A scheme to build a new theatre on the site of the former Derby Assembly Rooms has been halted amid fears escalating costs could lead to "effective bankruptcy” for the council.
Derby City Council said that high inflation and interest rates had driven up predicted borrowing and construction costs for the Assembly Rooms site, which has been closed since a fire in 2014, leaving the project "unviable".
Earlier this year, the authority was awarded £20m from the Department of Levelling Up, Housing and Communities (DLUHC) to demolish the venue and replace it with a new ‘Learning Theatre’ hosting shows and offering students a place to work and perform.
The council had estimated the scheme, partnered by Derby Theatre and the University of Derby, would increase theatre attendance by 83,000, attracting an additional 25,000 visitors to the city and generating an extra £1.7m each year.
With the plan scrapped, DLUHC has agreed to a proposal to split the funds equally between Derby Theatre and the Guildhall Theatre, which has been disused since 2019.
Derby Theatre had been set to move into the new Assembly Rooms building as its current location is up for demolition. Meanwhile, the council is looking at bids from developers for the Assembly Rooms site.
Labour City Council Leader Baggy Shanker said: "The financial landscape for local government means that we can no longer take on the risk of proceeding with schemes of this scale, which could put us in the same difficult situation affecting some other local authorities who have had to declare effective bankruptcy.”