The controversial £148.5m Norwich Northern Distributor Road has been given government permission to go ahead, but today questions have been posed over how precisely it will be paid for.

Transport secretary Patrick McLoughlin yesterday agreed to grant a development consent order for the 12.5-mile road, which will stretch from the A1067 Fakenham Road at Attlebridge in the west to Postwick in the east.

The news has been hailed by business leaders as a potential £1.3bn shot in the arm for Norfolk's economy, while council leaders said it would create new homes and jobs, as well as speeding up traffic.

However, critics said it would lead to urban sprawl and pollution and destroy the quality of life in rural villages, while they questioned how the full cost of the dual carriageway would be paid for.

The government has agreed to contribute £86.5m towards the scheme, but Norfolk County Council and developer contributions will be needed to cover the final £60m of the scheme.

However, with the county council needing to identify £169m of savings in the next three years and the developer cash from community infrastructure levy dependent on homes being built, critics questioned whether services could suffer to finance what they branded a 'road to nowhere'.

Green county and city councillor Andrew Boswell said: 'Local funding for the road will drain resources away from other transport infrastructure for a generation.

'The road will open up development and urban sprawl towards the pristine Norfolk Broads, and later to the Wensum valley to the west.

'Communities around Norwich have opposed it strongly, and their quality of life will now be badly affected. Generations to come will question why this government promoted such irreversible destruction in Norfolk for a mirage of short term, but undeliverable, material gain.'

However, the council said it had been planning for how to cover the £60m. Tom McCabe, director of environment, transport and development at County Hall said some £40m was anticipated to come from the community infrastructure levy pooled by Norwich, Broadland and South Norfolk Council.

He said any gap in that could be covered by the county council borrowing money, while the final £20m would be covered mainly by a pot of capital receipts built up by the authority.

The decision to grant development consent for the road came yesterday following a public inquiry in Norwich last year, where all sides got the chance to convince a panel of inspectors whether the road should go ahead or not.

The business community welcomed the decision, saying it handed the county an opportunity for the creation of new jobs and homes.

Caroline Williams, chief executive of Norfolk Chamber of Commerce, said: 'This news is another positive step toward getting the improvements to Norfolk's infrastructure which the business community has been calling for.

'Norfolk Chamber is delighted the government has given the go-ahead and look forward to work starting as the earliest possible opportunity.

'The Northern Distributor Road is not just a piece of road, but the opportunity to unlock jobs and new homes for the city and surrounding area.'

Norfolk County Council's leader George Nobbs said it was a 'huge stride forward' after years of under-investment in the county.

He said: 'There are other hurdles to clear, including finalising construction pricing and funding approval, but the Secretary of State's announcement brings us significantly closer to starting work.

'This much needed road improvement around greater Norwich will allow us to create the capacity for other city centre improvements.

'People of Norwich and Norfolk have supported our Transport for Norwich plans and we are straining at the leash to get started on the road so that we can realise the full potential of this part of East Anglia. On its own, the new road could bring over £1bn in economic benefits to Norfolk.'

But James Parry, chairman of countryside charity CPRE Norfolk, which had opposed the road, said he was extremely disappointed.

He said: 'A three-quarters Northern Distributor Road will not solve the transport needs of Norwich and Norfolk, will lead to vast amounts of infill development to the north of the city and will compromise the quality of life in many rural villages.

'Most seriously it will generate 'rat-running' traffic, leading inevitably to demands for the road to fully connect to the A47, which will then destroy the beautiful and environmentally sensitive Wensum Valley.

'The taxpayers of Norfolk and our precious countryside will bear the cost of this expensive road for years to come.'

Although consent has been granted, opponents do now have the opportunity to launch a legal challenge against the decision, before work can start.

Denise Carlo, spokeswoman for the Norwich and Norfolk Transport Action Group, another long-standing opponent of the road, said it was too early to say whether her group might join forces with others to mount a legal challenge.

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