DELAY to the Silver Hill scheme will push Winchester closer to the edge of a “financial cliff”, city bosses were warned in the wake of a legal ruling which could set the plans back by years.

Opposition leader Cllr Kelsie Learney told a budget-setting meeting that doubts over the project’s future put public finances in further peril.

It came hours after a remarkable High Court judgment that the council acted unlawfully when it allowed developer Henderson to propose changes to the £165 million city centre regeneration.

The council’s 2015/16 budget, backed by cabinet yesterday, contains a council tax freeze and ring-fencing of frontline services.

But figures were revised to assess the “immediate impact” of the court ruling.

Cllr Stephen Godfrey, portfolio holder for finance, said the decision does “not have significant impact” on public coffers over the next two years, but outlined extra costs which could total more than £1 million.

He said the council has set aside £400,000 to cover legal fees and an independent review and will borrow up to £5 million, previously due from developer Henderson, for land bought at Kings Walk.

That interest will cost civic chiefs £170,000 per year, he added, while another £400,000 in car park revenue could be lost if the scheme does not go ahead as planned.

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Cllr Learney, Liberal Democrat group leader, said: “I think we have to recognise that the council is very close to the edge of a financial cliff and that was the same yesterday as it is today.

“The difference that the Silver Hill judgment has made is that we’re now that much closer to the edge and stopping us going over will be that much harder.”

“Rather than navel-gazing and focussing on what’s gone wrong and who’s to blame we really need to put to the residents of Winchester and concentrate on working together as a council and get the regeneration of a crumbling part of our city back on track.”

A special fund set up to tackle major projects would “cushion” the blow, he added, but civic chiefs still face a deficit of £2.5 million over the next two years.

The budget, which is put to full council for final approval on February 19, does not include costs of further action on Silver Hill, such as starting from scratch or putting it out to commercial tender.