Millions unspent in starter home plan

A flagship Government programme to ease London's housing crisis has fallen behind target with millions going unspent.

The £250million Starter Homes Initiative, launched with fanfare by Stephen Byers in 2000, has reportedly helped only 3,300 of the 11,000 key workers who were supposed to benefit.

Less than £100 million of the money has been spent, with just eight months of the three-year scheme left to run.

Deputy Prime Minister John Prescott will today relaunch the scheme with a relaxation of the rules on how the cash is handed out. Whitehall sources blamed housing associations, charged with distributing the aid, for failing to advertise the scheme and for imposing unnecessary restrictions on who can claim help.

Two-thirds of the spending was supposed to be in London, where the initiative offers interest-free loans averaging £30,000 to teachers, doctors and nurses buying first homes. The amount on offer to buyers outside the capital will be doubled from £10,000 to £20,000.