Decade-long plans for a conference centre at The Sage Gateshead that would have boosted the region’s economy by £26m a year have been dropped.
The proposed venue due to be built next to the world-famous music centre has been deemed “financially unviable” by those behind the £30m project.
Anthony Sargent, general director of The Sage Gateshead, described the decision to scrap plans as disappointing but said the centre would continue to attract some of the UK’s biggest events while a funding solution is found.
Gateshead Council and the North Music Trust announced they would not proceed with a £10m application for funding from the Arts Council England which would have acted as leverage for financing the rest of the project.
Gateshead Council leader Mick Henry said: “We have to be realistic, that in the current economic climate it would not be prudent to go ahead with this project at this time.
“While disappointed, we believe this is the right decision.”
Assistant chief executive Sheila Johnston added: “Unlike other regeneration projects we have delivered, this project would have required prudential borrowing based on a viable business case for investment.
“At a time when council budgets are being significantly reduced, any investment must be balanced against a sustainable economic impact.”
The decision comes after a market review into the project found the cost of borrowing money for its construction would outweigh the benefits provided by an additional 3,000sqm space.
The build would have increased the venue’s conference capacity from 1,700 people to 4,500 and allowed it to hold up to 75 additional conferences a year – rivaling facilities in competitor cities such as Edinburgh and Glasgow.
Major events already held at the Quayside venue include the autumn party conferences of all three major political parties, the Womex music event and the British Council of Shopping Centres.
This is the latest in a line of failed financial settlements for the expanded facility.
It was hit first by the closure of regional development agency One North East and then by the scrapping of 1NG – a regeneration body set up by Newcastle and Gateshead Councils.
Gateshead also bid unsuccessfully for the project in the Government’s Regional Growth Fund.
In 2012, a significantly downgraded vision of the original ï¿½80m centre was revealed, with hopes pinned on the Arts Council money unlocking further capital.
Sarah Stewart, chief executive of NewcastleGateshead Initiative, said: “We are confident we can continue to attract major conferences that bring huge benefits to our local economy and profile. Just this week, 600 people from 33 different countries have been at the 12th International Colour Conference – bringing an estimated ï¿½1.1m to the local economy.
“We will also continue to work with partners to further improve our offer and attract future major events and conferences.”
Sarah Maxfield, Arts Council England’s Area director for the North, said it had been a bold and ambitious project and gave the council and trust credit for recognising economic conditions mean it would have been an unwise move.
The centre would have been built under The Sage’s south car park.