‘Pirates’ partly blamed for Northampton's Market Square £5.1m overspend – as scathing councillor warns future mistakes could leave council ‘totally, utterly bankrupt’

West Northamptonshire Council has approved an extra £1 million to settle a long-running financial dispute with Stepnell Limited, the contractor behind Northampton’s Market Square redevelopment.

The move brings the total cost of the project to £13.5 million and formally concludes a protracted disagreement over Stepnell’s final bill for the works, which included claims for delays and additional work caused by archaeological finds, underground utility diversions, and repairs to an old sewer.

The settlement was discussed at the council’s cabinet meeting on Tuesday, November 11, following a report recommending a confidential agreement with Stepnell. The report noted that the 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.”

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.

Tory councillor Daniel Lister, who oversaw the Market Square redevelopment, defended the project and cited external factors impacting costs including blaming ‘pirates’. He said: “Eight million of that was secured from the Conservative government on the Future High Street Fund. There will be lessons learned, I'm sure, from the team who are very capable. It was the first scheme that they did.

“They did see cost pressures from COVID to Ukraine, even to pirates. They had many different challenges on that scheme. But what it has done now is it did kickstart the investment into Northampton.

“It's secured hundreds of millions as a local authority into this town, from Stack to Waterside to Greyfriars to the Future High Street Fund. And I don't think the value of the Market Square, and yes, there is an overspend, should be understated because of what it's done for the town of Northampton. Now for the new administration to go away and use that Market Square and sell the future.”

The reference to ‘pirates’ is referring to the Houthi rebels, whose attacks in 2023 disrupted global shipping and contributed to rising construction costs.

Independent councillor Ian McCord slammed the council over its mismanagement of the project and the costly, mishandled settlement, warning of a pattern of financial recklessness. He said: “I seem to have missed the apology from Dan [Cllr Lister] when he spoke. The fact of the matter remains that we started with a project that was promoted at £8.5 million and we managed to bring it in at £13.5 million.

“And yes, there might have been extenuating circumstances, but that's the long and the short of it. We've also heard earlier others saying, well, what were you trying to hide? Now, this has only got to this meeting tonight because I insisted on it. On the 25th of September, I was presented with a paper that said, we want to sign this off quickly as an urgent action.

“And I pushed back on it and said no – this type of decision should be done in public, under the layer of transparency, so people can actually see that if you're going to spend another million pounds on the Market Square, it's right and proper that people know that in public. It didn’t even make the October meeting. It was so urgent, the item could wait for six weeks. So I really want to know what was going on with that.

“Turning to the report, it noted that a pre-contract agreement was supposed to minimise risk. But reading further, it’s clear that many of those risks were overlooked.

“It’s been mentioned many times – lessons will be learned. Please, can we change that language? At the very best, lessons will be identified. They will only be learned whenever we know that the next contract hasn’t fallen into the same traps as the previous ones.

“[Later in the report], you actually find out that lessons aren’t really being learned. And we’ve got the same contractor pulling the same tricks, asking for more money. So are the contingencies that we are allowing in these projects right? That’s what really worries me.

“And what I’m particularly concerned about is the much bigger picture. Whilst these amounts that we’re discussing tonight are annoying, they are manageable within the council’s financial envelope. But if Greyfriars, or some of these other projects, in which hundreds of millions have been alluded to, are out by a similar percentage, we are totally, utterly bankrupt.

“Because we do not have the financial capacity to fund a £100 or £200 million dropping of the ball, which would be on the same scale as what’s going on here. And that’s what worries me – do we actually have the expertise, the competence, and the wherewithal within the council to take on these much, much, much bigger projects?

“And if you want to identify any lessons, that’s the one that needs to be identified. All members need to be given confidence that we do actually have that, before we’re sitting here looking at another report with another set of figures on it, saying: terribly sorry, but can you write another cheque for many, many, many millions? Thank you.”

A West Northamptonshire Council spokeswoman said the council had been told to finalise the settlement quickly because of rising costs. When consent wasn’t given in time, officials had to renegotiate the agreement. They said the process was helped by Stepnell agreeing to cooperate, but under normal circumstances the original deadline would have applied.

Reform Councillor and deputy leader of the council James Petter also spoke, saying: "Lessons will be learned but, Councillor McCord is right, lessons learned is sometimes just words. As far as I'm concerned, paying an extra million pounds out of Northampton's budget is not progress for Northampton. It's not a good place to be in.

"However, we do need to move on from this and we are going to make sure the Market Square is used. We're going to fill it as much as we can and actually make it payable back to the people of Northampton and make it a great place to be. So even though this isn't a time to point fingers, I would love to but I'm not going to, so I would recommend this to cabinet for approval.”

Council leader, Reform Cllr Mark Arnull said: "It's another piece of legacy that unfortunately we've got to conclude for the previous administration. It's not particularly positive, but what is positive is the use of the market square as we've seen this summer with the Rugby World Cup, Diwali, Great Fire, and more recently Northamptonshire Day."

Labour’s Cllr Keith Delamere Holland added: “With other previous projects, with redevelopment in a town centre, like housing developments, where you think, OK, Northampton, medieval town, what could be underneath the ground? When you read this report, you sometimes think, why didn't no one understand that there would be additional groundwork costs and those types of things?”

The motion to approve the £1 million increase was passed.

The Market Square redevelopment, initially budgeted at £8.4 million from the Government’s Future High Street Fund, was completed at £12.5 million before the settlement and features new paving, water features, seating, enhanced landscaping, and 18 fixed stalls. It also includes 19 pop-up tents, 26 additional pop-up stalls, and space for up to 10 food concession vehicles.

West Northamptonshire Council says the settlement and completion of remaining works will allow the project to be formally closed and enable a full “lessons learned” review to prevent similar issues on future schemes, which there are many.