Update: The full audit report has now been released. Read our follow-up coverage here:

Audit reveals chaos behind £2.89m Glastonbury project as funding shortfall sparks clawback risk

A major Glastonbury regeneration scheme has been thrown into disarray after Somerset Council confirmed it will not release any further funding to the Life Factory project – and may even demand some of the cash back.

The decision comes after an independent audit uncovered serious concerns over how nearly £2.9 million of taxpayer money was spent, and whether the project can be completed at all.

It was one of ten projects awarded a share of the £23.6 million Glastonbury Town Deal, is being delivered by the Red Brick Building Centre Ltd. But in late 2023, Somerset Council – the body responsible for managing the government grant – began raising red flags over how the project was being run.

By January this year, payments to the Red Brick Building were paused. The council cited issues with reconciling invoices in grant claims with actual progress on the ground. The matter was then handed over to the South West Audit Partnership (SWAP) for a full investigation.

Now the results are in – and they don't make for comfortable reading.

In a stark statement, the council said the audit had "confirmed our concerns" and found that the project "cannot be successfully delivered in line with the Grant Funding Agreement." The report also revealed that Somerset Council's own oversight could have been stronger.

Chief executive Duncan Sharkey said: "Although we took action to pause payments and refer to auditors, we accept the findings that our level of oversight and monitoring of this project could have been strengthened.

"The audit also notes that a number of control weaknesses lie with the Red Brick Building. We believe these issues are isolated to this project."

He added that the council is now reviewing its oversight of the other nine Town Deal projects, but insisted they are being "managed robustly."

While the council has no direct contractual obligation to pay contractors working on the Life Factory, it acknowledged the fallout for local businesses caught in the crossfire.

"We understand the impact this is having on those with legitimate claims, a number of whom are local," said Mr Sharkey. "However, we cannot release any further funds."

Work on the Life Factory has now ground to a halt, and the council is warning that it may need to recover some of the funds already spent.

The audit report will be presented to Somerset Council's Audit Committee on Thursday 22 May at 10am.