Subsidy warning on decision day for tapestry

It is two years since the council voted to allocate £3.5m in capital – repayable at £208,000 a year for 30 years – on a £6m permanent home for the 160-panel artwork at Tweedbank.

It was a decision informed by the “in principle” commitment of the Scottish Government, through its Borders Railway Blueprint Programme, to contribute the required balance of £2.5m.

But the business plan for Tweedbank failed to stack up with the Edinburgh mandarins and, in June this year, the Poundstretcher site in Galashiels, linked to the listed former Post Office building next door, emerged as an alternative location.

Earlier this month it was announced that the Scottish Government, having assessed the business plans for both sites, had agreed to back the Galashiels option.

At today’s full council meeting, a report by SBC’s corporate transformation director Rob Dickson will urge councillors to locate the new centre in Galashiels.

The project cost will be £6.7m, including £600,000 for site acquisition, compared to the £6m estimate for Tweedbank.

Councillors will be asked to confirm their £3.5m capital commitment, note the £2.5m from the Scottish Government and approve the submission of a bid to the Heritage Lottery Fund and other funding sources not available to Tweedbank to bridge the funding shortfall of £700,000.

However, if these bids are unsuccessful, Mr Dickson avers: “The council will be required to underwrite any resultant funding shortfall.”

This, he suggests, would require the transfer of £345,000 already allocated to the Galashiels Inner Relief Road project and, as a last resort, the further borrowing of £355,000, repayable at £11,000 a year.

In terms of the revenue costs of the new centre and based on projected visitornumbers, the report estimates that, if the facility is managed by Live Borders, which runs the region’s sport, leisure and cultural services, it will record a deficit of £2,005 in its first year of operation.

But this will turn into surpluses of £23,755, £65,633, £59,027 and £56,160 over the next four years.

“This demonstrates the project has the potential to avoid any further financial burden to the council if the Live Borders operational model is implemented,” stated Mr Dickson.

However, he also notes that revenue costs are “best estimates” and he cautions:

“Failure to meet visitor related income targets or to manage costs within the parameters set out in the business case [for Galashiels] will result in an ongoing subsidy being required.”