JOHN Prescott is to be asked to settle a row over the scrapping of grants for people made homeless by the Elevate plans.

Hyndburn MP Greg Pope will ask the Deputy Prime Minister to step in after Hyndburn Council decided to axe relocation grants for residents whose homes will be demolished.

Mr Pope said he was deeply concerned those forced to move in Church and West Accrington due the second phase of the East Lancashire-wide housing regeneration programme will instead be given an equity loan.

The loan will bridge the gap between the amount they receive for the market value of their house and the cost of their new home rather than the non-repayable grant of up to £30,000 given to those in the first phase.

Hyndburn Council regeneration bosses decided the grants were unsustainable and the new loans, which will be paid back when the new house is sold, will offer a way of recycling public money for further regeneration.

But the MP has already taken his concerns to senior housing officials at Hyndburn Council and said he was planning to raise the issue with Mr Prescott and Elevate East Lancashire, which is overseeing the massive programme.

He said: "This is a sensitive issue. It is causing some distress to residents living in phase two who are not receiving the same compensation grants as those in phase one.

"I have every sympathy with elderly people who have paid off their mortgage and who are not only faced with the upheaval of moving but find they may have to borrow money in order to just buy a similar house in another part of Accrington."

He went on: "One of the aims of the regeneration process was to create a buoyant housing market but rising property values are causing problems for both the council and, much more importantly, people living in the second phase of Project Phoenix.

"This is a very difficult problem. I shall be talking to all the parties to try and find a satisfactory solution."

Coun Tony Dobson, council cabinet member for regeneration, said: "If someone is in a house worth £30,000 and are moving to a house worth £50,000 they will have the cost of their house plus the equity loan to make up the difference.

"If they then sell that house and pay back the loan they will still have the £30,000 they started with -- they will not be worse off.

"This is a way for us to be sensible with public money. We are here to help the most deprived and we're trying to recycle this money to help as many people as we can."