Little Britain: East Midlands

The East Midlands, he says, faces an important choice: should it embrace the government's drive for growth or concentrate on regenerating deprived areas? The Communities Plan gave a bundle of cash to the part of the East Midlands that falls into the Milton Keynes housing growth area, underlining the problem of a region that displays the dysfunctions of the UK housing market in microcosm: how to reconcile low demand in its northern counties with growing demand in its south.

Malone fears a compromise will be impossible despite the regional housing board's intentions to accommodate both issues. Growth, he believes, will trump regeneration, leaving some of the region's most established RSLs out in the cold.

Nothing on paper hints at the tensions at play beneath the region's surface. The East Midlands has a relatively small population (see "The stats", above) and no big cities: its three biggest conurbations are Nottingham, Derby and Leicester – all cities, but medium sized. Unemployment is below average, house prices are comparatively low. In the north and east, the region is predominantly rural. To the south, towns such as Northampton, Corby and Kettering are within touching distance of Milton Keynes, and fall into the growth area.

The regional housing strategy is due to be agreed in April and recognises the need for regeneration and growth. But a glance at the regional housing board's provisional plans seems to bear out Malone's fear that development has the upper hand: almost 40% of the £133m affordable housing X programme for 2004-6 will go to the East Midlands' southern areas – that's a mere eight of the region's 42 local authorities.

If you look at the Communities Plan it’s clear there is a series of priorities, most linked to dealing with the burden anticipated around London 

David Seviour, chief executive, Leicester Housing Association

Then there's the funding to improve infrastructure in the south: not three weeks ago, £35m was allocated to the Milton Keynes/South Midlands growth area, with £10.6m going to Wellingborough, in Northamptonshire, to pave the way for 3400 homes to be built. This cash will draw attention southwards; low-demand northern areas fear they will lose out as a result.

David Seviour, chief executive of Leicester Housing Association, says: "The Communities Plan sets out a number of objectives, but if you look at the resource table at the back of the plan it's quite clear that there is a series of particular priorities – most linked to dealing with the burden anticipated around London." He points out that the region's former Coalfields area, to the north of Nottingham, has been allocated little more than £12m toward the replacement of blighted housing with new homes.

Rather than pursue development, Leicester Housing Association has chosen to concentrate on improving its stock in the north and on challenging regeneration projects such as Braunstone in Leicester. The association has already invested £14m in some of the mining villages that failed to recover from the decline of the coal industry in the 1980s (see "The three cities", below).

Seviour's concern is shared by his colleague Gary Kirk, who has been seconded from Leicester Housing Association to be director of regeneration at a body set up to lead the rehabilitation of an area of the North Derbyshire coalfields (See "How green is my Meden Valley?" below). Kirk says: "The danger is if there isn't a strong regional strategy statement and funds, the south is going to grab all the resources. And the big issue is the north-south divide and what money there is left over for regeneration."

The East Midlands is set to become a region where established RSLs will be forced to work together

Harry Perry, chief executive, Leicester Newarke Housing Association

Unlike Leicester, Nottingham Community Housing Association has opted to pursue growth. It has run an £8m-plus building programme for several years and because of this development record, chief executive Andrew Malone says he expects Nottingham Community to be selected as one of the Housing Corporation's preferred partners.

This means it will be "pushed to where the money is". Such is the pull of the southern growth area that Nottingham Community, for the moment, no longer has any plans to develop in its home area around Nottingham.

The only other East Midlands association likely to be made a preferred partner is Longhurst Group, which owns homes across the region. Many of the homes planned for the southern growth area will have to be built by associations from outside the region.

For those RSLs that were regional middleweights – East Midlands Housing Association, Leicester Newarke Housing Association – the future doesn't seem so bright. Harry Perry, chief executive of the latter, says: "There are only one or two RSLs that have the regular year-on-year clout. Most are not large enough. The East Midlands is set to become a region where several established associations will be forced to work together to deliver the economies of scale required."

For Rosemarie Anderson, chief executive of Rockingham Forest Housing Association, a small RSL based in East Northamptonshire, the challenge will be convincing large developers to get involved in small rural schemes and then allow local RSLs to manage the homes built. "We're at risk of losing good management," she says. "An aggressive developer can't necessarily add value to a community."