The Government has told the North West Development Agency it stands to lose nearly £50m from its budget for capital projects in the next two years as it diverts £300m from regional development agencies to the new Homebuy Direct initiative, one of the measures in last week's housing package.
The cuts will see £5m taken from the agency's capital spending in 2009/10. A further £44m will be trimmed the following year. The agency's budget is around £500m a year.
Steven Broomhead, chief executive of both the NWDA and the nine-strong UK RDA group, said: "We are disappointed that the RDA budget is being reduced. We need to have that money to invest in building the regional economy."
The agency's board must now decide which projects will not receive funding, and potentially not go ahead at all if replacement backing cannot be found.
Broomhead added: "We have got to sit down and look at our indicative budget and programmes which are committed. Some would be coming on stream in the next year and those may be simpler to cut."
One obvious target could be the £9m set aside for the protracted new Liverpool FC stadium in Anfield. Broomhead said he is due to meet the club's US owners, or their representatives, in the coming weeks to ask again if they have funding in place for the stadium. The club recently said it would be put on hold for a temporary period due to the lack of liquidity in the financial markets and rising construction costs. The project subsequently lost a £5m European Union grant.