The Government rule 'freezing out' most of the North from vital homes funding

Rules designed to tackle the over-heating housing market in and around the capital mean the vast majority of northern councils are not eligible to bid for 80 per cent of funds handed out by government agency Homes England to help them build new homes.

It is feared that without investment in housing in the North imbalances in the UK economy will continue to deepen, making it harder to retain talent, attract investment and increase productivity.

Ahead of next week's Budget speech by Chancellor and Yorkshire MP Rishi Sunak, housing associations across northern England have teamed up to call for the so-called '80:20 rule' to be scrapped.

Homes For The North (H4N), which represents 17 housing associations across the region, says the North's share of funding to help deliver new homes could be slashed by 50 per cent unless a new approach to distribution of investment is taken.

Prime Minister Boris Johnson is being warned that the North will struggle to fulfil its potential and deliver his 'levelling-up agenda' unless it gets it fair share of funding to build badly-needed new homes.

As part of a campaign backed by a number of northern MPs, councils and business groups, H4N has urged Ministers to look again at Homes England's rules which it says are "rigged against the North".

It adds: "The North is being frozen out of Homes England investment in new homes. A specific spending guideline is in danger of directing money away from the North and into overheated housing markets in the South East.

"Government can make a simple change to spending rules that would result in much more money being available to renew communities across the North."

As an example, it cites the £2.3bn Housing Infrastructure Fund designed to help build up to 100,000 homes, which has seen just £23.4m handed out to the entire Yorkshire and the Humber region so far and some poorer areas such as Bradford and Hull miss out entirely. By contrast it says North Kent has received £219m from the same scheme despite having a much smaller population.

The focus on tackling 'affordability' pressures in London and the South East means areas with high levels of deprivation are largely being excluded from funding, says H4N.

The Government has insisted that no areas are excluded from Homes England funding. A spokeswoman said: "We encourage applications from every area of the country."

Sheffield MP Clive Betts, the chair of Commons housing select committee who has previously criticised the shift in housing need from the North to the South, said: "The North has the capacity, it has the land and it has the ability, lets get on and build the homes."

It comes as the Onward think-tank, led by Huddersfield-born Tory MP Neil O'Brien, warns in a new report that the Treasury should stop directing so much money to rich and productive areas.

The former adviser to ex-Chancellor George Osborne says an analysis of transport, science, housing and culture investment under successive governments shows that spending to improve productivity is lower in less productive regions, and higher in regions that are already more productive.

A government spokesman said: “The Government has been absolutely clear that it will unleash the potential of the whole country and deliver opportunity across the UK.

“Since 2013, over 57,000 First-time buyers have become homeowners in the North of England thanks to the Government’s Help to Buy scheme. The Government is also investing hugely in infrastructure across the North with a record £13 billion investment in better transport across the North.”

“We’re determined to level up across the regions and build the homes this country needs, and we’re working with Northern leaders and authorities to ensure more people can achieve their dream of home ownership.”

To read the full special report pick up a copy of this weekend's edition of The Yorkshire Post.