Deputy prime minister John Prescott is to launch a nine-month review of regeneration policy, following this week's comprehensive spending review.
Prescott was also expected to flesh out spending plans for the £1.3bn extra that is to be set aside for housing in a statement to the House of Commons yesterday.

The decision to hold the review, which is expected to be officially announced later this year, also follows a meeting with Urban Task Force chairman Lord Rogers last week, in which reservations about the progress of regeneration in Britain were expressed.

Prescott is understood to have told Rogers that the results of the re-evaluation would be announced next spring. The review is expected to list specific methods for achieving the targets set out in the urban white paper.

A source close to Prescott said that the policy review would not undermine the urban summit at the end of October, which will assess how successful the regeneration policy has been. The source said: "It will mean that ideas that come out of the summit will be rather more forward-looking."

The decision by Prescott to re-evaluate regeneration policy came after an 80-minute meeting between Prescott and members of the taskforce, including Rogers and CABE chief executive Jon Rouse, last Thursday. The taskforce has complained that the programme has stalled since the publication of the urban white paper in 2000.

A source close to the taskforce said specific plans under consideration included the equalising of brownfield and greenfield tax and allowing local authorities to keep tax generated by regeneration projects.

Regional housing agencies could also be given a leading role, taking over the work of the Housing Corporation and English Partnerships, to ensure a more integrated approach.

Prescott is expected to announce that regional housing agencies will be established in pilot areas such as Ashford, Kent, and the Thames Gateway, where thousands of affordable homes are to be built.

The review will mean that the urban summit will be more forward-looking

Source close to John Prescott

The role of these agencies is unclear at the moment.

Of the extra £1.3bn allocated for housing in the comprehensive spending review on Monday, £500m has been earmarked for the establishment of a housing market renewal fund, to demolish and refurbish derelict housing. Nine pilot schemes have been selected to receive money, mainly in the north of England.

However, the decision to spend £500m on this venture is expected to disappoint councils that were pushing for an £8bn fund over the next 10 years.

A housing consultant said the fund would only be enough to demolish and refurbish about 25,000 homes. The government believes that the £500m is sufficient to tackle the 400,000 homes that require attention.

Construction Products Association chief executive Michael Ankers was more upbeat about the future, saying: "In housing, this is a bit of a sea-change. The establishment of a single housing inspectorate will ensure that in key areas of investment there is value for money, and that targets are met."

The role of regional development agencies has also been beefed up, with an increase in their overall budgets to £2bn. They will also have an established role in the planning process. RDA bosses met the chancellor and deputy prime minister yesterday morning to be briefed on their expanded role.

Education was the big winner in chancellor Gordon Brown's spending review. Its budget is to be doubled to £4.5bn a year by 2006. It is unclear, however, how much this will benefit the construction industry.

At a glance: The comprehensive spending review

Education Annual budget to increase from £2.25bn to £4.5bn by 2005/6
Housing Annual budget to increase from £4.6bn to £5.9bn by 2006
Transport Annual budget to increase from £7.7bn to £11.6bn by 2006
RDAs Annual budget up from £1.6bn to £2bn by 2005/6