Costly 'broken promise'

A multi-billion pound boost for some of the areas of highest demand in the country is under threat after it emerged some could get less than promised.

The spending review included a pledge to guarantee up to 27 per cent extra in capital spending as part of the Housing Investment Programme.

Overall it promised an extra £2.5 billion for housing and regeneration including £1.6 billion investment for affordable housing by 2004 (Housing Today, 20 July)

But it has emerged several London boroughs hardest hit by deprivation and housing demand will get as little as five per cent extra to ease the crisis.

There are fears that up to two thirds of Basic Credit Approval cash - the money used to fund council house construction - will be wiped out to make way for the Major Repairs Allowance introduced next year.

MRA feeds into the housing revenue account but cannot be used for development.

Under the recently announced spending plans, London should get a boost of around 20 per cent for capital spending through the Housing Investment Programme. However, it has emerged that some boroughs could get as little as a five per cent increase.

Camden director of housing Neil Litherland has written to housing minister Nick Raynsford to urge the government to look again at the plans.

"The council's position is that we appear be being sold short," he said. "It's a broken promise when you look at the detail because the introduction of MRA looks set to take money away. Some boroughs face a severe shortfall and they appear to be boroughs that have got high demand and intense social deprivation."

Other councils thought to be affected by the changes include Hackney and Hammersmith.

Representatives of the London boroughs are urging officials at the DETR to re-assess the formula for calculating the MRA in the hope that the shortfall is the result of a methodological oversight.

Litherland was less certain: "There is no such thing as a methodological error," he said. "Their [the government's] policy statements are about focussing resources in areas of high demand and social deprivation. I recognise the methodology is complicated but it needs sorting out."

Association of London housing committee chairman Tony Newman plans to raise the matter with Raynsford. He said: "The issue of MRA shows a lot of the extra money will be to improve existing stock, but it also shows we are likely to have a shortfall for capital spending for new build."

A DETR spokesman said: "London will still receive a significant 10 per cent increase in local authority housing capital resources."