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The government has revealed that it will not fund the redevelopment of the Meadows council housing in Nottingham through the housing PFI Scheme. The Department for Communities and Local Government said it will only fund housing PFI schemes that are under contract.

This means that Nottingham City Council's £200m PFI credit for the Meadows Housing proposals has been cut. The authority said this would have been the catalyst for wider regeneration including investment in a new district centre and the creation of energy efficient houses in the Meadows.

Councillor David Liversidge, portfolio holder for housing delivery and the voluntary sector, said: "This is a devastating blow for the Meadows neighbourhood and our citizens who live and work there. Our plans were to transform the area by building new properties and refurbishing existing council housing, creating better access to the neighbourhood, investing in better community centres and building new shops.

"A significant amount of consultation has been carried out with the local community to ensure that the people who live in the Meadows got what they wanted. These changes would have improved their quality of life.

"The wider economic effects of today's news are significant too. The project would have created hundreds of jobs for local people, particularly in the construction industry. The redevelopment could have generated additional new money for the local economy so the overall impact is massive.

"We remain committed to improving the Meadows and we will look at how we can continue to develop the area."

Nottingham City Council has already spent more than £700,000 to develop the proposals. In July 2009, Nottingham City Council was allocated a £200m PFI Credit from the Government for a major housing regeneration scheme in The Meadows. An Outline Business Case (OBC), which shows what the scheme could look like and how it could be achieved, was submitted to the Government for final approval in October 2010.

The scheme would have been delivered over the next 25 years. It would have replaced many of the unpopular properties in the New Meadows with quality family homes, both for council housing and home ownership. The scheme also included the redesign of street layouts, refurbishment and improvements to remaining council properties, new family housing and improved parking facilities.

The council says it will be reviewing the full impact of the loss of this funding support to the Meadows.

The Department for Communities and Local Government (DCLG) and the Homes and Communities Agency (HCA) are also withdrawing support for other schemes in Midlands including: Lyndhurst Estate in Birmingham; Eastfields and Thorplands in Northampton; Extra-Care Housing in Shropshire and the Surburban Estate in Stoke-on-Trent.

However, it has confirmed that 13 others that are in procurement will go ahead for the time being. In the Midlands, these include the Social Rented Housing scheme in Derby and Extra-Care Housing in Stoke-on-Trent City Council.