A £3m regeneration project in Glastonbury could end up "at best a watertight shell" unless urgent financial issues can be resolved.

Glastonbury was one of 101 towns across the UK – and one of only two in Somerset – which has received funding from the government's towns fund, with £23.6m being provided for projects designed to enhance the town centre and improve the town's fortunes.

Around £3m was allocated to the Red Brick Building, located off the A39 Street Road, to deliver new offices, events and community space within part of the complex, known as 'The Life Factory' or 'Building C'.

Work on the project was "paused" after reports surfaced that small businesses associated with the project had not been paid "since March".

Somerset Council has now confirmed that the project and the Red Brick Building as a whole are being extensively audited to ensure the remaining grant funding can be properly spent.

But timing is running out to waterproof the building before the onset of winter, with Building C currently being without a roof and planning permission still not being granted for the remaining work.

The Red Brick Building comprises buildings A, B and C – with planning permission being granted in 2011 to convert all three buildings into offices, light industrial units, a restaurant or café and various leisure uses.

While Buildings A and B are now occupied, Building C was not converted at this time due to financial constraints.

Further permission to convert Building C – also known as the Life Factory – was granted in 2015, but this was also not completely implemented.

The government provided £250,000 of 'accelerator funding' during the coronavirus pandemic, allowing some of the initial work on the building to be carried out ahead of the full planning application coming forward in August 2023.

Councillor Susannah Hart, one of two division members for Glastonbury, raised the issue in a series of questions submitted before the full council met in Bridgwater on September 26.

She said: "A number of tradesmen have approached their elected representatives to seek redress for the failure of payments being made to them for works already undertaken on the Life Factory project, which forms part of the Glastonbury town deal.

"It is understood that an independent audit of the finances of the Life Factory and the other projects administered by the Red Brick Building is currently being undertaken, and we look forward to a timely publication of the report.

"Payments are apparently outstanding for more than six months to tradesmen who were deliberately chosen because they were small, local firms.

"Such small businesses simply cannot remain in business without payment. We ask therefore, on their behalf, when can all outstanding payments expect to finally be received?"

Ms Hart contended that the condition of Building C could deteriorate unless these issues were resolved before the winter, meaning the project may not be able to deliver on all its ambitions.

She said: "The last published minutes of the Glastonbury town deal board refer to the Life Factory as being 'a project of concern' and state that the outcome would be 'at best a watertight shell'.

"Given that the scaffolding is currently being removed and the timber beams will, as such, be exposed to the elements, as we move into winter, is it really likely that even this minimal outcome can be achieved?

"At present, 74 per cent of the £3m allocated to the project [c. £2,220,000] has already been spent, only to result in a roofless structure.

"In all honesty, has there been any consideration of the voracity of the entire scheme in terms of value for public money spent?"

Under the planned regeneration, the ground floor of Building C will be completely remodelled to create space for an air conditioned recording studio, the relocation of the Glastonbury FM community radio station (which is currently based in Building B) and a canteen with space for 50 diners.

The ground floor will also include a self-contained "youth area" multi-function space, space for the 'Mini Makers' community arts and crafts workshops (aimed at young children), a well-being therapy centre, a shop and a community laundry for members of the 'non bricks and mortar' community.

The first floor will be an open plan space with facilities for craft industries, including leather-making, textiles, art, sign-writing and screen printing.

Offices with hot desking will be available on the same floor, with double glazed roof lights being installed along with solar panels and new connections to the other two buildings.

Councillor Mike Rigby, portfolio holder for economic development, planning and assets, said that the Red Brick Building was responsible for ensuring the grant funding from the town deal budget was being properly spent.

He said: "Under the terms of our grant funding agreement, it is the Red Brick Building that is responsible for the Life Factory, including the delivery of the capital works, paying creditors and raising match funding as required.

"We identified the Life Factory as a project of concern in January, and paused grant payments because of concerns about its financial management. Shortly after, the Red Brick Building board paused the project itself.

"The Glastonbury town deal board has been kept informed throughout this process, and it has been discussed at all its 2024 meetings.

"To date, the Red Brick Building has drawn down 74 per cent of the town's fund grant allocated to the Life Factory project. This includes a part claim in May for the wages of two apprentices and ensures that essential health and safety works were legally compliant at the site.

"We have been working closely with the Red Brick Building since January to resolve this matter and find a positive way forward."

Mr Rigby – who represents the Lydeard division – said that concerns about the Red Brick Building's governance had led the council to involve independent auditors, with a report expected to be published later in the autumn.

He continued: "Earlier this year, the focus was on reviewing the project and formulating a rescue plan; during this time, the Life Factory project team was told not to incur further costs until the way forward was agreed. However, contractors continued to work at risk.

"In the spring, the Red Brick Building board took on a new accountancy firm, whose first task was to rework their accounting records. This was a huge task that took over three months to complete.

"It became clear that the involvement of the South West Audit Partnership (SWAP) was absolutely necessary, and an audit was required.

"The purpose of the audit has been to assess whether there are sound governance arrangements and financial controls in place for these projects – including checking whether the project is compliant with relevant legislation and regulations.

"The audit started in mid-June this year and a report is imminent. It is noted that the time taken to do the audit reflects the complexity of the project, its governance arrangements and financial management.

"We are currently working with professionals who are checking whether capital works done to date are of the right standard and represent value for money. This necessary work is nearly complete and is happening in parallel with the SWAP audit.

"The priority is to pay existing creditors from the Life Factory's remaining town deal grant, subject to SWAP audit outcome."

Mr Rigby said that both the council and the Red Brick Building board intended to make Building C watertight before the winter, ensuring that the remaining work could be carried out once all the outstanding issues had been successfully resolved.

He added: "The Red Brick Building's aim is to make Building C watertight as soon as possible, because the structure is exposed to the elements.

"We share their concerns and recently appointed an independent structural engineer to see whether the walls and gables of Building C could support a roof and to look at the condition of the wooden roof frame.

"The key findings are that some gable ends need further work before they are strong enough to hold up a roof, and the wooden frame is okay for now but should not be left uncovered for much longer.

"Before the roof can go on, the Red Brick Building needs to sign the Section 106 agreement to secure planning consent, secure a bat licence and procure a roof contractor.

"The Red Brick Building has also had significant unexpected structural problems with Building B that resulted in closing the event space and moving out tenants, causing a loss of income in the short term.

"When our structural engineer visited the site, he was able to confirm that the problem was crumbling bricks and not the work to Building C.

"The Building B work, which was to rebuild the foundations and walls, is nearing completion, enabling the reopening of the events space and offices. The Red Brick Building board has fundraised for the cost of this work."

The Glastonbury town deal originally comprised 11 projects, but was reduced to ten after the town deal board voted to scrap the creation of the Glastonbury enterprise and innovation hub on Beckery Road, citing the impact of high inflation in the construction industry, high interest rates and the long-term effects of the coronavirus pandemic.

Mr Rigby said the remaining town deal projects were progressing well within their allocated budgets, with two of the projects expected to be completed by Christmas.

He said: "We are working with ten projects in the Glastonbury town deal, and eight of them are progressing as planned.

"Two town centre projects are due to complete by the end of this year – the Glastonbury Abbey piazza and the sports and leisure hub.

"This will benefit both organisations in terms of their economic and workforce development, and residents and visitors in terms of their quality of life and well-being."