Council bosses insist that a new arena and conference centre on the Gateshead Quayside will be built, despite fears that the inflation crisis could scupper critical projects across the country.
Gateshead Council recently launched a second attempt at securing £20m of levelling up funding from the government after seeing costs for the huge riverside complex, which will be known as The Sage, jump substantially.
Local authority leader Martin Gannon was quoted in The Times on Tuesday as saying the £300m scheme could not go ahead without extra funding due to the rising cost of materials, especially steel, and that double-digit inflation was “absolutely disastrous for a construction project”. Former Newcastle United chairman Sir John Hall also told the newspaper that the huge development must not be left “high and dry”.
But council chiefs have now denied that The Sage, hailed as a "world class" centre that will create 2,000 jobs and bring a £70milllion boost to the local economy each year, is at risk of falling through. Officials have indicated to the Local Democracy Reporting Service that, as was the case when the rising building costs were reported by the LDRS in June, that if the council failed again in its bid for a share of the £4.8bn Levelling Up Fund then the arena development would have to be redesigned and scaled back – rather than being completely abandoned.
Read More: Gateshead Quayside arena in need of £20m Levelling Up boost as construction costs escalate
The council said: “The Sage and the Gateshead Quays development have inevitably been impacted by external events which have led to funding challenges. A combination of the supply chain recovery from Covid, inflation and the war in Ukraine that has directly affected steel and gas prices as well as the wider energy costs has led to increased construction costs and a degree of uncertainty that has made it extremely difficult for the contractor BAM to confirm a fixed price construction cost.
“The Council has submitted a £20m Levelling Up Fund (LUF) Bid Round 2 to Government to support the project, which should it be successful will be utilised to support key objectives of the scheme. This will support Net Zero and digital infrastructure, critical to competitive business and leisure offers that enable the North East and UK to flourish on the world stage. This includes supplying heat from minewater and solar power; a local SME visitor showcase; and trialling innovative digital visitor experiences.
“The development at Gateshead Quays unlocks fantastic opportunities for further investment as part of the River Tyne Renaissance with £2bn investment in residential, commercial and leisure opportunities along the south bank of the River Tyne. Whilst there are challenges that require Government support we are committed to delivering this project to Level Up Gateshead and the North East.”
The development will feature a 12,500-capacity arena that will replace the Utilita Arena, a conference centre, and a hotel – plus new bars, restaurants, public space and walkways along the Quayside. With Sage PLC having bought the naming rights for the new complex, which is being developed by Ask:PATRIZIA and will be operated by ASM Global, the existing Sage Gateshead music centre next door is set for a name change.
With inflation having risen above 10% and amid warnings it could spiral as high as 18% in 2023, there are concerns that major building projects which have been key to outgoing prime minister Boris Johnson’s promises to level up neglected areas will have to be scaled back or be axed entirely. Northumbria Police and Crime Commissioner Kim McGuinness warned: “If government pull the plug on levelling up projects the gap between the North East and rich southern areas will widen irreversibly. But, levelling up should be about more than buildings, it must be about people, opportunities, pulling households out of poverty.”
Projects already awarded grants from the Levelling Up Fund include a new leisure centre in West Denton and the refurbishment of Newcastle city centre’s Old Eldon Square and Grainger Market. There are several other North East projects hoping for success in the second round of the fund, such as the building of a new jetty for the Shields Ferry and a regeneration of Ashington.
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