APPENDIX 14
Memorandum submitted by the Wales Millennium
Centre
I am referring to your letter of 18th April
and have pleasure setting out below what I hope covers the written
evidence requested.
PROJECT OUTLINE
The objective of the Wales Millennium Centre
(WMC) project is to create a special place which will provide
a focal point for the unique culture, identity and talents of
Wales—a world-class showcase for musicals, opera, dance,
exhibitions, entertainment and education. It will enable the people
of Wales to enjoy what will be a Millennium landmark with long
lasting benefits for the whole community. It is located on a prestigious
site on the Cardiff Bay waterfront in the centre of this highly
successful regeneration area.
Uniquely in the world the Centre will be home
to several resident long established activities:
— Welsh National Opera—International
opera
— Urdd Gobaith Cymru—Wales' leading
youth organisation
— Diversions Dance Company—Acclaimed
repertory dance company of Wales
— University of Wales, Welsh &
Celtic Studies—Wales' world class research department
— Academi—Representing Welsh
writers in both languages
— Welsh Amateur Music Federation—Represents
25,000 musicians in choirs, bands and societies
— Welsh Music Information Centre—One-stop
shop for information about music in Wales
— Hijinx Theatre Company—Touring
productions in community venues for general public and adults
with learning disabilities.
TOUCH TRUST
Educational touch therapy for people with profound
disabilities
It is estimated that 1.75 million will visit
the Centre every year and that 425,000 people will enjoy musicals,
opera, dance and other performances each year.
There will be permanent work for over 350 people—including
approximately 200 new jobs. There will be work for 1,000 during
the 2.5 year construction programme. Priority will be given to
employing local people.
The building is about 38,000 square metres of
a design which will be internationally recognised and unmistakably
Welsh, of an international standard, drawing people in just as
visitors or to enjoy and explore the arts. There will be a world
class Lyric (Music) Theatre for Wales. 1,700 to 1,900 seats—depending
on use, with excellent sound for both amplified and non amplified
music—and with affordable prices. Many other spaces in the
building will be multiple purpose.
WMC will be owned by a Trust which will have
33 members drawn from all over Wales. They will elect the board
and make sure the constitutional purpose of the Centre is maintained.
Present members of the board are: Sir Alan Cox CBE, Chairman;
Lord Davies of Llandinam (WNO); Prys Edwards (Urdd): David Goldstone,
Geraint Stanley Jones, Dafydd Bowen Lewis and Helena Braithwaite.
They possess a wide range of knowledge and expertise. The Chief
Executive is Kathryn McDowell, a native of Northern Ireland and
former Music Director for the Arts Council of England. She was
appointed in April 1999.
Support for the Wales Millennium Centre has
been registered from many and varied organisations including:
— Schools and colleges throughout Wales,
representing nearly 100,000 pupils and students.
— Musical and Art Societies throughout
Wales.
— Cardiff Bay Business Forum
— Members of the National Assembly
for Wales, Members of Parliament and MEPs.
The organisation in receipt of the grant is
WMC, a newly formed charitable company limited by Guarantee. WMC
has created the project dealing with all aspects of strategy,
business planning, building design and procurement and fundraising
and it will manage the project after opening. The residents have
leases from WMC and are responsible for their own businesses.
The project marks the year 2000 and the beginning
of the new Millennium because it brings together for the first
time a number of high quality long established bodies related
to the performance art activities of Wales into an outstanding
location in a statement building. It will enable an experience
and exploration of the performing arts to be enjoyed by everyone.
In totality, it will be unique in the world and of an international
standard.
THE ROLE
OF THE
MILLENNIUM COMMISSION
The Millennium Commission gave a first indication
in 1996 that support for the project would be available eventually,
provided that all the emerging conditions were achieved. The administration
has been clearly defined and responsive and the monitoring of
progress has been consistent and constructive without any lessening
of standards. The due diligence assessment process has been rigorous
but has helped the project to confirm key benchmarks and standards
to be adopted. It should be noted that under the process adopted
for this project no grants were made for feasibility studies and
until conditions subsequent of the formal agreements were satisfied
no payments were made at all. There is little risk sharing however
and this approach can lead to a reduction which might lessen the
income should the project succeed above the agreed business plan
levels. In our case, the cost plan has therefore included less
commercial provision than needed if the normal to optimistic visitor
levels forecast are met.
PROJECT BUDGET
The project budget at the time of outline approval
in 1996 was £70.2 million and is now £75 million. The
cost plan has been developed to eliminate the risks in the project
as far as possible. We divided the project into fixed and flexible
elements and we are nearing completion of the cost plan on the
basis shown below. We intended to manage the project within £75
million but our fundraising target is £78 million. We will
make no further changes to affect the fixed cost.
| Cost Plan £ million
| | | |
| Original | Present
| |
| Note 1 |
| |
| | |
Comment |
| Land | 2.1 | 2.1
| Purchased |
Management Fees and
Preliminaries |
5.1 | 7.2 | Fixed
|
| Design and Fees | 10.3 |
10.6 | Fixed |
| Shell and Core | 24.9 | 30.7
| Guaranteed Maximum Sum still to be finalised
|
| Sub Total: | 42.4 | 50.6
| |
| Other Costs: | |
| |
| Fit out | 19.5 | 18.4
| Flexible—designed to achieve agreed cost targets
|
| Revenue | 4.0 | 4.0
| Costs pre-opening 2002 |
| Contingency | 4.3 |
2.0 | |
| Total | 70.2 | 75.0
| |
Note 1: adjusted to current analysis.
| | | |
The main reason for increase in the cost plan has been the
introduction of extra residents and the extra cost associated
with delays caused by changes at governmental political level
in Wales and the extra cost of removal of old dock works on the
site allocated by the regeneration bodies.
The original grant indicated in 1996 was £27 million
and the Millennium Commission has made clear to us that it never
provides an extra grant on top of that originally indicated.
The current estimate of the total budget is as shown above
and the funding target is £78 million with a minimum of £75
million.
| Funding Plan £ million |
| | |
| Original | Present Plan
| Comments |
| Millennium Commission | 27.0
| 27.0 | Agreed |
| Arts Council of Wales | 7.2
| 10.2 | Agreed—increased because of extra residents
|
| 34.2 | 37.2
| |
| Matching Funding | |
| |
| National Assembly for Wales and related bodies
| 17.0 | 14.4 | Agreed in principle
|
| European Development Funds | 1.5
| 4.4 | Agreed |
| Grants for Land | 0.3 | 0.3
| Agreed |
| Private Sector | |
| |
| Partners | 1.1 | 1.1
| Agreed |
Trusts, Donations, Leases and
Commercial
| 12.1 | 9.6 | Agreed or to be agreed shortly
|
| Balance needed | | 6.0
| See below and under cash flow |
| 66.2 | 73.0
| |
| Contingency | 4.0 | 2.0
| |
| Total (contingency) | 70.2(4)
| 75(2) | |
| | |
|
It should be noted that no funds have been made available
by Cardiff County Council.
The fundraising team is now in place and planning the options
and sequence of the final phase of fundraising. The funds however
are largely not required until 2002.
| Cash Flow Timing |
| | |
| Before June 2002 | After June 2002
| |
| £ million
| |
| Land | 2.10 |
| |
| Shell and Core | 29.80 |
0.90 | Retentions |
| Preliminaries | 7.20 |
| |
| Design and Fees | 10.10 |
0.50 | Retentions |
| 49.20 | 1.40
| |
| Fit Out | 17.40 | 1.00
| Retentions |
| Capital | 66.60 | 2.40
| |
| Revenue Costs | 3.60 | 0.40
| Balance |
| Contingency | | 2.00
| Unspecified |
| 70.20 | 4.80
| |
| | |
|
The funding agreement with the Lottery bodies is that they
will fund £36.80 million (plus £0.36 feasibility) of
a basic total of £65.9 million. The NAW contribution of £14.4
million will follow the same draw down formula. The ERDF will
provide a fixed amount of £4.3 million.
The private sector proportion of the £65.90 million
is £10.04 million.
| Funding Agreed Proportions £ million
|
| Lottery | |
| Millennium | 27.00 |
| Arts Council of Wales | 9.80
|
| Feasibility | 0.36 |
| 37.16 |
| Matching Funding | |
| ERDF | 4.30 |
| National Assembly for Wales | 14.40
|
| Private Sector | 10.04 |
| 65.90 |
| |
The private sector amount secured so far covers £8.5
of this £10.04 matching requirement and £2.5 million
of the £4.0 million revenue cost. Of the balance to find,
£2.24 million is needed before June 2002 and £2.78 million
is needed after June 2002 of which £0.4 million is for revenue.
If contingency of £2.00 million is required it would be post
October 2002. If successful the £78 million target could
add another £3 million contingency.
PROJECT TIMETABLE
The timetable originally envisaged a building programme of
about 27 months, the critical path being: design the theatre;
build the theatre. The approval period was never controllable
by the project and changed for many external reasons, none of
which were attributable to the Lottery bodies. It was agreed however
that the process would be led by the Millennium Commission.
| Millennium Commission Approval Timetable
| | |
| Original
|
Present Plan
|
| Outline | November 1996 |
November 1996 |
| In principle | August 1997 |
November 1997 |
| Agreement | August 1998 |
August 1999 |
| First Draw Down | August 1998
| February 2000 |
| | |
The timetable now envisages fully effective agreements and
commencement of building at the beginning of June 2000 aiming
at an opening for the Cardiff Festival of music in October 2002.
LONG-TERM
VIABILITY
One of the key criteria adopted by the board and later by
the Millennium Commission and all funders was to create a low
risk business plan to ensure that the activities could be sustained
without revenue subsidies from any sources.
The strategic characteristics which have helped to give confidence
that this criterion will be satisfied are several:
— there is no theatre of the type envisaged in South
East Wales ie the project is not creating spare capacity;
— the location is in an area of successful regeneration
with increasing visitors, habitants and businesses;
— the number and mixture of residents creates a
unique opportunity for synergies in cost and the continuing programme
of events;
— the whole will enhance the value of the 7 per
cent of space of commercial activities to be let at market rates;
and
— all this will provide reliable income streams
which, with cost control, adds up to a robust plan within which
there is flexibility.
It should be stressed against that all residents are self
sufficient and will not be funded by the WMC.
Perhaps I should mention that I presented the project to
the Committee on 2nd July 1998. I shall be very happy to supply
any further information that may be required.
May 2000
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