A nationwide skyrocketing of construction costs has left a funding gap for a delayed multi-million pound bypass project, Gwynedd councillors have been told.

Builders have reported struggling to complete jobs at their quoted price due to soaring costs of materials, with labour shortages also reported in the wake of the pandemic, Brexit, and the energy crisis.

Despite EU funding and planning permission in place, work on the £14m Llanbedr bypass was paused in June following Welsh Government’s decision to halt all new road building schemes while a review is carried out.

Now Gwynedd’s audit committee members have heard nationwide building issues have also taken their toll, with concerns that even the £7.5m of European Regional Development Funding could be an issue if delays persist.

Chief finance officer Dafydd L Edwards said: “Planning isn’t a problem and money has been earmarked. However, Welsh Government has announced it is reviewing all road building projects, which is understandable due to what’s going on with climate change.

“They have agreed to fast-track Llanbedr so we don’t lose EU funding and officers have met the independent chair of the panel and we are waiting for a decision over the coming weeks.

“If a decision is made we can proceed without losing the grants, but the delays have raised other risks.

There’s been a rise in material costs and we need to discuss with the government how we close that gap.”

A separate report, presented to cabinet on Tuesday, confirmed the authority intends to spend £71.6m on capital projects during 2021/22, with £26.1m of it (37 per cent) being financed by attracting specific grants.

Among earmarked projects is a start on a new primary school building to replace the ageing Ysgol Treferthyr in Criccieth, cash towards the ‘Nyth’ project in Bangor, transport and projects associated with its £77m housing action plan which includes new builds as well as bringing empty properties back into use.

But chief executive, Dafydd Gibbard, said it “made no sense” to proceed with some projects until the market had stabilised.

“We’re seeing an impact on building tenders with costs being substantially higher than budgets and the kind of prices we were basing them on a year ago.

“Forecasts suggest this will be a temporary issue so in some cases we’ve decided to hold projects back, it doesn’t make sense to accept tenders of up to 70 per cent higher than they were a year or two ago, and we live in hope there will be a restoration to normality. Until then we will prioritise and hold some back.”

Gwynedd Council said: “Rising costs in capital projects is a matter public bodies across the country continue to monitor.

“In terms of Llanbedr, we await further details from Welsh Government regarding their review, and will be better placed to consider any possible rise in potential costs at that time.”