A MAJOR Cornish harbour development was dramatically rejected yesterday – prompting jubilation from campaigners.

However, it also sparked warnings that it would sound the economic death knell of an entire town.

At the end of a fraught planning meeting in Penzance, a £44 million plan to enhance the Isles of Scilly ferry link was slung out by Cornwall council's strategic planning committee. It instantly raised the prospect that the finances for the scheme would evaporate while alternatives were being worked up.

Meanwhile, angry councillors on the Isles of Scilly are believed to favour severing their historic link with Penzance under any future scheme and switching the ferry to Falmouth.

On the mainland, people who had argued that the very future of the town depended on it said it was a bleak day.

"This is tragic for Penzance," said Mike Waters, chairman of the town's Chamber of Commerce.

"It is a shortsighted decision and the majority of businesses in the town will be devastated."

Graham Hicks, Cornwall Council's lead member on transport – who raised the temperature of the debate by calling objectors "small-minded" – said he was astonished.

"This is a disastrous day for Penzance," he said. "I cannot see it how can be delivered in Penzance now. There is a very real danger that the link will be lost altogether."

There was dismay on the Isles of Scilly, whose council long ago rubber-stamped the plan for its end of the link.

Councillor Gordon Bilsborough said time had run out to pull together an alterative.

"We do not think there will be enough time to get a fully costed scheme together before the funding runs out."

But their words fell on deaf ears for opponents, led by the Friends of Penzance Harbour, who have waged a determined battle to get the application thrown out.

John Maggs, spokesman for the group who is currently attending the climate talks in Copenhagen, was informed about the decision the moment the meeting ended.

"I'm very pleased indeed," he said by phone. "This is the function of a community that cares passionately about their town."

He said fears the funding, which comes mainly from the Government and the European Union, would be lost was a red herring. "Personally, I have never believed that the money will go anywhere else. If the public sector won't provide the link, the private sector will."

John Moreland, a Penzance town councillor and chairman of Penzance Civic Society, said he was delighted with the decision.

"It is excellent. It is a small victory for democracy. The problem all along has been the tick-box consultation which has taken place."

Outside the meeting, which had been packed with standing room only, there was a buoyant air of victory.

"Common sense has prevailed. The people of Penzance have spoken and have said they do not want this monstrosity," said one woman.

A Harbour Revision Order granted by the Government earlier this year had already effectively given permission for much of the proposed work to take place.

Under discussion at St John's Hall yesterday were works which would have facilitated the development, such as a pier extension and rock armour to protect the sea walls. This would have allowed the plan, known as Option A, to create a combined passenger and freight terminal, to go forward. Protesters believed this would destroy the historic Battery Rocks area of town and instead championed Option C.

This alternative, being presented to Cornwall Council's cabinet tomorrow, would mean a passenger handling facility in the converted Trinity House museum and an out-of-town freight depot.

But fears have been voiced that it would push up prices on the Isles of Scilly by 25 per cent and take too long to deliver. Many members of the committee were persuaded by a judgment from English Heritage delivered two weeks ago which made a number of strident objections.

The overall application from the Cornwall Council-led consortium Route Partnership was two strands, with the first on listed building consent concerning works to the pier. After four hours of debate, the committee voted 12-7 to reject the first proposal – prompting the Route Partnership to defer the second half.

Decisions will now have to be made on how – or whether – to carry the scheme forward.

For more reports and reaction see Thursday's Cornishman.