Shadow housing minister John Healey has said the Coalition Government plan to encourage councils to build new homes will be paid for by making huge cuts in funding for large towns and cities.
According to Mr Healey, the move will lead to many councils across the country being “hard-pressed” on their budgets.
Speaking at the Labour Party conference in Manchester, Mr Healey attacked the plans, which were announced last month by the Government, saying “big towns and cities would be hardest hit”.
He added that the scheme “robs some councils to pay others”.
Under the plans, the Government said it would match the council tax raised on each new house built in a council’s area for six years.
But Mr Healey said the money would come from existing grants, penalising those authorities which could not build more homes.
He said: “They’re right to want a strong incentive system for councils and communities ready to see new homes built in their area. But this isn’t it.
“There’s no new money. And the Government will take a top-slice cut across the grant to all local government to cover the cost.”
According to Mr Healey’s analysis of the scheme, based on local housing authority figures for new homes built in 2009, government grant and average council tax, 103 councils would see funds cut by an average £2 million each, while 222 councils would gain by an average £400,000.
Under the new bonus scheme, Birmingham would need 8,500 homes a year to be built to avoid losing grant, while Blaby would have to see only 70 go ahead.
Housing minister Grant Shapps said: “Under Labour’s watch, house building fell to its lowest peacetime rate since 1924 and the number of first time buyers was the lowest since records began.
“We should take no lessons on housing, given their irresponsible government spending spree threatened to bankrupt the country and send interest rates soaring.
“John Healey hates the idea of giving councils incentives to build new homes because it just highlights how his top-down regional strategies were a monumental, complete and total failure.
“Labour’s local government finance system punished councils for building new homes, by cutting their government grant. The coalition parties are putting aside differences to come together to sort out the terrible mess left by Labour.”