THE under-threat £575million Queensway homes scheme could potentially put Southend Council into bankruptcy, it has emerged.

The ambitious scheme to build 1,700 homes ground to a halt when the “barely viable” scheme was dropped by Sanctuary Housing after it took over Swan Housing.

Southend Council is already facing a £14million financial black hole.

And on Thursday, council auditors warned if the scheme has to be officially ditched, the £8million of capital costs accrued so far will be transferred to the council’s revenue budget.

At the policy and resources meeting, council leader Tony Cox said: “Difficult decisions are going to have to be made to wrestle that position back. If we don’t we will be ending up in s114 territory. That’s the reality of it.”

Mr Cox said it was going to be “incredibly difficult to get that back to zero” and the council only has £20million of reserves that could be used.

He added: “One of the things that has come to my radar recently is the amount of capital expenditure costs there were on the Queensway development because it looks highly likely we’re going to add those £8million costs to the revenue budget. It’s extremely worrying indeed.”

Former council leader, Ian Gilbert, disagreed.

He said: “We were briefed extensively on Queensway. Our understanding was as long as there was still a credible intention by this council to proceed with a scheme on the Queensway site, that would not be the case and that would not need to happen.”

Speaking after the meeting, Mr Cox added: “If you know there is a £14million deficit and I might have to put £8million back on our revenue budget because of the disaster of the unviable project for Better Queensway and I’ve got £20million in reserves - do the maths.

“It makes the level of savings I’ve got to find a darn sight harder.”

At the meeting the leader of the Labour Group accused the administration of not acknowledging a lack of Government funding.

Daniel Cowan said: “Pressures are increasing on statutory services. We see there is a £14million overspend but what’s not being said is £13.4million of that is in children’s and adult services, two statutory services. It does a disservice to residents to weaponise those pressures to say look how bad the other side is with money.”