Plan to build 'green' homes on pristine downland rejected

A bid by a giant insurance company to build a controversial "ecotown" in unspoilt Hampshire countryside has failed.

Zurich Financial Services was seeking a massive £1bn-plus profit from building a new settlement of 12,500 houses at Micheldever Station, between Basingstoke and Winchester. Four previous planning applications from the insurers for the site had been rejected and the Government will today refuse the latest scheme.

As reported in The Independent in January, Zurich hoped to get the go-ahead by having its proposal included in the list of new eco-towns – developments adhering to very high environmental standards – that the Government is planning as part of its housebuilding drive.

Eco-towns are intended to be new settlements of between 5,000 and 20,000 homes where housing and infrastructure are zero-carbon, and where up to 50 per cent of the homes would be affordable housing. Yet when the list of favoured sites is announced this morning by the Housing minister Caroline Flint, Micheldever Station will not be on it. "It just didn't come up to the mark," said a government source.

Ms Flint will announce a "long shortlist" of 15 sites from nearly 60 proposals that have been submitted by developers to the Department of Communities and Local Government. This will be whittled down by a consultation process to 10 by the autumn.

Five of the eco-towns will be built by 2016, with "up to 10" expected to be completed by 2020.

Originally suggested by Gordon Brown in one of his first announcements as Prime Minister last year, these will be the first new towns to be built in Britain since the 1960s. To be selected, proposals must make significant use of both the latest "green" technologies and previously developed brownfield land, including former MoD land, disused airfields and industrial sites.

It is expected that some ecotowns will generate opposition, although in discarding Micheldever Station, the Government has avoided a major confrontation.

The location of the proposal from Zurich Financial Services, which recruited Tony Blair as an adviser in January, was regarded as disastrous by environmental campaigners and local councils, as it would have begun housebuilding on unspoilt, rolling open downland.

Repeatedly put forward by Zurich's English property subsidiary, Eagle Star Estates, Micheldever had been turned down four times since 1994 – twice in the Hampshire County Council structure plan, once in the Winchester local plan and once in the South-East Regional Plan. Yet Zurich, the world's sixth biggest insurer, never gave up because of the possibility of enormous profits, having bought the land at £500 an acre in 1975.

With planning permission for housing, it would now be worth about £1.1m per acre, and with about 970 acres due to be given directly to housing in the scheme, the total would be worth £1.067bn – for an original cost of £485,000.

Last autumn when the ecotowns scheme was announced, Eagle Star was criticised when it reworked the plans and resubmitted them . The leader of Winchester City Council, George Beckett, described it as, "a cynical rebranding exercise".

Tom Oliver, the head of countryside policy for the Campaign to Protect Rural England, said such a new town, "would overshadow a huge swathe of rural Hampshire". He added: "To decorate this proposal with 'eco-bling' is cynical and undermines the credibility of the Government's eco-towns competition."