Rooker consults on how much to invest in key-worker homes and new build
The government is to consult social landlords on how it should invest the extra £2.5bn promised for the sector last week.

The government's spending plans for the next three years and its policy for reaching decent homes targets are under review. The money is likely to be spent on a regional basis, focusing on development in the South and renewal in the North.

And housing organisations will have a say in the role that the new regional bodies, announced by deputy prime minister John Prescott, will play in investment.

Housing minister Lord Rooker has asked the National Housing Federation for ideas on how to divide up the money pledged for the sector in last week's comprehensive spending review. This will reach £5.9bn by 2006, which the NHF said would mean an extra £2.5bn for housing. Rooker wants maximum cooperation among associations to cut waste and stretch the cash as far as possible.

National Housing Federation chief executive Jim Coulter said: "Lord Rooker wants to see a step change in collaborative working both in high-demand and market renewal areas. He is looking for our involvement in the delivery of the homes." NHF chair Richard McCarthy added: "We pressed our case for engaging associations on a more strategic basis."

The NHF is to draw up its submission by September.

The negotiations are unlikely to be all smooth sailing as there is already disagreement on spending priorities: the government wants to channel up to £300m into the starter homes initiative, but the housing sector is lobbying for cash to go into new rented homes as a long-term investment.

It is understood that the Housing Corporation is likely to have about £1bn extra to divide among starter homes, other low-cost ownership options, and new rented homes. That's about £700m less than the Office of the Deputy Prime Minister had hoped, and will limit the headline total of extra homes to about 15,000 over three years.

The Treasury had earmarked £700m for arm's-length management organisations and £500m for the housing market renewal fund, it is believed. Another £250m could go into promoting transfers. But details will not be announced until the government has completed a review of all the ways it could hit the decent homes target.

This review is understood to cover stock transfer, arm's-length management and the private finance initiative.

Breakage costs for councils' early redemption of loans, and measures to help partial or estate transfers will also form an element of the review as the government rethinks measures for meeting its 2010 decent homes target for social housing – extended to private sector homes last week.

The greatest difficulty for the ODPM will lie in attempting to achieve large numbers of new homes in the country's most expensive areas. New rented homes in London this year average more than £100,000 in grants each.

Lord Rooker is pinning his hopes on reversing the corporation's 1990s ethos of competition among associations in favour of partnership to cut costs. New construction methods will also play an increasing role.

How to spend £100m

In London you could:
  • Build 1000 homes for rent…
  • give 2480 Homebuy grants…
  • or build 1850 homes for shared ownership
In the East Midlands you could:
  • Build 2570 homes…
  • or bring 23,000 existing ones up to the decency standard
In the South-west you could:
  • Provide 5300 temporary homes…
  • or 2650 new ones