HUNDREDS of homes could be built by a council-owned company in a bid to combat Government cash cuts.

The £30 million project would see 300 homes built across four sites in Colchester, of which around 210 will be market value homes available for sale and rent.

The rest will be affordable homes, meaning they are only available for Colchester residents who are on the council’s housing needs register and who would be given a discounted rent.

The council has set up a housing company called Colchester Amphora Homes Ltd to take on the project spanning the next three years.

Council leader Paul Smith (Lib Dem) said: “The Government is absolutely determined the homes will be built.

“They have set targets for what Colchester has to build and we will be heavily penalised if we don’t match them.

“If we fail to deliver homes, they will be able to develop where they like.

“The homes are going to be there, we are going to have to build 920 a year or else, so it is a question as to who builds them in what conditions.

“We will be the people doing the development, we can make sure that the appropriate infrastructure is put in there.”

“It won’t be a case of a builder coming back in 12 months’ time and saying ‘I know I said I would provide this but market conditions have changed.

“People will have more confidence if the council is doing it.”

Mr Smith said the council would work with county council figures to ensure the right road infrastructure was in place.

The four sites, which Mr Smith wouldn’t disclose for “commercially sensitive” reasons, would be built on in the first three years of the project. but up to 12 more plots could be turned into housing in the future., as long as there were no development issues.

The sites could have a mixture of houses and flats.

Colchester Amphora Homes will buy four sites from the council and borrow up to £29.7 million from the council to finance the project.

The company will pay this back to the council as soon as the first homes are sold.

It is expected all the borrowed cash will be paid back in instalments by 2030/31.

After this, the company will still pay the council £700,000 in dividends each year until all the homes are sold.

James Price, campaign manager at the TaxPayers’ Alliance, said: “Whilst it is encouraging the council recognises the housing crisis in the UK, their solution is the wrong one.

“ They should help existing building companies secure planning permission and let them get on with it.

“Taxpayers do not want their money being used to set up a council-owned business when there are plenty of building firms out there already.”

Lib Dem Mr Smith said the council would “certainly consider” rent to buy options for tenants of the affordable homes in the future.

The authority has been in talks with Sutton council in London which is building homes in a similar arrangement and its representatives have visited Colchester to offer advice.

Colchester Amphora Homes is being launched by the council next week.

It will be under the parent organisation of Colchester Commercial (Holdings) Ltd, of which the council is the sole shareholder.

The council says it will be millions worse off over the next three years due to cuts in Government cash.

, including the core Revenue Support Grant - slashed from £5.7million in 2015-16 to £285,000 next year.