Wirral Council Confronts £63m Financial Loss on New Office Development
A damning audit report has exposed a staggering £63 million loss in value for Wirral Council related to two recently constructed office buildings. The significant financial impairment represents one of several critical findings in a comprehensive review of the local authority's financial management and decision-making processes.
Empty Offices and Mounting Costs
The two office buildings, named Mallory and Irvine and collectively referred to as the Birkenhead Commercial District (BCD), were completed in 2023 just outside Birkenhead town centre. While Mallory is partially occupied by council staff, the Irvine building remains completely vacant, contributing to the substantial financial shortfall.
The development was forward-funded by Canada Life Ltd, with Wirral Council committed to repaying the costs over a 35-year period. However, the buildings have faced persistent criticism since their construction, primarily due to the high repayment costs and lack of rental income to offset these expenses.
Audit Exposes Valuation Discrepancy
Independent audit firm Grant Thornton, in a report prepared ahead of an upcoming audit meeting, revealed that the council will be paying approximately five and a half times the actual worth of the properties. The council assumed full liability for a lease valued at £76.6 million, yet subsequent valuations placed the buildings' worth at just £13.2 million, resulting in the £63.4 million impairment loss.
An impairment loss occurs when an asset experiences an unexpected and permanent decline in value compared to its recorded accounting value. Grant Thornton stated clearly: "The impairment loss represents a significant financial impact where financing costs exceed the value of the asset acquired."
The audit firm also identified several previously omitted leases and made material adjustments to the valuation of the Birkenhead Commercial District office buildings. However, sources suggest the buildings' value could potentially increase if tenants are secured and rental income begins flowing.
Failed Profit Expectations
When the office scheme was completed, council projections anticipated an £11 million profit that would support investment in subsequent development phases. This expected revenue has been severely impacted by the council's inability to lease the vacant office space, undermining the project's financial viability.
Additional Projects Under Scrutiny
The audit report extends its criticism beyond the office buildings to include other major council initiatives:
- Birkenhead Market Redevelopment: Various proposals for Birkenhead Market have faced criticism, including a controversial plan to relocate the market to a former Argos store on Princes Pavement. That proposal has since been abandoned, with the council now considering the town's former TJ Hughes building as an alternative option.
Auditors noted that the original March 2020 business case for market redevelopment included "no specific measures relating to the outcomes or benefits" and featured "no analysis of the current financial performance of the market operation and the impact on the council in terms of future returns." Furthermore, the council failed to conduct detailed financial assessments of each option and did not revisit its business case when considering alternative sites.
- Maritime Knowledge Hub: Grant Thornton also criticised the council's prolonged timeline in scrapping plans for a Maritime Knowledge Hub at the former hydraulic tower in Wirral Waters. The Liverpool City Region Combined Authority had expressed concerns about the project's deliverability, readiness, rationale, and support from industry and academic partners.
A second business case was developed before the scheme was eventually abandoned in July 2024. According to Grant Thornton, this decision "could have been reached at an earlier stage with more effective initial business case preparation and a greater degree of challenge."
Escalated Legal Orders and Council Accountability
Grant Thornton, which annually examines the council's decisions and financial management to ensure accountability, has issued four legal orders for councillors to consider. This represents an escalation from their 2025 report. The audit firm explained this action was necessary because "sufficient action has not been taken by the council" and due to concerns about the "seriousness" of the current financial situation.
The comprehensive report primarily covers the financial year from April 2024 to March 2025. Councillors are required to review these findings at a meeting scheduled for March 2, coinciding with their decision on the council's budget for the upcoming financial year beginning in April.
