A dispute between Sutton Council and Boris Johnson is threatening to derail hopes of bringing the Croydon Tramlink to the borough.

The Greater London Authority (GLA) insisted it was prepared to press ahead with an extension of the network from Wimbledon to Sutton – if the council committed to spending millions of pounds on thousands of new homes.

But the council described City Hall’s demands as “impossible” and is looking to negotiate a lower level of investment, which it pledged “would not be at the expense of other priorities”.

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Steve O’Connell, Sutton’s GLA member, questioned the Mayor of London about the tram extension at a meeting last week.

Mr O’Connell said it was a “great frustration” no firm commitment had been made to the project - estimated to cost up to £240m - despite years of discussions.

Mr Johnson said: “There will be some tram extension if we can get an agreement with the borough concerned that they’re going to go ahead with the development that is needed and, at the moment, I must tell you that to my knowledge we’re still negotiating, we’re still in discussion.

“In order to get the Sutton Tramlink done you have to show that there is a very good business case and also you need some uplift from the tax base in the area. There is a conversation being had.” 

GLA’s demands are understood to include 10,000 new homes built by Sutton and Merton councils.

Mike Brown, Transport for London commissioner, said: “[Trams] are about growth along the line of route and ensuring there is sufficient housing development and other development for businesses along the route to allow the business case to proceed.

“We’re absolutely committed to doing what we can to move this forward. We need to ensure that the borough, and in fact any borough planning such an extension, would properly contribute.”

But council leader Ruth Dombey said: “We are discussing about how we are going to pay for it and how many homes we need to build along the route in order to make in viable.

"The GLA started with numbers that were just impossible but as a result of negotiations it is improving but we are still not there yet.

"They are expecting a far higher capital contribution from the council than they normally expect in other projects so we are challenging them on that.”

A council spokesman added: “We are willing to contribute as much as we possibly can, however this cannot be at the expense of other Sutton priorities, nor the character of the borough.

“The level of contribution from Sutton is unprecedented given the strategic nature of the investment in our infrastructure.”

A council survey in 2014 found 84 per cent of people supported the extension.

The council’s preferred route for the tram extension was published in its local plan document yesterday.

Cllr Dombey said: “The tram would come down to the town centre. It would be even more expensive to get it down to Belmont, but it makes more sense to get it down to Belmont because that is where we are doing the London Cancer Hub.

"That is where we expect to have the 10,000 new jobs and we need to link up across the borough.

“The issue is about transport links in this part of London generally. We don’t have the underground, we don’t have the overground – it is a real issue.”