The government has approved the first three bids for housing market renewal funding.
Birmingham/Sandwell, Manchester/Salford and Newcastle/Gateshead have been told they each qualify for £2.66m to fund the development of pathfinders.

Birmingham/Sandwell, the first to bid, said it hoped the two councils' pioneering work on raising private renting standards will enable it to pilot innovative government schemes on licensing set to be announced in this week's Queen's Speech.

It will submit its strategy to the Office of the Deputy Prime Minister by the end of next year. That should enable it to begin drawing capital funding as soon as it becomes available in April 2004. Deputy prime minister John Prescott will confirm how much funding the pathfinders will receive in January.

The pathfinder is chaired by Castle Vale Housing Action Trust chief executive Angus Kennedy.

He said: "Our major success already has been forging a broad-based partnership for this work."

Newcastle/Gateshead will be chaired by Leo Finn, who retired as chief executive of bank Northern Rock last year. Gateshead council development and enterprise director John Robinson said the group will carry out extensive community consultation.

A government spokeswoman said three more bids are being considered: Oldham/Rochdale, East Lancashire and Merseyside.

Hull, Staffordshire and South Yorkshire are expected to submit bids soon.

East Lancashire, which expects formal approval shortly, is running a competitive recruitment exercise to choose its chair. It is also recruiting a director, to be paid up to £74,000 – significantly higher than most other pathfinders, which are expected to offer about £60,000.

Blackburn executive director Graham Burgess said: "This is an extremely important post. We are going for top quality and believe it is worth paying the extra to get it."

Meanwhile, the government revealed on Monday that it has been in discussions with a number of private firms to ensure their involvement with the pathfinders.

Martin Townsend, a member of the ODPM market restructuring team that is overseeing the schemes, said he had held "half

a dozen meetings" in recent weeks with firms including contractor Bovis Lend Lease and housebuilder Lovell.