Labour said the Government should ‘think again’ about cutting funding to housing market renewal (HMR) pathfinders, after an Audit Commission review stated they had made ‘a substantial contribution’ to communities.

The watchdog’s report, published last week, coincides with the ending of the New Labour programme this month, after funding was cut by the coalition government.

The HMR initiative was a flagship programme set up by deputy prime minister John Prescott in 2003, when the Office of the Deputy Prime Minister contained the current mandate of the Department for Communities and Local Government (DCLG).

Pathfinders saw the regeneration of nine areas of housing in the north of England, including Liverpool, Manchester, Birmingham and Newcastle. By 2008, the total cost of the programme was in excess of £1bn.

The review stated concern the axing of the programme may lead to current programmes being shelved, damaging previous investment.

But it didn’t go as far as criticising the ending of the programme, which it said ‘some will consider untimely and premature’.

Instead, the review laid emphasis ‘on completing current projects...to reduce the risk of previous investments being undermined by leaving a legacy of uncompleted projects’.

Also, some areas ‘will require continuing support to address underlying economic and housing market frailties’, the report concluded.

Shadow local government minister, Jack Dromey, criticised the abolition of the programme. ‘The report clearly shows that the Government has made a bad decision, abandoning hard hit communities and it should think again. The Government should read this report, rather than burying it away on the Audit Commission’s website.’

A DCLG spokesperson said: ‘Although Pathfinders made some achievements in certain areas of the country, these top-down targets for the demolition of homes often proved unpopular.’