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 on Friday, September 27 members received an audit report on the project by the council's internal auditor SWAP.

The report warned there is a “medium” risk the project led by the council in partnership with the Canal and River Trust - with a project board overseeing the work - will not be delivered.

It was awarded just under £14 million from the UK Government in 2021 – but the committee was told there had been “significant delays" at the start of the project.

READ MORE: Powys council could scale back Montgomery Canal project

Work did not begin until August 18, 2022, after a service level agreement between the council and the Canal and River Trust, but the money is expected to be spent by March 2025.

As of March 2024 the project had spent £2.431 million and 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.”

(Image: NQ)

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.”

READ MORE: New bridge could be built over Montgomery Canal in Powys

She confirmed that meant a £6 million underspend.

Ms Nicholson explained that even if the extension is granted, 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.