Gordon Brown's flagship plan to build a string of environmentally friendly 'eco-towns' across Britain has been dealt a critical blow, with only two of the 10 sites promised now expected to be built.
The model green communities, where residents would be able to do without cars and grow their own food on allotments, were billed as the most imaginative answer to putting roofs over heads in half a century. But the plans are now in jeopardy thanks to a combination of the credit crunch, a collapsing construction industry and fierce local opposition.
Officials at the Department for Communities and Local Government have concluded only 'one or two' of the 15 shortlisted projects are genuinely viable, according to a source close to the discussions. The Eco-Towns Challenge Panel, appointed by ministers to ensure the plans were genuinely green, is understood to have reached similar conclusions. Some bidders have already dropped out, while others are said to have been alarmed by the house price crash and the collapse in sales.
The final decision on how many should go forward is yet to be taken by Margaret Beckett, the new housing minister. But she failed to mention either eco-towns or the government's wider target to build three million new homes by 2020 - which housing experts are also now openly questioning - when she made her first speech to the Home Builders Federation's annual conference last week.
The news comes as Brown prepares to hail green industries tomorrow as a new source of job creation in Britain. Geoff Hoon, the Transport Secretary, will announce plans to boost the manufacture of electric cars which ministers hope could become more appealing, as they are exempt from congestion charges and also save on petrol. He will announce a £20m grant for businesses to buy electric vans.
Eco-towns are, however, central to Brown's vision for the environment. They were one of the first major ideas he announced within days of becoming Labour leader, pledging thousands of new homes in every part of the country. Four months later, he doubled his original target of five towns because of interest in the scheme, adding: 'For the first time in nearly half a century we will show the imagination to build new towns - eco-towns with low- and zero-carbon homes.'
Although only a small amount of the three million planned new homes, eco-towns were intended to encourage other builders.
'The government will probably say it's all to do with the economic climate but I think the mistake was their approach to the subject,' said Grant Shapps, the Tory housing spokesman.
'They came up with a good idea but they messed it up by going for a top-down "ministers know best where they should go" approach.'
A spokesman for the Department for Communities and Local Government insisted the programme would remain on track.