The communities department is in chaos over how to implement the coalition government’s proposed housebuilding incentive scheme, according to the previous Labour housing minister.

John Healey told a fringe meeting at the Labour party conference that his former department had no idea how to implement the New Homes Bonus scheme, a system of incentives that involves local authorities retaining council tax on new development for some time, rather than passing it on to the government - an allegation immediately denied by housing minister Grant Shapps.

Healey said: “There is panic in the department at the moment - they simply don’t know how they’ll make it work.”

The measure is intended to give local authorities that are anti-development a reason to give planning approval to new homes. For every home built, a council would keep six years’ worth of council tax.

The plan follows the abolition of the housing targets imposed on councils by the previous government.

There is panic in the department at the moment

John Healey

Healey also accused the coalition of seeking systematically to “relinquish the government’s role in meeting people’s need for decent housing,” with its cuts to social housing funding, planned cuts to housing benefit and the planning shake-up.

Shapps told Building: “This is utterly untrue [that the department doesn’t know how to implement the scheme]. I have no idea what John Healey is talking about, and I suspect neither does he.”

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