Somerset Council’s Executive will discuss redevelopment plans for Yeovil’s Octagon Theatre in light of rising interest rates.
The business case for the Octagon redevelopment was initially approved on the premise of borrowing £16.318m which would be repaid, plus interest, by users of the venue through tickets sales and the ticket levy.
Since then, interest rates have risen four-fold, from 1.5% when the business case was approved to around 5.6% last month – dramatically increasing the costs of the project, even if construction costs stay the same.
Local government finances are under pressure nationally and last month Somerset Council published budget papers showing a projected £26.1m overspend for the current financial year. This has led to a review of all spending, including capital projects, to ensure core services for those most in need are protected.
Officers are speaking to funding partners – including the Department for Culture, Media and Sport (DCMS) who have announced £10m towards the development and their delivery partner, Arts Council England – to ensure they are updated on the progress of the project. The Council is also continuing to work with other partners to seek additional funding for the project.
Executive Members will receive an update at their next meeting on Wednesday, 4 October and agree the next steps. Find the Executive papers and agenda for this meeting using the hyperlink below.
Councillor Federica Smith-Roberts, Lead Member for Communities, Housing and Culture, said:
The report to Executive essentially proposes to give officers more time to consider what might be possible for this much-loved and very successful venue.
Work has progressed well to date but these are factors outside our control which will massively impact on costs, and we need to carefully consider the way forward. We want to be open about the challenges we need to address, the reasons for them and the possible next steps.
Arts and culture are important for Somerset – it’s part of what makes our county a great place to live and also attracts outside investment.
We absolutely understand the public interest in this, we’re committed to keeping our residents informed every step of the way and it is important that we are open about the options available to us.
The Octagon Theatre has been closed since May this year to allow contractors to carry out detailed and intrusive survey work ahead of the development. This was required to inform the project team what needs to be put into the more detailed contractor’s specification for the next phase of works. With hundreds of access points made to expose its structure, the venue will need to remain closed until further work has taken place.