To help ease housing shortages, the government is now offering bonuses to councils for newly built homes. Under the government supported New Homes Bonus Scheme, taxes raised by each new home will be matched for six years.

Grant Shapps, housing minister, proclaimed that a bonus plan like this was needed. New construction of homes is at its lowest level since the 1920's.

In sharp contrast to the opinion of shadow housing minister John Healey, Grant Shapps feels action must be taken and a better system for the housing industry is much needed.

Shapps said: "We will not tell communities how or where to build. But the New Homes Bonus will ensure that those communities that go for growth reap the benefits of development, not just the costs. With house building falling to its lowest level since 1924 under the previous government, action is needed now to build the homes the country needs."

"We think this top-down system which pitted communities against developers meant they spent loads of time in court and at planning appeals. We think that is crazy. And a better system is to get people actually saying there is something in it for our area - we can have a new swimming pool, or town centre, or something that we want in our area if we allow some house building to go ahead. That rebalances the argument and we believe they will build more homes."

The New Homes Bonus will also stipulate that the local authorities are expected to have control over how they spend the money.

But Healey then said: "The cost will run into billions met mainly - as Tory proposals indicated before the election - by existing grants to local councils.

Given the potential impact on essential local services, we could quite literally see government robbing Peterborough to pay Poole."