TAXPAYERS will step in to rescue a community arts centre at Oxford’s Old Fire Station if the project fails.

Oxford City Council is set to agree to act as guarantor for a £115,000 loan for the Arts at the Old Fire Station project, opening in October.

If the company defaults on the loan the council will pay it back.

The building will also house education and training for the homeless, through charity Crisis Skylight, but this is unaffected by the funding issue.

Centre and council bosses said they were confident the arts project – studios and a gallery – would bring in cash to repay the loan.

Council leader Bob Price said the guarantor deal was not discussed when it decided to look for a firm to reopen the council-owned building in George Street last year.

He said: “We always expected there would need to be some sort of funding.

“How that was going to be accessed was left to the appointment of the board and director.”

He said the centre’s business plan was “robust” and the risk of defaulting low.

The plan predicts the centre’s income will rise from £175,913 in its first year to £303,833 in its fifth.

Income plans include hiring out workshops, the theatre and gallery, a shop, business training, vending machines and fundraising. Rent will be provided free by the council.

Project director Jeremy Spafford said: “I’m not going to pretend it isn’t tough. We are in a very difficult economic climate and we will have to work very hard. We’re not expecting to call on the city council’s money.”

A loan was always expected to start the project, though the need for a guarantor emerged in the last three months, he said.

Social enterprise bank CAF Venturesome will provide the loan.

Three of its six studio spaces have been taken for 12 months, the theatre and studio is booked Monday to Thursday evenings for the next year and the gallery until Christmas.

Mr Spafford said the project would bring the building – built in 1896 and closed as a fire station in 1971 – back to life.

Liberal Democrat council group leader Stephen Brown and Green Party group leader David Williams backed the guarantor move.

The project has had a chequered history with fears over Government funding cuts last year and builders Rok going into administration in November.

But funding was secured and a new contractor brought in.

Mr Price will be asked to approve the guarantor deal on Monday, August 8, subject to final terms.