The county council has had to repay £50,000 it received from a property developer to improve transport links in Watford.

The section 106 payment – made by developers to local authorities to alleviated the impact of new developments – was agreed ten years ago, when planning permission was granted for a new business development in Caxton Way.

It was agreed at the time that the money, paid by West Countryside Properties PLC, would be used to fund improved travel links – a link that was never agreed.

But a seven year time limit on spending the cash expired in March, meaning the money must now be repaid.

Liberal Democrat Councillor Stephen Giles-Medhurst said the payment was the latest in a list of failures by the Conservative controlled council to spend section 106 contributions – at a cost of more than £250,000 to taxpayers in the last five years.

Hertfordshire County Council explained what had happened. A spokesman said: "Unfortunately, it has not been possible to spend the Section 106 money from the Caxton Way development (22-34 Caxton Way) as we had planned. The £50,000 had to be spent within seven years on passenger transport initiatives and the scheme we had in mind - providing a bus link between Wolsey Road Park and Watford Enterprise Centre - did not, after lengthy negotiations, gain planning permission.

"There are strict limitations on how Section 106 money can be spent - the money has to go towards projects that relate to the development, rather than general highways work such as filling potholes or projects elsewhere. If we do not spend the money in the right way we would be in breach of government guidance and open to legal challenges.

"However, although we had to return the £50,000 the developer kindly allowed us to keep the interest, which totals over £26,000. This money will now be put towards improvements at Watford Junction station.

"We are currently running a special scrutiny session to examine how Section 106 funds are spent. This will conclude on November 26."