WORK has started on the final phase of a £15m flood defence for Banbury – to prevent hundreds of homes and firms from flooding.

The move will also pave the way for a multi-million pound regeneration of Canalside, which could involve 1,200 new homes, shops and a school. In a joint initiative, the Environment Agency, Cherwell District Council and local businesses teamed up to pay for the scheme after the Government withdrew funding in 2006.

A giant earth dam will be built on land between the M40 and Daventry Road, and should prevent a repeat of the town’s worst-recorded flood in 1998.

In 2007, 80 homes and businesses were affected by floods after a day of torrential rain. Afterwards it cost £532,564 to get the old Spiceball Sports Centre up and running again because it had been uninsured.

The anti-flood scheme will protect 441 residential and 73 commercial properties, including Banbury Railway Station and Grimsbury Water Treatment Works.

From March 28, part of the A361 between Banbury and Daventry, from Banbury Road the Williamscot Hill Spinney Road, will close until July 11.

Work will involve raising the height of the road along a 860-metre stretch to reduce the risk of the road flooding because of the scheme.

Banbury MP Tony Baldry said: “I am pleased to see the final phase of this important scheme get under way.

“This flood alleviation scheme will provide Banbury residents with a much higher level of protection from flooding, as well as benefiting the local environment.”

Environment Agency flood risk manager Barry Russell, said: “We’ve had a huge challenge trying to reduce the risk of flooding to this area, but we’re now pressing ahead with the job. We can’t stop flooding completely but we’ve taken action to reduce the risk.”

George Reynolds, Cherwell District Council’s environment chief, said: “I’m sure this work would not have been possible without the council’s £2m funding and other large contributions from firms in the area.”

Parts of the flood defence have already been completed, including work around Moorfield Brook Pumping Station, which protects more than 300 houses in the Grimsbury area from flooding.

A circular walk has been created north of Banbury as part of the scheme.

l Cherwell District Council unveiled its masterplan for the 45-acre Canalside site, between Bridge Street, Cherwell Street and the railway line, in 2009. It is a planning guide to any potential developer. Businesses and the football club would have to relocate if the proposal goes ahead.

Any redevelopment of Canalside was dependent on the anti-flood work.