The Homes and Communities Agency has been told to work up a series of options for how it might be slimmed down to aid a ministerial decision about its future over the summer.

Sir Bob Kerslake, its chief executive, met housing minister Grant Shapps last week to discuss the future of the agency, following news that £230m may be cut from the agency’s allocation from the communities department, as well as £610m promised by other departments.

An HCA source said: “The agency has been told to put together an appraisal and list of options for the minister to consider. These should take on board the fact there is going to be less money around, and a strong policy focus on devolution.”

Shapps has previously said that the agency, which spends £6bn annually, should devolve social housing spending to elected authorities in areas such as London. He has also criticised the size of the body.

Asked this week whether the HCA would survive, Shapps said: “We are in new times and part of the answer is to make sure money is channelled more directly to schemes, to the frontline. The HCA does many of the things English Partnerships used to and it will still do those things but overall it will be involved in less.”

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