BURNLEY'S £74 million plan to transfer all its council homes to a private housing company by January is set to be put back on track - despite the lack of a firm guarantee that its financial headache will be resolved by the Government.

Council housing chiefs last month froze further spending on the project until they received assurances that the £20million shortfall between what the 5,600 properties are worth and what they are being sold for will be met.

But tonight they will be asked to resume the sale process at a special meeting of the housing committee or risk putting the transfer in jeopardy.

Councillors fear the town could be left with an extra £2million bill for set up costs if the Government does not bail Burnley out and the whole deal falls through.

Urgent talks with ministry officers has brought clarification and some assurances, but no guarantees, say council finance chiefs. But they warn that to do nothing could place the vital transfer, which will unlock millions of pounds of home improvement cash for council estates, in even greater jeopardy.

They are recommending members to give the go-ahead to new spending, but regularly review the situation as it develops.

"The risks associated with proceeding or delaying are finely balanced," they say.

"The overall conclusion is that notwithstanding the additional assurance provided by the Government consultation paper on transfers and the meeting with DETR officials, it is impossible to provide members with a guarantee that the overhanging debt issue will be resolved to the council's satisfaction."

They warn, however, that delay could make it much more difficult to transfer in later years, leave Burnley vulnerable to Treasury management and debt charges and tenants may have to be re-balloted on transfer.

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