A BID to build 200 "affordable" homes in the Ribble Valley using private cash has been kicked out by the Government.

Ribble Valley Council had applied for permission to set up a Private Finance Initiative by bringing in a company to build the houses.

They would have either been rented or sold to local people facing the prospect of moving out of the area because they cannot afford property prices.

Money from the council and the Government would be paid back to the private company over a set period, enabling the homes to be built immediately, rather than waiting for public funds to be made available.

Similar schemes are being used to build hospitals, schools and libraries across the country, including the new super £100million super hospital at Queen's Park, Blackburn.

The council told the Government it was confident it could find suitable sites for the developments, and indicated it would also use its own land.

It currently has a ban on the building of new homes, unless they fill the affordable housing gap.

But after holding preliminary talks with the Government and submitting a draft bid for PFI credit, the council has been told it has been unsuccessful.

One of the reasons given was there was an element of uncertainty about the continuation of Ribble Valley as a district authority.

This stems from the regional assembly referendum due to be held in autumn.

If people vote Yes in that, a shake-up of local authorities will also take place with Ribble Valley either merging with Burnley, Pendle and Rossendale or being scrapped altogether.

The housing problem has grown to such an extent that 600 people applied to the council when it announced it had 24 of its houses available for the next year.

Christine Grimshaw, housing manager, said: "We were informed by the Office of the Deputy Prime Minister that there had been 19 bids for this round of PFI.

"We were also informed that we had been unsuccessful due to the bidding round being oversubscribed."

Ribble Valley MP Nigel Evans said today: "This decision shows just the effect the whole regional assembly debacle is having on people's lives, even before the vote."

The council is offering cash incentives for people to use empty rooms, such as flats above shops, to provide new accommodation.