Forty percent of the region's 'white van' businesses are on the brink of bankruptcy because of decisions made by "desk-bound" bureaucrats, a council leader has claimed.
John Fuller, from South Norfolk, warned that the local construction sector was in crisis because of the block on the construction of new homes imposed by Natural England 18 months ago.
Officials from the organisation have forced local councils to stop granting permission for housing developments until they can prove the new properties would not contribute to river pollution.
But Mr Fuller said the restrictions were having a devastating impact on the local economy, with jobs already lost.
He said: "My council estimates that 40pc of my local construction sector is near to bankruptcy – not just the large builders but the jobs of many plumbers, electricians, bricklayers, carpenters, roofers and tilers.
"All the white van trades are now at risk as a consequence of the ban on house building imposed by the desk-chair bound bureaucrats of Natural England. People are losing their jobs."
READ MORE: How two words left Norfolk's plans for thousands of homes in limbo
Government advisors Natural England told Norfolk councils last March that they could not permit planning applications for homes within the catchment areas of the River Wensum and the Broads.
The halt was because of fears extra nutrients created by homes could go into waterways and harm species.
Councils were told they could not approve housing schemes until mitigation measures were in place.
Prime minister Rishi Sunak and local government secretary Michael Gove visited Norfolk last month to announce to announce bill amendments to remove that requirement - only for the House of Lords to vote the changes down.
Norfolk council bosses are now depending on a joint venture with Anglian Water to allow housebuilders to 'offset' the impact of developments by buying 'credits' to fund mitigation measures and allow decisions.
SMALL DEVELOPERS MOST AT RISK
In a new report, the House of Lords committee examining the issue said advice on nutrient neutrality rules can have "crippling" effects for smaller developers.
The committee said it would not comment on the "validity" of government policies on development or habitat protection and instead focus on whether they are achievable and how they affect one another.
But it found that their success had been "hampered and sometimes completely blocked by lack of co-ordination in policy-making and haphazard and unbalanced implementation".
It recommended the government provides "clear advice" as to what assumptions can be made by local planning authorities and developers about the requirements following the passage of the Levelling Up and Regeneration Bill.
It also criticised "poor agricultural and sewage management" over the decades for leading to the water pollution which councils and housebuilders are now being expected to help tackle.
Lord Moylan, the committee's chairman, said: "The current approach to managing any conflict between new homes and the needs of the environment is failing to deliver for either side.
“There is no way the government can deliver on its housebuilding targets unless it is brave and displays the political leadership necessary to deliver and implement a comprehensive strategy for both development and the environment.”
'POLLUTION MUST BE TACKLED AT SOURCE'
A Natural England spokesman said: "The rivers affected by nutrient pollution are among the most precious in the country, hugely valued by people and internationally important for wildlife.
"Natural England continues to work in our advisory role with partners and councils on the development of nutrient mitigation schemes in Norfolk.
"Those schemes will support local authorities to meet their housebuilding targets while also ensuring clean and healthy rivers.
"We know we must work together to build the homes this country needs — tackling pollution at source while protecting and improving the environment."
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