A council said it will not let a £10m grant to redevelop one of Somerset’s biggest theatres slip through its fingers.

The government granted the money for the redevelopment of the Octagon Theatre in Yeovil in 2021.

The deputy leader of Somerset Council said they needed to come up with an alternative business case which puts less pressure on the council’s budget.

Liz Leyshon said: “People in the Department for Digital, Culture, Media and Sport and the Arts Council are well aware of challenges to big projects in other arts venues across the country, so they know, I’m sure, that we’re being responsible here.

“And we also know £10m into the culture and arts of Somerset is something none of us have ever seen in our lifetime before, and we will not let that opportunity go.”

The refurbishment of The Octagon, which closed in April, was projected to cost £30m.

This figure was based on the council borrowing £16.3m from the Public Works Loan Board at 1.5%.

At a recent meeting however, councillors were told that rate had jumped to 5.6%, taking annual interest repayments from £245,000 to more than £1m a year, for the first few years.

The government has said the money it originally granted to the project was pinned to the original business case, so the council would need to ask for the money afresh, when it presents its new plans.

Ms Leyshon added: “It is our responsibility to come up with, through the options appraisal, an alternative business case, that can achieve the same outcomes, but with a lesser pressure on the council’s overall budget.”

She admitted the council had “huge” budget challenges and statutory responsibilities it needed to provide, in addition to creating jobs and providing good schools.

But she also defended funding the arts and said: “People of all ages must be able to have happy, healthy, fulfilling lives, and the opportunity to either perform or be in the audience is a part of that prevention agenda.”