Northampton Market Square costs rise AGAIN as taxpayers face £1 MILLION bill to settle council's dispute with contractor

A report going before the council’s Cabinet this week recommends signing a confidential settlement agreement with Stepnell Limited, the firm that carried out the £12.5 million revamp of the historic square.

If approved, the deal would increase the total cost of the project to £13.5 million and bring to an end a protracted disagreement over Stepnell’s final bill for the works.

Stepnell has claimed around £2.3 million more than its original contract price, blaming delays and extra work caused by issues such as archaeological finds, underground utility diversions, and repairs to an old sewer.

The council disputes parts of that claim, arguing that some of the extra costs were already covered in the contract. Both sides agreed to enter mediation in August this year in an attempt to avoid costly court action.

According to the report, the proposed settlement “demonstrates the best final account position that WNC can achieve whilst minimising the significant exposure to further cost from continued dispute at further adjudications or court proceedings.”

Council lawyers Sharpe Pritchard advised that the settlement amount falls within an acceptable range and would likely cost less than continuing the legal fight.

The additional £1 million will come from the council’s General Fund, which is the main pot of money used to pay for local services and council operations. It is funded largely by local council tax, business rates and government grants, meaning the settlement will ultimately be covered by taxpayers.

The money will fund both the agreed settlement payment and the cost of completing remaining project work.

If the settlement is approved, Stepnell will carry out final snagging, fix minor defects, and provide outstanding subcontractor warranties – actions needed to formally close the contract.

The report warns that if the deal is rejected, the dispute could drag on through adjudication or court proceedings, leading to higher legal costs and further delays in completing the project.

The report also lists several lessons for future major projects. These include better planning for cost inflation, carrying out more intrusive ground surveys before construction, and considering different types of contracts that allow for more flexible management of unforeseen risks.

WNC says: “Given the time that it took from preparing the cost plans to government granting the funding, greater risk and optimism bias mitigations could have been built into the budget to account for further unforeseen events.”

The council plans to carry out a full “lessons learned” review once the final account is settled.

Reform Councillor James Petter, cabinet member for local economy, culture and leisure, said: “We know this wasn’t the outcome anyone wanted. We’re taking responsibility and learning from it. Our approach to construction contracts, risk and procurement needs tightening, and we’re already reviewing those processes to make sure this doesn’t happen again.

“That said, the new Market Square is already transforming the heart of Northampton. It’s busy, it’s vibrant, and it’s drawing people back into the town. Events are bringing thousands of visitors, boosting trade and breathing life into local businesses.

“West Northamptonshire taxpayers are seeing a return on their investment, and private confidence is up because of it. Settling this now lets us draw a line under a complicated build and focus fully on the benefits the space is already delivering for our community.”

The Market Square project was delivered under the previous Conservative administration, with current Tory leader Daniel Lister overseeing the scheme as cabinet member for town centre regeneration at the time alongside head of major projects and regeneration at WNC Kevin Langley.

The redevelopment caused major disruption for traders, who were relocated from Market Square to a temporary site at the Commercial Street car park during construction. Many stallholders described the move as disastrous for their livelihoods, with some referring to the site as “hell” due to low footfall, poor conditions and reduced takings.

Last year, in October 2024, West Northants Council told the Chronicle & Echo that the £12.4 million Market Square scheme was “not over budget” – despite sharp rises from the original £8.4 million figure approved in 2021.

A council spokesman said at the time: “I’m still working to the budget I was set in 2021. The £8.4 million budget that was the grant we had from the Future High Street Fund. The cabinet report in 2021 set the budget I’ve been working to ever since [£12.4 million]. It’s never gone above budget.”

The Market Square scheme, funded largely through an £8.4 million government grant from the Future High Streets Fund, began as part of the Northampton Town Centre Masterplan in 2019.

The project was initially expected to take 18 months but overran by four months, finishing completely by the end of November 2024, with WNC spending £86,000 on the grand opening event.

It features new paving, water features, seating, enhanced landscaping, a dedicated events space, and 18 fixed stalls. These bespoke stalls are equipped with electricity, water and lighting, along with 19 pop-up tent stalls and an additional 26 pop-up stalls in the events area. The market can also accommodate up to 10 food concession vehicles.

In April 2024, it was revealed by this newspaper that the redevelopment had reached a cost of £12.4 million. The initial project cost was £8.4 million, fully funded by the Government’s Towns Fund. This figure later rose to £10 million during construction and then £12.4 million. WNC attributed the increase to ‘construction costs being significantly higher because of inflation and the lasting effects of the pandemic’.

Cabinet members are expected to discuss the report at a meeting on Tuesday, November 11, and decide the next step.