Serious concerns have been raised over a council spending money on non-urgent projects amid the collapse of the sale of the North Quay offices and the loss of £4.5 million.

Leader of Weymouth and Portland Borough Council Cllr Jeff Cant warned the authority would look "foolish" if it ended up with little in the coffers and was facing an emergency – such as the collapse of a harbour wall.

It comes as the council is to look at new options for its former offices on North Quay after announcing it would be withdrawing the contract for its sale to developers who had failed to complete the sale as per the contract.

With uncertainty over North Quay, Cllr Cant attempted to persuade the management committee, without success, that the council should not be spending £450,000 from the capital receipts fund to purchase two properties to temporarily house homeless people. This is an initiative which came before councillors as an alternative to using expensive bed and breakfast accommodation which could save money long-term.

But Cllr Cant, chairman of the committee, said: "This is very unfortunate timing for this paper. Without the sale of North Quay it is difficult. My main concern is with about £1 million in capital receipts and no capital receipt from North Quay, if a harbour wall was to collapse into the harbour we would look foolish with no money. It is an excellent paper but we are not able to afford this.

“Against the backdrop of recent events I think we probably have to vote against this, but I encourage it to come back when we are clearer about where we are going with capital receipts.”

Despite his concerns, Cllr Gill Taylor argued that the purchase would create "substantial savings" for the council.

She added that the money is available and if a harbour wall were to collapse the council could borrow money.

The committee agreed to grant the £450,000 from capital receipts but wanted to hear regular updates on the initiative and feedback from officers looking for the appropriate properties on the market.