Many of the properties were bought to help revive Birkenhead
The Vue Cinema in Birkenhead is one of several investment properties bought by Wirral Council(Image: Andrew Teebay/Liverpool Echo)
Properties bought by Wirral Council as investments have seen a drop of more than £9m in value since the local authority bought them. These properties include the likes of Birkenhead’s Vue Cinema and Europa Centre which had previously seen a drop in value.
Auditors Grant Thornton’s annual report on Wirral Council’s financial accounts was published on January 6 ahead of an emergency meeting to be held next week on January 14. The audit firm made a legal recommendation as well as finding three significant weaknesses in the local authority making two key recommendations as well as 12 recommendations for improvement.
The report said the council needed to respond to its recommendations publicly under the Local Audit and Accountability Act 2014 as it is “in an extremely challenging financial situation with significant financial pressures creating budget overspends combined with low levels of reserves.” The council this week revealed it plans to request a £40m bailout from the government over the next two years as it is “highly likely” it would go bankrupt without it.
In response to the report, the leader of Wirral Council, Cllr Paul Stuart, said the council was “implementing detailed and stringent measures to address the financial challenges,” adding: “Years of underfunding and the rising costs and demand for social care services have outstripped available funding necessitating major changes in operations, including some very difficult and unwanted decisions to ensure the council can provide its statutory services and look after and take care of our most vulnerable residents.”
While he accepted the audit highlighted several areas for improvement in financial management, he added: “The reality is that regardless of efforts there has not been and still is not enough money to maintain services as they were.”
Issues raised by auditors about the council include a black hole in school finances that is projected to grow, issues around SEND services and the council’s work to comply with an improvement notice, placement costs for children in care, and councillor oversight.
One relates to investments the council has made in recent years as the council’s commercial properties funded through borrowing “have significantly reduced in value which creates financial risk to the council.” These properties were not bought for financial reasons but to support the council’s planned regeneration of Birkenhead.
This includes £8.4m for the Europa Centre in Birkenhead where Wilko used to be a major tenant, £6.8m for the Birkenhead Vue cinema, £10.59m for the Pyramids and the Grange shopping centres, as well as £9.2m in other investment properties. In March 2024, these were estimated to be £30.1m in total.
Now auditors said following their assessment, these properties now have a value of £26m, a drop of 25% from when they were bought. Auditors said they saw no evidence the council was considering getting rid of any of these properties though noted the investment strategy forecasted a 3.17% return on the investment.
Auditors warned the drop of £9m in value “does create financial risk to the council” and pointed out the council said it would review these properties if their value falls “significantly below their purchase cost.”
Auditors said the council should provide members with an updated investment strategy report setting out the most recent values of its commercial properties, the financial impact of the valuations, and the details of planned council activity to manage any financial risks as a result. They said this would enhance transparency and oversight.
In response, council management said all investment properties were valued annually and the council will consider if they should be included in the investment strategy reported to councillors going forward. Management stressed all decisions around assets were taken by the Economy, Regeneration and Housing committee.