Work on a key project within the Glastonbury town deal has been "paused" as councillors and partners struggle to get a grip on rising costs.

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.

Work has been ongoing at the Red Brick Building, located of the A39 Street Road, to deliver new offices, events and community space within part of the complex, known as 'Building C'.

Reports surfaced from local residents in late-May that "bricklayers, carpenters, roofers, plumbers, joiners and labourers" associated with the project have not been paid "since March".

Somerset Council and the directors of the Red Brick Building have now confirmed work on the project has been paused to ensure the remaining funds for this work can be properly spent.

The Glastonbury town deal board confirmed in the minutes of its meeting held in December 2023 that there was "a substantial shortfall in funding" for the 11 identified projects, in light of high inflation within the construction industry.

The impact of this, along with high interest rates and the long-term effects of the coronavirus pandemic, have led the council to scrap one of the projects altogether – namely the creation of the Glastonbury enterprise and innovation hub on Beckery Road.

The council said on Wednesday (June 5) that this project would not be going ahead, with the funding allocated to this element of the town deal being redirected to allow other projects to proceed.

A spokesman said: "The situation is different for each project and not all projects need match funding against the towns fund grant. All projects are working within their available funding envelope and carefully managing their budgets.

"Project teams have been experiencing tender prices coming in over where they expected them to be, as with many town deals across the country, and as a result projects have had to carry out value engineering and consider phasing and/ or de-scoping in order to keep project costs within the available funding envelope.

"Even where projects have secured match funding, the budgets remain tight. The town deal board and the council are closely monitoring the position.

"An observation is there was lower inflation when we were writing the town investment plan back in late-2020.

"Since then high inflation, increased interest rates, covid impacts and macroeconomic factors have had a huge impact on all town deals across the country, and as a council we continue to raise this with the government.

"A recent decision by the council not to progress the enterprise and innovation hub means there are now ten projects in the town investment plan.

"While this is a disappointment, it has provided us with the opportunity to reallocate towns fund grant to ensure the success of other projects in the programme.

"We have done this based on a set of deliverability criteria and are in the process of seeking approval from the Department for Levelling Up, Housing and Communities (DLUHC)."

The initial work to redeveloping Building C of the Red Brick Building (also known as 'the Life Factory') has been undertaken despite the fact that the project has yet to secure planning permission.

The Red Brick Building board of directors issued a statement confirming the pause and stating that work would resume as soon as humanly possible.

They said: "Where has been much speculation around this project and we, the board of directors and Beckery Construction Company, would like to assure our suppliers, contractors and the community that we remain committed to fulfilling all financial obligations.

"We deeply appreciate our suppliers' and contractors' continued dedication and patience during this period.

"The issues we face have been due to unforeseen circumstances and significant cost increases, which have impacted the financial plans of The Life Factory and slowed the progression of the redevelopment work.

"Additionally, we have adhered to strict government funding regulations, which required us to establish new organisational structures as we rapidly transitioned from a small community organisation to managing a much larger project.

"We have discussed these issues at length with Somerset Council and have undertaken a temporary pause in proceedings for the Life Factory while we diligently work to ensure the remaining available funds can secure us a safe, watertight building."

The directors added that the Red Brick Building would remain open during this time and work would continue on its other initiatives – including the Morlands and Baily's industry and community project, which recently attracted more than £81,000 of National Lottery heritage funding.

The directors stated: "Everyone at the Red Brick Building and the Life Factory remain committed and hold the vision of a vibrant and fully functioning community centre for arts, education and enterprise, as proposed in the original town deal, and we are currently seeking the matched funding that we require to bring this vision to life."

The original business case for the Life Factory project envisioned the project costing just over £3m, with £2.77m coming from the town deal and the remaining £250,000 from match funding.

The council, which is the accountable body for the town deal said it had recently taken steps to "strengthen" its financial processes to ensure the remaining funding was used appropriately.

A spokesman said: "In our role as the accountable body, we have temporarily paused grant payments to the Red Brick Building Centre for the Life Factory project. This is to allow issues with financial processes to be strengthened.

"Under the terms of their grant funding agreement, proper accounting processes must be followed and we are the accountable body are responsible for ensuring all grant recipients have proper accounting processes in place.

"The town deal board, as the advisory body, has been kept fully up to date on all matters involved.

"We have now made a fourth grant payment to the Red Brick Building and anticipate further grant payments will resume for The Life Factory project as soon as it is possible to do so."