Speaking to the Birmingham Post at the Conservative conference in Birmingham’s ICC, Local Government Minister Brandon Lewis said the council’s own pension fund could potentially buy the authority’s stake in the airport, which serves more than nine million passengers a year.
The seven metropolitan councils of the West Midlands, including Birmingham, own 49 per cent of shares in the airport between them. The Ontario Teachers’ Pension Plan and Australia’s Victorian Funds Management Corporation have 48.25 per cent and an employee share trust has the remaining 2.75 per cent.
But Birmingham faces massive liabilities after agreeing to compensate 11,000 female staff who were paid less than men for doing what are considered to be equivalent jobs.
The city council has already paid out at least £430 million but it is expected to pay £1.1 billion in total.
Ministers have made it clear that they will not bail the council out, and the authority is in the process of selling of The NEC Group, including the National Exhibition Centre, the International Convention Centre and the National Indoor Arena, to raise the funds it needs.
Mr Lewis backed the NEC sale and said he was “surprised” the council had apparently failed to consider selling its stake in the airport.
It followed a hard-hitting conference speech by Chancellor George Osborne, who warned that there would be further cuts in Government spending to come.
While Mr Osborne did not confirm which services would be hit by spending cuts, Mr Lewis said local government would have to take a share of the pain.
Mr Lewis said: “We don’t know exactly how the programme across departments will go.
“Local government does account for 25 per cent of public expenditure, so it has a hugely important part to play.”
He said some councils were “revenue poor but asset capital rich”, and should look at selling assets
“Somewhere like Birmingham – I am surprised they didn’t look long ago at whether, even to their own pension fund, selling the NEC and the airport as well would make a lot of sense.
“Birmingham got itself in a lot of trouble because it didn’t sort out fair pay when it should have done.
“They have got to get to grips with that. That’s what local leadership is about, making those tough decisions.
“Birmingham is in a very advantageous position in owning the NEC and the airport and I’m sure a lot of institutional investors including its own pension fund would be very interested in taking on that kind of an asset. Having changed the pension fund regulations earlier this year they can now do that.”
Sir Albert Bore, Labour leader of the city council, has announced the authority is to axe 6,000 jobs by 2018, on top of 7,000 posts already cut since 2010.
The authority has so far saved £460 million of its £822 million target by 2018.
But Mr Lewis insisted councils across the country had managed to cope with budget cuts by improving the way they operated, for example by sharing management with neighbouring authorities to cut costs.
And he suggested local authorities could become commercial landlords, providing homes to rent at market rates as a way of rasing revenue, as opposed to traditional “council houses” which are let at low rent, usually to people on lower incomes.
“Local authorities have a general power of competence now. They have the ability to raise revenues themselves.”
Some councils “are looking at the buildings they’ve got, and the buildings they can create and produce and develop, that actually not just provide homes to people but also that rent provides revenue income.”
In his conference speech, George Osborne made it clear there were more cuts to come if the Conservatives won the next election, saying: “To eliminate the deficit and finish the job, we will reduce Whitehall spending by at least the same rate for the first two years of the next Parliament as we have done through this Parliament. That will save at least £13 billion.”
However, councils should not expect any windfalls from Labour either.
Shadow Chancellor Ed Balls, in his conference speech, said: “Labour will balance the books in the next parliament... we will get the current budget into surplus and the national debt falling as soon as possible in the next parliament.”
On the face of it, his policy is the same as the Chancellor’s.
But when Mr Balls talks about the “current budget” he is using a definition of public spending which excludes capital investment.
The total deficit – which Mr Osborne has pledged to eliminate – is £75 billion, according to the Office for Budget Responsibility. The “current” budget deficit is £48 billion.
So Mr Balls isn’t promising to cut as much. But local authorities will be forced to make savings whoever wins the next election.