A “major mistake” was made by “not listening” to Paisley businesses concerned about a controversial cycle path idea earlier, the leader of the Labour group has claimed.

The proposal for Causeyside Street, which included a two-way route between Canal Street and Gilmour Street stations and so-called ‘floating bus stops’, was dropped after pressure from the community and town centre traders.

A petition launched by Paisley First, the business improvement district, which called for a rethink, gathered more than 2,500 signatures.

Councillor Iain McMillan told Wednesday’s leadership board: “I welcome the change of heart in terms of Causeyside Street … I think the big change in people’s thinking of it was the meeting that was held a few weeks ago by the business community in Paisley and in particular in the Causeyside Street area.

“It was quite clear that evening that the businesspeople didn’t want this. They saw it as going to have a bad effect on their livelihoods.

“These people put a lot of money into these shops, they invest huge amounts, they re-mortgage their houses, they make sacrifices to run their own businesses and anything that they see that could be detrimental to that, they’re going to fight against it.

“I think we made a major mistake in not really listening early doors to what the businesspeople were saying.

“It was quite late in the day when they had that meeting.”

The council was awarded £920,000 from the Low Carbon Travel and Transport Challenge Fund for the regeneration project – of which it has claimed at least £144,000.

However, a report confirmed it will not draw down the remaining amount, because it had a spending deadline of the end of September and the proposals “will not move forward in their current form with a segregated cycle route”.

The local authority is considering bus priority measures and ways of improving traffic flow and safety at and around four town centre junctions.

Councillor Alison Ann-Dowling, Labour group finance spokesperson, said it was “regrettable” that such a “huge chunk of money” would now not be used for some form of project in the area.

She added: “The intentions were good behind it … but the practical reality of how the route would work when you’ve got pedestrians, getting on and off buses, having to look for cyclists and vice versa, that on its own really does justify pulling these proposals.”

SNP council leader Iain Nicolson said: “This was part of the consultation and that’s the outcome of it.

“Just because we have funding doesn’t necessarily mean every project will go ahead.

“I am aware of other proposals that came forward and it’s dependent on the outcome of consultation.

“We’re not committed to spending the money at any cost, we’re committed to listening to what the consultations tell us.

“That applied to Causeyside Street, as it did to other areas as well.

“We made a commitment a couple of years ago with regards to proposals like this, they had to have the backing of the local community and that includes businesses as well.”

Councillor Michelle Campbell, SNP convener of the infrastructure, land and environment policy board, added: “When I spoke with Paisley First on Friday of last week and I met with businesses from Causeyside Street … they were able to give me some really decent feedback, not just about this but other aspects that need to be looked at, and the collaborative approach and relationship that they have had with the council in the past and they’re keen to continue that.

“It’s just to give that assurance that, as the convener, I heard what was being said and I acted on that.”