A senior local government figure has called for more taxpayers’ money to be used to help council tenants buy or rent private homes so social housing can be made available for victims of the credit crunch. Councillor Paul Bettison, who chairs the Local Government Association’s Environment Board, said vital funding was stuck in the system.

Mr. Bettison said some councils were using state-sponsored deposits to help people move in to the private sector but he wanted more cash to be diverted so such schemes could be expanded in the recession. Housing associations, he said, could not get credit from banks to fund the building of new social homes. Many councils believed targeting schemes to free up existing provision would be more effective than attempts to boost new build.

Mr Bettison praised councils for what they were doing to help people leave social housing but said the programmes were limited without a significant cash boost. “This scheme costs a lot of money. If you are going to give somebody part of their deposit on the purchase of a house you are going to have to give them a reasonable sum to make any difference,” he said.

Councils are seeking talks with the Homes and Communities Agency to ask for funds to be redirected to local authorities from housing associations that were having trouble securing credit to build new homes. Mr. Bettison accepted that this would not help everyone but added, “We’ve all seen people who say ‘we were hoping to buy a house because we could do it without a deposit but now we can’t’. These are the people who could be helped by a scheme like this.”