Councillors had previously agreed to a land swap between the Exeter Science Park and Eagle One that would make the next phase of the Science Park expansion more deliverable and allow the 150 new homes to form an extension of the Redhayes/Mosshayne development.

The plans were agreed by councillors in April, subject to a viability assessment of a £216,000 contribution towards the NHS due to the impact of the development.

At last Tuesday’s East Devon District Council development management committee meeting, Chris Rose, the council’s development manager, said that the NHS contribution would not have a sufficiently detrimental impact on scheme viability to cause the proposed land transfer to fail.

But he said that Eagle One have said that as the overall transaction would not be in their interest, they will not agree to provide any NHS contribution.

Officers had recommended that councillors approve the application, even without any NHS contribution.

Mr Rose said: “In pure viability grounds, our viability consultant considers that with the contribution to the Trust, the development is still just viable but could certainly support a reduced sum of £81,422 as officers have tried to negotiate.

“However, the applicant is not prepared to enter into a S106 agreement which includes any contribution to the Trust as they consider it doesn’t meet the tests for acceptability and that the land deal is on the basis of what was previously agreed without the contribution to the Trust.

“The options open to the council are therefore to either refuse planning permission on the basis that the development does not adequately mitigate its impact on health services, or accept that no contribution to the Trust will be forthcoming and proceed.

“The main risk with a refusal is that the proposed land deal would be lost which would negatively impact on the delivery of the Science Park.

“To issue an approval of planning permission without the contribution to the Trust would secure the land deal and have huge benefits to the progress of the Science Park. Members would need to be clear that to do this would accept no mitigation for the impact of the development on health services.

While at the current time, significant weight should be attached to the request for a contribution to the NHS Trust, it is considered that greater weight should be attached to the proposed land transfer which will facilitate significant long terms gains for the delivery of a major science park integrated with the other development happening in the area.

“While there are grounds to secure a contribution to the Trust, nevertheless the applicant will not agree to a contribution and have advised that they will not enter into the land transfer on this basis. “The only way for the Council to proceed with confidence that the land swap transaction will go ahead would be without the NHS contribution.”

He added though that late documentation had been provided by the applicant from neighbouring councils to support Eagle One’s assertion that the NHS’s request was not justified, but that officers had not had the chance to fully assess the documentation.

Cllr Kevin Blakey, portfolio holder for economy, said that the application should be approved due to the benefits it would bring to the Science Park, and that if it was refused, the land swap deal was almost certain to fail.

He added: “Although the request is legal, this deal won’t proceed if there is a requirement for Eagle One to make a contribution. It may be unpalatable but if we want to see this happen and introduce opportunities for highly paid and highly skilled jobs, this deal should proceed.”

But Cllr Mike Allen, lead member for business and employment, said that while the land swap should proceed, there should be a contribution for the NHS as it was viable. He added: “This has been rejected by Eagle One and I think they have stepped over the line from negotiation to bullying.”

Cllr Steve Gazzard said that he had real concerns about the application and that Eagle One’s behaviour was ‘tantamount to blackmail’. He said: “They will build 150 homes so that could be up to 500 people, and it will increase pressure on the NHS. It is not an undemanding request that they should provide something.”

He proposed that the application be deferred to seek further advice on the legitimacy of the health contribution following additional information being submitted by the applicant.

Cllr Paul Hayward supported him, although said: “I wouldn’t use the word blackmail. I think undue pressure may be better. I am sure there is a reason why the NHS has asked, so we have to take it into account. We have asked for something, and they are saying they won’t pay and won’t move their position at all. We need to see the evidence.”

The council’s solicitor, Henry Gordon Lennox, said that officers had considered the benefits from the land swap were sufficiently great that the application should be approved, even if there is no contribution towards the NHS.

He said: “We were content that the contribution was justified, and we have now been given information that it isn’t, and we haven’t had a chance to look at it properly. But as they aren’t paying a contribution anyway, so it is irrelevant.

“Our officers are suggesting you approve it without any contribution to the NHS. If you are not willing to do that, then deferral is the right option, as we need to understand the legitimacy of the health contribution.”