Councillors have voted to put plans to build new headquarters and civic centre on hold after fears over how much part of the project might cost.
The decision to step back and review the financial implications of the entire scheme follows a directive from the European Union on how major public projects in Scotland are paid for.
It is understood the ‘ESA 10’ regulation from Brussels could impact on Forth Valley College’s bid for an £80 million complex at its Falkirk College campus in Middlefield.
The council is talking with them about building a replacement town hall on the site at a cost of £4 million - but the new rules confirmed by the Office for National Statistics last September - have put that idea in doubt.
So far the council has spent over £500,000 on professional fees moving things forward.
Now further spending has been cancelled and officers have been told to provide a detailed analysis of the costs and timeline for the entire project as they are currently projected and a full review of the alternatives available.
It will also set out the potential impact of accounting rules and VAT issues related to the proposed civic centre and assess how these might hit the overall HQ project.
The council wants the facts and figures ready by early next year.
The Labour administration has always maintained the scheme to replace its HQ and close its offices at Abbotsford House in Bainsford, Callendar Square in Falkirk and Willow House in Grangemouth and move all the staff under one roof would be self-financing.
A report to the council in August said the £1.9 million a year it costs to run them – plus the proceeds of selling the remainder of the West Bridge Street site for possible housing – would pay the bill and also deliver the prospect of a £260,000 a year saving to reinvest in a new civic centre.
At its meeting yesterday (Wednesday), council leader Craig Martin said: “Given the scale of the commitment required for this project we have to be entirely sure of all the financial implications that we could incur in the future.
“Further investigations regarding VAT issues and changes to public sector accounting rules means there may be complications in the future that leave our budgeting estimations for this project wide of the mark.
“This is new information that has led to these circumstances. Members have been kept fully aware of all the facts to date as they have been known.
“We have to remain prudent and thorough, and have asked for a more detailed report that will allow members to make a better informed decision on how the project proceeds.”
Councillor Cecil Meiklejohn, leader of the SNP Group, claimed: “The ONS published details of this change last September and yet we are being asked to accept this has appeared like a ‘bolt from the blue’.
“The news the financial model has been flawed since almost day one does not install confidence in this administration.
“I sincerely hope the coming report not only contains a full statement of costs incurred to date but also ensures good money is not being thrown after bad. It must also contain a credible exit strategy for a project that was always doomed to fail.”