Prescott's plan to build the homes that southern England so desperately needs is not going to work without a huge increase in funding. So far, there is little sign that he has the money or the political support to make it happen.
In February, deputy prime minister John Prescott launched the communities plan, arguably the most ambitious government housebuilding programme since the Second World War. Its aim is to tackle the crippling housing crisis by building hundreds of thousands of homes in four key growth areas in the south – the Thames Gateway, Stansted, Milton Keynes and Ashford, Kent.

Last week, at the Chartered Institute of Housing Conference in Harrogate, Prescott's permanent secretary at the Office of the Deputy Prime Minister, Mavis McDonald, admitted that the government has been slow to deliver the plans. McDonald is not the first to express her fears.

Over the past few months, leading figures in the regeneration business have started to spot the cracks in the communities plan, and are slowly being drawn to the same conclusion: without a massive hike in funding and decades of unwavering goverment commitment, it cannot be delivered in its current form.

The major concern is a lack of funding to build the infrastructure desperately needed in the largely derelict growth areas. The government has committed just £446m over the next three years. Consultant Roger Tym & Partners has estimated that Stansted, Milton Keynes and Kent need an investment of £18bn over 30 years. The requirement in Thames Gateway has yet to be assessed, but senior figures involved in the project suggest that it may cost twice that of the other three combined – unsurprising, given that the government is looking to create an urban area the size of Leeds, with 200,000 new homes.

Sources close to Prescott have confirmed that no public sector funding is guaranteed beyond 2006. Although it is not unusual for a government to be prudent with its spending commitments, councils want assurances before launching into major building programmes.

David Hackforth, chief planning officer for Milton Keynes council, says: "Seventy thousand dwellings are planned for between 2001 and 2030. We're saying that the plans are all well and good, but 30 years of growth can't be funded through three years of spending."

Milton Keynes is estimated to require £1.76bn in infrastructure upgrades to make the plan viable. Kent council has warned that its infrastructure bill will be even higher at £10bn if it is to build 120,000 new homes across the county. Brian Gates, chief planning officer at Tonbridge & Malling Borough Council, which is at the heart of the Kent regeneration, says: "The government needs to underwrite the cost of the development. We mustn't assume that developers will bear the full cost."

The government believes developers will be willing to take the financial brunt because of the long-term profits the new housing estates will eventually generate. But the omens are not good. The hypothesis has been tested out at a scheme in Barking Reach, Thames Gateway. This Bellway development is designed to provide 6000 homes, but central and London government wants density to increase to 10,000. The result is a standoff: Bellway will not build the extra housing unless the government commits to the construction of a Docklands Light Railway extension, making the scheme viable – and government will not commit to the DLR unless the new housing is guaranteed.

70,000 homes are planned for between 2001 and 2030. Thirty years’ growth can’t be funded by three years’ spending

David Hackforth, Milton Keynes council

Bill Brisbane, managing partner at planning consultant Roger Tym, says that the government will have to come up with novel, strategic, PFI-funded regeneration schemes if the new communities are to be created. This would possibly ease the government's funding problems. But it could lead to further delays to a programme that Prescott's department already believes is sluggish.

Martin Tidd, managing director of the private sector unit at contractor Wates, says that PFI procurement had never been used for regeneration, and would experience the same teething problems that occurred when the procurement process was introduced in health and housing: "Inevitably there will be a need for clarity before the first of these schemes reaches financial close," he says.

Indeed, the potential delays to implementation of the plan are mounting. First, London's bid to host the 2012 Olympic Games is threatening to take priority. The London Development Agency is slashing its budgets by a quarter to divert funds to a bid in Stratford, east London. This takes money and people away from work on the Thames Riverside, a key area in the Thames Gateway development. The LDA argues that additional spending in Stratford will open up the Gateway, but others insist that the Riverside is an important area that would accommodate vital infrastructure such as CrossRail and DLR extensions, sparking surrounding development, and therefore requires as much focused funding as possible. Tony McBrearty, chief executive of the Thames Gateway London Partnership, says: "All of these programmes that are due to take place will at best be held up because of an Olympic bid."

The government's planning bill has also been delayed. It was due to be in place by early next year, but will not be ready until the summer, owing to the legislative timetable. Part of this bill amended existing legislation that governs urban development corporations. These amendments would allow them to hand over some of their planning powers to local councils, and would permit more people to sit on their boards. Two such UDCs are to be set up in the Thames Gateway, and the changes are seen as vital if they are to have sufficient public and private sector co-operation. A temporary version of the government's model will have to be set up until the bill is passed.

The final question mark is over Whitehall: is the whole of the government sincerely committed to regeneration? The ODPM is co-ordinating the plan, but industry figures are convinced that regeneration can only come about as a result of good employment, transport and environmental policy. Jon Rouse, chief executive of architecture watchdog Cabe, says: "This is only going to work with cross-governmental support. ODPM only has responsibility for environmental quality – are the Department for Work and Pensions and the Department for Transport signed up to it?"

Government reaction to this point is, inevitably, "yes" – it points out that Tony Blair himself chairs a cabinet subcommittee dedicated to the Thames Gateway. But with his problems ranging from Middle Eastern relations to the euro to the re-emergence of the Real IRA, few believe that this subcommittee is high up Blair's list of priorities. The Cabinet Office refuses to reveal how many times the committee has met since it was set up in February.

While Blair jets off for international talks, Prescott remains as the government's driving force behind the housebuilding programme.

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