Auditors working on the final year audit of Eden District council have identified misstatements about Voreda House by the council as a significant risk and have revealed a valuation commissioned by Westmorland and Furness Council that places a valuation of £2.3million on Voreda House.
The council’s deputy leader has said the valuation just a “technical valuation” and delivery of Voreda House by the council was not just about the cost and value of the new council office.
The valuation of Voreda House was carried out following the new council office opening in June this year following the significantly delayed completion of works started by the former Eden District Council after it purchased Voreda House in 2020 paying over the market value for the building.
In February 2020 Eden councillors agreed to purchase Voreda House for £900,000 despite an independent valuation report obtained by the council in October 2019 prior to purchase of Voreda House which said the current market value with vacant possession, was just £785,000.
With the council agreeing to pay £115,000 more than the price the building had been independently valued at.
Costs rapidly increased from the initial £2.3 million the council agreed as the delivery budget including the purchase price, spiralling to £8.5million.
It also emerged in a recent report commissioned by Westmorland and Furness Council that Eden Councillors were never told about the independent valuation that placed a lower market value on the building before the purchase.
Auditors Grant Thornton in their audit findings report said “The valuation of the building of £2,305million” in June 2024 “indicates a significant impairment the asset under construction costs of £8,500million.”
“The budget and timeline for delivering the capital project has been revised several times since 2020-21”.
“The revised deliverability and increased costs information could reasonably have been used to assess the risk of impairment and therefore it is appropriate to recognise the impairment.”
In response to the auditor's report revealing the Valuation of Voreda House at millions less than £8.5 million cost paid by the council, Cllr Andrew Jarvis, Deputy Leader of Westmorland and Furness Council and Cabinet Member for Finance, said:
“Westmorland and Furness Council is committed to being a financially responsible authority which puts customers at the heart of its operations.”
“We made a commitment very early on that we would retain Penrith as a key hub and this requires that our staff and customers have a modern fit for purpose building in the town.”
“The investment decision taken by the new Council to continue to deliver Voreda House was not just about the cost/ value of the building but the wider benefits of having a state of the art office building in a central location in the town centre supporting the local economy and local businesses. The building provides for more efficient energy use and less overall operating costs and is a flagship and innovative step forward in respect of supporting our ambition to be net zero by 2037 or earlier.”
“Every year all of the Council’s operational assets are valued by our external valuers on a basis of ‘existing use’. This is not a market value in respect of any potential ‘sale’. Eden DC 22/23 statement of accounts includes this technical valuation of £2.3m for Voreda House based on ‘existing use’. The subsequent reduction from the overall construction costs results in a technical accounting adjustment. This does not impact in any way on the Council’s cash balances and therefore does not have an impact on the council’s budget.”
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