A MAJOR probe today has highlighted the plight of an East Lancashire family living in squalor - and put the blame on a major housing regeneration programme.

The report published today warns that plans to revitalise rundown homes could be pricing people out of the market - leading to a rise in homelessness.

On the Up? - produced by homeless charity Shelter - revealed projects like Elevate East Lancashire, one of nine pathfinder companies set up to transform dilapidated neighbourhoods, contribute to rising house prices.

It claims investors from outside the region are snapping up the regenerated housing stock earmarked for local communities. The charity has now called for an urgent review of the programme to address the rise in homelessness.

As part of the investigation, Shelter staff visited homes in London, the South West, North West and Scotland.

The Scholes family, in Bacup, were highlighted after they were refused council housing. Claire, 24, and Marc, 29, have two young children - sixth-month-old Amy and Katie, two - but are stuck in a small, two-bedroom private rented terraced house.

Their cold Daisy Bank home, next to a boarded-up property, has no central heating and is riddled with damp.

The visit was sparked when Claire contacted Shelter for help after Amy was taken to hospital with a chest infection, which the family put down to the damp.

Claire, a full-time housewife, said: "When we looked at Amy's mattress it was full of mould. We've had to throw away most of the cuddly toys as they were damp.

"We are not allowed to install a heater in Katie's room as part of our contract so it's freezing. We actually feel guilty putting her to bed."

Marc uses his wages as a bus driver for Burnley and Pendle Transport to pay the £275 a month rent and bills - with their last electric bill £400.

Claire added: "We are not asking for handouts, we don't claim benefits, we just want somewhere decent and affordable to live."

Adam Simpson, director of Shelter, said: "With rapidly rising levels of homelessness in many of these areas, an urgent review is needed to prevent money that has been intended to regenerate areas for the benefit of local people effectively ending up in pockets of speculators."

He added: "Last year in Lancashire there were 1,798 homeless people, this year there were 2,303 - a 28 per cent increase."

Steve Jackson, housing market renewal manager at Rossendale Council, said: "The Elevate programme is helping to bring all homes up to a decent standard.

"Shelter's comments are understandable as there are a lot of people buying up empty houses and not doing anything as, with the area's housing uplifted, so is the value, which does tie up housing. But the scheme is working well."