Five years ago, Birmingham City Council approved a plan for a groundbreaking £6.6m development, which would bring together affordable and eco-friendly residential and retail premises in Stirchley, Birmingham. But now the project – led by Stirchley Co-operative Development (SCD) – is under existential threat.
“The consequences could be devastating,” says SCD‘s Sean Farmelo. “Three long-standing local businesses at risk of closure; serious housing insecurity for residents; and lasting damage to the prospects for large-scale co-operative Registered Social Landlord housing projects in the UK.”
SCD was established in 2016 by two local housing co-operatives and three co-operative businesses (Birmingham Bike Foundry, Artefact, and Loaf) to address rising costs of living and working in the area. The plan was for the co-op to own and manage a building comprising 39 homes and three retail units, with community and arts spaces, a garden area and cycle parking.
Land on Pershore Road was purchased in August 2022 from Seven Capital, with costs covered by Homes England (the government body that subsidises the development of affordable housing) and a mortgage from an ethical lender. Funding support also came from Power To Change (through The Big Lottery Fund) and the Homes England Community Housing Fund, as well as grants from WMUCH and Interreg NWE Charm.
Costs continued to increase, but construction finally began in 2023 and last year SCD held a topping out ceremony, which celebrated the completion of the highest point of the three-storey, 35ft co-operative building, attended by Selly Oak MP, Al Carns and West Midlands mayor Richard Parker.
However, in 2024, construction was taken over by GreenSquareAccord (GSA), a UK housing association providing and developing affordable homes. SCD had partnered with GSA early on to provide technical expertise and manage development processes; GSA switched to its in-house construction team following the original contractor’s insolvency. According to SCD a fixed price contract was not on the table for the project, though assertions were made that the price would remain the same except for a small variance, and they had no option but to continue on a mutual faith agreement.
Despite years of delays, the final completion date was set for 23 March 2026. But on 12 March, GSA leadership informed SCD that it intends to retain ownership of the building, citing a major financial shortfall.
“The initial cost of the development has increased due to a number of challenges during construction – including the original contractor liquidating and associated challenges which we had to pick up when we took over the site. We have been clear about these cost increases with SCD and Homes England throughout this process,” a GSA spokesperson told Co-op News.
“While we appreciate this is not the expected outcome for SCD and our partners, as a not-for-profit social housing provider, it would be irresponsible for us to absorb the £1.16m shortfall between the cost of the development and SCD’s offer, which would ultimately compromise investment into homes and services for our customers.”
The move leaves in limbo the residents and businesses planning to move in, with many having already given notice on their previous homes and premises.
“It was like pressing the nuclear button on SCD,” says Farmelo, who is also a worker-owner at Birmingham Bike Foundry. “We wouldn’t put 10 years of work into something that we weren’t absolutely sure would be a good thing for our business and community, and it feels like we’ve invested all this time only to have it pulled out from under us.”
He also believes GSA’s claim that SCD can’t meet the costs of the project “misrepresents the current situation”. SCD claims most project cost increases resulted from GSA’s own construction delays and mismanagement.
“Essentially, the price has gone up by over £2m since GSA took on the scheme, from £10.53m to £12.57m. The final offer that we gave them was £11.11m, which also included an additional deferred payment of £500,000 in year 30,” says Farmelo.
“This took us right to the absolute limit of what was financially manageable for the co-op and already started to challenge the purpose of the co-operative.
“It’s doubly frustrating because the project wouldn’t even exist without the 10 years of community groundwork put in by SCD, which helped to develop the plan, broker the land deal, and navigate the planning process.”
SCD also secured the crucial £210k Community Housing Fund to work up the planning application, leading to the Homes England capital grant that made the whole project viable.
Farmelo adds: “In its refusal letter, GSA states it is ‘committed to ensuring the spirit of the project continues.’ But the ‘spirit’ of the project is inseparable from its co-operatively owned nature, which is now at risk.
“Rather than negotiate, GSA has also begun approaching individual worker co-ops directly about commercial leases, with no affordability guarantees, no move-in dates, and no commitment to current residents, many of whom are homeless while they wait due to repeated unfulfilled move-in dates.”
The delays have already had a huge impact on retail and residential tenants – including co-op member Loaf, a co-operatively run bakery and cookery school, which has been without premises since February.
“They had to give six months’ notice to their previous landlord,” says Farmelo, “which they did in September on the basis that they would have three or four months to move into the new place and fit it out after their busy Christmas period. They’ve all taken voluntary pay cuts, and they’re trying to do pop-ups with with zero hour contracts in order to keep the business from going under.
“One of our residential members, John, is 80. He needed to move out of his house and was planning to move in. He’s now homeless.
“We have all been planning our lives around it … And it’s not like we’re dealing with a private, corporate organisation that we didn’t have a partnership with. GSA is actually registered with the FCA under the Co-operative and Community Benefit Societies Act 2014. So in our view it’s just incredibly bad behaviour that could have genuinely far-reaching consequences.”
One such consequence is the future of other large-scale co-operative housing projects.
“Three weeks ago, we were finally approved as registered housing providers,” says Farmelo. “That process was extremely difficult because it’s a process designed for much larger organisations. Now the uncertainty that has been created through GSA’s actions, just after we were registered, could really impact the chances of other large housing co-ops becoming registered providers in future.”
This could affect co-ops in similar situations, he adds, such as Stourbridge Powerhaus (a CLT in the West Midlands also working with GSA) and Gida Housing Co-op in London (whose vision is to be an affordable housing provider which empowers Black and Minoritised communities by giving them influence and collective control), which is also looking to get registered provider status.
“It just pulls into question so many other community-led housing projects.”
Because there is a social housing grant against the building, rent levels are capped for any housing provider using the premises, meaning the only area GSA could recoup costs is through commercial rents and planned communal areas. Within SDGs plans, its retail members wouldn’t be getting cheaper rent than they currently have, but would be “getting long-term security, which is something we can plan for”, says Farmelo.
“This is a board level decision made by people who haven’t been in contact with SDC before … the idea that they would set higher rent rates that could bankrupt the worker co-ops, put their own social tenants in without us being in charge of the residents and the membership processes, or even change the structure of the building to commercialise it further than than we had intended, are all hugely worrying.”
SCD is now exploring legal options and political pathways, speaking to the council, West Midlands Combined Authority and “people who have expressed really strong support along the way”.
“The co op movement is already pulling together in a way that GSA can’t,” says Farmelo, “but we now urge anyone to get in touch if they can think of any way that they can help, whether it’s in terms of political leverage, a grant or other types of support.”
Within 24 hours, SCD received over 100 messages of solidarity.
“I have supported this development since the very beginning, as a Stirchley resident myself,” said Mary Locke, Labour and Co-operative councillor for Stirchley. “This goes deep into the heart of what Stirchley is about. I am extremely worried and will do all I can.”
