London and Thurrock development corporations to have budgets cut to fund East End public spaces

Thames Gateway regeneration schemes are set to take a multimillion-pound hit to fund improvements to public spaces in the East End of London in time for the Olympics.

The communities department has told both the London and the Thurrock Thames Gateway Development Corporations they will have £10m raided from their annual budgets in order to fund public realm improvements in the five Olympic boroughs.

Sources close to the urban development corporations (UDCs) said schemes such as Countryside’s £3.7bn Canning Town redevelopment would have their funding hit, and that opportunities to make investments in regeneration sites were being missed.

The communities department has been trying to drum up funds for the past year since the Olympic boroughs asked for £500m for improvement work. Sources suggest the department is seeking to raise between £50m and £115m to pay for the programme.

Both UDCs are thought to be opposing the move behind the scenes. The London UDC is opposed in part because it has already committed £12m towards the Stratford High Street 2012 improvement project.

A source close to the process said: “The communities department was given this plan and has spent the last year totally failing to find the money to pay for it, and is now resorting to stealing off the UDCs.”

Niall Lindsay, chief executive at the Thurrock corporation, said: “If we have to look at a reduced allocation we can accommodate it by moving resources.”

Newham, Hackney, Tower Hamlets, Greenwich and Waltham Forest boroughs will spend the funds on projects such as improving the route between Canning Town and the Excel centre. Council heads received a letter from the department last week saying the programme of works would go ahead.