Councillors have approved funding of £500,000 towards building two new homes for the elderly in York.

The move clears the way for City of York Council to seek tenders for the project.

The authority’s cabinet made the decision after hearing concerns that transferring care home job from the public to the private sector would lead to lower levels of care, and allegations that reductions in staffing costs were being used to fund building costs.

Coun Tracey Simpson-Laing, portfolio holder for care for the elderly, said: “We want York to be a great place for people to live in, and that particularly applies to the people who live in our homes.”

Denise Craghill, of the Green Party, claimed staff whose jobs were privatised would have worse pay and conditions and therefore be less motivated or unable to provide excellent care.

She claimed the council could only afford the type of homes it wanted to build by reducing running costs such as staffing costs.

But Graham Terry, assistant director for adult commissioning, modernisation and provision, denied that private sector meant poorer care, and said that there were high satisfaction rates with the private care already used by the council.

The authority will now tender for one organisation to design, build, operate and maintain a care home at Burnholme and a care village at Lowfields.