Housing Minister Grant Shapps has told councils that local communities who go for growth in the provision of housing will receive direct and substantial extra funding.

The Minister has confirmed that councils who take action now to give planning consent and to support the construction of new homes where they are needed and wanted will receive direct and substantial benefit for their actions.

Shapps has urged councils to open up an honest and direct debate with the communities they serve about the benefits of building new homes in their area and how they can reap the benefits of development - not just the costs.

He also confirmed that the Government is working on business rate reforms to encourage economic development, as well as reforming the Community Infrastructure Levy to provide an even clearer incentive to develop.

Shapps said: "We have wasted no time scrapping the ineffective top-down planning system that forced unsustainable development on communities and are returning control of a much faster and more responsive planning system to local people.

"We will not tell communities how or where to build, or how they should grow. But the New Homes Bonus will ensure that those communities that go for growth reap the benefits of development, not just the costs.

"With housebuilding falling to its lowest level since 1924, action is needed now to build the homes the country needs. Thats why these new powerful incentives to build will be introduced early in the Spending Review period. And its why I have confirmed that those councils who go for growth by providing planning permission now will reap the rewards.

“So I urge councils to seize the moment and open up a debate with their communities now about the new homes they need and how they would use the new Bonus."

The Government wants to hear the views of councils, communities and industry as it finalises the scheme and a consultation paper on the final scheme will be published following the autumn spending review.