They have warned that without guaranteed cash for vital infrastructure such as schools and hospitals, the population growth created by the plan will be unsustainable.
The government is planning to build more than 300,000 homes across the Thames Gateway and three other growth areas – Milton Keynes, Ashford and the M11 corridor – by 2016.
The Local Government Association and the Government Office for the South-east are working with the group, led by Milton Keynes' chief executive John Best, on the problem.
They are calling for the government to set up an official public service agreement with councils affected by the growth areas.
This will guarantee funding from relevant departments so that services can be provided after the houses are built.
The idea is to set PSA targets for councils on issues such as health, education and crime, which, if met, would automatically unlock funding from the departments in question.
Best said: "What we're talking about is a PSA that will oblige all departments to properly fund the population growth we will deliver."
The current system of government funding bases subsidies on population figures from the Office of National Statistics, which typically are two or three years out of date.
This can be a serious problem for a city like Milton Keynes, growing by 3000 people a year.
Growth has left it with a hospital built to serve 16,000 people now coping with 65,000.
Richard Kemp, executive chair for housing at the LGA, confirmed the plan: "We're looking at the key indicators to make it effective."
Henry Cleary, head of growth area communities at the ODPM, said: "In principle there is no reason why this idea can't work, but no decisions have been made yet."
Initial proposals have been submitted to regeneration minister Jeff Rooker. The group will discuss specific targets at a meeting in Milton Keynes on 4 February.
Lorna Adamson has been seconded to the government office from the Treasury to work up proposals.
Source
Housing Today
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