Bradford Council bosses have been accused of snatching £50,000 destined for a Bracken Bank play area.
The cash, paid by a firm building houses next to the estate, could instead be spent anywhere in the Keighley parliamentary constituency -- including Ilkley.
Keighley MP Ann Cryer has accused the council of "moral bankruptcy" in considering depriving estate residents of the money.
She is among local politicians demanding the cash be spent only on play facilities within Bracken Bank. Improvements have been suggested for playgrounds at Bracken Bank Crescent and Worth Valley Middle School, both next to the development.
The row concerns 64-plus houses currently being built by Skipton Properties on land next to Damems Lane.
Skipton Properties must pay money to Bradford Council under the "section 106" law governing new housing projects.
The rule calls for developers to fund new amenities to make up for the effects on existing residents of their new estates. When planning permission was approved in 2004, Skipton Properties agreed under section 106 to fund landscaping works, affordable housing and what Bradford Council termed "off-site provision of children's play facilities".
The council this week revealed "off-site" can mean anywhere in the constituency, which stretches as far as Ilkley, Silsden, Oxenhope and East Morton.
It has promised to consult Keighley Area Committee, Keighley Town Council and ward councillors before deciding where to spend the £50,000 earmarked for play facilities.
But it adds: "The contribution is not ring-fenced to any specific area. The money must be spent on a public play facility."
In some past instances, such as at Oakworth and Steeton, Bradford has spent section 106 money on playgrounds within the same villages as the developments.
Skipton Properties spokesman JO Steel said section 106 payments were a "fairly common" obligation for developers, and one his firm was happy to meet.
He said: "Such sums are supposed to take account of the perceived increased usage due to the development, such as of recreational facilities.
"The fundamental key is that it has to be spent to benefit that area."
MP Ann Cryer said: "Skipton Properties has been asked to make this contribution as a result of its development in Bracken Bank.
"It will be morally corrupt for that money to go anywhere else but the people of Bracken Bank."
Keighley town mayor Tony Wright accused Bradford Council of abusing section 106 simply to fill its coffers.
He said: "They're subsidising a shortfall in the leisure budget. It's almost like blood money.
"What's being lost here is an open field -- they should put something back into the area."
Bradford councillor Cath Rowen, who represents Bracken Bank, said new houses would mean more children using the estate's existing playgrounds.
She said: "This money should be used to provide much-needed places for the kids. The play areas could be made far more interesting and safer."
Keighley Area Committee chairman Andrew Mallinson called for a clearer process so that local councillors had an input into how future Section 106 payments were spent. But he added: "Something needs to be provided within the locality. There are definitely suitable areas in Bracken Bank."
Bradford Council development manager Ian Day yesterday said each section 106 agreement differed on where money could be spent.
He said: "Some are within the constituency, some are ring-fenced to the ward and others to the development. We always work within the terms of these agreements, evaluating the needs of the area and the development.
"We are committed to further consultation before any decisions are taken on this agreement."
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