Brummie Bonds – £45 million breakthrough for new homes
Labour’s pledge to build more homes has taken a major step forward following a multi-million pound deal between Birmingham City Council and a leading institutional investor.
Midlands-based pensions and life assurance specialists Phoenix Life, which employs around 600 people in Wythall, has agreed to invest in a ‘Brummie Bond’ and will lend the Labour-run council £45 million at favourable rates of interest.
The money will go towards building much-needed new homes, helping to deliver a key pledge by Birmingham City Council Labour leader John Clancy to tackle the housing crisis.
The interest rate the council will pay to borrow the money is, lower than that charged by the Public Works Loan Board (PWLB), which means the council will pay £1.4 million less in interest over the course of the loan than would have been the case had it borrowed from the PWLB.
Councillor Clancy said: “It is clear that the agreement we have reached with Phoenix Life represents a vote of confidence in Birmingham City Council by the private sector.
“With this council’s budget facing relentless austerity cuts, we must be more imaginative in identifying ways to generate funding to bring homes and jobs to Birmingham. I am determined that the Brummie Bonds programme will go from strength to strength.
“This council won’t raise the white flag of surrender. To make us less reliant on rapidly shrinking Government grants, we’ll go out and bring in millions of pounds of investment that would normally go to London markets.
“Typically, this is Birmingham doing what it does best. Buckling down, being pragmatic. Brummies are doing it for themselves.”
Phoenix Life’s Chief Executive, Andy Moss said, “I am delighted that as such a major employer in the Midlands, we have been able to provide this support to the local council whilst ensuring diversification in our investment portfolio. We hope to continue investing in our local community in the future”.
The Government-approved Birmingham Development Plan makes it clear that some 89,000 new homes will be required for Birmingham citizens by 2031.
Radical plans to build new homes in Birmingham city centre are already taking shape. Cllr Clancy said he expected over the next few years to deliver 10,000 properties at Smithfield, Snow Hill and Curzon Street, an unprecedented rate of growth in city living.
Birmingham is building more new council houses than any other local authority. The Birmingham Municipal Housing Trust (BMHT) has built over 2,000 new homes for sale or affordable rent since 2009, with plans for up to 500 homes for affordable rent also in place.
During 2015-16, BMHT built 562 new homes in Birmingham, equivalent to 30 per cent of all new homes in the city.
Phoenix Life is part of the Phoenix Group and is based at Wythall, south of Birmingham. It is part of the Phoenix Group, the UK’s largest specialist consolidator of closed life and pension funds, with over 6.1 million policyholders and £76 billion of assets held by the Group’s life companies, including the newly acquired AXA Wealth, SunLife and Abbey Life businesses. The Group employs around 1,300 people split across the Group, with around 600 based at Wythall, its main operating centre.