COMMENT It may have been something of a shock for EG readers to learn that Birmingham City Council had issued a section 114 notice – an effective declaration of bankruptcy – earlier this week. But for those of us who also move in local government circles, it was hardly a great surprise.
This is the simple function of a historical equal pay claim which has presented the council with an eye-watering, and wholly unaffordable, bill. Just get your head around this: the potential liability relating to equal pay claims for the council is in the region of £650m to £760m, with an ongoing liability accruing at a rate of £5m to £14m per month. You can see that something had to give.
And Birmingham is not alone. Other organisations (notably Asda, as well as several other councils) are also confronting historical equal pay claims. So please do not interpret this section 114 notice as being a result of poor governance or decision-making in the city. Far from it. No council leader wants to be in this position. Actually, it was very brave of the leadership team to confront the harsh fact that, however hard they might try, there is no way to make the budget balance. And it gives us a textbook demonstration of the financial fragility of the local government sector, a stark function of austerity, not to mention the continuing fallout from the pandemic.
In favour
Historically, the property industry has always been very well disposed towards Birmingham. Even more so in recent years, with Brum being awarded City of the Year in last year’s EG Awards – which is an even greater achievement when you consider that the judging panel convened in mid-May, which predated the fabulously successful Commonwealth Games.
The Games themselves could not have been a greater success and helped to build real civic confidence and pride in Birmingham (with a fair dollop of the halo effect for the rest of us in the UK). Those Games were a total triumph. And they built on the excellent narrative provided by the likes of the seminal relocation of HSBC, the shiny new refurbishment of Brum’s “front door” at New Street station and the potential for HS2 to turbocharge the area around Curzon Street. These all add to existing heritage assets, the majestic civic squares, great civic monuments such as the famous Floozie in the Jacuzzi, and the Jewellery Quarter.
Closer to home, at least for the property industry, it was standing room only in May as we packed into the main auditorium at UKREiiF for the launch of Birmingham’s Future City Plan – an aspirational growth plan which could not have been better received.
Strong signals
The local Birmingham property sector is tight-knit. The industry quarter, centred on Colmore Row, still boasts a welter of colourful characters – legend-in-their-own-lunchtime types (who seem rather scarce in Mayfair these days, she sniffed) – and there’s many a restaurant or alehouse where those in the know can still be guaranteed to do a deal on a Friday afternoon.
Our national developers and investors love Birmingham too – our second city – and rate it on all metrics (and not just return on investment, although it admirably ticks that box too). Dear reader, I have myself convened a group of developers and investors to visit Birmingham. We watched as captains of our industry were only too happy to be led, Pied Piper fashion, by Deborah Cadman, the investment-friendly chief executive of Birmingham City Council, around the sites, with the (previous) editor of the EG and me trailing in their wake, feeling humble and totally unworthy. And it should never go unnoticed that the late, great Tony Pidgley – ever the market bellwether – had chosen Birmingham as his first foray for Berkeley Homes away from the London and South East market. These are strong signals. The values are there; the confidence is palpable.
Keep the faith
So I implore our industry: do not let that confidence slip. Somebody called me yesterday and asked me if they should be concerned about their planning application in the city. I responded with a resounding “NO” (I seriously bellowed at the poor man). Birmingham City Council has a structural problem, which is pretty severe and should not be underestimated. It will need to be sorted out in partnership with the trade unions and central government. In the meantime, as far as property development and investment is concerned, it must be business as usual. The aforementioned Deborah Cadman has built a strong team of seriously excellent and truly market-facing property professionals, widely held in high regard, to implement their Future City Plan. We need to help them do just that.
This is a major setback for Brum, no doubt. But it will be sorted. We press on. Birmingham’s demographic is young and vital. The city has excellent bones. Hold fast. Do not wobble. There is all to play for.
Jackie Sadek is director of Rural & Urban Strategic. She is co-author, with Peter Bill, of “Broken Homes – Britain’s Housing Crisis: Faults, Factoids and Fixes” and is chair of the newly formed EG Public Sector Forum
Discover which agents have been most active in Birmingham so far this year >>
