House builders’ hopes of a fresh stimulus were dashed last night when the House of Lords voted by 203 to 156 to reject a government amendment to the Levelling-up and Regeneration Bill.

The amendment was part of the Government’s planned relaxation of river pollution rules designed to allow development in areas previously impacted by nutrient neutrality.

More than 60 local authorities have restricted house building in certain areas after orders from the Government agency Natural England.

The advice, based on a previous EU directive, was aimed at controlling phosphate and nitrate pollution of rivers.

Stewart Baseley, Executive Chairman of Home Builders Federation said: “Despite the fact that new homes make a negligible contribution to the nutrients issue, around 150,000 homes across the country remain on hold.

“Whilst doing nothing to reduce the disgraceful pollution of our rivers the ban is deepening our housing crisis, reducing economic activity and costing jobs.

“After four years we need to see politicians delivering a solution to address this damaging ban so desperately needed homes can be built.”

The vote comes as new research by the HBF shows that in the past three years, developers have given water companies more than one billion pounds in cash contributions and new assets to support upgrades to water provision and wastewater treatment.

The total value of contributions made by developers to water companies between 2020/21 and 2022/23 is estimated at £1.05bn, which includes:

· £427m in developer payments for Infrastructure Charges and connection fees

· More than £600m in new assets being added to water company balance sheets in the form of new pipes and other infrastructure from which water companies will ultimately also derive a long-term income stream.

Water companies covering some of the areas most severely affected by the nutrient neutrality restrictions are among those to have received the highest payments from developers over recent years with Severn Trent receiving almost £70m in payments and Anglian Water topping £60m in contributions from builders.