COLCHESTER Council is set to pocket £3.4 million in New Homes Bonus cash in April.

Official Government figures show the authority will pick up the cash after 738 homes were built in the borough in 2016/17 - though only 419 are eligible for the reward.

It is a reduction of about £450,000 from last year’s allocation after changes to how the cash is paid to local authorities, which sees the first 0.4 per cent of homes discounted from the overall number.

New Homes Bonus money is used by the Government to encourage councils to grant planning permission for new homes considered to be “sustainable development”.

The statistics, released by the Department for Communities and Local Government, also show just 44 affordable homes were built last year while 60 more homes were added to the empty homes register.

Paul Smith, leader of Colchester Council, said the authority has come to rely less on the payment, but the cut will have an effect on its spending.

He said: “There has been a number of changes in how the money is paid to councils, which means we are seeing less and less coming in each year.

“There is no doubt it does make it more difficult to plan.”

For every 80p paid to borough and district councils, 20p is handed to Essex County Council.

Mr Smith said, in total, the council is preparing for an overall cut to its income of about £3 million over the next few years.

In the last two years, £1 million in New Homes Bonus money has been allocated to the Mercury Rising campaign, which will see the Mercury Theatre undergo an £8.9 million overhaul.

About £1 million will also be used to pay for the sports complex side of the Northern Gateway scheme, while £250,000-a-year has been moved into the council’s revolving investment fund, which is used to fund projects which the council hopes to make a financial return on.

In Tendring, the council is set to receive £1.3 million, with 245 homes being eligible for the payment.

Braintree Council will receive £1.2 million.

A total of 240 were built but figures show no “eligible” homes were completed, an issue which council leader Graham Butland has blamed on “tardy” developers not completing homes.

Maldon District Council is set to pocket £695,000, having built 165 eligible homes, while Chelmsford City Council will be handed £3.1 million.