Manchester to pump yet more money into Factory as costs climb
The city council has confirmed it will need to borrow at least another £20m to finish the 143,000 sq ft arts venue, with a warning the final budget for the flagship cultural project could exceed £230m.
Rising inflation and ongoing design fees mean the cost of Factory International – recently renamed Avivia Studios – will be more than double the 2017 projection of £110m, made after plans for the project were approved.
The cost of the scheme will rise from £210m to £219.7m this week when Manchester City Council signs off £8.7m of borrowing for the building and an additional £1.1m to complete public realm works to create nearby River Square.
There will then be another cost rise in September, which will be “more than the [£9.8m] amount being requested this month”, according to the city council.
Manchester City Council cites the “volatile economic climate and the complexity and uniqueness of the building” among the reasons for the soaring costs.
Other reasons include high material and labour prices and acceleration costs, relating to 24/7 working to ensure the building was sufficiently complete in time for Manchester International Festival 2023.
“Nothing great was ever achieved without difficulty,” said deputy council leader Cllr Luthfur Rahman, reacting to the latest cost increase.
“For all the challenges it has faced – and who could have predicted that these would include being built during a global pandemic and against such a difficult economic backdrop – this game-changing venue is definitely worth the investment and worth the wait.”
The city council said the cost increase would be largely covered by the income from the recent naming rights deal with Aviva, rumoured to be between £25m and £35m.
Over the existing 30-year lease with Factory International, the authority expects to accrue £80m across various naming rights and sponsorship deals, which could cover the cost of its investment in the scheme.
Of the £210m spent so far, the city council said it has contributed £64.6m. This figure sees a correction from earlier reports that put the authority’s contribution at £80.6m.
£106m of the total has come from various national pots: £78.1m Treasury funding, £7m Arts Lottery, and £21m via the Kickstart Capital Cultural Recovery Fund administered by Arts Council England.
The remaining £39.3m came from external fundraising.
Rahman added: “The unprecedented level of national investment in Aviva Studios, both from the government and Arts Council England and commercial backers such as Aviva, is a huge statement of confidence in this remarkable venue and in Manchester.
“Over time, naming rights and other partnership arrangements will enable the council to recoup the funds we have invested in this project in full as Aviva Studios makes an enormous wider contribution to the life of the city, the region and the UK as a whole.”
Designed by design studio Office for Metropolitan Architecture, founded by Dutch architect Rem Koolhaas, The Factory is being built by contractor Laing O’Rourke.
Following the budget increase in 2020, the city council’s former leader Sir Richard Leese said the authority could not afford to contribute any more to the project.
An additional £25m was pumped into the project last October, taking the budget to £210m.
The city council has consistently defended the project and its failure to deliver it on time and on budget, claiming the economic and cultural benefits of the venue will far outweigh the cost of construction.
It is estimated that Factory International could generate up to £1.1bn for Manchester’s economy over 10 years and attract up to 850,000 visitors a year.
“What is being created here in Manchester is a venue which is bold, visionary and spectacular,” Rahman said.
“It’s a nationally and internationally important centre for art and creativity at the heart of our city which will also create new opportunities for our people, boost our creative and visitor economy and strengthen Manchester’s global reputation.”