A CASH-STRAPPED council insists a flagship regeneration project remains a priority - despite losing out on millions of pounds of Government funding, as further spending cuts loom.

The Northern Echo revealed last month that Darlington Borough Council’s town centre fringe development, which has the aim of revitalising run-down areas including the banks of the River Skerne, would now not receive a £20m injection from the Homes and Communities Agency (HCA).

More than 650 homes originally planned as part of the scheme, but this has now been more than halved as a result of the loss of anticipated funding.

Richard Alty, the council’s director of place, insisted the town centre fringe remains one of the council’s priority sites for new housing developments.

He said: “The HCA is not providing any regional funding, so it is not that Darlington has lost out.

“What we need to is look at other ways of funding it, the loss of £20m is a big impact.

“[The town centre fringe] is not going to happen as fast as we hoped, but it remains a strong priority and we will be working to make it happen.

“I am optimistic that it can still be developed as one of the key new housing areas for Darlington.”

Mr Alty’s comments come as the council prepares to set its budget for 2014/15, following months of public consultation.

The draft budget includes a proposed council tax increase of almost two per cent for the coming financial year, as well as spending cuts worth £13.75m.

Cabinet members will consider the proposals in a meeting on February 18, ahead of full council approval on February 27.

Also included in the proposals are plans to cash reserves worth £8.3m to fund services over the next three years, as well as a requirement to make a further £10m of savings by 2020.

Council leader Bill Dixon said that, despite the proposed increase, council tax rates in Darlington will still be among the lowest in the region.

He added: “The reduction in Government funding continues to hit Darlington and the North-East much harder than many other areas.

“While Darlington will have lost approximately £36m of Government funding by 2020, councils in the south of England, such as Wokingham, have seen their spending power increase.

“This is not a fair system, the Government is moving funding from poorer areas to richer areas.

“Together with other councils in the North-East, we continue to lobby the Government to change the system.”