PLANS to spend £1.25 million of South Lakeland taxpayers' money on a scheme to re-open the Lancaster Canal as far as Kendal have been put on hold.

The ambitious canal project, which could one day see barges sailing into the heart of Kendal, could cost as much as £30 million.

District council officers had suggested that SLDC made a £1.25 million commitment to the scheme over the next five years.

But, after hearing of a £600,000 budget shortfall, councillors agreed to allocate just £15,000 during 2001/2.

Members of the economic development subcommittee had been told that restoring a 14-mile stretch of the canal from Tewitfield to Kendal, had the potential to create 1,800 jobs.

After allocating £15,000 towards the scheme members also resolved to take up an earlier offer made by Westmorland and Lonsdale MP Tim Collins, to broker a meeting with Lord Whitty, minister for canals, in the hope of securing extra central government money for the project.

After the meeting, chief executive of the Waterways Trust Roger Hanbury said the allocation of £15,000 was positive news.

Cumbria County Council's South Lakeland area committee this week agreed to allocate £ 2,000 grant towards the cost of appointing a Waterways Trust project manager.

Mr Hanbury told the area committee that small demonstration restoration projects would soon begin along the canal and a conservation plan for the Northern Reaches was being drafted.

Work on the canal is expected to begin in 2005.