Crisis-hit Birmingham council disposes of £250m worth of assets
Crisis-hit Birmingham Council has disposed of more than £250m worth of ‘assets’ amid its financial turmoil – and could still need to generate hundreds of millions more.
More than 1,000 properties and plots of land have been sold off since September 2023, the month that saw the Labour-run council alarmingly declare itself effectively bankrupt.
During the following two years, the turbulence within the authority has manifested as cuts to local services; council tax hikes and asset sales.
Figures obtained through a Freedom of Information request this week laid bare the scale of the council’s asset sale programme in particular as it looks to overcome its financial woes.
The vast majority of the sales since September 2023 were homes but the list of disposed assets also includes shops, industrial and business premises, garages, car parks, a former pub and plots of land.
Perhaps the most notable of these was the Bordesley Green ‘Wheels’ site, which was sold for £50m and is set to become the home of Birmingham City FC’s new stadium, a potential future landmark which is planned to be at the heart of the Sports Quarter development.
Other big sales include 10 Woodcock Street, a building which was acquired by Aston University for £25m, and land lying to the north of Kingsbury Road for £48m.
But many other smaller assets have been disposed of through sales too, such as a former children’s centre in Quinton Road West and a former pub in Kings Norton.
The total amount made from such sales on this particular list of disposed assets comes to just over £250,625,000.
Throughout the fallout of the council’s financial crisis, the actions of the Labour administration have been heavily criticised by opposition councillors amid cuts to services and sale of properties.
“That’s not abstract assets in the city,” Conservative councillor and leader of the opposition Robert Alden said recently.
“It’s our community centres and historic buildings, the built infrastructure which holds together the fabric of our city.”
On the wider financial crisis which has plagued the city council, he continued: “Residents are still footing the bill for Labour’s financial incompetence.
“The only thing Labour have delivered is a double whammy of higher taxes for fewer services and a reputation for chaos that shames our city.”
‘Extremely stretching target’
Despite this eye-watering figure being reached, many more sales are expected in the coming months.
Government-appointed commissioners, sent in to oversee the council’s financial recovery, said in their report that the asset sales were financing the cost of equal pay, a major challenge that has tormented the council.
They also said they sales were meeting previous budget deficits.
“The original plan was to target sales of £750m,” they said. “However, due to the increased risks around equal pay this was stepped up to £1 billion last year.
“This will be an extremely stretching target which based on current evidence will be difficult to achieve.
“This emphasises the importance of managing the equal pay programme, waste dispute and associated risks to reduce the need for additional asset sales beyond the original £750m envelope. ”
They went on to say that it is “conceivable” that the £750m target may be reached by late 2026 – but only if “the current focus and approach is maintained”.
They also said this would be dependent on market conditions.
“This will require significant discipline by officers and resolve by members in the run up to the May 2026 elections,” they said.
“It is imperative that members continue to support the asset sales programme.
“The alternative, of borrowing more, would have a far greater detrimental impact on services for Birmingham residents.”
A perfect storm of issues brought financial strife to Birmingham Council, including the equal pay debacle, inadequate budget setting, poor service management, demand led pressures and the disastrous implementation of a new IT system.
Labour councillors have also pointed the finger at funding cuts during the previous Conservative government.
The commissioners’ report did warn that the council still faces high-profile risks, such as equal pay, the bins strike and the council being ‘financially fragile’.
But it also praised the positive actions being taken, highlighting progress in areas such as housing and children’s services as well as a framework agreement on equal pay being reached.
“We are pleased to record that progress is being made […] as a result of the determination and resilience being demonstrated by the political leadership and the sense of purpose being embedded in the organisation by the managing director and the management team that she has assembled,” the report said.
Responding to the publication of the report, Labour council leader John Cotton argued that the troubled organisation had “turned a corner” due to action taken by the administration.
“We are not complacent and recognise there is still much to do before we become a well-run council that delivers good services for the people of the city,” he said.
