York City Council has terminated a £9m contract with Interserve to redevelop the historic Guildhall after it judged the firm’s cost estimates to be too high.

The council awarded the contract to to redevelop the site into an office space and business club to Interserve in August, but the contract will now be re-tendered.

Director of economy and place, Neil Ferris, explained the contract had a break clause so that the council could decide whether or not to proceed with its selected partner.

He said: ‘We set up the contract following Government procurement rules and, as such, included a contractual break point after the first stage of the contract. 

‘We recognised from the start that, given the site complexity and risks around the foundation structure, there was always the chance that estimate would be higher than anticipated. 

‘We structured the procurement in this way to protect York residents from potentially spiralling costs.’