WORCESTER'S MP, Mike Foster, has held talks with the Housing Minister about the future of the city's housing stock.

He said today the Minister, Nick Raynesford, believed the city council - which is running short of funds to repair its stock - could set up a management company to run its 5,200 homes.

Mr Foster said Mr Raynesford had told him Worcester would be eligible to apply for funds to set up an "arm's length company" - an option urged by Labour city councillors, but dismissed by Conservatives who claim the council might take 18 months to meet tight Government criteria.

Mr Foster said Mr Raynesford - who was unable to promise that cash would be forthcoming - had assured him that the size of Worcester's housing stock was sufficient to qualify to bid for funds to set up such a company.

"It's clear that the arms-length company is an option which Worcester could bid for in the future," said Mr Foster.

The city council's housing sub-committee has voted to transfer the properties to a housing association, although the matter has yet to be rubber-stamped at the full council meeting on Tuesday, October 31.

Tenants will have the final say in a city-wide vote.

Mr Foster believed that extra Government funds for the maintenance of council homes could allow the city council to delay a decision on transferring its housing.

This would allow it to pursue the possibility of setting up an arms-length company.

Under this option the council would continue to own the homes, valued at £40m, and the management company would be overseen by representatives from the city council, tenants, and laypeople.

The first arm's length company could start operating in 2002.

But the leader of the city council, Robert Rowden, said today: "I have no faith in chasing gold at the end of the rainbow."

Transfer was the only feasible option unless circumstances changed, he added.