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Council pockets £14m airport dividend, but it’s no cause for celebration

Council pockets £14m airport dividend, but it’s no cause for celebration

🕔13.May 2016

Birmingham city council has pocketed a £14.2 million dividend from Birmingham Airport.

The council, which part-owns the airport along with the six other West Midlands metropolitan authorities, picked up the payment for 2015-16, which saw the airport celebrate its busiest year with 1.1 million passengers and the introduction of several new routes.

Birmingham Airport Holdings Ltd turned over £121.1 million, up from £113.7 million a year earlier.

New routes included services to Reykjavik, Madrid and Jamaica, and Birmingham became the first airport outside of London to introduce a direct flight to China.

Council leaders across the region have consistently rejected suggestions that they should sell their stake in the airport, which amounts to 49 per cent of the total shareholding, preferring instead to receive a regular income stream through dividends.

But the cash winging its way to Birmingham, although coming in handy, will go only a little way towards addressing the council’s financial difficulties, which saw budgets cut by £110 million last year in response to the Chancellor’s austerity programme, with a further £90 million to be found this year.

The 2015-16 financial outturn for Birmingham city council will be reported to a cabinet meeting on May 17, and the accounts demonstrate exactly how the authority is struggling to keep its head above water.

A year-end underspend of £2.8 million from a £3.2 billion budget tells only part of the story, with officials engaging in a complex stream of transfers from reserve funds and the transfer of cash between departments to balance the books.

One figure to leap from the accounts is a £16 million overspend by the People directorate, which delivers adults and children’s social services.

This included overspending the budget for younger adults by £6.1 million.

The report discloses a number of measures to recoup the money including securing wider public support to move people from residential care and reviewing in-house learning disability day care.

Missing a target to reduce the number of older people admitted to hospital resulted in overspending the Better Care Fund by £1.3 million, and there was also a £280,000 overspend on the Independent Living Fund, which allows disabled citizens to allow them to live independently.

The budget for legal costs was overspent by £855,000, largely arising from a judicial review of the council’s homelessness policies and procedures. Although the judicial review found in the council’s favour, the assumption that costs would be awarded in the council’s favour did not prove to be the case.

A cash fund set aside to cover bad debts was overspent by almost £1 million, due to higher than expected write-offs largely as a result of reduced client contributions to adult social care.

A sharp increase in the number of homeless people in Birmingham meant that the council spent £824,000 more than expected on turning vacant properties into accommodation.

Acivico, the council’s arms-length design, construction, facilities management and catering company, overspent its budget by £1 million, due mainly to lower than anticipated income.

The introduction of a levy on businesses applying for planning permission raised £313,000 less than expected.

Waste Management Services overspent by £579,000 due to the cost of hiring mechanical sweepers to maintain clean streets, depot service improvements, and one-off pension strain costs.

The council’s markets overspent by £1.3 million after planned new fees and charges were not implemented.

At the end of the year the council’s debt had fallen, slightly, from £3.051 billion to £2.987 billion.

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