Canal project could lose vital £6m in funding

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.

At a meeting of Powys County Council’s Governance and Audit committee yesterday (Friday), members received an audit report on the project by SWAP, the council’s internal auditors who have said that it is a “medium” risk that the project will not be delivered.

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 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 is 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-Chair, 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.

By Elgan Hearn, Local Democracy Reporting Service