It has been confirmed the government is to pull the plug on £170m of funding promised to Medway Council.

It was reported last month that spiralling costs and scheduling fears had led to a rethink from Homes England over cash from its Housing Infrastructure Fund (HIF).

This was aimed at supporting development work needed to allow 12,000 homes to be built on the Hoo Peninsula.

Medway was promised the cash in November 2019 after the long-term lobbying of the government.

Rochester and Strood MP Kelly Tolhurst announced this afternoon that the funding had definitely been withdrawn.

The decision was made by Levelling Up Secretary Michael Gove and leaves the Hoo scheme– including potential new jobs – in tatters.

Welcoming the news alongside ward and parish councillors who have campaigned against, Miss Tolhurst said: “I took a stand against the HIF proposals and the previous council leader [Alan Jarrett] back in 2018 when the full plans were made clear.

"I have fiercely represented the views of our community making our case in Parliament and with Government ministers, challenging the plans put forward within the HIF, which would legitimise the destruction of the peninsula by pursuing the ambition of large-scale house building, merging three of our unique rural villages together which was not supported by the community or any of the elected representatives for the area.

“Homes England, after carrying out an independent evaluation, have identified a number of risks and issues with the project and have recommended to the Government that support for this project should be removed.

"The HIF plan was never truly about delivering improved infrastructure for the existing community as it totally failed to do that. It didn’t support development in the right place, with new home schemes that would provide the right type of homes for the needs of local people. Nor did it enable sustainable jobs, development of the local economy or protect our green spaces and environment.”

Medway Conservative Group councillors Elizabeth Turpin, Gary Etheridge and John Williams said in a joint statement: “Following on from the robust criticism we, the three Strood Rural councillors, received from the [previous Tory] administration when requesting clarification of the HIF process and the financial viability in August 2022, it comes as no surprise to discover that not only were the residents and elected councillors misled but also Homes England and the Government.

“At the special full council meeting we called in September 2022, we requested the consultation on the Hoo Development Framework was paused for the following reasons.

“ Firstly, council reports showed the rail proposal in particular, was financially flawed and the HIF project could not be completed without substantial additional financing.

“Secondly, previous commitments dating back to 2018 to residents, which included new sports and leisure facilities following the closure of Deangate Ridge Golf course, had not been delivered or even investigated.

"We have never seen categorically, the Hoo Peninsula can sustain the level of development proposed within the draft plan or the original business case that was submitted to Homes England for the HIF.

“Following on from the announcement in March of the rail link to be passed indefinitely we are pleased that Homes England and the Government have listened.”

A statement from the peninsula's three Independent councillors, George Crozer, Michael Pearce and Ron Sands, said "more than 30 reasons" were given by the Department for Levelling Up for reaching its decision.

It said: "The council's business case submitted to Homes England is crystal clear, without the HIF project the scale of housing development proposed can't take place on the peninsula.

"The HIF project was designed by Alan Jarrett to simply protect Capstone Valley and Rainham by allocating all the development on the peninsula.

"The council has wasted just over £18 million of taxpayers' cash on the rail, road and environmental schemes that form part of the project."

"Some planning applications for development may still be submitted locally, but these will be judged individually on their sustainability against the National Planning Policy Framework."

It is a massive blow to the new Labour administration led by Cllr Vince Maple and new chief executive Richard Hicks who was instrumental in securing the funding.

The council says after recent discussions with Homes England and the government, it submitted a proposal for a reduced scheme it was confident could be delivered.

This recognised the challenging position of public finances but would have still delivered significant road and environmental improvements alongside a smaller number of homes.

It focused on improvements to the two key junctions at Four Elms and Sans Pareil, alongside delivering a new community parkland at Deangate, improvements to public rights of way and enhanced public transport links.

“I took a stand against the HIF proposals and the previous council leader back in 2018 when the full plans were made clear.” – Kelly Tolhurst MP

This prioritised sustainable development and addressed climate change and supported the new administration’s commitment to delivering a Local Plan within two years. But this approach was also refused.

Medway Council will now need to stop work on the original proposed investment in six road schemes which were designed to improve the peninsula’s links to the rest of Medway, reduce congestion, and improve air quality, and investment in public access to open spaces.

Its HIF team raised concerns over inflationary pressures last summer and agreed with Homes England to review the programme.

A revised plan, budget and timetable was submitted in March that kept the programme within the £170m funding bid originally agreed with the government, and the council took the decision to pause the rail plans.

Cllr Maple said: “We are continuing to press for a meeting with the Secretary of State and are deeply disappointed not to have had the opportunity so far. We welcome their commitment to identify future funding streams to deliver the project outside of the programme.

“People must also realise that the decision now risks homes being granted permission.” – Cllr Vince Maple

“The loss of HIF means we cannot fund and deliver the long needed all-important roads, public transport and environmental improvements ahead of new homes being built on the peninsula.

“This decision has implications for residents across the whole of Medway. It risks undermining our commitment to delivering a Local Plan by 2025 and building new homes in the right places while creating sustainable healthy communities with the associated high-value employment prospects for Medway residents.”

As part of the Government’s national housing targets, Medway Council has to deliver 1,667 new homes a year between now and 2040 – a total of nearly 28,500. This target still exists.

Cllr Maple added: “We know there are people on the peninsula who oppose the prospect of new homes, but this decision won’t stop those homes being built on Hoo, or elsewhere across Medway. Recent planning appeals have shown that Medway is already struggling to reject developers’ proposals to build homes in what we believe are the wrong places without the necessary infrastructure. We want to stop that happening.

“People must also realise that the decision now risks homes being granted permission without the all-important contributions from developers towards local health, education, and community facilities as part of any forthcoming planning applications.

“Having signed a letter giving her full support to the council’s bid in 2017 for the HIF grant, we are disappointed by Kelly Tolhurst’s evident change of view which would have delivered significant infrastructure improvements for residents on the Hoo Peninsula.”

In response to the news and criticism leveled at him, Mr Jarrett, said: "We are going to get a load of houses in Capstone any way. If you look at a map of Medway, half of it is green and most of it is on the Hoo Peninsula.

"I personally think the Government saw a Labour administration had come in with no experience of running a large authority and thought, let's have our money back. On my watch negotiations were going well."

The Department for Levelling Up said in a statement: “The taxpayer rightly expects us to only continue funding projects if we are still confident they can be delivered, and unlock the homes we need.

“We worked with Medway Council for a number of months to try and progress the scheme, but ultimately concluded it is not deliverable within the budget and timeframe of the HIF. We have therefore made the decision to pull the funding. We will continue to work through Homes England with Medway to explore other housing options in the area.”

Medway Liberal Democrats says it is “deeply disappointed” by the move.

A spokesman said: “The plans were not perfect, and our party has offered suggestions throughout the consultation process to improve the scheme. But fundamentally these funds are needed to help the local community.

“This money was vital to relieve the already congested and polluted roads leading off the peninsula, as well as improving much needed cycling and public transport routes.

"The fund was also going to be used to create two brand-new country parks, acting as safe havens for local wildlife, an oasis for local residents to improve their mental and physical health, and a much-needed boost to the local economy. Instead these parks are now at risk of being concreted over, because despite what local Conservatives believe and have told residents, this will not stop development on the peninsula.”