My honourable friend the Minister for Housing and Planning has made the following Written Ministerial Statement.

In our December response to the Kate Barker review of housing supply, we committed to reform the planning delivery grant to support local housing delivery and to conduct a wider consultation on local planning and housing incentives. Today we launch the consultation on a proposal for a new housing and planning delivery grant and the criteria for allocations for the final year of the current planning delivery grant. The consultation will run until 17 October 2006.

The Government’s aim is to encourage local authorities to respond more effectively to local housing demand. Over 200,000 new households are formed each year, but last year just under 170,000 additional homes were built, with upward pressure on house prices as result. The Government believe that local authorities do not have sufficient incentives to respond to housing need.

Under our proposals, a performance-related grant would be paid to local authorities as a reward for meeting the housing needs of the community and for improving planning performance. The proposal is part of the Government’s package of measures to improve housing affordability and our commitment to create and maintain sustainable communities.

The Government’s aim with a new grant would be to encourage local authorities to become active in the delivery of new housing to meet local housing demand. The grant would be awarded to local authorities with high levels of demand that are delivering additional housing. The proposal envisages that the grant would continue to resource planning to ensure effective delivery of the new planning system.

We are also consulting on the criteria to allocate £120 million of planning delivery grant for the financial year 2007-08. Within this allocation, we are proposing to increase the percentage of planning delivery grant awarded to support housing. This is to ensure that the grant better supports areas that are delivering high numbers of new homes and areas struggling with issues of low demand. We plan to announce the first part of this grant in November 2006, with further announcements planned for spring 2007.

Copies of the Planning Delivery Grant 2007/08: Proposed Allocations Criteria have been placed in the Libraries of both Houses and the document is available on the DCLG website at www.communities.gov.uk/index.asp?id=1501792.

The housing and planning delivery grant consultation paper will be placed in the Libraries of both Houses tomorrow and will be available from tomorrow afternoon on the DCLG website at www.communities.gov.uk/index.asp?id=1017165.