Birmingham councillors have approved a new property committee, tasked with disposing of assets to close the council’s £300m budget deficit.
The city council, which declared effective bankruptcy in September, said it had identified £150m of savings by 2024/25, but acknowledged that the remainder would need to be found through even greater cuts, increases to council tax or asset sales.
It is now working with government-appointed commissioners to close the budget gap. The new committee shows that property sales will be at the heart of this strategy.
Birmingham City Council is the single largest owner of property in Birmingham. It holds the largest land estate of any UK local authority, extending to 26,000 acres – 40% of the land within the municipal boundary – and more than 6,500 buildings. The portfolio, excluding residential homes, infrastructure and schools, has an asset value of more than £2.4bn.
Its investment portfolio, of around 5,500 buildings, generates £34m in revenue per annum. All of these could potentially now be sold to generate funds.
A meeting of the council’s leadership, chaired by council leader John Cotton, met earlier today (12 December) to green-light plans for a new “cabinet committee for property decisions”.
The committee will be tasked with “expediting asset sales” to provide cash to close the gap.
The report presented to councillors stated: “A key element of financial recovery, outside of the revenue savings… will be a review and assessment of the capital programme and assets within the council.”
These capital receipts would then be used to support an application to central government for a capitalisation direction, which will allow it to pay down its £760m equal pay accounting liability as well as to deliver a balanced budget by 2025.
The document said “a programme of rationalisation and re-gearing” of the council’s investment property portfolio has been agreed. This portfolio comprises development sites and strategic assets, industrial buildings, retail premises and “miscellaneous assets located across the city”.
The committee will have delegated powers from the cabinet to assess higher-value land and property and declare it surplus to requirements. It will then have the power to seek offers and conclude sales.
The report said that the property committee’s “main purpose will be to deliver the capital receipts programme without delays”.
Its powers to sell assets will not be limited to the investment portfolio, as it will also have authority to sell both general fund assets and housing revenue account assets.
As part of the planned cuts, spending on corporate landlord activities, transport and connectivity, sustainability and planning will be cut by £9m to £54m. Housing management and homelessness will have its budget cut by 23.8% to £24.5m.
To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews
Discover which agents have been most active in Birmingham so far this year >>
