COUNCIL bosses have pulled out of a multi-million pound contract to refurbish York’s historic Guildhall.

The major overhaul planned for the Guildhall - which includes serviced offices, riverside access, a cafe and restaurant - has ground to a halt due to rising costs.

The city council gave the £9 million deal to Interserve in August, but has ended that contract because detailed costs turned out to be “significantly” higher than planned.

In a statement released yesterday, City of York director Neil Ferris confirmed the Interserve deal had been terminated.

He said that under government procurement rules, the contract had to have a “break point” after its first stage - when Interserve would give a detailed build specification and target cost .

“We recognised from the start that given the site complexity and risks around the foundation structure, there was always the chance that estimate would be higher than anticipated,” Mr Ferris added.

“We structured the procurement in this way to protect York residents from potentially spiralling costs."

He said: “We remain committed to the Guildhall development and are excited about the potential it offers local businesses, communities and visitors. Our next steps are to review options to reduce costs, such as revising the scale, scope or access arrangements to the site and we will invite members to confirm their preferred option in May. In the meantime, to reduce delays, we will progress less disruptive works, such as fitting new utilities.”

Council leader Ian Gillies said the council had been a “victim of circumstance” as costs had grown.

He said the ambition for the project was still there, but the council would be looking carefully at the plans before making another construction deal.

“We will go back to the market, but we will be looking at what we want and what is achievable,” Cllr Gillies added.

However, he said the project was not quite “back to square one” as a lot of work has already been done in the first stage of the contract, and that would not be wasted.

He added: “I can’t say there will be no abortive costs, but they will not be significant.”