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All spending by the Housing and Communities Agency was put on hold this week as the quango entered 鈥渋ntense negotiations鈥� with ministers and officials over budget cuts.

A source at the HCA said the body, which has about 拢700m of funding for construction waiting to be signed off, was examining 鈥渁ll uncommitted budgets鈥� to try to identify savings.

It is thought likely the body will be expected to contribute to the 拢6bn of savings to be set out by chancellor George Osborne on Monday. It has a total budget of 拢6.1bn for 2010/11.

The future of the agency in its current form is also understood to be in doubt; housing minister Grant Shapps criticised it when he was in opposition.

In addition, the Treasury confirmed this week that the review of all spending decisions made since 1 January extended to quangos, meaning a raft of grant allocations made by the agency could be re-examined.

The HCA source said the conversations with ministers and officials included 鈥渨hat constitutes a 鈥榗ommitted budget鈥� 鈥� there are different tests in terms of strength of commitment鈥�.

In particular, housebuilders will be concerned about reductions to the second funding round of Kickstart. This is worth 拢550m, but only 拢110m has been committed. Funding for schemes such as Countryside Properties鈥� 650-home Canning Town scheme in east London (pictured), which have been approved in principle but do not have a signed agreement, is in doubt. The HCA鈥檚 拢330m Pathfinder programme for regenerating housing estates in the north of England is also on hold, awaiting the sign-off of budgets for this financial year.

The uncertainy over spending cuts comes on top of a review of the HCA鈥檚 property and regeneration business, which began just before the election.

The review is intended to work out priorities for the agency鈥檚 large land holdings and interests in regeneration schemes across the country.

This week, the HCA also suffered the latest in a series of high-profile departures, prompting a senior management reshuffle that cut the number of corporate directors from seven to three to save 拢2m in running costs. John Lewis, the acting director of new ventures and partnerships, will leave, following Duncan Innes, the head of land, Gill Taylor, the skills director, and Eamonn Boylan, the deputy chief executive.

A separate industry source at the HCA said: 鈥淭here鈥檚 a feeling it鈥檚 the last helicopter out of Saigon time. The worry is that there is a huge housing pot the coalition can see to make savings from.鈥�

The HCA is not alone in having its spending put on ice 鈥� sources said all communities department agencies had been told a spending moratorium was in place.

Negotiations with ministers include what constitutes a 鈥榗ommitted budget鈥�

Source at the HCA

Peter Andrews, chief executive of the London Thames Gateway Development Corporation, said the freeze was holding up progress on starting the 10,000-home Barking Riverside scheme with Bellway, which was reliant on a 拢9m grant from the agency. 鈥淲e鈥檇 love to get on site with that scheme but we haven鈥檛 been given the authority to progress at the moment.鈥�

All change: How new regime is affecting key sectors

Health

The unveiling of the six winners of the 拢3bn Procure 21+ framework is awaiting approval from health secretary Andrew Lansley. However, the 11 contractors that were shortlisted have received letters confirming it will go ahead.

One contractor said he expected to win the same number of jobs as in the original Procure 21, but that they would be worth less and would be more focused on refurbishment.

• A source at the project to replace the Royal Liverpool University Hospital with a 拢400m PFI hospital, which was put out to tender in April, said the team was trying to contact the Treasury to clarify its position.
• The project director at the 拢280m PFI replacement for Liverpool鈥檚 Alder Hey hospital, for which Balfour Beatty and a joint venture between Laing O鈥橰ourke and Interserve were shortlisted in April, said they have heard nothing from the government and were continuing as normal.

Olympics regeneration

Legislation is to be put through this year to create a development corporation in east London to oversee the regeneration of the Olympic park and surrounding area after the Games, according to a source close to the situation.

The body will merge the London Thames Gateway Development Corporation and the Olympic Park Legacy Company. It will be given planning and compulsory purchase powers, and will require primary legislation to set up. It is not clear how the body will be funded.

Crossrail

Chief executive Rob Holden said dates had been agreed to meet ministers over the 拢16.9bn programme but that for the time being it was 鈥渂usiness as usual鈥�. He said: 鈥淲e haven鈥檛 been told to stop or slow.鈥� Chair Terry Morgan, speaking after transport secretary Philip Hammond publicly backed the programme, said he was working on the assumption that it would be completed in 2017, dispite wider fears that the timetable may slip.

Planning

Senior officials this week offered ministers a 鈥渕enu of options鈥� to take forward the proposals suggested in both parties鈥� manifestos. Both had proposed abolishing regional housing targets and returning power to local authorities. A communities department source said: 鈥淚t鈥檚 not a question of whether it鈥檒l be done but when. However, they have ideas about what they could do straight away and we鈥檙e having to advise what鈥檚 realistic.鈥�