An immediate £4.7 million cut to a flagship scheme to revive the housing market in struggling parts of Bradford could land it in “trouble”, the Government has been warned.

Ministers faced questions after suddenly slashing the budget of the West Yorkshire and South Yorkshire ‘housing market renewal’ scheme and ten similar projects in other towns and cities.

The HMRP was created in 2002 to tackle problems of housing market failure, where prices had often collapsed and areas were facing widespread abandonment. Bradford, Kirklees, Leeds and Wakefield were brought into the scheme in 2007.

Now it must decide how to cut 15.3 per cent off its budget in 2010-11 – part of £6.2bn overall spending cuts – which will reduce funding from £30.9m to £26.2m.

Pendle Liberal Democrat peer Lord Tony Greaves raised his concerns in the House of Lords and suggested the move might cause to a premature winding-down of the schemes before work was completed.

He said: “The housing renewal programmes were intended to last 15 years and are only halfway through.

“Some of the areas have recovered, but others have not recovered at all. If they are halfway through clearing an area and the money suddenly gets cut off then they could be in trouble.

“They will still have to improve the land before they can offer it to a private developer, or a housing association. They could end up wasting the money that’s gone in already.”

But Local Government Minister Baroness Hanham said: “I don’t anticipate there will be much drawing back on the ground as a result.”

A National Audit Office report said the scheme has closed the gaps in house prices within regions, and housing markets in local authorities chosen for the programme have, on the whole, performed better than housing markets in local authorities with the most similar problems of low demand not included.