TENS of millions of pounds is being snatched from Mersey town halls to fund the building of “executive homes” in the South, an explosive report warns today.

The flagship “New Homes Bonus” – unveiled by the government last week – is attacked for disguising an annual cut of £68m from local authorities in the North West.

Councils in the South East will gain a staggering £128m a year from the initiative and those in London a further £62m, according to an analysis by the National Housing Federation (NHF).

In a case study, the NHF suggested Knowsley Borough Council would lose £3.9m a year – while Guildford, in Surrey, will gain £2.1m – suggesting millions of losses across Merseyside.

The organisation says the astonishing cash transfer will take place because the bonus scheme faces a funding shortfall of £1bn, which will be plugged by cutting town hall grants for providing vital services.

Crucially, the scheme, designed to revive housebuilding, offers higher bonuses to councils building large, expensive homes – built, predominantly, in the South.

An NHF spokesman said: “The New Homes Bonus will promote the building of large, executive homes in the South, with rewards, in effect, part-funded through cuts in funding to deprived areas.”

Those cuts have already forced Merseyside councils to slash funding for key services and make thousands of staff redundant.

The criticism comes just days after Grant Shapps, the housing minister, hailed the New Homes Bonus for delivering a “housebuilding revolution”.

Mr Shapps announced expected allocations for each local authority for the next financial year, which total nearly £3m across Merseyside and North Cheshire.