THE new headquarters of Zurich on the cleared Kimmerfields site will be bought by Swindon Borough Council at a cost of nearly £40m.

The Swiss insurance and finance company signed a contract with builders Skanska this week to put up the new tower block and work is expected to begin this summer and be completed in 2022.

It will then be bought by the council and rented back to Zurich, with the authority hoping this will provide an ongoing income.

It is going ahead with the investment plan despite facing a real financial challenge because of the coronavirus pandemic – extra spending and loss of income has meant it is looking at a £12m funding gap in its budget for this year.

The council’s cabinet member for the town centre Dale Heenan said the long-awaited building is a vital part of regenerating the central business area and the whole town centre.

He said: “The new building, which secures Zurich’s future in Swindon and allows them to expand, is the first new office development in 20 years in the town centre.

“It is the first piece of the jigsaw. The council and Zurich have entered into a sale and leaseback deal which is a tried and tested approach and the first time we have done it on a new construction project as a council.

“Only when construction has finished in two years’ time, and Zurich employees have moved in, will the council purchase the building and lease it back to the company for an annual rent. At no cost to taxpayers, with the minimum of risk, it is a commercial deal based on professional expert advice that we should explore more often.”

At a private session of the cabinet in May senior councillors agreed to increase the amount the council will pay to Zurich for the building to a figure understood to be about £38m.

In February the cabinet agreed, again in a private session, to buy land in central Swindon and to borrow the money to do so. It agreed to secure £5m in grant funding for preparatory infrastructure work.

Think tank the Institute for Fiscal Studies produced a report recently saying councils that relied heavily on property investments for income may be vulnerable because of the coronavirus crisis.

Swindon council is using the new buildings as a centrepiece to bids for millions of pounds of government funding.

The Kimmerfields site and the creation of a car-free 'bus boulevard' in Fleming Way, is one of seven projects in the council’s bid for £25m from the government’s Stronger Towns fund.

Coun Heenan said: “I remain optimistic Swindon will secure £25m of government funding in October, which will transform Fleming Way and the bus station and become the second piece of the jigsaw next to the new Zurich offices.

“As soon as we can, the grand plan for the remainder of the Kimmerfields site will be published so that residents, businesses and investors see how construction will visibly transform our town centre for the better over the next eight to 10 years.”

The new office block will have six floors and a terrace and function space on the roof, which will include beehives to improve biodiversity and produce honey to raise funds for charity

There will be charging points for electric cars and extra bike parking to encourage green commuting by the company’s 950 Swindon staff.