Officials furious after being told to scale back schemes because of overbudgeting in three years to April 2006

The government鈥檚 flagship regeneration programme is facing a cut in funding of up to 15%.

The cutbacks to the nine housing market renewal pathfinders are to be implemented in this financial year. They are required because the ODPM gave the green light for the pathfinders to spend more than their initial 拢500m budget.

An ODPM spokesperson said the department had pledged an additional 拢100m in the three years to April 2006 but that this needed to be reduced. He said: 鈥淲e are now working closely with the pathfinders to manage any overspend. We anticipate that 拢535m will have been spent by March 2006.鈥� This would mean the overall spend being cut 11%.

He added that there would be no over-programming in future.

Some unspent funds have been found from other ODPM budgets to make good the shortfall, but a source said: 鈥淭he bottom line is that we cannot afford it so there is going to have to be a spending hit somewhere.鈥�

Pathfinder leaders said this week said that the cuts could not have come at a worse time, as they were fighting a 鈥渃redibility battle鈥� with local communities over upgrading and demolition plans.

One said: 鈥淲e have been working hard to try to win people鈥檚 hearts and minds, so a 15% cut, with refurbishment work being postponed, does not look good.鈥�

An ODPM source said officials were meeting representatives from the nine pathfinders and examining individual contracts to find out where the savings could be made.

Margaret Jackson, director of the Urban Living pathfinder in Birmingham and Sandwell, said: 鈥淲e are looking at cutting or reprofiling our spending. We are not delighted but we think we can handle it.

鈥淭here are three or four others, however, a bit further down the line than us, who are finding the cuts harder to make.鈥�

These are understood to include Manchester Salford, Newcastle, Gateshead, Liverpool and South Yorkshire.

Jeff Goode, director of Transform South Yorkshire, said: 鈥淚t is hard to say whether we鈥檒l need to drop certain projects 鈥� we鈥檇 prefer to postpone rather than drop them.鈥�