Crewe's Royal Arcade scheme set to be scaled back

Phase one of the scheme, involving a new bus station and car park, is set to be completed next year, but phase two is now subject to change

The second phase of a town centre development is to be scaled back, a council has said.

The scrapping of HS2 and rising costs have been cited amongst reasons for Cheshire East Council to review the second phase of its Royal Arcade scheme in Crewe.

Under the alternative proposals, a planned leisure development could be replaced by a temporary park.

The council is due to consider the alternative options later.

Work on the first phase, which includes a new bus station and a multi-storey car park, is due to be finished by spring 2024.

But a report to councillors said double-digit inflation had hit the scheme's construction costs, which have already topped £40m.

Work on phase one of the project began earlier this year

News that the high-speed rail project will not reach Crewe has affected market confidence, the council said.

The review of plans comes after the council entered into an agreement, in 2020, with Peveril Securities for the two-phase scheme in the town centre.

The local authority bought the site in 2015 and work began last year, with demolition work starting in January.

The second phase was for leisure space - including restaurants, a cinema and retail space.

'Interest rate rise'

But the report said the council needed to contemplate different options for the site because of "viability challenges".

Four options are now being considered:

• Continue with the scheme but look for other public-sector funding

• Grant an extension to its contract with the developer to allow the market to settle

• Scrap the agreement with the developer and consider a smaller or alternative scheme

• Scrap the agreement and seek temporary uses for the site instead

The council is currently favouring the fourth option.

In the report, council officers said there was leisure sector interest, but the increase in construction costs and interest rates had "adversely affected the cost".

Ending the agreement with the developer would "render unlikely" any similar development on the site in the next five years, they added.

The alternative options will be discussed later by the council's economy and growth committee.