The Commonwealth Games studium may be a triumph, but the £2bn regeneration scheme that was to go with it has run into the buffers.
The heart of Britain's biggest and most ambitious urban regeneration project is no longer beating. A gleaming £2bn programme to revive 1100 ha of urban dereliction east of Manchester has been plunged into doubt, despite an early history that could not have been more promising.

The blame for the stalling of what should have been an exemplary regeneration scheme lies squarely with the planning and land assembly system. Jon Rouse, chief executive of the Commission for Architecture and the Built Environment, was so incensed by the failure of the project that he presented it to a recent meeting with housing minister Lord Falconer and Stephen Byers, head of the DTLR. He said: "East Manchester is a microcosm that represents the problems in regeneration schemes across the country and exposes the flaws in the urban white paper."

New East Manchester was launched in October 1999, uniting the city council, volume housebuilders, contractors and architects. The aim was to make it a model public–private partnership: there was supported from a housebuilders' forum that included Alfred McAlpine, Wilcon Homes and Barratt, CABE was impressed by the early framework masterplans by GVA Grimley and hopes were high.

The plan was to link the city centre with the City of Manchester stadium in the east using a thriving corridor of high-density, socially mixed housing. Luxury loft-style apartments would line the derelict flatlands of the Medlock Valley. Beswick's run-down estates would make room for 3000 homes and landscaped open spaces, all ordered within a new road grid. Such a development, in an area half the size of the city centre, could have substantially contributed to the 10-year target of 12,500 homes: it was also hoped that the link would allow inner Manchester's vibrancy to percolate into the city's bleaker eastern areas.

Then, the problems started. The designer apartments in the Medlock Valley had to be shelved when it was realised that riverbank land had been classified as environmentally sensitive under a unitary development plan dating back to 1995. Without these apartments, it would be difficult to raise interest in the less glamorous housing planned elsewhere. A hole had appeared at the centre of the regeneration.

Public consultation to change the UDP could take up to three years, and any attempt to shorten the process could be challenged under the Human Rights Act. Rouse believes that the problem is symptomatic of the country's flawed planning system: "What has happened at the Medlock Valley will probably recur in other regeneration schemes. The problem needs radical reform."

Next, the redevelopment of Beswick began to run into problems. Landlords and owner-occupiers were unwilling to sell their crumbling terraces as house prices in the area have sunk to the bottom of the market. As a result, development land has been hard to come by.

Initial enthusiasm has turned to frustration. "It could have been a huge statement that said as much for Manchester as the Commonwealth Games," says Roger Humber, former chief executive of the House Builders Federation. "But we're not seeing anything like what we hoped for. The situation goes back to the core problem of urban renaissance – how everyone can be perfectly willing, but when push comes to shove, not enough happens."

Compulsory purchasing would be one way to settle the land shortfall, but Rouse says the council's power is far from absolute: "It's not easy to assemble the land unless you can demonstrate an economic case; but you can't demonstrate the case unless you have the land. It's a chicken-and-egg problem." He argues for a revival of the power to start projects without an economic case that the old urban development corporations wielded in the 1980s.

Some commendable schemes are being nurtured at the fringes of east Manchester, but the heart of the regeneration has gone. And despite the willingness of the council to rethink the strategy, development will now be limited to 1000 houses in the south-west.

"There is a missing link between the city and the housing," says Paul Pedley, managing director of the Redrow Group, a firm that has been involved in the scheme throughout. "It may be big pepper-potting, but it's pepper-potting all the same."

Pedley is also concerned that pressure to show something by the time the Commonwealth Games starts in July 2002 means that the council is making hasty decisions. "There is an argument for waiting and trying to stick to the original ideas. It is not worth rushing into and getting it wrong."

Or, it has to be added, in becoming a model for just how difficult it is to push through large-scale urban regenerations, regardless of how beneficial they are likely to be.