Octagon Theatre regeneration put on hold by council

The theatre has been closed since April, with £1.77m spent to date on preparatory works, writes Daniel Mumby, Local Democracy Reporter.

But Somerset Council has halted the project due to rising costs, with councillors promising to “explore all the options” regarding the venue’s future.

Here’s everything you need to know.

What was originally planned for the regeneration?

• The Octagon Theatre regeneration was intended to deliver the following “long overdue” improvements to the building:
• An increased seating capacity in the main auditorium from 622 to 900, with enhanced technical facilities that will improve the comfort for audiences;
• Two new smaller cinema/studio spaces, predominately for film screenings but also able to host smaller-scale live performances;
• A dance studio, which will become the new home for the Octagon Academy and “the perfect place” for all dance classes;
• A community studio offering an alternative space for additional classes, as well as a rehearsal room for local choirs, theatre groups, and arts and crafts workshops;
• A greatly improved café bar area, open throughout the day;
• Improved front-of-house and customer facilities;
• Improved backstage accessibility;
• A fly tower, which can be used for flying scenery, enabling larger visiting companies to use the venue;
• A changing places toilet for those with additional needs.

How much has the budget gone up?

The project was originally expected to cost £23.01m, of which £10m would come as a grant from Arts Council England and much of the remainder would be borrowed.

The district council voted in February 2022 to allocate a further £6m to the project in light of rising construction costs, bringing the budget to just over £29m.

The project went out to formal tender in January 2023, with planning permission being granted by councillors shortly afterwards.

In the first round of the tender process, the contractors estimating that it would cost in the region of £30.7m to implement all the improvements wanted by the council.

With a further round of tendering still to be completed, it is possible this final sum could rise even further.

Why is the business case no longer viable?

Under the original business case, approved by the district council, the majority of the funding for the project – some £16,318,000 – was due to come from external borrowing.

Local authorities can borrow money from the Public Works Loan Board (PWLB – which is part of the Treasury) for major capital projects, with the money being repaid over a number of years or even decades – and often at a lower interest rate than the private sector enjoys.

When interest rates were low, borrowing this amount of money was deemed affordable – with annual repayments expected to be around £285,000.

However, interest rates have shot up as the Bank of England has struggled to tame inflation, which means borrowing is more expensive for everyone.

With the PWLB now charging councils 5.56 per cent interest on 50-year loans, the council faces annual repayments in excess of £1m for several years – the last thing it can afford at a time of huge pressures on its finances from demand on children’s services and adult social care.

These problems are compounded by the fall in other available funding sources for the project, from £2.25m to £1.312m.

Councillor Federica Smith-Roberts, portfolio holder for communities, housing and culture, said the original business case had been financially sound, but that circumstances had changed significantly.

She said: “This is not a criticism of the original business case. It is a recognition of the economic conditions which have changed.

“Ultimately, with borrowing costs now modelled at repayments of £1m a year, the original business case can no longer be met.

“We need to explore all the options to keep the Octagon Theatre a flagship venue.”

How have Yeovil residents reacted? 

Yeovil residents gave their reactions when the council’s executive committee met in Taunton to discuss the project on Wednesday morning (October 4).

Jason Welch lambasted the council for spending so much money on the project already, and called for the venue to be reopened as soon as possible to prevent further losses.

He said: “Who in their right minds really thought that this was ever going to happen in these financial difficult times? This whole scheme was never really going to get off the ground.

“What we are left with is a facility which was usable by most in the community is now closed, with a bill for £1.8m for various surveys undertaken which have likely rendered the facility unusable.

“You never had a true idea of actual costs or actual time-scales. Surely common sense must prevail here, never mind the duty to council taxpayers in Somerset.

“How can you possibly proceed with a clear conscience with this scheme? Put the building back to the way it was and get it open as quickly as possible.”

Tareth Casey, who sits on Yeovil Town Council as an independent, was unable to physically attend the meeting but described the project as “a money pit” in a statement read out on his behalf.

He said: “I believe this to have been a foolish project in the first place, and these costs add to the weight of the argument for not moving forward.

“The cost outweighs any perceived and undefined benefit. The lack of businesses willing to tender highlights a flaw in the project.

“One of the potential bidders felt the project was not feasible under the budget, so they declined to apply.

“This is not an investment opportunity – it is a money pit.”

Ray Tostevin, who runs a Yeovil-based production company, claimed that reopening the theatre without any improvements could cost £9m – a figure which the council has strongly disputed.

He said: “I am not persuaded to continue with the current proposals, with the current costs esteemed at £30m and expected to rise higher.

“£1.77m has been spent on preparatory work, and the contractor has not been finalised – so there’s no firm time-line.

“Even reopening the Octagon with an un-scoped refurbishment scheme could cost £9m. Why so much?

“Have the contractors already gutted the inside so comprehensively? It must reopen as soon as possible.”

Chris Hall, the council’s executive director for  communities, said the £9m figure was not a formal estimate and any decision on reopening the theatre would be taken as part of an options appraisal.

He said: “Reopening requires a decision on borrowing and budget, and the way to do that is an options appraisal.

“The £9m figure is not a designed scheme – that number came from a contractor.

“We haven’t taken that forward, and therefore it’s not detailed in design. I can’t give you an exact price today to what it will cost [to reopen the theatre].”

How have councillors responded?

Numerous councillors – many of whom sat on the district council when the project was first approved – used the meeting to criticise the Conservative government’s economic record, claiming the project could proceed if interest rates had not risen so sharply.

Councillor Adam Dance, portfolio holder for public health, equalities and diversity, is standing to represent the Yeovil constituency for the Liberal Democrats at the next general election, hoping to unseat current Conservative MP Marcus Fysh.

He said: “If we don’t go ahead with this project, the sensible thing is to raise the money and reopen it immediately.

“If we didn’t have this government, we might not be in such a mess with interest rates.

“If we leave it shut for three or four years, the building will get in a worse state, and the people of Yeovil and the surrounding area will be let down dramatically.

“All it’s had is a few holes knocked about in it and some stuff removed.”

Councillor Tom Deakin concurred: “It is the government’s actions in crashing the economy, causing inflation to rise and interest rates to soar, which have put us in this position.

“Frustration should be pointed at the Conservative government, which has let us down. We are doing the right thing by reviewing this project.”

Councillor Val Keitch, associate portfolio holder for local community networks and public health, served as leader of the district council until its abolition in April.

She said: “I’m disappointed with this. I don’t think there was anything wrong wit the original base case – do people really think the Arts Council wouldn’t have given us £10m if they thought there was something wrong?”

Councillor Mike Rigby, portfolio holder for transport and digital, said the options appraisal should try to deliver as much of the original project as possible, given the wider financial position of the council.

He said: “We’re not being asked to cancel this project – let’s make that very clear. All options remain on the table.

“I have some sympathy with Mr Tostevin’s very well-argued plea [to reopen the theatre], and I’m pleased that remains an option.

“But before we do that, we have a duty to see if we can put together a business case which retains some of the original ambitions.”

Councillor Graham Oakes, however, warned that simply reopening the theatre in its original form would lead to the Arts Council grant being permanently withdrawn, damaging the long-term viability of the arts in and around Yeovil.

He said: “If you reopen the theatre, £10m will go straight back ot the government – and that won’t be back again.

“The council will be blamed for breaking its promise. The way we get out of this mess, rather than being Treasury-led, is to build this project.

“If we choose not to build this, it will be viewed badly by people – as a Lib Dem, I know what the consequences are when you break your word.”

What happens next?

The committee voted to instruct council officers to undertake an options appraisal, looking at the options for the future of the site and forming the basis for a revised business case.

The options could include (not an exhaustive list):

• Proceeding with the project in its current form if additional funding can be found;
• Proceeding with the project in a scaled-back form, with a smaller number of improvements being delivered;
• Cancelling the project and reopening the theatre in its original form.

Officers will work with Arts Council England and the Department for Culture, Media and Sport (DCMS) to put together the revised business case.

Mr Hall said the numerous options would come back before the executive “as soon as is reasonably and practically possible”.

A special meeting of Yeovil Town Council, to discuss how it can support the theatre going forward, will be held at Westlands Entertainment Venue on Westbourne Close on Tuesday (October 10) at 7.30pm.

An online petition to reopen the theatre, which has more than 400 signatures as of Thursday morning (October 8), can be signed by visiting www.change.org/p/reopen-the-octagon-theatre-don-t-risk-it-s-long-term-future.