Levelling Up White Paper: government to scrap controversial ‘80/20’ housing funding formula

However, researchers found that it systematically disadvantaged poorer parts of the country, particularly in the North and the Midlands, where house price to earnings ratios tend to be lower.

Kevin Hollinrake, Conservative MP for Thirsk and Malton, had previously called on Mr Gove’s predecessor Robert Jenrick “to address the inherent unfairness in the operation” of the fund.

Mr Gove made the announcement as part of the government’s flagship Levelling Up White Paper, which sets out the government’s plan to transform the UK by spreading opportunity and prosperity to all areas of the country.

With the formula scrapped, the majority of the £1.8bn in brownfield funding will instead be diverted to transforming brownfield sites in the North and the Midlands. As part of the new scheme, metro mayors will be allocated £120m of this funding.

Mr Gove said: “For decades, too many communities have been overlooked and undervalued. As some areas have flourished, others have been left in a cycle of decline. 

“The UK has been like a jet firing on only one engine. Levelling up and this white paper is about ending this historic injustice and calling time on the postcode lottery.”

Northern housing associations and housing groups welcomed the decision after years of campaigning for the formula to be scrapped.

Nigel Wilson, chair of Homes for the North, said: “Homes for the North warmly welcomes confirmation of the decision to scrap the 80/20 rule, which will remove a serious block on delivering more and better homes in the North. Now a long-term replacement for 80/20 is needed. 

“Government and Homes England need to adopt a new umbrella strategy for spending money in the right places to level up. A long-term strategic commitment to the North is essential if we are to build enough new homes to drive prosperity and build local pride in our communities.”

However, Nick Walkley, former chief executive of Homes England, warned that scrapping the funding formula will not address a lack of funding options in other areas.

Mr Walkley, who led the arm’s-length body for four years, tweeted: “[80/20] going is good news. But let’s not overstate. It only ever applied to a portion of the Homes England budget and almost totally in recoverable investment. Real problem was and is a lack of grant or gap funding. Without it viability in many places remains a massive issue.”