THE estimated cost of York's new city hall has risen by £8 million in a year before a brick has even been laid.

City of York Council's relocation to new headquarters at Hungate is set to cost £35.71 million - £4.54 million higher than the figure presented to city chiefs 15 months ago, and £8.1 million higher than initial estimates.

Opposition leader Coun Dave Merrett called the news "staggering" and said the additional money could have been spent on swimming pools.

Coun Quentin Macdonald, executive member for corporate services, said the increase would not impact on council services, and said the expenditure would be recouped by efficiency savings at the new site.

He said the Hungate development would "transform the standard of service we are able to give the residents of York."

The increased cost is being funded by additional borrowing from the Government's Public Works Loan Board (PWLB), and a higher than expected income from selling the council offices in St Leonard's Place and Museum Street.

A £10 million loan will be repaid at a rate of 3.7 per cent, with the rest at varying rates up to a maximum of 4.5 per cent.

The sale of current buildings will bring in £13.1 million - £2.46 million higher than first thought.

In November 2005, the estimated cost of the new HQ was £27.1 million. Checks were then undertaken to obtain a more precise estimate, producing a figure of £31.17 million.

A report to the executive said initial figures had been oversimplified and omitted some costs.

By last October, the estimate had increased again to £35.71 million, dwarfing other council projects, such as the £17.6 million redevelopment of Manor CE School.

The council report said: "The model said that it was applying inflation, when it was in fact not. This has added £3.7 million."

Coun Macdonald said: "We knew the £27.6 million was not the full story. The £31.17 million was apparently the full story, but it was not."

The rise was compounded by the ambulance station at Hungate costing more to purchase than expected, and a slight delay to the completion date, but is partly offset by the extra revenue from the existing buildings.

Labour group leader Coun Merrett said: "It's crucial that this project is effectively managed and that there is no further rise in outlay. The consequence of this change has been to absorb more council capital, which could have been spent, for instance, on funding the pool replacement programme in the city.

"We find it staggering that such a major mistake should have been made in the inflation allowance for this project in the beginning, which was supposedly double checked by the council's own staff."

Coun Macdonald said the PWLB lent money on a case by case basis, so it was wrong to say other projects in York were losing out.

He said the Hungate development would bring huge benefits to the council, saying: "I am sure, over a period of time, the efficiency savings will be major."

The council hopes to move into Hungate in June 2010.