another blow for local communities at a time when vital services are being hit. “Areas in the north are being penalised for having a weaker housing market, caused by the recession and because developers can make bigger profits in the south. The Government must rethink this unfair funding scheme.”