NEWPORT council has agreed to pay costs of around £1.2 million up front for the demolition of Newport Centre, after costs of clearing the current site have spiralled.

Plans for a new seven-storey building on the site of Newport Centre were submitted by Newport City Council and Coleg Gwent. It will be for educational use, in addition to having shops, restaurants, offices and a hotel.

On October 5, the council’s planning committee unanimously approved the outline planning application, in line with officer’s recommendations.

At a cabinet meeting on Wednesday, however, leader of the council Cllr Jane Mudd said that the cost of demolishing the current Newport Centre had risen over and above the original estimate.

The rise in costs has been attributed to “market instability and rapid inflation”.

The land is valued at £870,000, and Cllr Mudd proposed the council would front the costs of the demolition – now expected to be around £1.2 million – with Coleg Gwent agreeing to then pay the original £870,000, along with half of the costs over that amount.

Last week, Cllr Mudd said the council faced "very few choices" after revealing a budget gap of £33 million in the coming year.

Coleg Gwent’s board have already agreed to the deal in principle, the cabinet was told, with the decision set to be ratified at their next meeting.

“Whilst it was previously envisaged that the capital receipt for the land would have covered the cost of demolition, we are very much aware now that project costs have been subject to unprecedented inflation and we are now there to be an additional cost over and above the value of the site,” said Cllr Mudd.

“Because of the timescales involved, the council will have to fund the entirety of the demolition costs up front.

“Coleg Gwent will seek to reimburse their share of the costs above the land value price once the demolition works are complete, with the £870,000 land receipt paid once the lease is granted.”

The full cost of the demolition work will be confirmed once the tendering process is completed – at the end of December.

The council and Coleg Gwent have also agreed to share the costs of around £213,000 which have already been incurred through applying for planning permission, undertaking technical surveys and other project costs.

Cabinet member for education, Cllr Deb Davies, said: “This project is transformational. It provides us opportunities. It achieves our priorities that we have clearly set out.

“I think we absolutely have to do this.

“It’s also transformational for our city.”

Cllr Debbie Harvey, cabinet member for community wellbeing, said the project was “an ambitious plan”.

“It’s got to move forward,” she said. “Coleg Gwent need the space, and we need a state-of-the-art pool and leisure centre for future generations.”

The cabinet agreed to the cost-sharing plan, and to include all required land within the disposal agreement to Coleg Gwent.