Armouries museum is pounds 20m in debt

THE GOVERNMENT was last meeting the private backers of the Royal Armouries Museum in Leeds after it was disclosed that it is up to pounds 20m in debt.

Department of Culture civil servants were meeting representatives from Royal Armouries International (RAI), the private-sector venture that runs the pounds 42.5m museum, and the main creditor, the Bank of Scotland, which has set a weekend deadline for assurances about the museum's fiscal future. Trustees for the museum fear it may have to close indefinitely or open part time to claw back running costs.

Last night officials said Chris Smith, Secretary of State for Culture, was reluctant to bail out the museum with taxpayers' money but may concede a one-off payment to help it. Taxpayers support it to the tune of pounds 4m a year in grant aid.

The preferred solution, said Mr Smith's aides, was to restructure the debt, review the way it runs its operation and dismantle a tier of management seen as "flabby".

Since it opened in 1996, the nuumber of visitors has failed to reach the 1 million a year anticipated by the consortium's business plan. Last year, 394,000 people visited the museum, built on wasteland in the city centre.

Its possible closure could have an impact on a proposed pounds 30m leisure and retail development planned for an adjacent site. Critics attacked the museum's location outside London as a mistake but its backers said it would have a greatercatchment area, based largely on Leeds's central location.

Academics attacked the move because it saw a large part of the Tower of London's Royal Armouries collection leave the capital, which, they said, would hinder scholars.

Trustees had touted relocation as the best way to make the collection more accessible. Under the old regime, up to nine-tenths of the collection was never seen by visitors because the Tower of London did not have enough display space.

A Department of Culture spokeswoman said there had been a number of recent meetings about the museum. Although she could not confirm its imminent closure, she said: "We are aware of the financial difficulties facing the Armouries." The building was one of the first put up under the last government's Private Finance Initiative, instituted to attract private- sector money to building projects.

Last night the Bank of Scotland refused to comment on the the crisis, citing "customer confidentiality". Neither were the Royal Armouries nor RAI were prepared to comment, although a museum source said: "It's business as usual and we have no plans to close."

Some of the museum's craftsmen who rent space were unhappy with the handling of the affair. Peter Dyson, a gunsmith who runs a workshop on the site, said: "They were over-ambitious in thinking who would come and it has thrown their business plan out of kilter.

"One of the problems is that Leeds in itself is not a major tourist destination, so perhaps people are not coming because of that. Foreign visitors will do London, York and Edinburgh and don't immediately think of Leeds.

"The crisis in the Far East has not helped either, because there has not been as many Japanese tourists coming as perhaps we thought."