Filming of The Cranford Chronicles, which was planned as the landmark BBC drama for the autumn 2006 season, has been cancelled after two years’ work.

The scrapping of the six-part adaptation of the semi-autobiographical books by Elizabeth Gaskell, the 19th-century writer, is a significant blow to the corporation’s reputation.

“It’s a huge shame, it’s two years’ work wasted,” said the series producer, Sue Birtwistle, who previously produced Pride and Prejudice by Jane Austen, and Wives and Daughters, a Gaskell novel brought to the screen in 1999.

The loss of the new drama follows an internal review by Mark Thompson, the director-general, who is seeking savings of £360m-£370m across the corporation over the next three years together with the loss of nearly 4,000 jobs.

Yet the BBC has continued to spend heavily on overheads. It tripled its spending on management training from £1.2m in 2002-03 to £4.2m in 2003-04 and its taxi bill in 2004-05 was £1l.8m, an increase of £500,000 on the previous year.

It has also been criticised for continuing to pay excessive sums to presenters. It paid £3m to lure Graham Norton from Channel 4 last year — yet appeared to have little idea what to do with him. So far he has hosted Strictly Come Dancing and has stood in for Terry Wogan on Points of View, an audience feedback programme.

The Cranford Chronicles was adapted by Heidi Thomas, whose credits include the 2003 romantic film I Capture the Castle and the television drama Soldier Soldier. The BBC is believed to have spent more than £250,000 on the Gaskell work before pulling the plug.

The adaptation was a combination of Gaskell’s 1853 novel Cranford, and two of her other books. The novel portrays small-town life in the northwest of England in the middle of the 19th century through the eyes of the narrator, Mary Smith. Cranford itself was based on Gaskell’s home town of Knutsford in Cheshire.

Dench was to have taken the lead role of Miss Matty Jenkins, a shy spinster. BBC managers, who originally planned to start filming in spring this year, repeatedly delayed shooting to demand cost cuts of 15% and reducing the number of episodes from six to five.

Further reductions were then demanded. This resulted in more delays to filming. The difficulties eventually led Universal Studios, the Hollywood company which was to have been the BBC’s partner, to pull out.

The Cranford Chronicles was to have been filmed mainly in the West Country and studios in London. By contrast, other networks use foreign locations to cut costs on costume dramas. Much of Elizabeth I, the drama starring Helen Mirren which is being broadcast on Channel 4, was filmed in eastern Europe.

Despite the expense, costume dramas have previously made profits for the BBC. The 1995 version of Pride and Prejudice, starring Colin Firth, and North and South — a Gaskell adaptation with Daniela Denby-Ashe — are among those that have pulled in large audiences and sold around the world.

The last high-profile cancellation of a BBC drama was in 1997, when Salman Rushdie’s Midnight’s Children had to be abandoned because of financial problems.

The BBC may be moving away from lavish costume dramas, instead placing historic books in more modern — and cheaper — settings. In 2003 it ran a version of The Canterbury Tales set in the 21st century which bore little resemblance to Chaucer’s 14th-century original. The BBC is also about to launch a series of Shakespeare plays in a modern setting.

Alan Yentob, creative director of the BBC, said of the cancellation: “It’s sad but we’ve had to pull it. Money was a big problem when Universal pulled out. Perhaps some day we can resurrect it but we do not have to find another major drama for autumn next year.”

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