Birmingham's flagship Paradise development has been left in limbo after money for the project ran out.
The £700 million project includes 10 new office buildings, a hotel, public spaces and 550 car parking bays between Centenary Square and Victoria Square, as well as shops, restaurants and cafes.
Previous landmarks such as the former Central Library and Fletchers Walk have been demolished to make way for the new scheme.
But costs have spiralled and the scheme has run out of money - and £50 million is needed for it to continue.
Birmingham City Council's Audit Committee was told yesterday (Tuesday, November 20) that the overspends were inevitable.
It was conceded there had been a significant breakdown in communication between builders, the city council and the Greater Birmingham and Solihull Local Enterprise Partnership (LEP).
The project is now in limbo with no budget currently available to deliver Phase 2.
Talks are now on-going with the LEP about finding the £50m.
We will bring you the latest information, and reaction to this story in updates below..
Paradise in Birmingham
Key Events
New statement
Statement from the Paradise Circus Limited Partnership:
“Costs for infrastructure work for Phase 1 of Paradise Birmingham have not increased by £50m or £100m, as incorrectly reported in the press.
“The increased scope of off-site works for Phase 1 of Paradise, together with a combination of construction inflation and the collapse of Carillion, led to an increase in costs of £29m.
“Private sector funding is in place for our next building, One Centenary Way, and we are awaiting the outcome of the LEP’s considerations regarding a CPO and infrastructure costs relating to Phase 2.”
Statement
A joint statement from Birmingham City Council and the Greater Birmingham & Solihull LEP has just been issued.
A spokesman said: “With regard to the Paradise project, the LEP Board have received a request for further investment in the project.
“This is currently under consideration.”
The spokesman added that the project continues to progress.
What do you think?
News about the shortfall in funding for the development has clearly upset readers. Many are questioning whether the council should be ploughing any more money in given other issues in the city - from homelessness to funding shortages for schools.
Tell us what you think on our Facebook forum.
Cost increases ‘would have happened anyway’
Clive Heaphy, the council’s director for finance and governance, said he became aware of the issues soon after joining the council in January 2018 and immediately informed the council leader.
A full audit report was being carried out around the decision-making and communication with the council.
He stated that most of the cost increases ‘would have happened anyway’ regardless of whether the council knew about them.
He added: “It is an excellent site, with an excellent cost return ratio and excellent job creation. This is about the delivery of the project, the governance and communication. The scheme itself is still excellent and will go forward.”
'Alarm bells should have been ringing'
The news has angered councillors who said the council should have seen this coming.
Coun Suzanne Webb (Cons, Castle Vale) was the most vocal critic of the current situation describing the scheme as a ‘financial mess and risk to our city’.
She demanded answers as to why the Audit committee was not informed of the situation sooner, adding: “It’s not okay to overspend. Alarm bells should have been ringing.”
How did this come about?
The shortfall in funding was revealed at an Audit Committee meeting at Birmingham City Council yesterday. The committee was told that the overspend was inevitable but it was conceded there had been a significant breakdown in communication between builders, the city council and the Greater Birmingham and Solihull Local Enterprise Partnership (LEP).
They need £50 million to continue with phase one.
This is what the council is saying
Council leader Ian Ward (Lab, Shard End) has admitted he only became aware of the funding issue earlier this year.
He said: “When the decision (to approve initial funding) was taken it was recognised this was strategically important for the city. This remains the case today.
“What we have got to get right is the change in governance.
“The fact that there is a return to the LEP through business rates growth and return to the city council, does, I believe, mean we have to find a way of ensuring this development continues otherwise we will be left with a problem in that particular location for years to come.”
Talks are now on-going with the LEP about finding the £50m.
Initial Paradise vision
The original vision for the site was to create eight new office buildings, significant new public spaces with a cafe culture, a cycle hub to encourage green transport and a brand new hotel to replace the Copthorne.
Phase Two
Phase two is currently in the early stages of development and this is the phase which is now in limbo - with no budget currently available.
This part of the scheme includes two new office buildings - One Centenary Way, which is already under construction and Three Chamberlain Square. The plan also includes a new 250 bedroom four star hotel to replace the Copthorne Hotel, which is currently still open.
Phase One
Phase One of the Paradise project is currently under development. This includes two office blocks - One Chamberlain Square, which is on the site of the old Central Library and Two Chamberlain Square. It also includes a new public space between the buildings and re-routed roads.
The development in pictures
These were images of how Paradise was developing from this summer.
What was the Paradise development?
The development of paradise was billed as the most important development Birmingham has seen in a generation.
The plans included three new squares - Chamberlain Square, Ratcliff Square and Congreve Square which would provide a network of public spaces, giving people somewhere to spend time and relax in.
it was also creating 10 new office buildings,a four star hotel, new car parking, restaurants and cafes.
What happens now?
The city council has revealed the Paradise Development has overspent - and there is not currently enough money to keep it going.
It has left the overall scheme with a major cash-flow problem and money is now being sought from the LEP to deliver Phase 2 which includes the One Centenary Way, Three Chamberlain Square and new 4-star hotel buildings as well as Ratcliff Square.
At this stage, no extra money is needed for Phase 3 which would deliver a number of office blocks surrounding Congreve Square, behind the One Chamberlain Square tower.
