THE multimillion pound East Cowes regeneration project has been plunged into crisis after its Hong Kong backer pulled out of the scheme.

One marine business owner — who has now refused to move from the site — said it was 'delusional' to think the idea would ever work, branding the project 'an utter balls up' that had caused huge stress and uncertainty.

Heralded as a new dawn for the town, the plans to transform the Venture Quays waterfront with a 400-berth marina, plush townhouses, a hotel, bars and manicured public gardens now lie in ruins.

Victoria Quay Estate Limited (VQEL) — the Hong Kong company chosen to develop the site by the Homes and Communities Agency (HCA), now Homes England — has claimed it cannot reach a commercial agreement with Cowes Harbour Commission. It has also blamed 'difficult market conditions.'

It is understood the company was due to invest more than £4 million in the new look 'Victoria Quay' project.

Homes England said it would appoint advisers and consult with stakeholders in order to draw up a new strategy in line with its regeneration aims.

The scheme is separate to Red Funnel's plans for a new car park and marshalling yard. 

The chief executive of Wight Shipyard, one of the companies due to be relocated from the site following its regeneration, branded the scheme a complete waste of time and taxpayers' money.

Peter Morton said: "It was never going to work. The numbers don't add up. These delusional people at Homes England and the Isle of Wight Council have these ridiculous ideas, they find foreign investors — companies without any track record or credibility — and it's all smoke and mirrors.

"This has caused three years of chaos and uncertainty for the Isle of Wight marine sector. And now it's all fallen apart."

Mr Morton said he understood Homes England, and its predecessors the HCA and SEEDA, had spent £21 million buying and reclaiming the land, and on the planning process.

"That's taxpayers' money. We have paid for that. How much time and money and pain has gone into this? For nothing. There is no substance to any of it."

Mr Morton said Wight Shipyard would not move from the site — even if he was threatened with arrest.

"I've got 130 people and we are not moving. If they put locks on, we will chop them off," he said.

"If I have to go to jail, so be it. If they try to move me, there will be a riot."

UPDATED 16:56: An Isle of Wight Council spokesperson said: “The developer’s decision to withdraw from the Venture Quays scheme provides an opportunity to work with Homes England, as landowner, to identify the best regeneration solution for this key site, that best meets community needs and supports our wider Island regeneration ambitions.

“We will continue to work with all stakeholders to help secure a positive, deliverable regeneration of East Cowes and the wider Medina Valley.”