Birmingham City Council has raised a whopping £45 million to build much-needed council houses - through a new secure loan scheme known as “Brummie Bonds”.
The impressive wave of funding will be used to build the homes through the council’s Birmingham Municipal Housing Trust - the city needs to build 89,000 new homes by 2031.
A bond is a type of secure loan to a council or government through which money is raised for major projects.
The fundraising initiative has seen Midlands pensions and life assurance firm Pheonix Life become the first to buy the Brummie Bonds issued by the council.
Labour council chief John Clancy championed the idea of Brummie Bonds long before he became leader a year-and-a-half ago - often outlining the proposals in regular columns for the Birmingham Post.
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.
Future waves of funding could be used to support small and medium sized businesses or build city infrastructure. Brummie Bonds could also be picked up by the new West Midlands Mayor to channel investment across the region.
Cllr 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 employs 600 people at its Wythall headquarters. 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 investment follows a deal struck last year with Chinese developer Country Garden through which £2.2 billion will be invested in housing in the city.
The company has since visited Birmingham and cast an eye over several development opportunities such as the Icknield Port Loop development at Ladywood.
The Birmingham Municipal Housing Trust was set up by the city council in 2009 to fund and build council houses and is now the city’s largest single house builder completing more than 562 new homes in 2015-16.