Communities Secretary Ruth Kelly today announced major changes in government support for the delivery of new housing and urban regeneration

The changes involve the creation of a new, publicly funded agency called Communities England.The agency will combine the functions of national regeneration agency English Partnerships and the Housing Corporation - the main provider of grants for affordable housing.

Communities England will also undertake a range of work carried out by the Department for Communities and Local Government (DCLG), including its housing market renewal and housing private finance initiative programmes.

Kelly said one aim of Communities England was to allow DCLG to focus more on strategic policy making, although the new agency will require primary legislation and department officials said it is unlikely to come into force until 2009.

The new initiative will not entail more government money but will combine the existing funding of the two existing agencies and the relevant DCLG programmes to have an annual budget of over £4bn.

‘Communities England will pioneer innovative and more efficient ways of working with our key partners in public, private and voluntary sectors... it will also help achieve much better outcomes from public investment in particular places.’

The announcement follows Kelly’s housing and regeneration review.

Details on who will lead the agency and whether there will be redundancies are unlikely to emerge until the summer when Ford is due to publish the strategy. After five years at EP, however, Ford ruled herself out of contention for the top job, saying she would leave after the transition work is over.

Home Builders Federation chairman Stewart Baseley said: ‘The key test for Communities England will be its contribution to delivering the extra homes which, it is now universally agreed, are so badly needed in this country.’

Jon Ladd, chief exectutive of the British Urban Regeneration Association, said: ‘It is crucial that the new agency hits the ground running and that current programmes do not become stalled whilst the Communities England is in development.’