A decision to recommend the withdrawal of £170m of funding for a major development in Kent is down to economic problems “significantly impacting” such projects across the entire country.

Homes England has recommended the scrapping of Housing Infrastructure Fund (HIF) cash for Medway Council’s £170m project to provide infrastructure for thousands of new homes on Hoo.

If the funding is withdrawn, the massive investment would not be used towards infrastructure such as roads on and around the peninsula, public transport, access to green space, and employment opportunities.

Homes England, which is the government’s housing and regeneration agency, said providing funding for infrastructure works is “central to achieving our mission to drive the delivery of high-quality homes and thriving places”.

“However, we are also acutely aware the current economic environment is significantly impacting the deliverability of some schemes, including the Hoo Peninsula.

“As a public sector organisation, we need to ensure we achieve value for money alongside the delivery of new homes and settlements.

“We have been working closely with the council and the Department for Levelling Up, Housing and Communities to try and find a way forward.”

Since the HIF funding was approved in 2019 rising inflation and interest rates have seen project costs and borrowing spiral.

Speaking last week, Medway’s council leader said stopping the HIF project “would not stop new homes coming”.

Cllr Vince Maple continued: “It will stop the vital roads, public transport and public access to green spaces that current residents have been clamouring for.

“It will also jeopardise crucial new jobs coming to Medway.”

The council has written to the chairman and chief executive of Homes England, requesting an urgent meeting, as well as to the minister responsible for HIF in the Department for Levelling Up, Housing and Communities (DLUHC).

While Homes England has recommended the funding be withdrawn, the future of the HIF funding will be decided by Levelling-Up Secretary Michael Gove.

Cllr Maple added: "We remain keen to work in partnership with Homes England to explore all options available to deliver a sustainable new community on the Peninsula.

“Our recent submission to them dealt with the impacts of inflation and kept the programme to the agreed £170m grant fund."