Cash blow for low-demand areas that aren't in pathfinders

Areas suffering low housing demand that are outside the official market renewal pathfinders missed out on major investment from the comprehensive spending review.

The news emerged on the back of chancellor Gordon Brown’s announcement on Monday that investment in the nine pathfinders will be trebled to £450m in 2007/08.

Richard McCarthy, director of sustainable communities at the ODPM, said: “We anticipate any grant will only be a modest sum, and will only be in year three of the spending review. We’ll be looking at very targeted interventions in specific areas.”

That means areas such as the Tees Valley, West Yorkshire and Barrow-in-Furness will have to wait until at least 2007 for government money to deal with failing housing markets.

This is despite the fact that deputy prime minister John Prescott promised on Tuesday to “widen the approach” to market renewal.

Merron Simpson, head of policy at the Chartered Institute of Housing, said: “A number of projects across the country are going to be very disappointed. They were hoping for money sooner than this.”

The CIH and National Housing Federation put in a bid in March for a £350m national market renewal programme to tackle low housing demand outside the pathfinders.

For the nine pathfinders, however, there was a two-fold boost in the review. As well as extra cash, they received a commitment from Paul Boateng, chief secretary to the Treasury, that they would be able to keep any money they make from their schemes and re-invest it in their areas.

This will be a considerable boost: the Manchester Salford pathfinder, for example, estimates this could be worth as much as £500m over the life of its programme.

Angus Kennedy, chair of the Birmingham Sandwell pathfinder, Urban Living, said: “Capital receipts could become a significant extra element of funding. It’s a very positive week for pathfinders.”