Row breaks out after potential collapse of Montgomery Canal project is revealed with Powys County Council

At a meeting of Powys County Council’s Governance and Audit committee on Friday, September 27 members received an audit report on the project by SWAP.

SWAP are the council’s internal auditors for the council and have said that it is a “medium” risk that the project will not be delivered.

This is because the funding needs to be spent by March 31, 2025, and any leftover could be clawed back by the UK Government.

As it stood at the end of last March (2024) the project has spent £2.431 million and had received £8.319 million of the total funding of £13.937 million

Powys Independent group Councillor Graham Breeze said: “What has really concerned me is that the first I heard of a delay and possible loss of the funding is when I read it in the newspapers.

“That really annoys me.

“If we didn’t have this report in front of us today would any of us have known or when would we have known, and I’m alarmed by that.”

Councillor Breeze said that as one of the councillors for Welshpool he had been at the centre of the project: “from day one.”

Councillor Breeze said: “I’m very supportive of it, the reputational damage this would cause if we fail to deliver this project is absolutely enormous and totally indefensible.”

He asked cabinet member for economic development and regeneration Councillor David Selby why this hadn’t been brought to all councillor attention sooner, so it could be “discussed openly” before auditors had: “picked it up.”

Liberal Democrat Councillor Selby said: “The process for the project is the same as anything else in the council, the appropriate reporting is done at the appropriate time.

“We could not discuss an audit report until receiving it either.”

He explained that the general election and change of government had: “caused us great problems.”

Councillor Selby said: “I’m confident that we know the way out of this and so long as the PAR (project adjustment request) process can speedily be resolved at a (UK) government level then we are ready to get on.

“You will know there are contractors on site in Welshpool working on elements of the project now as we speak.

“Nearer Newtown work is being conducted on the aqueduct.

“It’s not like nothing is happening, there’s a lot of work going on.”

Councillor Breeze said: “I don’t accept that you could not come to council with concerns that you could share that this project is at risk.”

Programme delivery manager Louise Nicholson explained that there are a number of bureaucratic layers of management to the project before getting to the political level.

She explained that in July 2022, Cabinet had approved delegating the day to day running to a project board so long as it kept to the approved funding.

Anything more that would have to go to cabinet for a political decision.

Ms Nicholson said: “We have our project board but also our programme delivery supporting communities board which we reported to on this.

“That then goes up transformation delivery board and on to CLT (corporate leadership team) and cabinet.

“There are reports giving updates on this project going through the system and those should have been shared throughout.”

Before the application for an extension goes to Westminster, Ms Nicholson said it needs to be approved by Cabinet.

Once the Liberal Democrat/Labour cabinet sign off the “project adjustment request” it will be submitted to the UK Government in November.

If this extension is agreed, the project could have an extra nine months more to spend the available funding in a bid to finish off the project.

The meeting on Friday heard that Powys County Council could lose £6 million to be used in restoring the Montgomery Canal, if the UK Government insist on clawing back the funding.

The project is led by the council who are working in partnership with the Canal and River Trust, and a project board oversees the work.

After successfully being awarded just under £14 million from the UK Government’s in the autumn of 2021 – the committee were told that there had been “significant delays at the start of the project.”

Essentially work on the did not start until August 18, 2022, after a service level agreement between the council and the Canal and River Trust.

The issue now is that the money is expected to be spent by the end of March 2025.

As it stood at the end of last March (2024) the project has spent £2.431 million and had received £8.319 million of the total funding of £13.937 million.

SWAP assistant director Ian Halstead said: “There are potentially three options, the rollover of remaining funds, but this is uncertain.

“The project is funded from other sources, obviously Powys council is one of those.

“And finally, the project is halted part finished but there will be some reputational damage in that.”

He explained that in future if there a short timescale to bid for government funding for schemes the council should have a “pre-prepared oven ready” list of projects.

Programme delivery manage Louise Nicholson told the committee that talks were continuing with the UK Government around the extension.

Officially known as a project adjustment request (PAR) Ms Nicholson expected it to be submitted to the UK Government in November, following the autumn budget statement.

Ms Nicholson said: “If UK Government decides not to give us an extension, then any money not spent by March 31 would need to be returned.”

Committee chairwoman and independent lay member Lynne Hamilton said: “That’s a £6 million underspend.”

Ms Nicholson said: “It would be.”

Independent lay member and committee vice-chairman John Brautigam said: “If the PAR is granted will the project be completed to the same or reduced scope.

“If it is reduced, what are we losing out on.”

Ms Nicholson explained that one of the three nature reserves planned along the canal would be dropped from the project.

Ms Nicholson said: “That’s because the bridges have come in over budget and we needed to balance the books.

“Those nature reserves were to mitigate boat movements on the canal, but that will not take place for up to 10 years.”

Ms Nicholson explained that it hoped that the nature reserves would have “matured and developed” before boat journeys along the restored canal happen.

Mr Brautigan believed the project should be put on the council’s corporate risk register so that the committee can: “keep an eye on it.”

Ms Hamilton asked for this to be discussed with the relevant council chiefs.