THE government is threatening to pull up to £68m of funding from Greater Manchester because it is not building enough houses.

In a letter from the ministry of housing, a senior official said it will not be going ahead with a housing package previously promised to the city-region worth millions.

It specifies the decision to cut the number of houses leaders are pledging to deliver by 2037 to 200,980 in the latest draft of Greater Manchester’s masterplan.

This comes as ministers told politicians from the region that the government has not set housing targets for local authorities.

Simon Ridley, director general of decentralisation and growth, wrote: “This is below the 227,200 agreed in the outline agreement and so, regrettably, we will not be able to progress with the implementation of the package.”

The housing package includes up to £50m to encourage housebuilding in existing urban areas by preparing brownfield land for development, which was expected to deliver more than 4,000 homes.

A further £10.25m was earmarked for the regeneration of the Collyhurst Estate in Manchester.

Greater Manchester Combined Authority (GMCA) can continue to bid for some of this money according to the letter addressed to the chief executive.

However, £8m which would have been used to create a new team to support housing delivery in Greater Manchester has been completely withdrawn.

The government has also refused to offer any flexibility on a further £300m in the housing investment fund which was set out in the prospective package last year.

Mr Ridley added: “We do, however, remain committed to continuing to support Greater Manchester’s housing ambitions.”

The letter was sent on the same day that a cross-party group of politicians from Bury met with housing minister Kit Malthouse to clear up the confusion over housing targets.

Previously, the minister said that the estimated housing need calculated using the government’s recommended methodology is not a mandatory target that councils must hit.

Mayor Andy Burnham said the minister’s comments were "misleading" and Bury’s cabinet member for housing Eamonn O’Brien described them as “typical Conservative game playing”.

At a meeting on Wednesday, Mr Malthouse said that the need to build houses does not automatically mean that houses must be built on green belt land.

But he ruled out using lower housing figures produced by the Office for National Statistics in 2016 which local politicians say would prevent any houses being built in protected beauty spots.

Bury North MP James Frith attended the meeting this week alongside Bury South MP Ivan Lewis, council leader Rishi Shori and the two opposition group leaders.

He said: “This letter, sent to GMCA by a senior official in the Housing Department on the same day we were sat in a meeting with the minister, makes absolutely clear that the government did indeed agree a housing target for Greater Manchester and will now punish Greater Manchester to the tune of potentially tens of millions of pounds for failing to meet that target in the second draft of the Greater Manchester Spatial Framework.

“It could not be clearer that the government doesn’t care about real housing need, it wants to see councils meet its political housebuilding targets and those who fail to do so will have funding withheld. I’ll be urgently writing to the Minister to seek clarity on this matter.”