Referral of Stoford Digbeth Ltd subsidy by Birmingham City Council
The Subsidy Advice Unit (SAU) has accepted a request for a report from Birmingham City Council concerning the proposed subsidy to Stoford Digbeth Ltd.
| SAU referral type | Mandatory referral |
|---|---|
| SAU referral state | Closed |
| Sector | Real estate activities |
| SAU referral opened | 1 June 2023 |
Administrative timetable
| Date | Action |
|---|---|
| 13 July 2023 | SAU’s report to be published |
| 14 June 2023 | Deadline for receipt of any third-party submissions (submissions after 5pm on this date cannot be taken into account) |
| 1 June 2023 | Beginning of reporting period |
Final Report
13 July 2023: The SAU has published its report providing advice to Birmingham City Council concerning its proposed subsidy to Stoford Digbeth Ltd. The report sets out our evaluation of Birmingham City Council’s Assessment of Compliance of its proposed subsidy with the requirements set out in the Subsidy Control Act 2022.
- Final report (13.7.23)
Request from Birmingham City Council
1 June 2023: The SAU has accepted a request for a report from Birmingham City Council for the proposed subsidy for Stoford Digbeth Ltd. This request relates to a Subsidy of Particular Interest.
The SAU will prepare a report, which will provide an evaluation of Birmingham City Council’s assessment of whether the subsidy complies with the subsidy control requirements (Assessment of Compliance). The SAU will complete its report within 30 working days.
Information about the subsidy provided by Birmingham City Council
Birmingham City Council proposes to award Stoford Digbeth Limited (SDL) a grant of £14.3m to resolve the viability gap associated with converting the former Typhoo building into an 84,000 sq.ft of modern studio and office space for the BBC and 2,780 sq. ft of retail space. The funding will be paid in respect of construction costs and will only be paid where costs have been incurred. The timescale for dispensing the funding will not go beyond March 2026.
The redevelopment of the Typhoo building by SDL will cost £69.3 million, with circa £55 million being funded by privately raised capital. This has left a viability gap of £14.3 million.
The overarching rationale for the project is to improve economic opportunities, enhance productivity, and to attract high wage jobs to Digbeth. This project will address market failures by creating a vibrant cluster of modern occupiers and vastly improved public realm and will help overcome social inequalities in Digbeth.
The BBC’s lease at Mailbox in Birmingham expires in 2026. The BBC commenced a search for a new broadcasting centre in November 2021, using an advertised, fully competitive process, and the former Typhoo tea factory building in Digbeth was selected as its preferred location based on the proposed emphasis on sustainability, low carbon footprint during construction, future flexibility and build design, with SDL as its preferred developer. The BBC has committed to signing a 25-year lease, providing the high quality fit out is achieved and public realm is delivered. The Typhoo building has been derelict for more than 30 years.
SDL has undertaken an open procurement process to appoint a main contractor for the work. The freehold owner of the Typhoo building, Benacre, will not receive more than the market value of the land as part of the scheme. The BBC will not be receiving any subsidy as it is not paying below market rates for its lease. The Council and SDL will enter into a grant funding agreement containing appropriate protections and constraints, including a clawback provision in relation to the level of profit which SDL receives through the project.
Information for third parties
If you wish to comment on matters relevant to the SAU’s evaluation of the Assessment of Compliance concerning the Birmingham City Council subsidy to Stoford Digbeth Ltd, send your comments before 5pm on the date stipulated in the timetable above. For guidance on representations relevant to the Assessment of Compliance, see the section on reporting period and transparency in the Operation of the subsidy control functions of the Subsidy Advice Unit.
Send submissions to SAUBCCSDL2023@cma.gov.uk copying the public authority: jane.smith@birmingham.gov.uk.
Provide a contact address and explain in what capacity you are making the submission (for example, as an individual or a representative of a business or organisation).
Notes to third parties wishing to make a submission
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The SAU will only take your submission into account if it can be shared with Birmingham City Council. The SAU will send a copy of your submission to Birmingham City Council with its report. This is to allow the public authority to take account of the submission in its decision as to whether to grant or modify the subsidy or its assessment. We therefore ask that you provide express consent for your full and unredacted submission to be shared. We also encourage you to share your submission directly with Birmingham City Council using the email address provided above.
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The SAU may use the information you provide in its published report. Therefore, you should indicate in your submission whether any specified parts of it are commercially confidential. If the SAU wishes to refer in its published report to material identified as confidential, it will contact you in advance.
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For further details on confidentiality of third party submissions, see identifying confidential information in the Operation of the subsidy control functions of the Subsidy Advice Unit.
Contacts
SAU project team: SAUBCCSDL2023@cma.gov.uk
CMA press team: 020 3738 6460 or press@cma.gov.uk