A FLAGSHIP Government scheme to buy unsold homes from developers was branded "ridiculous" last night after it emerged fewer than 500 properties have been snapped up in the Westcountry.

Critics said the efforts were a "drop in the ocean" in tackling the region's acute housing shortage, with more than 52,000 families on council house waiting lists in Devon and Cornwall.

MPs called for banks part- owned by the taxpayer to be forced to help people get mortgages on homes in local affordable housing schemes.

The National House Clearing Scheme – which sees public money used to buy new homes which will not sell on the open market – was launched with much fanfare by Gordon Brown after he became Prime Minister.

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When the PM said a year ago that £200 million had been found for the scheme, critics noted the average new home sold in the South West cost more than £218,000 so the funding would not go far.

New figures reveal the limited impact the programme has had in Devon and Cornwall, with one MP lamenting it had been a "pretty poor show".

Communities minister Ian Austin said in the year from March 2008, 476 homes were bought in the two counties by the Homes and Communities Agency.

In Teignbridge, South Devon where 3,300 people are in need of a home, just seven unsold properties were bought up for social housing.

Torridge saw the highest number – 76 – but even that is dwarfed by the 300 bought up in Bristol.

The figures were obtained by Liberal Democrat MP Adrian Sanders, whose Torbay constituency saw only 14 new homes purchased while more than 5,200 people waited for social housing.

Last night Mr Sanders said the scheme was a "drop in the ocean" of what was required.

"There is an unbelievably acute housing shortage in the Bay and it is ridiculous that other areas, which do not have such needs, are getting more help from the Government," he said.

He said ministers should "stop wasting time and money on complicated distribution systems" and direct the funding to the areas where it is needed most.

North Cornwall Lib-Dem MP Dan Rogerson called for the Government to force banks rescued by the taxpayer to do more to help those struggling to get on the housing ladder.

"Ministers seem to be entirely detached from what is happening on the ground," he said. "Local families are ready, willing and able to make the commitment to some of the few affordable housing schemes available in the Westcountry, yet the banks – banks we have paid to keep going – are standing in their way."

The Government's housing plans have come under intense scrutiny this week, after the PM unveiled his Building Britain's Future initiative.

Mr Brown pledged £1.5 billion for 20,000 new affordable homes – but doubts continue about where the money is coming from. Around half will be raised from "underspends" from the Home Office and the health, education and transport budgets.

But the rest will be found by "reprioritising" cash at the Department for Communities and Local Government, sparking concerns that existing projects will be cut, including the Decent Homes Initiative to refurbish existing properties.

In a further sign of the Government's housing policies descending into chaos, Mr Brown's pledge to allow local people to jump the queue for council houses has unravelled with Tory claims the plans to reform waiting list priority criteria would be scuppered by the Government's own proposed equality legislation.

Lib-Dem communities spokesman Julia Goldsworthy (Falmouth and Camborne) said: "The Government is long on announcements but short on delivery."

Andrew George, Lib-Dem MP for St Ives, said the public was becoming more cynical about the effectiveness of Government announcements. "I certainly think there is a very heavy bucket of salt taken with every new pronouncements and re-announcement of old targets and spending commitments," he said.

Mr George said they were made "to create an environment where activity is happening but unfortunately most people are pretty unimpressed. It is a pretty poor show".