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Leaders of housing schemes designed to regenerate deprived areas of the North with new homes have said existing government investment will be wasted because of cuts to funding for the Labour scheme.

The calls came despite housing minister Grant Shapps yesterday pledging 拢30m to help residents left stranded in derelict areas by the premature ending of the housing market renewal pathfinder programme.

Speaking to the communities select committee, Mike Gahagan, chair of the Yorkshire pathfinder, Transform, who speaks for all nine schemes, said: 鈥淩emember we鈥檝e gone from 拢260m [of funding] to zero in one year. Some areas have got beyond the tipping point where the private sector can step in, but other areas haven鈥檛. In most pathfinders we鈥檝e left families with next door properties boarded up, there鈥檚 a real worry these places will go backwards.鈥�

Gahagan said Rotherham council had budgeted for an extra 拢100,000 a year in policing and fire brigade costs just to deal with the consequences of increased deprivation in the pathfinder areas.

David Orr, chief executive of the National Housing Federation, said: 鈥淭here鈥檚 a very severe danger the money will be wasted, because the communities haven鈥檛 got to the place where they can look after themselves.鈥�

Jim Coulter, former chair of the Newcastle Gateshead pathfinder, which has now been wound up, suggested the timing of Shapps鈥� pledge to invest 拢30m in these areas was influenced by the select committee evidence. He said: 鈥淚t鈥檚 a real risk things will go back. I鈥檓 sure it鈥檚 just a coincidence that today we got given 拢30. But this only covers five of the nine, and there are problems of a different nature elsewhere.鈥�

The 拢2bn initiative, which saw rows of empty Victorian terraces demolished to make way for new homes over a period of seven years, had its funding cut from 拢260m a year to zero under October鈥檚 Comprehensive Spending Review.

Shapps said yesterday the 拢30m would provide 鈥渁 lifeline to families trapped in abandoned streets due to stalled large scale housing demolition schemes.鈥�

He said: 鈥淒espite the best efforts of local communities, the previous government鈥檚 controversial centrally controlled programme of large scale housing demolition hasn鈥檛 worked. It pitched neighbour against neighbour and in some cases trapped families in abandoned streets.

鈥淭his coalition government is committed to helping vulnerable people and will not stand by when residents are stranded in derelict neighbourhoods through no fault of their own. That is why today I am announcing a 拢30m lifeline for these isolated families whose lives have been blighted by failed schemes.鈥�

Merseyside, East Lancashire, North Staffordshire, Hull and Teesside councils will be expected to bid for the 拢30m funding pot, under rules to be released 鈥渟hortly鈥� by the Homes and Communities Agency.