Birmingham City Council effectively bankrupt

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Coventry next!

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Whilst I'd not take a bet, I'm not so sure

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Birmingham council votes for £300m of cuts and 21pc council tax hike



Birmingham residents are being made to pay for Labour’s failure through a 21 per cent council tax hike, a government source has said.

The Labour-run council, which declared itself effectively bankrupt last year, voted on Tuesday night to make £300 million of cuts over the next two years in an attempt to balance the books.

At the same time, council tax will rise by 10 per cent in April and 10 per cent the year after – adding £350 to average bills.

Birmingham issued a Section 114 notice in September, meaning it had to halt all new spending, after facing equal pay claims of up to £760 million and an £80 million overspend on an under-fire IT system.

Independent commissioners were brought in by Michael Gove, the levelling up secretary, to help run the council, which owes almost £3 billion to lenders.

A source close to Mr Gove blamed Birmingham City Council’s “eye-watering levels of debt” and “wasteful spending” on “severe mismanagement” by the Labour Party

It is a “flashing red warning sign” for life under Sir Keir Starmer’s leadership, the source added.

Under the cost-cutting plans street lighting will be dimmed, bin collections will be made fortnightly, burial charges will be increased, and spending on highway maintenance will be slashed – putting drivers at risk of potholes.

There will also be a new charge for dealing with rat infestations in people’s homes and gardens, prompting one Tory councillor to complain: “Only rats will prosper in Birmingham.”

The Government source said it was a sign that Sir Keir would take Britain “back to square one”, with “more spending, more borrowing, more debt and higher taxes”.

“The Labour Party’s severe mismanagement of Birmingham City Council – the largest local authority in Europe - has bankrupted the council,” they said.

“There are eye-watering levels of debt and wasteful spending. Sadly local residents are being made to pay for Labour’s failure through higher taxes.

“This is a flashing red warning sign for what a Labour government would do to the UK. More spending, more borrowing, more debt and higher taxes. Taking us back to square one.”

Under the budget plans, fortnightly waste collections are set to be introduced in 2025-26, with other savings expected to come in almost immediately.

Dimming street lights is set to save almost £1 million a year, while cutting spending on highways maintenance could save up to £12 million, depending on the outcome of discussions over a private finance initiative.

Adult social care will be slashed by £23.7 million in the next financial year, while the children’s young people and families department will be forced to find £51.5 million in savings.

As part of the large cuts to adult social care, providers will not be given inflation-linked increases in many cases. Crisis payments for food, gas bills and white goods such as fridges and cookers will cease.

Staff will use fewer mobile phones and will go back to cheaper landlines, with people wanting to ring the council having to deal with more voice automation rather than actual human call handlers.

There will be a new charge of £24 for dealing with rats in gardens and houses. The bulky waste charge will be increased from £35 to £45, while garden waste subscription charges will increase from £50 to £60 a year. Fees for sport and leisure facilities will increase by 5 per cent.

Car parking charges will be introduced in parks and the number of rangers will be cut. More than 30 parks maintenance staff will be sacked and the use of herbicides will be phased out.

Less money is set to be spent on removing graffiti, with offensive cases tackled first, and a number of street cleaners will be cut.

All grants for cultural projects will be cancelled from 2025 and the budget to promote Birmingham as a tourist destination will be cut. The council will also aim to make more money by hosting more weddings at its registry offices.

The two 10 per cent council tax increases – which add to up to 21 per cent over two years – will add around £350 to a typical Band D home and £700 on the most expensive Band H properties.

A protest gathered outside the building where the councillors were debating the budget on Monday evening, with local media reporting that hundreds of people had shown up to voice their concerns.

In an attack on the Labour Group, Morriam Jan, a Lib Dem councillor, asked whether it was worth hosting a “two-week party” for the Commonwealth Games in 2022.

She claimed Labour was warned not to go ahead with the event, adding: “Was the job bankrupting the city? Was that two-week party worth the millions of pounds worth of assets we will need to sell? Or the jobs that will be lost? Or the services that will be stopped?”

The cost of the 2022 games was estimated at £778 million, of which the council and its partners paid £184 million.

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Yet the ar$eholes that created the problem are still holding office!

The first rule of turnaround strategy is that you remove those responsible for the present mess! They created it, they aren't going to be able to fix it.

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Yet the ar$eholes that created the problem are still holding office!

And could be running the whole country soon!

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'Bankrupt' council owns art worth £451m



Birmingham City Council owns an artwork collection valued at almost half a billion pounds, a BBC investigation has discovered.

But none will be sold off to help tackle the financial challenges at the council which declared it was effectively bankrupt last year.

The commitment to preserve the collection was made by the council’s leadership despite the need to plug a £300m hole in the council’s budget over two years.

Residents in the city have already seen cuts to services and a council tax rise of 10% this year, with another planned from April 2025.

There were no proposals to sell any artworks and many of them were gifts to the city from donors who wanted them on public display, a council spokesperson said.

“These are not regular council assets but artworks within an accredited museum so there are major implications and complications even if we wished to consider this," they added.

The council also said any sales could have implications for Birmingham Museums Trust which is responsible for most of the artworks, with grant funding potentially at risk.

Having initially refused to supply the value of the publicly owned art collection to the BBC, the Information Commissioner's Office ordered the council to reveal the £451m value under the Freedom of Information Act.

The scale of the council-owned art collection was also revealed and included 1,430 paintings, 560 sculptures and 25,924 works on paper as of January.

The council also said any sales could have implications for Birmingham Museums Trust which is responsible for most of the artworks, with grant funding potentially at risk.

Having initially refused to supply the value of the publicly owned art collection to the BBC, the Information Commissioner's Office ordered the council to reveal the £451m value under the Freedom of Information Act.

The scale of the council-owned art collection was also revealed and included 1,430 paintings, 560 sculptures and 25,924 works on paper as of January.

The decision not to sell off artworks was backed by the council’s Lead Commissioner Max Caller [pictured], who has been brought in to oversee the financial recovery of the council.

That is despite commissioners’ comments published this week which warned the council did not "have sufficiently robust plans to balance the budget in 2025-26 and subsequent years".

Reacting to the BBC's story, Joanna Marchong from low-tax pressure group The TaxPayers' Alliance said the financial situation faced by the council was scary.

“There are people at stake here, and it’s only really residents and taxpayers that will be the ones picking up for [the council] if they’re not making active decisions themselves,” she said.

She added that her organisation had concluded Birmingham City Council had acquired 61 new pieces of artwork in the last three years.

“If we don’t put our foot down now, who’s to say that they will always view artwork as a priority instead of actually delivering frontline services and helping the people that truly need it,” she said.

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Bankrupt Labour council plots double-digit council tax rise



A bankrupt Labour-run council is plotting a 10pc council tax increase amid an ongoing bin crew strike and growing rat problem.

Birmingham City Council – which is facing an estimated £760m bill over historic equal pay claims – also plans to cut £153m from its public services in a bid to balance the books.

But it comes after the local authority already enraged residents by scrapping free rat control services to residents. Critics dubbed the decision an effective “rat tax”.

Officials have requested government permission to raise its council tax by 9.9pc from April – almost double the approved 5pc cap.

If given the green light, it means Birmingham residents will have seen a 21pc increase in its council tax in two years. It equates to an extra £400 on a Band D property.

Councillors warned the decision would likely enrage taxpayers who are already battling rat infestations, made worse by bin worker strikes.

Bin crews are refusing to work for 12 days between January and April.

Conservative leader, Cllr Robert Alden, said Birmingham residents face “another double whammy of higher council tax for fewer services in the year ahead”.

Speaking at a cabinet meeting on Monday, Cllr Roger Harmer, leader of the Liberal Democrats, said: “The truth is this is being done on the back of a much dirtier city with savagely-cut services, and a whole raft of further cuts about to arrive.

“I can’t be the only councillor that’s really noticed a change in the tone of emails I get from residents really, really concerned about the state of the city.

“Of course, it’s only going to get worse.”

Birmingham City Council declared effective bankruptcy in October 2023 after facing equal pay claims of up to £760m and an £80m overspend on an under-fire IT system.

Last year, officials scrapped free rat control services to residents in a bid to save £400,000 a year. It sparked fears of a surge in the city’s vermin woes, with opposition councillors claiming the policy heralded a “golden decade for rats”.

The £24 pest control charge, which remains free for council tenants, has been labelled a “rat tax” by Conservative councillor, Adam Higgs.

Mr Higgs told a separate meeting last week: “I believe that the service should be free – we are currently in the midst of a bin strike where residents, through no fault of their own, are not having their waste collected.

“This is obviously going to have an impact on an increase in rats.”

Council director of regulation and enforcement, Sajeela Naseer, said there has been a 70pc reduction in the use of the rat control service since fees were introduced.

She insisted this had not led to an increase in rat complaints to the council – though cautioned residents may be purchasing rat poison on their own accord.

Local authorities can increase council tax above 5pc without holding a referendum if it can persuade the Government that they are in a financial mess.

Prior to Rachel Reeves’s Budget, the council was expected to target £67m in savings for 2025-26. However, this has grown to £153m partly due to the rise in employer National Insurance and the national living wage.

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Bankrupt council denied new 9.99% tax rise



Birmingham City Council has been denied permission to increase its council tax by 9.99% next year after a government request for the figure was rejected.

But the authority was allowed to raise it by 7.5% in April before it would need to hold a local referendum to seek approval for any higher increase.

The council previously stated it would not be able to set a lawfully balanced budget without the request for 9.9% being approved.

The authority's leader, John Cotton, said the government had agreed with the progress they had made to allow them to cut the planned council tax increase.

Under normal circumstances, authorities can only increase council tax by 4.99% in total without holding a local referendum.

Along with its decision on tax rises, the government also announced an increase to the funding it provides to local authorities which will be raised by 6.8% compared to the 2024-25 financial year.

In a written statement, external, Ms Rayner said there had been a record number of councils asking for additional council tax increases.

"We have agreed to a limited number of requests and in all cases have not agreed to the full amount requested," she said.

"Where we have agreed, it is only for councils with amongst the lowest levels of council tax, and where we expect, even after these increases, residents will still be paying less than the average compared with similar councils."

Birmingham City Council declared itself effectively bankrupt in October 2023 as it struggled to deal with equal pay claims originally estimated to total £750m.

Government-appointed commissioners were brought in and residents in the city have already seen cuts to services since then with a council tax rise of 10% for the 2024-25 financial year.

Mr Cotton said talks with the current government have been constructive.

"Following extensive talks, we've agreed that Birmingham has made sufficient progress over the last 12 months to reduce the planned council tax increase," he said.

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The ‘bankrupt’ Labour council spending £283m on gold-plated pensions



Rubbish in the streets, library doors slammed shut and vital support services decimated from cradle to grave. These are just some of the symptoms of a tough period for the residents of England’s second largest city.

When Birmingham City Council effectively filed for bankruptcy almost 18 months ago, it announced £300m of cuts over two years – affecting almost every area of public life.

During that same period, the council is on course to stuff another £283m into gold-plated pensions for staff, The Telegraph can reveal.

Birmingham has one of the most expensive schemes in the country — it spent around £1 in every £3 of council tax receipts on staff pension contributions last year, according to The Times. Officials receive a guaranteed, inflation-linked income for life when they retire.

The figures serve as a kick in the teeth for local residents, who face a 7.5pc rise in their council tax bills this year – adding £134 to the average home.

With adult social care centres closing, youth services pared back and arts funding slashed, they have never paid so much for so little. Even rubbish collection, widely regarded as a staple council service, will now become fortnightly across the city.

The savage programme of cuts started in 2024-25 as the local authority desperately shedded £149m of spending.

Yet that same year, figures suggest that council staff enjoyed pension contributions of around £142m – almost enough to plug the shortfall.

Darwin Friend, of the TaxPayers’ Alliance campaign group, said it was time that the schemes were closed.

He said: “Taxpayers are sick of coughing up huge sums to support overly generous pension schemes for public sector workers.

“While residents face huge rate rises, millions of pounds are being diverted from frontline services to the golden nest eggs of council officials.

“Rather than cutting services to fund these schemes, they should be closed to new entrants and the benefits brought into line with those available to the private sector workers who pay for them.”

Yet there are no such changes planned over the coming years, a period which will bring more pain for Birmingham’s residents.

The council has already confirmed another £148m of cuts for 2025-26, with adult social care, children’s services and housing firmly in the firing line. This is despite a £150m funding boost from central Government.

Smaller outlays will be scrapped as well – including £50,000 for library books and another £50,000 for dropped kerbs.

Staff pensions, however, are untouchable. No cuts can be made to contributions before 2026-27 and even then, they will be decided by an independent expert based on the scheme’s financial health.

It means the council will funnel approximately £142m more into pensions next year, the equivalent of 27.2pc of salaries.

The West Midlands Pension Fund, which disburses the eventual payouts, already hands 362 retirees more than £50,000 a year. Eight of those get more than £100,000.

Pensions expert, John Ralfe, said councils should tell the Government that the schemes are unaffordable.

He said: “Local government pensions are much more generous than the private sector, and the higher cost is paid by council taxpayers.

“And because the generous pension terms are set by central government, they are trapped into supporting these high cost schemes and there is little any individual council like Birmingham can do.

“They, and other councils, should be telling Whitehall that they can’t afford the long term cost of these pensions, and push for future pensions to be less generous.”

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Critical Birmingham Budget decision meeting postponed in 'flabbergasting' setback



Cash-strapped Birmingham City Council has had to postpone its crucial Budget meeting by a week, triggering an angry response.

The delay to the legally-binding meeting to agree the Budget for this coming year, due to take place next Tuesday, was decried as 'flabbergasting' and a sign of the council leadership being 'unfit to lead'.

Instead the full Budget meeting will take place a week later, on Tuesday, March 2. Because that will fall in Ramadan, the council is to start the meeting in the morning so it can end in time for Muslim councillors to break their fast at sunset.

The postponement drew an angry response from opposition members. They sajd it was proof the council was caught out by a belated Government decision to only allow the council to put up council tax by 7.49 per cent and not, as it wanted, by 9.99 per cent.

That left a black hole of £11 million which could only be filled by asking the Government to let it draw funds as Exceptional Financial Support. Labour leaders described that as a done deal, and declared they had produced a balanced budget as a result.

But it has now emerged a legal budget cannot be set until the Government allows the EFS request - and Parliament is currently in recess so won't be looking into the bid until its return from February 24.

In a message to members today, Monday, February 17, the council said the original timeline 'was no longer possible'. It said: "We have written to the Ministry of Housing, Communities and Local Government (MHCLG) in relation to Exceptional Financial Support to enable a balanced budget to be agreed . MHCLG advised late last week the outcome of this request may not be confirmed by February 25, due to Parliamentary Recess..."

It said the meeting would still be held in time to meet the statutory deadlines for council tax setting of March 11.

Conservative group leader Coun Robert Alden said it was a 'flabbergasting' state of affairs. He said it proved that, as BirminghamLive had first exposed, the council leadership was caught out by the Government's announcement that it was only permitting a 7.5 per cent tax rise, despite an attempt by the Labour leader to paint it as a mutual decision.

Coun Alden (Con, Erdington), said it 'beggars belief' the political leaders didn't realise their budget would not balance without Government intervention.

"They had to delay last year’s meeting for this very reason, so to have made the same mistake again 12 months later is flabbergasting, and shows how unfit for governing the Labour administration in Birmingham is," he claimed.

Coun Ewan Mackey (Con, Sutton Roughley), deputy leader of the opposition, said the Labour cabinet was now having to publicly admit it did not yet have a balanced budget to present to the city.

"The only thing bigger than their budget gap, is their credibility gap. Birmingham needs a change,” he added, referring to the May 2026 all-out elections for the council's 101 seats.