The lack of detail in the comprehensive spending review has prompted fears that ministers will demand the corporation diverts funding to the South to pay for schemes to provide key-worker housing there.
In the spring, housing associations in the North and Midlands had £12m diverted from their grant cash to boost the controversial starter homes initiative. They fear the move, made on last-minute government orders, could be repeated next year if extra money cannot be found for all. London already receives half of all corporation funding.
This year, however, northern and Midlands associations were told their grant money would be delayed, so that immediately available cash could be sent south. The North-east was worst hit, losing almost a fifth of its £27m budget.
That forced associations either to delay building, losing face with their development partners, or to borrow privately. Manchester Methodist Housing Group deputy chief executive Matthew Harrison said: "It affects our credibility with partner organisations. We have given them assurances and don't want to let them down. But if we go full steam ahead it will cost us both in interest charges and in not being able to spend that money elsewhere."
County Durham's Three Rivers Housing Association was granted £3.8m this year. It estimates the cost of privately funding schemes at about £40,000. Chair Clare Hepworth said: "Northern tenants are subsidising those in the South."
The National Housing Federation called for a return to formula-based decisions. Research officer Neil Griffiths said: "The credibility of this process is being brought into doubt by tinkering for short-term tactical purposes."
Source
Housing Today
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