Costs have increased by nearly £700,000 for plans to develop redundant council offices in Hadleigh into homes, it has emerged.

Babergh District Council chiefs are next week set to increase the debt threshold for its holding company in order for work to begin later this summer.

The council secured planning committee backing to turn its old Corks Lane offices into 57 homes in March 2019, after moving to a shared base at Ipswich’s Endeavour House.

The final planning permission was only secured in March 2021 as a result of several delays, including negotiations with the neighbouring cricket club, but a condition means work must start by September this year.

However, a report to the council’s rainbow cabinet has confirmed that increasing costs in the construction market, and impacts from Brexit, the war in Ukraine and inflation has caused the cost of the scheme to go up by £680,000.

The council said it had measures in place to mitigate that, but needs cabinet’s approval next week to increase the debt threshold of its holding company, Babergh Growth Ltd, from £3.7million to £7m to facilitate the necessary cashflow.

It said that without the change it would exceed its £3.7m limit which means contractors would not be able to begin on site and the planning permission will expire.

Cllr John Ward, Independent Conservative leader of the council, said: “This is not about a bill for the taxpayer increasing by millions – this is purely to do with cashflow during the phasing of the project and the governance around the amount Babergh Growth Ltd can borrow to deliver it.

“Ultimately, the development is still expected to break-even or even show a modest profit for the council, with new homes and investment for Hadleigh – but only if we can release the cap to borrowing that was imposed, based on cost estimates and phasing from four years ago.”

But the opposition Conservative group said the council should consider selling the site. It said the £500,000 valuation for the site was “not credible” and hadn’t been tested in the open market.

Conservative group leader Simon Barrett said: “We are concerned they want to up the borrowing requirement from £3.7m to £7m, which is worrying because the whole project is very marginal whether it makes any money.

“It values the site at £500,000 which is ridiculous.

“We would suggest that it would be better to put it up for sale in the open market and see what bids we get."