Money from a pot of £300,000 could have been available for a community bid for the Drill Hall, for which three commercial bidders competing.

Councillors have hit out at what they say is a lack of clarity over the use of the cash – part of an agreement when planning permission was given for the site of the former Fortfield Hotel, which burnt down in 2011.

Permission to build the Sanditon development included a contribution of £300,000 towards tourism in the town.

The district council says members have been aware since 2015 that the cash is available, but now two councillors say it was never made clear the cash could have formed part of a bid for the Drill Hall. Independent councillors Matt Booth and Cathy Gardner have become embroiled in exchanges with council chiefs, including CEO Mark Williams, now that bidding has closed for the Drill Hall.

In an email to Mr Williams on February 11, Cllr Gardener denied his claim that councillors were aware that the cash would have been available for a bid.

“Any bid that we might have put forward would have been judged on its merits,” she wrote. “The support that could have been achieved from other organisations with match funding should not be underestimated.”

She added said the money ‘would almost certainly have been a game changer for’ a bid.

Mr Williams replied that councillors knew about the money, but added community bidders ‘wouldn’t have been encouraged’ to factor the cash in a bid as, in his opinion, it would ‘throw doubt on the viability of their schemes’.

The council was asked by the Herald to clarify statements made during the dispute about what advice was given by council officers about the availability of the funds. A spokesman responded that the majority of the £1.5million total had been spent on affordable housing.

The spokesman added: “Focus will now turn to plans for this element and the town council will play a key role in determining how this money can be used to benefit the town.

“At a district level, councillors in Sidmouth have been aware since 2015 that this money is available and will no doubt want to be fully involved in working with Sidmouth Town Council to ensure this money is used to the best advantage of the town and its tourism.”