THE regeneration of East Lancashire is being hit by the credit crunch, a new report has warned.

Bosses have admitted some projects are being hit by the building slump and have warned vulnerable people will be affected by any holdups.

The Audit Commission said some areas had been cleared of housing with no agreement in place to redevelop them.

In its review of Elevate, which is in charge of the Housing Market Renewal programme, the commission said the economic downturn meant some of the newly-built housing promised for the next three years would have to be postponed.

But overall it found Elevate, which has received £317million of government funding since 2003, was “performing well”.

Elevate chief executive Max Steinberg admitted some firms were looking to renegotiate contracts because of the downturn.

He said he was negotiating with developers in a bid to “stimulate” more activity on site, adding: “We are concerned it is the very vulnerable communities that are hit by the credit crunch.

"Difficult times require strong leadership and not knee-jerk reactions”. Last month Mr Steinberg claimed it would take a £1bn investment to get the area back on its feet.

During 2008/09 Elevate is aiming to complete 540 refurbishments, 280 acquisitions and 365 demolitions.

The report singled out Phoenix One in West Accrington and Daneshouse in Burnley as facing difficulties finding developers.

But the commission also praised the “significant” impact of work in Bank Top in Blackburn.