There has been widespread coverage ahead of the Birmingham City Council budget meeting today, which is expected to approve cuts to local services today to save £300m. There are numerous pieces of coverage with the story running on BBC Radio 4’s Today Programme and on ITV bulletins.
The BBC online covers the council’s plans for a 21% tax rise in an attempt to balance its books – which is also the focus of ITV’s story.
The council faces significant financial challenges that have been widely reported and that are as a result of severe mismanagement. This includes an admission of its backdated equal pay liability, currently estimated by the council as being up to £760 million, along with an in-year budget deficit that includes the costs of implementing an IT system. These deficits were too significant for the council to manage.
As a result, commissioners were appointed in October 2023. They have the powers to provide advice and challenge the council over their budgeting decisions, to help protect the interests of taxpayers and residents. They also have powers relating to governance, scrutiny of strategic decision making, finance and senior appointments.
We recognise councils are facing challenges, which is why we recently announced an additional £600 million support package for councils across England. This will increase their overall funding for next year to £64.7 billion – a 7.5% increase in cash terms on 2023/24.
In the case of Birmingham, and a small number of councils, we have also taken a pragmatic approach by allowing them some exceptional financial flexibilities to help them balance their budgets and deliver vital services. This flexibility allows them to meet revenue costs through capital resources – for example through the sale of council held assets.
We have been clear that councils in the most severe financial failure, that are seeking significant multi-year support from Government, should continue to take all reasonable local steps to support recovery while controlling any unnecessary or wasteful expenditures.
A DLUHC spokesperson said:
Birmingham City Council faces a unique financial situation following its failure to get a grip of the significant issues it faces and years of severe mismanagement. This is why commissioners were appointed in October 2023 to protect residents and taxpayers in the city.
We recently announced a £600million support package for councils which will increase overall funding to £64.7 billion for the upcoming financial year – a 7.5% increase in cash terms – and while councils are responsible for their finances we stand ready to talk to any concerned about its financial position.