Union general secretary Sharon Graham claimed the Government was making money out of Birmingham’s debt – something the Labour administration has denied
Unite the Union general secretary, Sharon Graham, has accused the Government of ‘profiteering’ over Birmingham City Council’s ‘£3.9 billion debt’ and claims that is contributing to the bin strike (Image: Ian Forsyth/Getty Images)
The Government has strongly denied claims by the Unite union that it was ‘profiteering’ from its loan to Birmingham City Council.
The union alleged the financial issue was playing into the crippling bins strike – the latest blow to befall the crisis-hit authority, which declared itself effectively bankrupt and has been stung by expensive fiascos surrounding an IT contract and the Perry Barr housing project.
Unite general secretary, Sharon Graham accused the Labour Government of making money out of the council’s huge debt, when she spoke to BirminghamLive ahead of crunch talks involving conciliation service Acas on Thursday, May 1.
READ MORE: Union urges council boss to honour offer or quit as bin strike talks resume
She said the £3.9 billion debt was ‘owned by the Government’ and claimed it was adding a 0.8 per cent levy above the usual 4.3 per cent gilt rate, which she said it did not need to do.
Mrs Graham said: “There’s a £3.9 billion debt. Maybe £250 million was to do with any equal pay cases.
“I wrote to deputy Prime Minister Angela Rayner some time ago to say, part of the problem was there should be a restructuring of the debt. I was worried the Government was profiteering from the debt.
“Normally on a Government loan, you pay the gilt rate which is around 4.3 per cent.
“The Government, by its own admission, added on 0.8 per cent, which essentially it said was for admin costs.
“But 0.8 per cent on £3.9 billion, you’re talking about £9 million a year [*BirminghamLive makes 0.8 per cent of £3.9billion, £31.2 million a year] they’re paying more than what they should be paying.
“Now they are not saving £9 million a year in terms of what they are doing.”
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She continued: “For me the Government owns the debt. They are charging Birmingham City Council the gilt rate plus.
“What they could do, they could cut the debt. They could restructure the debt. They certainly could take the 0.8 per cent off the debt.
“They are loaning it for more than they borrowed it for. They are making money on the debt.
“This whole thing they are doing is saving them peanuts in comparison to what this debt is.”
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But the Government denied the claim and said it cancelled the one per cent ‘payday loan premium’, which was brought in by the previous Conservative government.
It also said there was no other proposal for the council debt to be reduced or written off.
A Ministry for Housing, Communities and Local Government spokesman said: “It is completely untrue to suggest the government is profiteering and that this is the cause of the current dispute – which relates to Birmingham City Council’s decision to reform unfair staff structures that were a major cause of unequal pay claims.
“Interest is set at a rate that protects taxpayers by making sure the government is not lending at a loss – a legal requirement – and the Deputy Prime Minister [Angela Rayner] has already scrapped the previous administration’s punitive one per cent “payday loan premium” for councils needing exceptional financial support [confirmed at the local government financial settlement in February 2025].
“We are actively supporting Birmingham Council to put it on a secure financial footing, having given an increase in Core Spending Power of up to 9.8 per cent, or £131m for 2025-26.
“This shows the government’s commitment to correcting unfairness in the funding system, and we put in place in-principle agreement to Exceptional Financial Support totalling £1.24 bn.”