After a £20m increase in the arts centre’s budget was signed off by Manchester City Council yesterday, minutes have revealed the council had looked at scrapping the £130m scheme entirely before agreeing to borrow money to support the project.
At the start of the month, the council said it would need to provide an additional £20m towards The Factory, designed by architect OMA, in the face of rising construction costs and design issues. This will bring its contribution to the project’s capital budget up to £40.8m of a total £130.6m; in total, The Factory will provide facilities including a 1,520-seat theatre.
Minutes from the council’s resources and governance committee, which took place on 8 November, have revealed leaders had looked into “scaling the project back, value engineering, and even scrapping [it] completely”.
However, council leader Sir Richard Leese said axing the project would have incurred costs to the council of £23m, “with little left to show for it but an empty piece of land”.
Similarly, taking a value engineering approach would have “taken away some of the project’s purpose, putting grant funding from central Government at risk”, and would have also failed to deliver sufficient budgetary savings “to make it deliverable”.
Leese added that the situation of a budget increase “was not ideal” and acknowledged “it did not portray a good picture to Manchester residents”.
The council initially said the costs would be funded entirely through receipts from sales of council-owned land, which it said “has significantly increased in value during the extended design period.” However, this is now to be met with prudential borrowing instead, as per a recommendation made to the committee on 8 November.
At the council meeting yesterday where the cost increase was signed off, Lib Dem Cllr John Leech criticised the rise in the project’s budget, citing a report from 2015 which said there was “no risk of exceeding the budget”, which was then £110m – this was a maximum the council was expecting the project to cost.
“The question we ought to be asking ourselves is, how many other reports are coming to the executive giving no indication there is a serious risk of the costs to the council being significantly more than is reported?” he said.
“Residents in Manchester have a right to know whether council reports accurately reflect the financial risk to the council. Cllr Leese ought to come clean and admit how many other reports have underestimated the potential financial liability to the council.”
In response, Leese said he had given a “very detailed account” of the cost increases and added the council had been subject to an independent review carried out on behalf of the Treasury and Arts Council England, which took place last week.
Leese added the outcome of the review had been “incredibly positive on the progress we are making with this project”.
As a result of the cost increases, the council has agreed to provide quarterly updates to the resources and governance committee on The Factory, and its progress against agreed costs.
The 145,000 sq ft venue is to be managed by MIF, which will create its artistic programme. A revised planning application was approved in July this year and the various land deals required to secure the site concluded in August.
Manchester’s required contribution is still less than a third of the total, with slightly more than £78m coming from the Treasury and a further £7m in Lottery funding from the Arts Council going for approval in January. Central government is to contribute £9m a year in running costs for the first three operational years at the facility.
Laing O’Rourke is on board as contractor and is set to start on site next year.
Leese added: “There is nothing like The Factory anywhere in Europe, let alone the UK and its game-changing impact for Manchester and the North of England cannot be overstated. That’s why it has been able to attract so much central government funding and is such an exciting prospect.
“Compromising on The Factory’s quality and ambition would have undermined its uniqueness, its purpose and the benefits it will bring. It’s a bold and ambitious undertaking and such projects do not come without complex challenges which we have tackled head on now so we can be confident going forwards.”
The professional team on the project features Buro Happold as structural and facades engineer; Gardiner & Theobald as project manager; BDP as services engineer; Charcoal Blue as theatre consultant; Level Acoustics and Vibration as acoustic engineer; Vectos as transport consultant; WSP as fire engineer; Deloitte as planner; and Planit IE as landscape architect.