Contractors who lost out when a developer behind a major housing project in Powys collapsed are not expected to get any backing from the county council.

The housing development on the former Red Dragon public house and Maesyrhandir Youth Centre site in Newtown was opened last year, but in February 2023, Old Colwyn-based building firm R L Davies and Son fell into administration.

A report by Powys County Council's internal auditors SWAP was brought before the Governance and Audit Committee for discussion on Thursday (April 18).

Cllr Peter Lewington, who represents Newtown West, brought up the problems with the project which prompted the probe, and asked for details of the council's liability to subcontractors.

Director of corporate services Jane Thomas said: “In term of the council’s liability, our responsibility of payment is to the main contractor.

“Unfortunately, that means we have no liability for the payment of sub-contractors as they are not supplying us but the contractor.

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“They would put forward any claims through the administration process.”

Cllr Lewington said that he was pleased to see that the audit review had had brought up lessons to be learned which are being worked on to ensure these “failings don’t happen again.”

But he added: “I really do think we need to reflect on the financial damage that has been done to the subcontractors involved in this development.

“The report confirms the council’s main concern was getting control of the asset and completing the development – there does not appear to be much thought about the sub-contractors.”

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He believed that if a project bank account had been put in place as the sub-contractors were led to believe this would have meant the money paid by the council to the contractor would have been “ring fenced”.

Cllr Lewington: “Consequently I ask the council to consider reimbursing all of the sub-contractors who are now thousands of pounds out of pocket.

“They cannot be expected to pay for the council’s multiple failings – we really need to do the right thing here.”

Committee chairwoman and lay member Lynne Hamilton said: “What I’m going to do is ask for is a paper to come to committee to explain in detail the council’s response about compensation – just so we know exactly where we are on that.

“I think it’s worth setting out for the record the limitations of our powers and why, if we cannot pay compensation exactly why legally we cannot.”

A further question brought up by Ms Hamilton is whether there’s a risk the sub-contractors would use the SWAP report to mount a legal challenge against the council.

The committee agreed the proposal for the compensation legal position report.