The York Station Gateway works have been delayed almost a year so far and they are £28.5 million over budget.
Veritau’s audit on the ongoing regeneration project found City of York Council entered a building works contract ‘at risk’, changes which pushed up costs and issues with reporting financial updates and oversight.
Opposition Liberal Democrat deputy leader Cllr Paula Widdowson said the Labour administration’s financial irresponsibility resulted in millions being taken from other projects to plug holes in the Station Gateway’s budget.
Cllr Katie Lomas, Labour’s major projects spokesperson, said her administration had been left to deal with problems resulting from the Liberal Democrats’ dreadful management of the scheme while in power.
The row comes ahead of the audit’s findings going before the council’s Audit and Governance Committee on Wednesday (11 March).
The regeneration of the area at the front of York Station began in 2023 after plans were approved in 2021 and originally had a budget of around £26 million.
Works were originally set to finish in May last year but they are now due to be completed this summer.
The council’s executive heard in July the project, made up of five packages of works, is now set to cost an estimated £54.7 million.
The Labour executive approved filling an £18.5 million hole in the project’s budget by diverting £14.55 million from the York Outer Ring Road and Castle Mills schemes.
York and North Yorkshire Combined Authority funding was used to plug the rest of the gap.
It followed an almost £10 million overspend which had emerged by and was plugged in January 2025, bringing the total overspend to around £28.5 million.
Veritau’s audit found there were fundamental weaknesses in the handling of contracts for the Station Gateway and the project itself.
It found they led to significant overspends and delays and gave the council the lowest grade of critical in those areas.
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 stated budget gaps were not highlighted for two years, other than in March 2024 when that month’s report on capital projects warned the project was £7.5 million over budget.
A report the following August on changes to the scheme did not say they would result in costs of £1 million due to extending works.
The audit stated 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 but losing what the audit said was knowledge and expertise at the correct levels meant officials could only limit damage already caused.
Liberal Democrat opposition deputy leader Cllr Widdowson said the failings led to the project’s budget doubling, with millions diverted from other vital schemes to pay for it.
Cllr Widdowson said: “This audit report exposes a catalogue of financial irresponsibility under Labour’s leadership.
“The result was a staggering £28.5 million overspend and a critical audit finding, the most serious category possible.
“Residents will rightly ask how Labour allowed this to happen and why other long-promised improvements are now paying the price for their mismanagement.”
Labour finance and major projects executive member Cllr Lomas said the contract for enabling works signed under the Liberal Democrat and Green administration caused delays and significant cost overruns.
The Labour executive member said: “Pulling out of the project was an option but 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, people will expect the Liberal Democrats to deflect responsibility.
“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.”
