Birmingham City Council, which is currently under government intervention, is set to consider selling assets within its £2.4bn property portfolio to help address its £300m budget gap over the next two years.
In September, commissioners were sent into Birmingham following its issuance of a section 114 notice due to an in-year budget shortfall of £87.4m for 2023/24, rising to £164.8m in 2024/25.
A new report by the commissioners outlined that the council is “between a rock and a hard place” as its “financial position remains extremely serious and challenging”, with the “only sensible course of action” being to balance its revenue budget as soon as possible.
The commissioners stated that due to a “lack of any early budget work” it will not be possible to find savings to address the 2024/25 gap. However, they request that by 7 January the council has a “credible plan” to meet the c£300m budget gap by 2025/26.
A report by Fiona Greenway, Birmingham’s interim director of finance and section 151 officer, highlighted that the council has already found savings of £149.8m and outlined potential measures to help find the additional savings needed. These included officer-led reviews of statutory and non-statutory services and asset disposals.
The report stated that Birmingham’s property portfolio, excluding residential homes, infrastructure and schools, currently has an asset value of £2.4bn and attracts on average £34m of revenue per year. It also contains around 6,500 property assets.
Greenway said: “A key element of financial recovery will be a review and assessment of the capital programme and assets within the council.
“This is with the intention of developing capital receipts for the council in order to support the formal application for a capitalisation direction; the council’s potential equal pay accounting liability; the costs involved in the redundancy scheme; and support to deliver a balanced budget for the 2024/25 financial years.”
Asset disposal programmes are currently being implemented at other councils under government intervention, such as Slough, which had generated capital receipts of £172.7m from asset sales in March.
Greenway’s report also recommended that the council request exceptional financial support from the government, which will include asking permission to increase the level of council tax above the referendum limit and a formal application for a capitalisation direction.
Both reports will be presented to the council’s Cabinet on 12 December.
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