Negative commercial income forecast impacts Wirral Council budget

Wirral Council is facing a negative income forecast of £300,000 across its commercial operations.

The fall in money coming into the council comes as the local authority’s budget overspend this financial year has doubled from £3.6m to £7.2m, largely driven by a £5.1m overspend in its neighbourhoods budget but also an overspend of £1.3m in its regeneration department as well as inflationary pressures.

Next year it is expected to have to find £15m in its budget and faces nearly £70m in cuts and possible bankruptcy over the next four years.

This year, Wirral faces a further £500,000 cost related to the delivery of its draft Local Plan, a major housing and development policy, as well as a negative income forecast for the buildings and land it owns of £300,000.

A Policy and Resources committee report ahead of a meeting on 8 November 2023 said a key aspect of this £300,000 is linked to the Europa Centre which includes Birkenhead’s former Wilkos store. The local authority previously said it anticipated a loss of income after Wilkos went into administration.

In November 2017, Wirral Council made the decision to buy the Europa Centre as part of its plans to regenerate Birkenhead. The Land Registry shows it sold for £8.4m in March 2018.

The 2023 report said the local authority’s asset department is now “working closely with administrators to review a way forward alongside continued strategic asset management with potential future tenants.”

Other budget pressures include a struggle to achieve savings amongst neighbourhoods management staff with “additional costs linked to employee overtime, enhancements, and sickness cover.” Staff employed through an agency are also adding a cost.

An impact of £1m is currently expected due to a shortfall in enforcement income relating to waste, tree maintenance, and managing the local authority’s parks.

The council is also seeing a £1.3m overspend driven by the Floral Pavilion due to unachieved savings from 2018. This is being mitigated by a £500k business rate rebate from the Williamson Art Gallery.

The local authority is currently reviewing the future of the Floral Pavilion, despite the financial position of the theatre improving by £610,000. Notwithstanding reduced costs, it continues to face pressure from the rising cost of supplies and goods and fewer customers.

The council plans to offset the £7.2m overspend through a £5m backup contingency fund as well as lower than expected energy costs. This will bring the total overspend down to £819,000.

Wirral is also on track to make most of the £28m savings it passed in its budget for 2023/24 in March but £1.486m of this isn’t expected to be achieved this year.

This is largely driven by delays in restructuring the council but “it is planned that by the end of the financial year all the required posts to achieve the full £2.3m saving will have been identified.” This will mean £800,000 of the planned savings will be made in 2024-25.

According to a treasury management report also presented to the committee, net debt has fallen £45m, mainly due to a repayment of £48m of temporary loans that Wirral Council had lent to other local councils that were taken out towards the end of 2022/23.

The council has also accepted a number of grants including £1.9m to help buy 20 properties for the homeless and Afghan refugees, contributions form the Wirral Growth Company towards changes on Conway Street and its new office buildings, as well £1.625m of active travel funding.

The council also plans to spend £4.5m, partly funded by borrowing, for a new substation in Birkenhead town centre. The council hopes to fund this through government grant funding in an investment plan recently submitted to the Department of Levelling Up, Housing and Communities.

The plan said the substation is “essential to enable commercial and residential development of the town centre where costs have escalated owing to inflationary costs and a 4km route to secure a point of connection for a power supply.”

To fund its building programme this year, it is expected to borrow £45m, £5.2m more than expected in July which is expected to cost the council’s yearly revenue budget, which funds day to day services, an extra £1.049m next year and £1.2m by 2027. This charge will peak at £1.6m in 2073.

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