Is it over for 'vote Blue, go Green' as guru exits?

Campaigners fear that, with Cameron's aide Steve Hilton off to the US, No10 is set to abandon the environment

In one of Steve Hilton's more eye-catching stunts, in spring 2006 hemp bags containing silver birch saplings were handed out at a press conference to launch David Cameron's "vote blue, go green" strategy to detoxify the Tory brand.

The bemused journalists held in their hands the literal manifestation of what was billed as the new Tory leader's embrace of the environment, to the astonishment of Conservative climate sceptics.

But, as the Prime Minister's self-styled policy guru prepares to uproot and move to the US for a year, there is a fresh battle between the green zealots and those who say nothing must stand in the way of economic growth.

With less than three weeks until the Budget, hard-line Tories are demanding that George Osborne dumps regulations that protect habitats in order to unleash a wave of economy-boosting housebuilding in the green belt.

Environmentalists, rural campaigners and even many coalition MPs fear the departure of Hilton and panic at the absence of growth will cause lasting damage to the environment, along with the Prime Minister's boast that he would lead the "greenest government ever".

It is all a far cry from the early days of Cameron's leadership, when Hilton was the architect of a rebranding that saw the new Tory chief hug huskies, cycle to the Commons and adopt a scrawled tree as a logo.

Hilton is nothing if not an optimist. From the Big Society to the "Happiness Index" and saving the planet, he has wanted to embrace the best in people. His decision to spend his year off in California, where his wife will work full time for Google, is no accident. He will join Stanford as a visiting scholar at the university's Freeman Spogli Institute for International Studies. "He is enthusiastic, he is high energy, he is dress-down," says a friend. "He is very American in that sense."

Yet, as the economic situation worsened towards the end of the last decade, Hilton's optimistic flourishes which marked Cameron's early leadership speeches – letting happiness "win the day" – were overshadowed by dark clouds of austerity. The environment was relegated as a priority. In last year's autumn statement, the Chancellor declared: "We are not going to save the planet by shutting down our steel mills, aluminium smelters and paper manufacturers."

While no fan of Hilton's brand of blue-sky thinking, the Liberal Democrats know they have lost an ally on the green agenda who will be difficult to replace. They worry, too, about the loss of Chris Huhne who, as Energy and Climate Change Secretary, openly challenged Osborne to back the green agenda.

In his first interview since joining the Cabinet, his replacement, Ed Davey, tells The Independent on Sunday today: "I am completely committed to the ambition for this to be the greenest government ever. It's easy to say but difficult to do. To bring it to fruition will be one of those things where people will look back and think 'that's where they changed, the economy and society changed'."

But evidence is mounting to the contrary. The coalition is embroiled in a court battle over the ending of subsidies for solar power; progress is slow on the Green Deal to make homes more energy-efficient; attacks on onshore wind farms from Tory MPs have resurfaced, with Cameron wading in at Prime Minister's Questions last week to claim they had been "wasteful of public money".

With less than three weeks until the Budget, the Treasury is studying a blueprint from the think tank Policy Exchange, calling for thousands of homes to be built on brownfield and greenfield sites, unless half of local people object.

Neil O'Brien, Policy Exchange director, said: "If the UK wants to compete with the rising Asian economies, we need to draw our workforce to our towns and cities. That means providing affordable family homes that do not alienate the local community."

Environmentalists were dismayed last week after reports that the PM told a special cabinet meeting focused on growth that major infrastructure projects should not be blocked by concerns about wildlife habitats. Green groups are anticipating a major row after this month's Budget.

And what of Hilton himself? As his Twitter parody, @SteveHiltonGuru, would say, there has not been enough #winning in the guru's wigwam.

Since the start of the year the Government has been drifting, with Hilton in a "face-off" with Andrew Cooper, No 10's polling guru, over what the priorities should be in 2012. "There has been no clear strategy, no priorities, no focus," said a source.

Hilton wanted to push public service reform, transparency and open data; Cooper to focus on health, education and crime – "what people care about". The environment did not figure. A strategy away-day at Chequers last month brought little clarity. There are even rumours that Hilton's deputy, Rohan Silva, may quit No 10.

Hilton became more and more inward-facing, focusing on policy and having little contact with other parts of the Downing Street operation. "He really felt that he had the best ideas and Dave had the worst ministers," says a friend of Cameron. Hilton became increasingly frustrated with the slow pace of the Whitehall machine. A colleague said: "Even though some of his ideas are completely bonkers he will really push things through and make them happen. He will leave quite a big hole. Osborne will fill that gap." That's what worries green campaigners, who fear the silver birches will fall victim to the Treasury axeman.

Virtual spoof: Will the real Steve Hilton please tweet

Steve Hilton's blue-sky thinking has spawned one of Westminster's most popular spoof Twitter accounts. The outpourings of @SteveHiltonGuru to his 7,600 followers detail life inside the Wigwam of Trust, working for "warlord" David Cameron and the woes of long-suffering sidekick Rohan Silva. But which of these ideas are from Downing Street's real head of policy, and which are evidence of #winning from the online imposter?

1. Replace the Downing Street press office with a blog

2. The Big Society is the Government's only good policy

3. Use cloudbursting technology to end the rain and make Britain sunnier

4. Prayers are voters' top priority

5. Shut Jobcentres and let community leaders give out money

6. David Cameron should give his "I love the Union" speech in a Clan Cameron tartan kilt

7. Fly Virgin, not British Airways

8. Abu Qatada to be arrested unceremoniously and FedExed to Jordan

9. Maternity leave should be scrapped to help firms hire women

10. The Nudge Unit is named after the button on a fruit machine

(Answer: odd numbers are real, while even numbers are the work of @SteveHiltonGuru)