Birmingham City Council will be forced into conducting the biggest ever sell off of its huge property and land portfolio in order to meet huge equal pay compensation bill.
The cost of settling legal claims bought by no-win no-fee solicitors on behalf of thousands of women who were underpaid when working for the local authority already stands at close to £900 million.
No one can be certain about the size of the final bill, although a sum in excess of £1 billion looks a racing certainty and the figure could be higher if future court judgments go against the council.
Local Government Secretary Eric Pickles has approved borrowing of £528 million to help the council meet the bill – a decision which in itself pushes up city debt to a level where a quarter of the revenue budget will soon be used solely for repaying loans rather than running services.
That would be bad enough at a time when swingeing Government grant cuts leave the council facing a £600 million funding gap. But as accountants Grant Thornton noted in an audit report, the financial strain gets far worse when the requirement for a further £359 million to meet the equal pay bill is taken into account.
If all of the equal pay compensation money had to be identified straight away, the council would certainly face bankruptcy.
However, the lengthy legal processes involved in pursuing claims mean that there is time to seek funding by tapping into the council’s £6 billion asset base.
Mr Pickles made it clear that he would not sanction further borrowing and that the council ought to be “grateful” for the loans already approved.
He went further, advising council leader Sir Albert Bore to sell land and property in order to raise enough cash to settle all outstanding equal pay claims. Mr Pickles has offered Birmingham special dispensation allowing all of the capital raised from asset sales to be used to pay down the equal pay bill.
What exactly, though, will the council be touting for sale?
Typically in an organisation where secrecy is often the default position, officials and politicians are reluctant to issue a shopping list even though such a list is most definitely being drawn up.
Sir Albert told a scrutiny committee a “fire sale” of assets would “be the worst possible position we could get into” and that he would make no announcements about disposals. Those close to Sir Albert talk about huge sensitivities surrounding asset sales with a very real fear that the council will be accused of panicking and selling the family silver.
Anyone interested in looking at what might be sold should access the council website, and enter ‘open data’ in the search box. They will then be able to see an asset list which identifies every piece of land and building owned by the council – well over 3,000 entries in total.
The sheer scale of property in the possession of Britain’s largest local authority is incredible, ranging from shopping centres to restaurants and office blocks to hotels. The council even owns a Chinese takeaway as well as a casino and a scrapyard.
Of course, leasing arrangements make it difficult to dispose of many of the buildings. There will also be financial calculations to be made comparing annual rent received for a property against the capital sum that might be realised from a sale.
On the other hand, disposing of a building might not raise much money but would save a considerable amount in maintenance and repairs.
Here then, in no particular order, are Chamberlain File’s top ten of possible asset sales:
- Birmingham Airport. The council owns 19 per cent of the airport’s shares, valued at £67 million in 2010. Valuation would be higher if the other West Midlands councils could be persuaded to sell their shareholdings as well in a joint package.
- National Exhibition Centre, International Conference Centre, Symphony Hall, National Indoor Arena, Town Hall. Almost certainly a step too far for Sir Albert, but may be backed by unusual alliance of left wing Labour and right wing Tory councillors.
- Grand Central Shopping Centre, previously the Pallasades, part of the New Street Station development which will also include a John Lewis store.
- Aston Science Park.
- Kennedy Tower and the Royal Angus Hotel. Both buildings sit on land earmarked for a city centre gateway development.
- The Council House. Listed building oozing with history and links to Joseph Chamberlain. But increasingly outdated as office space, expensive to run and largely empty following decamp of staff to modern buildings. Might make first class hotel.
- Birmingham Wheels Park, Nechells. The site was once suggested for replacement Birmingham City stadium.
- Former register office, Broad Street. Listed building, potential for restaurant/pub use.
- Suburban shopping parades dotted around Birmingham.
- Wholesale Markets. The vast Pershore Street site is close to the Bullring and will become vacant by 2015 when the markets are relocated.
Flog it all off, sort out the equal pay debacle, and use anything extra coming in to pare down BCC’s debts. And why is BCC funding both the CBSO and Performance Birmingham / the Town Hall anyway while making unemployed people pay 20% of their council tax bill? sounds like a local equivalent of ‘Yes Minister’!
Item 8 – former registery office. This is not a statutory listed building. The former Municipal Bank next door is owned by the Council and is statutory listed.
Once again, what a sorry state of affairs. 20 years of incompetency.
There are still a number of Victorian and Edwardian, urinals closed many years ago, in the city.
Any budding entrepreneur could purchase these, if the council was minded to sell them and charge 20p to take a pee.
Councils should not have properties and land that does not return a market income, so what is wrong with selling them off and allowing business to develop them and provide employment.
The Council House is accessed by so few ordinary citizens of this city, so sell it for hotel use and have a smaller modern building for council meetings and functions.
Brum council’s sale of the century. What assets might go to fund equal pay bill? @ChamberlainFile