A damning audit into Glastonbury's £2.89 million Life Factory project has uncovered serious financial mismanagement, missing documents, and a complete lack of oversight — raising fears the scheme may collapse entirely.

The investigation, carried out by the South West Audit Partnership (SWAP), found that Somerset Council and the Red Brick Building — the organisation behind the project — pushed ahead with construction without key funding or any formal delivery plan in place.

Auditors warned that the entire project now risks failing to deliver its promised outcomes, and that the government could demand its grant money back. They also flagged a potential risk of fraud, and said the system in place to manage the funding was "inadequate".

The Life Factory was awarded £2.89 million from the Glastonbury Town Deal, with the expectation that another £2.89 million would be secured through match funding. But the audit reveals that no match funding has ever been secured, and that a key subsidiary company — Beckery Construction Company — operated without proper contracts, HR processes or financial controls.

"We have not seen a fully costed project plan," auditors wrote. "There was no clear evidence of robust financial cost management or value for money... and reporting requirements laid out in the legally binding grant agreement were not met."

The findings are laid out in the Unrestricted Somerset Council Report of Internal Audit Activity 2024/25 – Progress Report (May 2025), which was published online this morning.

The audit report will be formally presented to councillors at 10am on Thursday 22 May in the Council Chamber at the council offices on Cannards Grave Road, Shepton Mallet.

The report lays blame on both Somerset Council and the Red Brick Building. It says the council failed to escalate the project's growing risks internally, and continued approving grant payments even after concerns were raised.

As of January, over £2.3 million had been spent, with very little physical progress visible at the site. Contractors have since come forward saying they have not been paid, and the building — known as 'Building C' — remains without a roof.

Despite warnings, auditors say claims kept being submitted with missing or late paperwork, and some money dedicated to other Town Deal projects was even misused.

The council is now only holding back 2.5% of the final payment — the bare minimum required to cover any defects — and auditors have warned that "this now appears unlikely to be enough" given the state of the project.

Among the most serious findings:

• No evidence of a proper delivery plan with milestones
• Missing or incomplete financial records
• No competitive procurement process for contractors
• Payments made to staff with no contracts or timesheets
• Match funding not pursued beyond "expressions of interest"
• Project risks significantly downplayed in internal reports

Auditors concluded that Somerset Council now needs to consider clawing back funding, and warned that unless urgent action is taken, Building C could be left as a half-finished shell.

The audit committee is expected to question officers next Thursday on how the project was allowed to spiral out of control — and what happens next.