Spending on a controversial seaside development could be paused as soaring costs mean the project cannot be delivered within existing budgets.

A report released today blames turmoil in the leisure, energy and financial markets for the spiralling bill for the regeneration of the Princes Parade site between Folkestone and Hythe.

It recommends that Folkestone and Hythe District Council, which is driving the scheme, now puts spending on hold to allow officials to reassess the proposals in light of the deteriorating financial outlook.

Soaring energy prices, the recent increase in the cost of borrowing, and time-limited fixed contracts have combined to put the scheme as it stands in jeopardy.

Freedom Leisure, which has been selected to operate the new sports centre on the site, says energy costs have increased by 110% for electricity and 184% for gas in the year since it tendered for the work.

The council has also seen its cost of borrowing leap from 2% to 5% following the calamitous 'mini-budget' which brought down the Truss administration.

According to today's report, it is anticipated that if the project does not proceed, the council would suffer a financial loss in the region of £4-5 million.

The report states: "Significant work is underway to deliver a new leisure centre, housing and public open space at Princes Parade in Hythe.

"This report gives an update on key matters since decisions were made in early 2022.

"It also concludes that in response to significant recent changes in the leisure, energy and financial markets giving rise to a high degree of cost pressures and uncertainty across the economy, the council is unable to deliver the project within existing budget."

A decision will be taken by the end of the month by the council's leader, Cllr David Monk.

He said: "It is disappointing that we have a recommendation that there should be a pause in spending on the development.

"However, at this time of uncertainty in the financial and energy markets and the potential effects on Princes Parade it is right that I should be asked to consider such a pause whilst we consider the ramifications.

"As a council we must be prudent in our stewardship of public resource and take a breathing space to consider the options available to us."

Cllr Tim Prater, who has been an outspoken critic of the scheme, says it's is not too late for the council to rethink in light of the changed economic circumstances.

He said: "I've lost count of the times since 2019 that we've said that the Princes Parade development is not just the wrong thing to do environmentally and ecologically, it's also massively expensive and hugely risky.

"Although I don't like to say we told them so, we really, really did. Repeatedly.

"And finally, as the costs keep spiralling and the economic position worsens, it seems that even the council leadership is starting to understand.

"There is too much risk in this project. It will already leave this council with debt for the next 50 years, and that's before we see a revised picture that will be even worse.

"It's not too late. FHDC can still stop this madness, and build a massively cheaper and better centre at Martello Lakes with massively less risk. We've been telling them for years, and we were right then, and we're right now."

Shepway Green Party has criticised the council for ignoring warnings the scheme was financially risky.

Cllr Jim Martin, deputy leader of the Green group, said: "At last the council has seen sense. While recent financial turmoil and rising energy costs made it inevitable that council officers would recommend this pause in the scheme, anyone could have seen years ago that Princes Parade was too financially risky.

'It is unlikely it will ever go ahead...'

"We did see the risk, and we have continued to warn the council leader, David Monk, and other Conservatives but they were hell bent on proceeding, even choosing to ignore a vote in full council to withdraw planning approval in 2019.

"If, as looks inevitable, the development is paused, then it is unlikely it will ever go ahead.

"While that’s welcome, four to five million pounds of council-tax payers’ money will have been wasted, causing huge challenges for the council in such already difficult times and the site will have been cleared of precious plant and animal life for nothing."