'Dark day' for city amid tax rises and assets sale

Birmingham City Council has indicated how it will manage its financial crisis

Birmingham City Council must sell off £1.25bn in assets to repay a government bailout loan.

The revelation came as the troubled local authority published draft budget documents.

They provide the starkest indication to date of how the city will drag its finances back into the black after declaring itself bankrupt in September, with other dramatic measures including a 21% council tax rise.

Andy Street, Conservative mayor for the West Midlands, said it was a "dark day that sets the city back, just as we thought we had turned a corner and were on the rise again".

The authority needs to tackle a £300m budget shortfall over the next two years.

It is also facing equal pay claims of up to £760m and an £80m overspend on an under-fire IT system.

Exactly which assets could be sold to repay the debt has not yet been finalised.

But no part of the council has been left untouched, with all-encompassing cuts targeting waste collections, burial costs, highways maintenance and children's travel contracts to list a few.

Council leader John Cotton said they were "really difficult decisions to take" but insisted the council was aware how the measures would impact people.

He said adult social care and children's services would take a lower percentage cut than back office functions responsible for council bureaucracy.

"What we've sought to do in framing this budget is ensuring that we've mitigated the impact on the most vulnerable," he said.

The city council must sell off more than £1.25bn of assets

But reaction was overwhelmingly negative, with Birmingham-born broadcaster Adil Ray leading criticism of what he called "scandalous" plans.

He said: "Should the people of Birmingham have to pay for this incompetence? How are they supposed to afford this in these times?"

Mr Street added: "Once again it’s citizens picking up the pieces. Innocent taxpayers set to fork out a lot more for a lot less.

"It’s so wrong that so many have been put in this position through no fault of their own."

Council leader John Cotton said he had made difficult decisions

Commissioners, led by Max Caller, have been appointed by ministers to help run the council as a result of the financial challenges.

Referencing the government loan in a note attached to the budget report, the commissioners said: “For the avoidance of doubt [the financial support] is really nothing more than a loan from government that must be paid back through asset sales.

“There are conditions for this loan that mirror the concerns raised above around savings delivery.”

Those concerns relate to “major improvements” that need to be made at the council in order to deliver planned savings.

The commissioners clarified there was a need to ensure the council recruited, retained and invested in people with the right skills and knowledge to undertake the required work.

They added: “The council has made limited progress in this area and needs to do far more and at a far greater pace.”

Max Caller is the Lead Commissioner at Birmingham City Council.

Reports suggested some community-facing assets would need to be closed, merged or taken over by residents.

Council buildings are also on the chopping block with locations on Woodcock Street, Sutton New Road and New Aston House all set to be closed.

As well as the council tax rise, bosses will have to make 600 job cuts.

Street lights are to be dimmed, waste collections are to become fortnightly and burial costs will increase.

There will also be a combined £75m of cuts to adult social care and the children, young people and families department.