Eco-towns plan undermined by official report

By Jim Pickard, Political Correspondent
Published: March 25 2009 01:43

Gordon Brown’s plans for a generation of 10 new “eco-towns” have been further undermined after their financial prospects were questioned for the first time by the government’s own advisers.
Only three of the proposals are sure to make a profit in the current property downturn, according to a viability study by the Department for Communities and Local Government. Some could need public subsidies of tens of millions of pounds to go ahead.

The Conservatives claimed the 270-page report – released by the department last week without any press release – was the “final nail in the coffin” for the policy.
The prime minister outlined his vision of the green conurbations, each with up to 15,000 homes, within weeks of taking office in the summer of 2007.
Not only would they help solve Britain’s perceived housing shortage, but also set new standards of environmentally-friendly design, he believed.
Since then, however, the number of possible schemes has dwindled from 57 proposals to a list of 15 last April – of which only eight schemes remain.
Some of the surviving programmes have been scaled back. There have been fresh delays to the programme with a consultation deadline extended from March to the end of April.
The government has always insisted the schemes had to be feasible without “recourse to public subsidy”. But the document says explicitly that two of the projects would need support from taxpayer money.
One, at St Austell in Cornwall, would have a development deficit of £60m to £190m, and could need “significant financial assistance from public sector sources”.
A planned community at Rossington in South Yorkshire would also need some form of subsidy to succeed.
Three more of the eight sites, Whitehill Bordon in Hampshire, Pennbury in Leicestershire and Ford Airfield in West Sussex, could end up with potential losses.
Typical was the comment on Whitehill Bordon, which was described as having the potential to generate “only a small financial buffer”.
The three schemes with no questions over their financial viability were Weston Otmoor in Oxfordshire, north-east Elsenham in Essex and Middle Quinton in Warwickshire.
The department said the report was only a snapshot of the current financial climate, which could improve. There would be no new “large-scale funding schemes” for eco-towns.
The report will raise further questions after a select committee last month said the eco-towns policy was in tatters.
Copyright The Financial Times Limited 2009