Communities secretary Eric Pickles has sought to allay concerns raised by district councils over proposals to siphon £400m of New Homes Bonus (NHB) cash into the single local growth fund from 2015/16.

Addressing the District Councils' Network's (DCN's) assembly at last week's Local Government Association conference in Manchester, Mr Pickles faced a barrage of questions from leaders of second-tier authorities angered at the Spending Review decision to reallocate the funding – which is set to make up one-fifth of the £2bn single pot from which England's 39 Local Enterprise Partnerships will bid for from 2015.

Council leaders, many from traditional Conservative-led shire districts, voiced anger behind the scenes in Manchester at the unexpected clawback. 

Many bridled that promises made to residents about the community rewards arising from permitting new house builds would not now come to fruition.   District chiefs have also expressed anxiety that redistribution could undermine their medium-term financial planning. 

Cllr Neil Clarke, chair of DCN said the decision was a ‘big hit' for district councils and would ‘dramatically affect council  budgets'. 

‘There are some councils using it to fund their revenue and there are some councils using it for business growth,' he said. 

‘Economic development functions that some councils are using that bonus to fund is potentially to be given to LEPs. We might have to be bidding for our own money as we understand it,' Cllr Clarke told the DCN assembly.

Before fielding questions, Mr Pickles told delegates that although one of his first acts as communities secretary was to ask county councils to treat second-tier authorities fairly, many districts remain frozen out in some places.

‘This money is part of a duty to co-operate,' Mr Pickles insisted.  ‘We're not part of some strange social experiment.  It wasn't an experiment on localism.  This money was to be used for economic development and the like.'

‘I'm in a hurry and these things need to be done,' he added.

Responding to accusations that councils had lost trust in the system, Mr Pickles explained the decision to bundle £400m into the single pot, which he agreed was right, had been strongly urged as a course of action by Liberal Democrat ministers.

He urged adjoining districts, county councils and Local Enterprise Partnerships to work as one unit to share money and drive local growth.

The communities secretary also said he was very happy to talk about situations where some of the 38 councils based in 21 overlapping LEP boundaries could instead settle for one economic partner. ‘I don't see a burning need for two LEPs,' Mr Pickles stated.