RYEDALE MP John Greenway has renewed calls for a public inquiry into a proposed new village on York's outskirts - after the Evening Press revealed that council chiefs stand to pay out £1.25 million if they pull out of the controversial scheme.

Mr Greenway said that he would press Government ministers to hold a public inquiry if City of York Council grant planning permission on council-owned land in Osbaldwick for the 540-home Derwenthorpe development.

Under planning law, the council must refer the matter to the Office of the Deputy Prime Minister for consideration for an inquiry if it is approved, because of the authority's potential vested interest.

Last month, the Evening Press exclusively revealed that the council agreed in May 2001 to indemnify the would-be developers, the Joseph Rowntree Foundation, against costs incurred for preliminary work ahead of purchasing the land and securing planning permission.

The amount was originally capped at £650,000, but increased to £1.25 million in February 2003, because of costs from environmental assessments and work in creating access to the site through Fifth Avenue.

Residents opposing the scheme said the agreement means the council's planners cannot be impartial when considering the application - a claim which was denied by executive member for planning and transport Coun Ann Reid.

Mr Greenway told the Evening Press that, while he understood the need for an agreement with developers, the perception was that it put pressure on the council to grant approval.

"The only way this matter can be resolved in a way that the public have some confidence in the outcome is with a public inquiry," he said.

The MP has written to the council's development control officer, Hannah Blackburn, to express this view and his opinion that recent proposed modifications by the developers in response to nature conservation concerns still "do not address the most serious concerns" - access to the site and flooding risks.

Council leader Steve Galloway said today that it was "not unreasonable" for the authority to share in the financial risk with the would-be developer.

He said: "That is a routine agreement that has applied to many developments across the city over the years, but if Mr Greenway wishes to press for a public inquiry, that is his decision."

Coun Galloway said any such inquiry would be "extremely expensive" for the council "at a time when we are urged to keep down taxes".

Updated: 08:22 Monday, October 11, 2004