Canal project could be scaled back

Auditors warn that a flagship Powys project to restore the Montgomery Canal, may need to be scaled back due to financial constraints.

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

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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.

The report’s purpose was to provide assurance that the:  “Montgomery Canal financial resources are being managed as efficiently and effectively as possible.”

In February 2022, the council received a Levelling Up funding worth £13.937 million from the UK Government for the project.

It is hoped that the project would open up navigation of the canal all the way to Newtown and “unlock and unfulfilled resource” in Powys, becoming a tourist attraction for boaters, walkers, and cyclists.

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.

SWAP assistant director Ian Halstead said: “The project is reported as not being on target and not within budget, but some issues are being addressed to mitigate this.

“There are many aspects of the project still to be completed.

“Overall, the deliverables are challenging and may not be achievable within the timescale and available budget.

“The council needs to be prepared for this eventuality and have a clear pathway identified that is agreed by the cabinet and stakeholders.”

The issue is that all the funding needs to be spent by the end of next 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

To get around the problems the report says that a “number of scenarios” will be put to the UK Government to “consider revisions” to the original scheme and request an extension.

If agreed at project board and by senior councillors in the Liberal Democrat/Labour cabinet a “project adjustment request” would formally be submitted to the UK Government to ask for the changes to be made.

But since the report was written the UK Government has changed following Labour’s General Election win in July.

Issues that have hampered the project according to the report include:

The need for public engagement.

Planning problems including land acquisition with bridges.

Councillor voting to implement a moratorium on selling council land during the last year.

Site visits from councillors.

Original cost estimates for two bridges being “unrealistic.”

The committee is asked to note the report and seek assurance that effective mitigation has been put in place to address the risks.