Knowsley Council has confirmed that ongoing national economic uncertainty has impacted on its plans to create a new cinema in Kirkby.
The Council has previously put finance in place, secured planning permission and appointed a preferred contractor to deliver the project, which will include a new multi-screen cinema and three food and drink outlets. However, the current national market conditions have resulted in the overall costs to deliver the scheme rocketing by up to £5 million – almost double the original cost – and still with considerable uncertainties. Finding an additional £5 million to deliver this project would be a considerable challenge and risk for the Council in today’s conditions.
In addition, the Council had planned to borrow some of the funds to pay for the scheme, with the borrowing costs to be repaid from rents charged to the cinema and the restaurants in the development. At interest rates early in 2022, the scheme would have broken even and perhaps even contributed a small profit to fund other Council services. But interest rates have risen from 2% in January 2022 to a current level of around 5%, which means that the project would now have to be delivered at a loss to public funds.
Taking into consideration all of these factors, the Council has reluctantly concluded that the time is not right to go ahead and the scheme will have to be paused. It is important to be clear that Knowsley Council and Reel Cinemas remain fully committed to the project and are keen to go ahead once the financial picture improves.
Councillor Tony Brennan, Knowsley Council’s Regeneration & Economic Development Cabinet Member commented:
“Over the past few years, Knowsley Council and the Liverpool City Region Combined Authority have put our money where our mouth is – we’ve invested millions of pounds in Kirkby Town Centre. We have been rightly ambitious in wanting the best for the town.
Pausing our plans for the cinema project has not been an easy decision to make, but one that we have been unable to shy away from, given the current financial circumstances in the country. We are facing rising costs across the board, a level of inflation we haven’t seen for almost 40 years, and the negative impact of recent Government policy announcements, which are seriously destabilising the financial markets.
It’s infuriating that the actions of this Government in the space of just a few weeks have turned everything upside down and forced us to put our plans on hold – we planned to start the scheme before the end of this year and now we face having to wait for markets to calm and for greater economic certainty.
At the same time, we’re also dealing with the devastating impact of a cost-of-living crisis which is also being made worse by this shambles of a Government. Our top priority now has to be to look after those people in our communities who are being plunged into poverty as a result of the cost of living crisis – people who in many cases were already struggling to pay their bills, heat their homes, and put food on their tables. This Council has to be there for those people and, in the absence of enough Government support, we have to use our own funds. Against that background, we can’t justify finding another £5m for a cinema, or running one at a loss.
But I want to stress that our ambition for Kirkby, and indeed for Knowsley as a whole, has not diminished – and, to be absolutely clear, we aren’t writing this project off – we are pausing it.
I hope that people will understand that we have had to be realistic about the costs involved and the risk of proceeding at this moment in time. The financial conditions are just too uncertain. Coupled with this, our own Council budget is already significantly stretched, and the Government is already hinting that there may be further cuts to public spending coming soon. This would only make our financial situation even harder.
He added: “Thankfully, our partners Reel Cinemas understand our concerns and fully support our decision, which we will keep under review. Very importantly, they remain fully committed to Kirkby. We will also continue to seek firm commitment from food and beverage operators with an interest in the development.”
Plans to create a new cinema with associated food and drink outlets are just one part of Knowsley Council’s multi-million pound investment into Kirkby Town Centre.
Since purchasing the town centre for £43.8m in 2019, many of the key aspects of the Council’s masterplan have already been delivered in under two years – including a new flagship Morrisons superstore, a petrol station, drive-through KFC and Taco Bell restaurants, and a large Home Bargains store. PureGym will also be opening a 24/7 gym later in 2022. To date, the scheme has delivered almost 500 jobs for local people and over 450 free parking spaces for visitors. The Council has also invested in Kirkby Market and delivered a successful programme of activities and events in the Town Centre, as a result of which footfall is up and new businesses have opened.
Furthermore, the Council has secured funding to help to attract more investment in the area and will be turning the multi-storey car park into a “Travel Hub” comprising a car park, electric vehicle charging stations, and cycle storage facilities. Work is also under way on the development of land south of Cherryfield Drive with Barratt Homes and David Wilson Homes recently carrying out a public consultation exercise to inform their designs and proposals to provide much-needed new homes at the site. A planning application, which will be subject to further public consultation, is expected to be put forward later in 2022.