The Cabinet Member for Central and Support Services introduced a report by the Head of Universal and Infrastructure Services which set out the terms agreed for the acquisition of a site in Abbey Street, Birkenhead, to facilitate the development of business accommodation for the offshore wind sector.

The Cabinet had received a report at its meeting on 14 March 2013 outlining the current energy challenges facing the UK and how nationally, there was a clear focus on renewables.  (Minute No. 222 refers)  The offshore wind industry was seen by the Government as a key growth sector reflecting the fact that the UK was recognised as the most attractive place in the world for investment in offshore wind (Arup, 2010).  Given the level of investment going into this industry, the Government was seeking to ensure that UK based suppliers were able to provide at least 50% of the content of future offshore wind farms.

The offshore wind sector presented a huge opportunity for Wirral. The Crown Estates were bringing forward sites for offshore wind farm developments and the Wirral coast already hosted some of the largest offshore wind farms in the UK at Burbo Bank and Gwynt y Mor.  Further investment was now taking place into Round 3 sites, which had a strong focus on the Irish Sea. Here 1,000 turbines were planned, the value of which was estimated to be in the region of £18bn and with an industry calculation of 4.5 jobs per installed turbine (Renewables UK), capturing a share of this market would bring immediate jobs, but also open up supply chain and export opportunities in this expanding industry.

The Cabinet Member for Central and Support Services informed that the off shore wind sector had already been recognised as a priority sector within Wirral and companies were already active in this industry. In 2011 Cammell Laird agreed a contract with energy company RWE npower Renewables to provide a construction base and engineering support for the development of the Gwynt y Mor wind farm.  Work was now taking place for the installation of 160 wind turbine foundations over the next two years.

In June 2012 the Council, working closely with Cammell Laird, had submitted an application to the third round of the Government’s Regional Growth Fund (RGF) for resources to support the development of the offshore wind sector. RGF was established to invest in business projects that created growth and supported a rebalancing of the economy and £1bn had been made available for Round 3. The Government had received over 400 applications totalling well over £2bn and in mid October the Council had been informed that it had successfully secured £5 million to be invested over the next three years.

Part of this RGF award had been identified to provide support to local businesses that wished to expand and diversify to take advantage of related supply chain opportunities.  In addition RGF monies would be used to attract new inward investment to Wirral within this sector.  This may include attracting investment from cable manufacturers, foundations fabricators and other supply chain companies.

However, attracting new investment and supporting existing companies in Wirral to expand did have an element of risk.  Since 2008, the property market in Wirral had been affected by the global economic conditions and the double dip recession currently being experienced by the UK had impacted significantly.  Whilst there had been some movement within the property market locally, the demand for medium sized workspace units actually out striped the supply of such premises.  Developer confidence was very low across Merseyside and the wider North West and even with pre-let agreements, developers are suffering from significant financial viability ‘gaps’, i.e. the end value of the completed development was significantly lower than the cost of the actual development.

The Council had facilitated several schemes using ERDF resources to bridge this ‘gap’ but despite this, supply of such premises was poor.  The main impact of this was that with so much sector potential in Wirral to support key supply chains, inward investors were put off by this lack of supply.  Indeed, Wirral companies looking to expand and relocate had to look outside of the Borough and inward investment enquiries were lost as a consequence.

As the Council was marketing the area for Offshore Wind and other advanced manufacturing investment, the lack of supply was a fundamental issue. Officers recently had held a well attended developers’ workshop designed to stimulate interest from the development community in key sites.  The session had been designed to look at how to better match opportunity and need. Whilst being moderately successful and the feedback had been good, new investment opportunities were limited.

The Cabinet Member for Central and Support Services reported that in order to address this supply issue and provide a kick start to the local property market, Officers had identified an opportunity to develop business accommodation for the offshore wind sector, using a mixture of Regional Growth Fund resources and other grant sources.

In line with the principles agreed by the Cabinet in March 2013, a site had been identified for the development of new business accommodation for companies operating in the Offshore Wind sector.  The proposal was to purchase the land, clear the site and demolish existing buildings, procure a private sector development partner to bring forward phased building on the site using a set amount of Regional Growth Fund resources as ‘GAP’ funding.

The scheme responded to local demand and addressed the viability gap by removing the profit margin normally made by developers and limited the risk by absorbing any actual remaining gap using the RGF monies. The main benefit was that it would restore some confidence to a marketplace where latent demand was evident, but financial viability prevents any sort of speculative development.  The March Cabinet report had identified Chrysalis as a potential funder for the project, but the model had evolved slightly and Chrysalis would be approached when a private sector development partner had been appointed.

The property identified was the former Transfood site located in Abbey Street, Birkenhead.  The site extended 1.12 acres and included warehousing accommodation of 19,849 square feet and offices of 5,749 square feet.  The property was on the market priced at £500,000 but, following negotiation, a purchase price had been agreed at £350,000.  The property was in a prominent location and its value to the market lay in its existing use, even though the Council intended to demolish the buildings for redevelopment.

Vacant possession would be given on completion and each party would bear their own fees in the transaction.

RESOLVED:

That the property be acquired on the terms set out above.