Gloucester City Council’s ambitious £107 million redevelopment project, The Forum, is set to cost taxpayers more than initially expected, primarily due to a sharp rise in interest rates since the project was conceived.
Located in King’s Quarter near King’s Square, The Forum aims to transform this section of Gloucester into a vibrant urban hub. Upon completion, the landmark development will feature 142,000 square feet of modern office space, a four-star hotel, residential flats, a 393-space multi-storey car park, and retail units.
While the project has been praised for its bold vision to revitalize the city centre, financial challenges are mounting. Last year, it was revealed that the city had already lost approximately £450,000 in income related to the development. Now, higher borrowing costs are exacerbating the budget pressure.
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Council leaders have opted for short-term borrowing to fund the still-under-construction Forum. This strategy allows them to spread financing costs over the life of the asset and evaluate longer-term borrowing options once the building is complete.
Declan Wilson, Resources Cabinet Member for Hucclecote, highlighted the impact of soaring interest rates at a recent council meeting. When the project was first approved in 2020, Public Works Loan Board (PWLB) interest rates stood at around 1.6 percent. Currently, those rates have climbed to about 5.5 percent—more than triple the original estimate.
“This rise in interest rates represents a significant financial burden for the council,” Wilson remarked. “Reviewing the initial documentation, it’s clear that the project’s financial planning was based on much lower borrowing costs.”
Wilson also acknowledged additional fiscal challenges stemming from accounting irregularities related to some commercial properties connected to the development. “We’re aware of issues with some of the contracts we’ve signed, which will place further strain on the budget,” he said. “However, we now understand the situation better and are working on plans to address these concerns.”
As Gloucester pushes forward with The Forum, addressing these financial hurdles will be critical for ensuring the project delivers the lasting economic and social benefits envisioned for the city centre.