'Critical' weaknesses in station scheme - audit

"Critical" weaknesses in the handling of the York Station Gateway project led to delays and the scheme being £28.5m over budget, an audit has found.

A study on the regeneration project by Veritau found City of York Council entered a building works contract "at risk", which pushed up costs and caused delays.

Opposition deputy leader Paula Widdowson said the Labour administration's "financial irresponsibility" resulted in millions being taken from other projects to cover Station Gateway costs.

But Labour's major projects spokesperson Katie Lomas suggested her party had been left to deal with historic problems caused by the previous administration.

The audit's findings will be presented to the council's Audit and Governance Committee on Wednesday.

The regeneration of the area at the front of York Station began in 2023, and originally had a budget of around £26m.

Works were originally set to finish in May last year but are now due to be completed this summer.

In July, the council's executive heard the project, made up of five packages of works, was set to cost an estimated £54.7m.

The Labour executive approved filling an £18.5m hole in the project's budget by diverting £14.55m from the York Outer Ring Road and Castle Mills schemes.

York and North Yorkshire Combined Authority funding was used to cover the rest of the deficit.

This followed a further £10m overspend which was plugged in January 2025.

This brought the total overspend to about £28.5m, according to the Local Democracy Reporting Service.

Veritau's audit gave the local authority the lowest grade of "critical" for its handling of contracts for the Station Gateway scheme and the project itself.

The council was found to have entered the contract for the scheme's construction works "at risk" before legal agreements had sufficiently progressed.

Changes made during the project were found to have caused disruption and pushed up costs.

The audit also rated delays in reporting the overspends as "significant", saying it may have stopped the council from dealing with them sooner.

It said budget gaps were not highlighted for two years, other than in March 2024 when a report on capital projects warned the project was £7.5m over budget.

A report the following August on changes to the scheme did not say they would result in costs of £1m due to extended works.

The audit said changes in council staff meant there was a crucial period in late 2024 before the impact of issues affecting the scheme were identified.

Attempts were made to bring in outside support, it added, but a loss of knowledge and expertise at the correct levels meant officials could only limit the impact.

Liberal Democrat councillor Widdowson said the failings led to the project's budget doubling, and that "residents will rightly ask how Labour allowed this to happen".

"This audit report exposes a catalogue of financial irresponsibility under Labour's leadership," she said.

"The result was a staggering £28.5m overspend and a critical audit finding, the most serious category possible."

But Lomas said the contract for enabling works, which was signed under the Liberal Democrat and Green administration, caused delays and significant cost overruns.

She explained that while "pulling out of the project was an option" it would have cost the council significantly and "delivered none of the fantastic improvements people are now benefiting from".

"The problems associated with it were such that as they emerged, an audit report was requested to establish how the council could improve and not repeat previous mistakes made," she added.

"This should mean tenders and contracts like those we inherited become a thing of the past, with far better public value for money as a result."

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