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Today, the picture is different. Ten of the 39 New Deal partnerships have run into trouble, with residents, staff and communities feeling exhausted, disaffected and betrayed.

The entire ethos of the New Deal was to make local people equal partners in renewal. Each of the 39 areas set up a board of tenants, residents, councillors, council officials and other local people. No one group held sway. Boards had to draw up a strategy on how to spend the cash, subject to government approval.

But it is this inclusive process that has led to many schemes going wrong. In Leicester, two senior board members were suspended by the council after a "complete breakdown in trust". And in Hackney disgreements between board and residents over plans for housing stock led to the strategy collapsing.

It could be said that the New Deal for Communities has become a victim of its own idealism, and that the practicalities fell by the wayside in its heady early days.

"The delivery process hadn't been thought through," says Keith Carey, director of regeneration at architect HTA. "It ended up in serious faction-fighting, which doesn't help. The idea was never fully tested and worked out before the launch."

Anne Power, professor of social policy at the London School of Economics, agrees: "The government was trying to do all the right things. It was a long-term programme, it gave a strong role to communities and had a strong focus on partnership. But it wasn't very well thought through. Giving community representatives the idea that they were going to control 拢50m was very misleading."

In some cases, delivery plans written by the communities were rejected by regional government offices. In other cases, residents felt resentful of the experience and influence of the local authority. Then, a shocking 66% underspend in 2001/02 鈥� when only 拢80m of projects delivered out of a projected 拢240m 鈥� meant the programme came under heavy fire from the Treasury and the Office of the Deputy Prime Minister.

The result has been high-profile casualties. Turnover at chief executive level has been high 鈥� one insider quotes a figure of 40%.

In-fighting led to a spate of resignations from boards. In several cases, the government or council have intervened in disputes with directors, or even insisted on elections. "Squabbles happen everywhere, but it's well out of proportion in the NDCs," says Michael Franks, a former board member at Islington's Finsbury New Deal, in London.

Not surprisingly, these pressures have led to delays. Many NDC partnerships entering their fourth year are only just embarking on their housing strategy or recruiting registered social landlord partners, and have not yet committed any spending to "live" projects.

Experience 鈥� or the lack of it
Empowering residents meant the 拢50m was channelled through organisations that often started work without proper offices or full-time staff, led by boards with inexperienced resident majorities.

According to one former NDC board chair, this left built-in weaknesses. "There were no party political structures, no local authority, no formal structures to mediate the arguments 鈥� it was asking for trouble. People who have never experienced power lack skills in directing it, so the whole programme ran into a capacity problem."

It takes a long time to get boards in place and empower them to the right level of competence. But the business plans we鈥檙e seeing now are a lot more robust

Keith Carey, Regeneration director, HTA

Funding 鈥� getting the budget right
The ability of boards to devise, plan and set up effective projects 鈥� which was at the root of the 2001/02 underspend 鈥� has improved as they gain experience. "It takes a long time to get boards in place and empower them to the right level of competence. But the business plans we're seeing now are a lot more robust," says Carey.

In response to the underspend, the ODPM's Neighbourhood Renewal Unit made it easier for NDCs to carry funds from one spending year to another, and cut the spending targets for 2002/03 from 拢186m to 拢173m. Some 拢170m was spent, and many boards see the problem as having passed. "We're within 5% of our budget," says Steve Hartley, chief executive at Bradford Trident.

A spokesperson for the ODPM says: "It's not surprising that some NDCs are experiencing problems at this relatively early stage in their lifespan. But many others are laying solid foundations to bring about lasting change, with significant progress already made in tackling crime, antisocial behaviour, unemployment and poverty. We have developed packages of support for those NDCs who are facing problems and our ongoing evaluation programme allows partnerships to learn from each other."

Wrong focus
The New Deal was launched with a focus on "soft" issues 鈥� tackling crime, reducing local unemployment and improving health and education 鈥� at the expense of physical projects. "The emphasis on housing only started to trickle in [from government] after the first bids were submitted," says Alan McDade, housing coordinator at Bristol's Barton Hill New Deal. "We were only told part way through to include an approach to housing," confirms Michael Franks. "People didn't necessarily want to gentrify the area."

Chris Brown, chief executive of the Igloo regeneration group, feels that giving limited attention to physical regeneration missed the point. "We've long since learned that successful regeneration needs to be social, economic and physical. The problem is that as people gain skills and jobs, they move out to better areas."

Perhaps in response to this initial agenda, in the first couple of years many New Deals prioritised quick-win "initiatives" 鈥� such as after-school computer clubs and CV-writing classes 鈥� over long-term physical regeneration. "The government was keen on having a full range of projects. You end up managing dozens of microprojects that create two jobs for local people. But if you blow 拢50m on soft projects, what have you got to show for it at the end of 10 years?" says a former New Deal board member. "At the end of the day, NDCs will be judged on their housing programmes."

But the focus on soft issues seems to be what residents want 鈥� their concerns are crime, education and health and they want to see results there first. Professor Power suggests that these problems could have been bridged by dividing the spend into two. A smaller pot would be entirely under community control, to fund local initiatives such as after-school clubs or drugs strategies. Meanwhile, the bulk of the money could be controlled by a partnership tackling housing and attracting investment. Here, the community would have a strong voice, but not a guiding role. "The two programmes could work in harmony," says Power.

Due to circumstances beyond 鈥�
Ironically, it was when attention turned to housing that the real trouble started. Where the stock is largely owned by the council, New Deals have been forced to work within its options appraisal or stock transfer policies. And in the North and the Midlands, New Deals have to deal with dilapidated stock and the problem of low demand.

London's New Deals have had a lot of problems. Many had their hands tied by high land and property values. Plans for stock transfer collapsed at the Aylesbury estate and in Shoreditch. In south Kilburn, building homes for private sale to subsidise a refurbishment programme led to plans for an unpopular increase in density. In Finsbury, the local authorities sold land and buildings the New Deals could have used. "The market dominates the area, but projects can't be sustainable unless the community can manage some of the assets," says ex-board member MichaelFranks. Other New Deals face unique housing problems. "Last year, we had 700 to 800 asylum seekers arriving in the area. We're trying to assemble sites, and are suddenly dealing with landlords buying up private property and establishing rental businesses," says Stephen Boyle, manager of the Liverpool Kensington NDC.

Ian Cole, professor of housing at Sheffield Hallam University's Centre for Regional Economic and Social Research, urges the government to "borrow elements from each of the programmes. We need to harmonise the NDC community-led approach and the housing market renewal fund approach of strategic intervention."

That message seems to be getting through: Liverpool Kensington is being quizzed by the Neighbourhood Renewal Unit on dealing with private landlords. "It's new territory 鈥� we're being asked to log our experiences and share it with others," says Boyle.