MORE than £84,000 of taxpayers' money is thought to have been lost on a "failed experiment" to rehouse Waltham Forest families 138 miles away in Walsall.

In March this year the council signed a deal to lease 27 flats in the Midlands town as temporary accommodation for homeless people due to a chronic shortage of suitable properties in the borough.

However only five tenants took up the offer and within months the council quietly abandoned the policy, with the flats eventually being sold off to a housing association.

Now opposition Conservative councillor Jemma Hemsted has discovered the authority spent over £97,000 on leasing the flats, but only made an estimated £12,700 back in rent before finally disposing of the homes earlier this month.

"This is an utter disgrace", she said.

"Any decision to spend council taxpayers' money should be made with extreme care and consideration.

"Yet again this Labour council has made an ill thought out decision that has lead to residents money being carelessly poured down the drain and in this case nearly £85,000 - it is inexcusable".

The figures emerged in a response to a question by Cllr Hemsted to Cllr Marie Pye, the cabinet member for housing.

She said it was getting increasingly difficult to find housing for needy families and said the authority had no choice but to explore alternative options.

Cllr Pye said it was "incumbent on the council to work both harder and smarter to identify innovative ways to find the necessary level of housing in spite of the trying circumstances.

"Those circumstances include a housing register of over 21,000 households and a progressively more difficult landscape in terms of housing...

"Factors such as cuts to Housing Benefit and growing demand for people who cannot get mortgages for the private rented sector market are increasing pressure on supply and exacerbating an already difficult situation".

Newham Council also launched a similar scheme earlier this year, pledging to rehouse up to 500 families in Stoke-on Trent, but was then accused of "social cleansing".

Cllr Hemsted believes Waltham Forest Council's leadership dropped the policy because it was embarrassed about similar bad publicity from its "failed experiment".

The £84,000 figure is currently a council estimate but Cllr Hemsted said Cllr Pye told her the finalised amount was unlikely to be much different.

Cllr Pye, who stepped down as cabinet member for housing in September 2011, only to return to the post in May 2012, said: "The arrangement with the properties in Walsall that I inherited when I took up the post, proved to be unsuitable for the majority of people who approached us.

"We therefore negotiated an arrangement with a local housing association to pass the units on for more local use and we’re pleased Walsall Housing Group were able to take the properties.

“While we now have a policy that does not seek to house people so far away from the borough, we appreciate the fact that the London rental market remains challenging and we need to be flexible in procuring affordable accommodation going forward.”