Local authorities are asking the consortium behind delayed plans to extend the new town of Stevenage by 163 ha to supply a bond to guarantee infrastructure costs

The councils want the Garden Village Partnership, made up of Taylor Woodrow, Persimmon and Redrow, to provide an £80m bond to cover the lifespan of the 15-year project.

Hertfordshire, North Hertfordshire and Stevenage councils are worried that if any of the consortium members quit or go out of business, section 106 money for infrastructure will disappear. They see a bond of this kind as a form of insurance against that happening.

The councils also want control over the specification of the schools, open spaces and health facilities that the consortium has promised to provide. These amenities are believed to be worth at least £80m.

The two parties have concluded a separate agreement under which the partnership has agreed to build 1375 affordable homes, which is 27% of the overall development.

The project manager of the partnership, Andrew Dutton, said that the market would not supply a bond to cover the whole of such a large and ambitious project.

He described the councils’ demand as “ludicrous” and said: “We don’t think it’s going to be possible to do this thing. We just hope that sense will prevail.”

We don’t think it is going to be possible to do this thing [get a bond]. We just hope that sense will prevail

Project manager Andrew Dutton

Deputy prime minister John Prescott has asked the partnership to provide a written justification for its position by the end of this week.

This means that the dispute is unlikely to be resolved until after the election.

The conflict over the bond is the latest in a long series of sticking points for the scheme, which has been mired in the planning process since the late 1990s when Prescott gave his blessing to the proposal to develop green belt land.

The scheme has lost the backing of Hertfordshire council after the Conservative party gained control in 2001.